Archive for the ‘Economy’ Category
March 11th, 2011
CPSS-IOSCO principles for financial market infrastructures
New and more demanding international standards for payment, clearing and settlement systems have today been issued for public consultation by the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO).
The new standards (called “principles”) are designed to ensure that the essential infrastructure supporting global financial markets is even more robust and thus even better placed to withstand financial shocks than at present. They are set out in a consultative report Principles for financial market infrastructures which contains a single, comprehensive set of 24 principles designed to apply to all systemically important payment systems, central securities depositories, securities settlement systems, central counterparties and trade repositories (collectively “financial market infrastructures” or “FMIs”). These FMIs collectively record, clear and settle transactions in financial markets.
When finalised, the new principles will replace the three existing sets of CPSS and CPSS-IOSCO standards, Read the rest of this entry »
Posted in Economy, Uncategorized | 
Tags: cpss, financial market, financial stability, financial system, iosco | 
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March 7th, 2011
An International Monetary Fund (IMF) mission led by Taline Koranchelian visited the United Arab Emirates during February 27-March 7, 2011 to conduct the discussions for the Article IV consultation with the United Arab Emirates. The mission met with H.E. Minister of State for Financial Affairs Obaid Humaid Al Tayer, H.E. Minister of Economy Sultan Bin Saeed Al Mansoori, H.E. Governor of the Central Bank of United Arab Emirates Sultan Bin Nasser Al Suwaidi, other senior government officials, as well as representatives from the business and financial community.
This are excerpts of what the IMF thinks about the UAE economy:
“The economic recovery is gaining strength, supported by a favorable global environment but subject to increased regional uncertainty. While overall growth is expected to remain unchanged in 2011 at 3¼ percent, non-oil GDP growth is projected to accelerate from 2 percent in 2010 to 3¼ percent in 2011, reflecting strong tourism, logistics, and trade in Dubai; and large public investment spending in Abu Dhabi, including through Government-Related Enterprises (GREs). Despite higher international food prices, CPI inflation is expected to remain moderate at 4 percent, as rents continue to decline. Higher oil prices are contributing to a marked improvement in the fiscal position and balance of payments.
February 22nd, 2011
IMF staff just published a report on this subject. Abstract:
We present evidence on one facet of energy security in OECD economies – the extent of diversification in sources of oil and natural gas supplies. Viewed from the perspective of the energy-importing countries as a whole, there has not been much change in diversification in oil supplies over the last decade, but diversification in sources of natural gas supplies has increased steadily. We document the cross-country heterogeneity in the extent of diversification. We also show how the extent of diversification changes if account is taken of the political risk attached to suppliers; the size of the importing country; and transportation risk.
You can buy the report here, or ask us for the full paper in digital form.
February 11th, 2011
The WSJ printed a research piece about economic changes in Africa. See the beautiful graph below.
Excerpts:
While U.S. and European companies are waking up to the continent’s accelerating growth, scores of African companies like Zambeef also are expanding. Telecommunications company MTN Group Ltd. has scooped up 116 million subscribers in 21 African countries on the continent from its headquarters in South Africa. Nigeria-based Dangote Cement PLC has acquired land and opened plants in Ghana, Cameroon and Ethiopia. Togo-based Ecobank Transnational Inc. set up branches in 30 African countries, doubling its presence in five years.
While the economies of U.S., Europe and Latin American contracted in 2009, Africa’s grew. The International Monetary Fund in October forecast that growth in the 47 countries of sub-Saharan Africa will reach 5.5% this year. That growth is creating legions of consumers.
Around 10 million Nigerians moved into the middle-income bracket, meaning they could buy more than just necessities, in the past five years, according to an estimate by London-based private-equity firm Actis LLP.
February 8th, 2011
Heritage just published their report of Chinese investment overseas for 2010. Excerpts:
The dominant aspect of Chinese investment in 2010 was a rush to South America, led by (but not limited to) Brazil. Other features include a jump in new, large construction contracts and fewer failed transactions. Chinese investment in the U.S. in 2010 was steady at a bit over $6 billion but far more diversified than in 2009. American policy concerning this investment is inconsistent and opaque and should be improved.
It is no surprise that energy and power draw the most funding and that 2010 closed with a rush of energy acquisition and plant construction deals.
Metals draw the second-most investment, followed by finance and real estate. The other sector of particular importance is transportation, which sees only minor investment but a great deal of engineering and construction contracts, such as rail lines. It is worth noting that the PRC’s established desire to acquire assets in agriculture and technology has been stymied almost completely up to this point.
The report has some nice graphics. You can request the full paper from us.
February 8th, 2011
Today the Wall Street Journal makes public the result of a little research on China’s rare earth policy (China Moves to Strengthen Grip Over Supply of Rare-Earth Metals, by James T Areddy):
China is building strategic reserves in rare-earth metals, an effort that could give Beijing increased power to influence global prices and supplies in a sector it already dominates.
Details of the stockpiling plans haven’t been made public. But the outlines of the effort have emerged in recent statements from Chinese government agencies, state-controlled companies and reports in government-run media. The reports say storage facilities built in recent months in the Chinese province of Inner Mongolia can hold more than the 39,813 metric tons China exported last year.
[...]. But a new mine can take a decade to develop, and processing of rare-earth elements will remain concentrated in China for years.
Industry observers say that if the stockpiling efforts further restrict China’s exports, that could raise hackles higher in foreign capitals, where some governments already are threatening to challenge Beijing’s quota regime by bringing complaints to the World Trade Organization.
