Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘Central Banks’

Financial supervisory architecture since the Global Crisis: Supervisory models remain diverse, but more powers for central banks

Posted by hkarner - 7. Dezember 2018

Daniel Calvo, Juan Carlos Crisanto, Stefan Hohl 23 November 2018, vox.eu

Daniel Calvo, Senior Economist, Central Bank of Chile
Juan Carlos Crisanto, Deputy Chair of the Financial Stability Institute, Bank for International Settlements
Stefan Hohl, Senior Advisor, Financial Stability Institute, Bank for International Settlements

Following the Global Crisis, a number of significant regulatory reforms have helped to improve both crisis prevention and crisis management systems. Yet an effective financial supervisory architecture is essential to optimise the positive effect of the post-crisis reforms. When referring to a financial supervisory architecture, we mean an institutional supervisory setup that: (i) assigns specific functions to individual financial authorities; (ii) establishes coordination and cooperation mechanisms among those authorities; and (iii) specifies other approaches and arrangements to avoid potential conflicts of mandates. Deciding on the above institutional issues generally entails trade-offs between synergies across functions and potentially conflicting goals. In addition, the choices are influenced by the structure of the financial sector, past experience with financial crises, and legal, historical, cultural and political economy considerations. Moreover, the effectiveness of a financial supervisory architecture is very much related to the financial authorities’ ability to act with clear objectives, operational autonomy, comprehensive and effective powers, sufficient resources and adequate incentives.  Den Rest des Beitrags lesen »

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Why Central Bank Digital Currencies Will Destroy Cryptocurrencies

Posted by hkarner - 21. November 2018

 

Nouriel Roubini, a professor at NYU’s Stern School of Business and CEO of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank.

Leading economic policymakers are now considering whether central banks should issue their own digital currencies, to be made available to everyone, rather than just to licensed commercial banks. The idea deserves serious consideration, as it would replace an inherently crisis-prone banking system and close the door on crypto-scammers.

NEW YORK – The world’s central bankers have begun to discuss the idea of central bank digital currencies (CBDCs), and now even the International Monetary Fund and its managing director, Christine Lagarde, are talking openly about the pros and cons of the idea.

This conversation is past due. Cash is being used less and less, and has nearly disappeared in countries such as Sweden and China. At the same time, digital payment systems – PayPal, Venmo, and others in the West; Alipay and WeChat in China; M-Pesa in Kenya; Paytm in India – offer attractive alternatives to services once provided by traditional commercial banks. Den Rest des Beitrags lesen »

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IMF Chief Calls for Exploration of Digital Currencies

Posted by stgara - 20. November 2018

Nov 14, 2018 at 09:00 UTC, Coin Desk
NEWS

Christine Lagarde, managing director and chairwoman of the International Monetary Fund (IMF), has encouraged the “exploration” of central bank digital currencies (CBDCs) in the light of decreasing demand for cash and rising preference for digital money.

In a prepared speech for the Singapore Fintech Festival on Wednesday, Lagarde said:

“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”

Various central banks around the world are “seriously” considering the issuance of digital currency, including Canada, China, Sweden and Uruguay, she said. “They are embracing change and new thinking – as indeed is the IMF.”

Lagarde noted that major cryptocurrencies like bitcoin, ethereum and XRP, are also “vying for a spot in the cashless world, constantly reinventing themselves in the hope of offering more stable value, and quicker, cheaper settlement.” Den Rest des Beitrags lesen »

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A debate about central-bank independence is overdue

Posted by hkarner - 20. Oktober 2018

Date: 18-10-2018
Source: The Economist

In a low-inflation world, links between governments and monetary policymakers need rethinking

The federal reserve has heard worse. But when the president complains that it has gone “crazy” by tightening monetary policy, as Donald Trump did on October 10th, Americans fret that another norm is about to be overturned. An independent central bank is considered a pillar of a modern economy; presidents are supposed to mutter any criticisms they might have in private. But is that really for the best? Although Mr Trump’s complaints were not intended to start a high-minded debate, one is overdue.

Operational independence for central banks is relatively new. The principle grew out of work in the late 1970s and early 1980s by prominent economists working in the “rational expectations” school of economic thought, among them Finn Kydland and Edward Prescott, who were eventually awarded the Nobel prize. They considered the implications of people’s ability to look into the future and to anticipate the behaviour of self-interested politicians. Den Rest des Beitrags lesen »

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The next recession

Posted by hkarner - 13. Oktober 2018

Date: 11-10-2018
Source: The Economist

Toxic politics and constrained central banks could make the next downturn hard to escape

JUST a year ago the world was enjoying a synchronised economic acceleration. In 2017 growth rose in every big advanced economy except Britain, and in most emerging ones. Global trade was surging and America booming; China’s slide into deflation had been quelled; even the euro zone was thriving. In 2018 the story is very different. This week stockmarkets tumbled across the globe as investors worried, for the second time this year, about slowing growth and the effects of tighter American monetary policy. Those fears are well-founded.