[...] Chinese government agencies manage other official stockpiles for commodities, such as copper and corn, as well. And many governments world-wide amass similar stockpiles to address temporary emergency shortfalls, such as grain supplies in a drought year. The U.S. manages a Strategic Petroleum Reserve but since 1994 has pared back holdings of a range of commodities that had been held in a World War II era stockpile.
China in recent years has expanded the number of commodities it holds in reserve. It appears to actively manage their use, but does so with little transparency and sometimes in ways that appear designed to influence market prices, analysts say.
When aluminum prices were soaring in early November, for instance, the State Reserve Bureau blunted the rally by unloading more than 200,000 metric tons of aluminum ingots at as much as 7% below Shanghai Futures Exchange prices. China’s lack of clarity over how exactly it manages its strategic reserves of petroleum has roiled global oil markets and drawn criticism from the International Energy Agency and others.
February 4th, 2011
Durmuş Yılmaz, Governor of the Central Bank of the Republic of Turkey, explains what to expect from Turkey’s economy and has this to say “on the risks regarding the inflation outlook in the upcoming period and the prospective monetary policy strategies to be implemented should these risks materialize”:
In the baseline scenario, which is the basis of our medium-term forecasts, it is envisaged that the policy mix composed of policy rates and reserve requirement ratios should be determined in a way to achieve a limited monetary tightening, in order to make sure that inflation remains consistent with the targets. Such a tightening aims to keep inflation under control by slowing down credit growth and domestic demand and to reduce the risks surrounding financial stability. We expect the impact of the measures we took in December and January to contain credit supply to be observed in the near term. However, the time lag and the extent of the impact of the policy measures may vary depending on developments beyond the control of the monetary policy. Therefore, the CBRT will closely monitor the effects of the policy measures and take further actions should the credit growth rate or the inflation rate deviates from desired levels.
Developments regarding the global economy remain central for the domestic inflation and monetary policy outlook. Under current conditions, we employ several instruments to maintain both price stability and financial stability. Therefore, unlike previously, global developments would affect not only the direction, but also the composition of our policy. [...]
[...] The possibility of a longer-than-anticipated period of anemic global growth and the likelihood of a long period of quantitative easing by advanced economies not only creates downside risks regarding foreign demand but also suggests that capital inflows to Turkey may continue at a faster pace. Should such a scenario materialize, a policy mix of low policy rate and high reserve requirement ratios may be implemented for a long period, both to balance domestic and foreign demand and for macroprudential purposes. If global economic problems further aggravate and domestic economic activity assumes a stagnation trend, we may have to utilize all policy instruments with their effect being on the easing side. Although downside risks persist, there are also upside risks regarding global economy, particularly driven by the lagged impacts of the exceptionally loose policies implemented by the advanced economies over the past two years. If the global economy assumes a faster-than-expected recovery, global inflationary pressures may occur and thus trigger a tightening in the monetary policies of advanced economies. The materialization of such a scenario would mean higher global interest rates and domestic demand-driven inflationary pressures, and thus necessitate increasing both policy rates and reserve requirements.
Read the rest of this entry »
February 3rd, 2011
Hernando de Soto, president of the Institute for Liberty and Democracy, Lima, Peru, explains today in the Wall Street Journal:
The Egyptian government has long been concerned about the consequences of [economic] marginalization. In 1997, with the financial support of the U.S. Agency for International Development, the government hired my organization, the Institute for Liberty and Democracy. It wanted to get the numbers on how many Egyptians were marginalized and how much of the economy operated “extralegally”—that is, without the protections of property rights or access to normal business tools, such as credit, that allow businesses to expand and prosper. [...].
After years of fieldwork and analysis—involving over 120 Egyptian and Peruvian technicians with the participation of 300 local leaders and interviews with thousands of ordinary people—we presented a 1,000-page report and a 20-point action plan to the 11-member economic cabinet in 2004. The report was championed by Minister of Finance Muhammad Medhat Hassanein, and the cabinet approved its policy recommendations.
Egypt’s major newspaper, Al Ahram, declared that the reforms “would open the doors of history for Egypt.” Then, as a result of a cabinet shakeup, Mr. Hassanein was ousted. Hidden forces of the status quo blocked crucial elements of the reforms.
Today, when the streets are filled with so many Egyptians calling for change, it is worth noting some of the key facts uncovered by our investigation and reported in 2004:
• Egypt’s underground economy was the nation’s biggest employer. The legal private sector employed 6.8 million people and the public sector employed 5.9 million, while 9.6 million people worked in the extralegal sector.
• As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.
• We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and Read the rest of this entry »
January 28th, 2011
In June 2009, the International Association of Deposit Insurers (IADI) and the Basel Committee on Banking Supervision (BCBS) issued Core Principles for Effective Deposit Insurance Systems. And the list of organizations working on those principles is quite impressive: Since December 2009, IADI has been collaborating with the BCBS, the European Forum of Deposit Insurers (EFDI), the International Monetary Fund (IMF), the World Bank, and the European Commission (EC) to develop a methodology to assess compliance with the Core Principles.
Posted in Economy |
Tags: bcbs, deposit insurance systems, efdi, financial stability, iadi, IMF, wb |
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January 26th, 2011
Martin Wolf says in the Financial Times (Why China hates loving the dollar):
What about turning the renminbi itself into a global reserve currency? In the very long run, this must happen. But any swift move in that direction would raise two difficulties for China. First, it would only make sense if the currency were to be unpegged from the dollar, in which case the mercantilist strategy would collapse. Second, for a currency to become global it must be freely convertible and traded in deep and liquid financial markets. China would have to abandon exchange controls and liberalise its financial system. It would become impossible to force Chinese people to hold vast quantities of low-yielding bank deposits. Above all, the authorities would lose their most important source of economic control: the banking system. This is surely close to inconceivable in the near term.