The world economy’s problem in 2018 has been uneven momentum. In America President Donald Trump’s tax cuts have helped lift annualised quarterly growth above 4%. Unemployment is at its lowest since 1969. Yet the IMF thinks growth will slow this year in every other big advanced economy. And emerging markets are in trouble.

This divergence between America and the rest means divergent monetary policies, too. The Federal Reserve has raised interest rates eight times since December 2015. The European Central Bank (ECB) is still a long way from its first increase. In Japan rates are negative. China, the principal target of Mr Trump’s trade war, relaxed monetary policy this week in response to a weakening economy. When interest rates rise in America but nowhere else, the dollar strengthens. That makes it harder for emerging markets to repay their dollar debts. A rising greenback has already helped propel Argentina and Turkey into trouble; this week Pakistan asked the IMF for a bail-out. Den Rest des Beitrags lesen »

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Europe Set for Trio of Central Bank Decisions

Posted by hkarner - 14. September 2018

Date: 13-09-2018
Source: The Wall Street Journal

A primer on what to expect ahead of the ECB, Bank of England and Turkey’s central bank announcements

ECB President Mario Draghi

A trio of central banks, in the U.K., eurozone and Turkey, are set to announce policy decisions within an hour of each other on Thursday, between 7 a.m. and 8 a.m. Eastern. They are likely to underscore weaknesses and vulnerabilities that have weighed on the world economy and financial markets this year.

Europe’s two most prominent central banks—the European Central Bank and Bank of England—are expected to signal caution, reinforcing a policy lag behind the Federal Reserve. Turkey’s central bank, by contrast, could act vigorously to tame soaring inflation.

ECB officials will likely have an eye on risks emanating from both Turkey, where a number of eurozone banks do business, and the U.K., which is entering a sensitive period in its negotiations to leave the European Union. Den Rest des Beitrags lesen »

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Central bankers grapple with the changing nature of competition

Posted by hkarner - 2. September 2018

Date: 01-09-2018
Source: The Economist: Free exchange

This year’s Jackson Hole meeting was a chance to study market concentration

RECENT visitors to Jackson Hole, a resort in the Teton Mountain range in Wyoming, were denied the usual scenic views by a shroud of smoke from recent forest fires. Disappointing, no doubt, for the tourists among them—but oddly fitting for the economic panjandrums attending the Federal Reserve Bank of Kansas City’s annual symposium on August 23rd-25th. Not only are economic policymakers used to making choices in a fog of uncertainty, but this year’s theme of market structures generated its own haze. Though the nature of competition in America’s economy is changing, it is unclear how worried they should be.

Jerome Powell, the chairman of the Federal Reserve, highlighted slow wage growth in recent decades. America seems stuck in a “low-productivity mode”, he said. Others pointed to sluggish investment, despite cheap capital, and a fall in workers’ share of national income. Could these ills share some common causes, namely rising market concentration and crimped competition? Den Rest des Beitrags lesen »

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Die Sehnsucht der Autokraten nach der Kontrolle über das Geld

Posted by hkarner - 22. August 2018

Mit dem „Wunsch“, die Federal Reserve möge ihm politisch „etwas helfen“, begibt sich der amerikanische Präsident auf sehr dünnes ökonomisches Eis.

Wenn Autokraten politisch träumen, dann spielt dabei nicht selten die Kontrolle über die nationale Notenbank eine tragende Rolle. Ist ja praktisch, wenn man seine Pläne mit Geld aus der Notenpresse umsetzen kann.

Einer der zentralen Punkte der bolivarischen Revolution des Hugo Chávez in Venezuela war demnach folgerichtig die 2007 erfolgte Unterstellung der Notenbank (samt der Devisenreserven des Landes) unter die persönliche Kontrolle des Präsidenten.

Wie so etwas auszugehen pflegt, können wir gerade live mitverfolgen: Der Internationale Währungsfonds erwartet für heuer eine Million Prozent Inflation. Schwer vorstellbar, nicht wahr? Was das konkret bedeutet, fragt man am besten jene Venezolanerin, die einem Reporter von „El Mundo“ gestern vorgerechnet hat, dass sie für ihren offiziellen Monatslohn nach der jüngsten Währungsreform gerade noch zweieinhalb Flaschen Orangensaft bekäme – falls es die im Geschäft überhaupt gäbe.

Auf flottem Weg in Richtung dieses Horrorszenarios befindet sich auch der türkische Sultandarsteller Recep Tayyip Erdoğan, der es geschafft hat, die Landeswährung mit der mehrmals ausgesprochenen Drohung, er werde eine (nach Meinung so gut wie aller Ökonomen dringend nötigen) Zinserhöhung durch die Notenbank nicht zulassen, jedesmal ein Stück weiter in den Keller zu drücken und das Land in Richtung Staatspleite zu lenken.

Und jetzt Donald Trump: Ihm gefallen die Zinserhöhungen der Fed ganz und gar nicht, und er „wünscht“ sich, dass ihm die Notenbank bei seiner America-First-Strategie mit Niedrigzinsen „etwas helfen“ würde, ließ er gestern verlauten.

Da brennt jetzt aber der Hut! Die Inlandskonjunktur mit Steuersenkungen anzufeuern, gleichzeitig die Inflation durch Importzölle auf Trab zu bringen – und dann der Notenbank lenkende Maßnahmen zu untersagen, das klingt nach einem teuflischen Mix.

Zum Glück sind die USA – trotz der autokratischen Züge ihres Präsidenten – noch lang keine Autokratie, sondern eine immer noch gefestigte Demokratie. Der Präsident wird mit diesen Aussagen also außer einer kurzfristigen Manipulation des Dollarkurses nicht allzu viel erreichen.

Aber gefährlich sind solche Vorstöße allemal. Denn die Notenbanken sind formell zwar unabhängig, schweben aber nicht im politischen Vakuum. Die Bestellung des Chefs der EZB ist de facto Angelegenheit der Eurozonen-Regierungen, der Gouverneur der Oesterreichischen Nationalbank wird formell vom Ministerrat berufen. Selbst der Chef der privaten amerikanischen Federal Reserve wird vom US-Präsidenten nominiert.

Eine bestimmte Form der Abhängigkeit ist also immer da. Zumal mit der Auswahl des Kandidaten schon konkrete politische Vorstellungen verbunden sind. Trump selbst hat ja durchklingen lassen, dass er von Fed-Chef Jerome Powell ein wenig enttäuscht ist, weil er sich von ihm anderes erwartet habe, nämlich billiges Geld.

Das ist noch keine große Sache. Selbstverständlich darf die Politik die Notenbank kritisieren. Wie etwa Trump das mit der Bemerkung, er sei von Zinserhöhungen „nicht begeistert“, gemacht hat. Haarig wird es, wenn die Politik beginnt, ins Tagesgeschäft der Notenbank einzugreifen. Das ist der erste Schritt in Richtung Abgrund. Trumps „Wunsch“, die Fed möge ihm bei seiner Politik „etwas helfen“, ist da schon sehr nahe dran.

Wahrscheinlich wissen das der Präsident und sein Beraterstab aber ohnehin, und es ist nur darum gegangen, den Kurs der Landeswährung ein bisschen in die gewünschte Richtung zu manipulieren. (Etwas, was Trump übrigens der EZB und den Chinesen ständig vorwirft.) Und ziemlich sicher ist die Fed stark genug, unsinnigen Präsidentenwünschen zu widerstehen. Sie hat schon anderes ausgehalten.

Aber hellhörig sollte man schon werden, wenn der Chef der mächtigsten Industrienation beginnt, in so abenteuerliche Gefilde abzudriften. Denn im Gegensatz zum venezolanischen Bolivar, der uns herzlich egal sein kann, steht hier die Weltleitwährung auf dem Spiel.

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Cryptocurrencies and monetary policy

Posted by stgara - 6. August 2018

Date: June 28, 2018

Executive summary

This Policy Contribution tries to answer two main questions: can cryptocurrencies acquire the role of money? And what are the implications for central banks and monetary policy?

Money is a social institution that serves as a unit of account, a medium of exchange and a store of value. With the emergence of decentralised ledger technology (DLT), cryptocurrencies represent a new form of money: privately issued, digital and enabling peer-to-peer transactions.

Historically, currencies fulfil their main functions successfully when their value is stable and their user network sufficiently large. So far, cryptocurrencies are arguably falling short against these criteria. They resemble speculative assets rather than money. Primarily this is because of their inherent volatility, which is the by-product of their inelastic supply, and which limits their widespread use as a medium of exchange.

Cryptocurrency protocols could theoretically evolve to limit their volatility and correct their current deficiencies. If successful, this could lead to an increase in their popularity as an alternative to official currencies. A successful alternative to official currencies could put pressure on those who manage official currencies to provide better policies. Den Rest des Beitrags lesen »

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Why Reinvent the Monetary Wheel?

Posted by hkarner - 24. Mai 2018

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Cryptocurrencies promise to realize Friedrich Hayek’s dream of a free market in money. But human societies have discovered no better way to keep the value of money roughly constant than by relying on central banks to exercise control over its issue.

LONDON – Slumps have always been boom times for monetary experiments, and the economic collapse of 2008-2009 was no different. Underlying this recurrence is the instinctive feeling that economic calamities must have monetary causes, and therefore monetary remedies. There is either too much money, which causes inflation, or too little, which leads to depression. So the aim of monetary reformers –among whom are always a large number of quacks and cranks – has been to “keep money in order” and prevent its gyrations from disturbing the “real” economy of production and trade.

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