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The Bulgarian Financial Crisis of 1996/1997
A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Berlemann, Michael; Nenovsky, Nikolay Working Paper Lending of first versus lending of last resort: The Bulgarian financial crisis of 1996/1997 Dresden Discussion Paper Series in Economics, No. 11/03 Provided in Cooperation with: Technische Universität Dresden, Faculty of Business and Economics Suggested Citation: Berlemann, Michael; Nenovsky, Nikolay (2003) : Lending of first versus lending of last resort: The Bulgarian financial crisis of 1996/1997, Dresden Discussion Paper Series in Economics, No. 11/03, Technische Universität Dresden, Fakultät Wirtschaftswissenschaften, Dresden This Version is available at: http://hdl.handle.net/10419/48137 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, -
Causes, Solutions and References for the Subprime Lending Crisis
Vol. 1, No. 2 International Journal of Economics and Finance Causes, Solutions and References for the Subprime Lending Crisis Caiying Tian School of Accounting, Shandong Economic University Ji’nan 250014, China E-mail: [email protected] Abstract The subprime lending crisis and a series of relative problems have aroused wide concerns by various governments, especially by financial institutions, which have begun to suspect the easy money policy, the risk regulation of financial institution, and the rating agency. Based on the analysis of the cause of the subprime lending crisis, using foreign solutions for references, some advices were proposed in the article for China to face the financial crisis, i.e. guiding by the Basel agreement, disposing the relationship between financial innovation and risk regulation, establishing the independent currency policy frame, and recovering the market liquidity and confidence. Keywords: Subprime lending crisis, Currency policy, Financial regulation 1. Cause of formation of US subprime lending crisis 1.1 Too easy-money policy The current fluctuation of financial market has been induced by the global easy monetary management since the beginning of the year of 2002. Easy currency policy, increasingly progressive financial technology, continually ascending risk burden and financial lever boosted the current mess together. Especially, when the prices of various assets rise, the international credit can be gained freely by a cheap price. These too easy global credit conditions reflect the mutual function among the currency policy, the exchange rate system selected by some countries (especially by the developing countries with abundant labor forces), and the important change of the global financial system. -
Meir Sokoler: the Time Has Come for a New Bank of Israel Law (Central
Meir Sokoler: The time has come for a new Bank of Israel law Lecture by Dr Meir Sokoler, Acting Governor of the Bank of Israel, at the scholarships award ceremony at the Technion, Haifa, 17 March 2005. * * * First, I would like to thank you for inviting me to address such a distinguished gathering in such an eminent institution as the Technion. Many years ago I was a student of economics here, and I remember the excellent students of this august institute and the wonderful experience of outstanding instruction I received. I am sure that you have all heard of the Bank of Israel, the country's central bank. It appears, however, that many Israelis do not know much about it, apart from the fact that it prints Israel's money. A few months ago a 6-year-old from an Israeli primary school wrote to the Governor. In the carefully drafted letters of a child who had just learnt how to write, he asked: "Mr. Governor of the Bank of Israel, I heard that you in the Bank of Israel print the country's money. Why don't you print more money so that there won't be any more poor people, and there will be more roads and schools?" It might seem natural that such a young child would not know the answer to the question, but it transpires that many citizens, adults as well as children, ask us the same question in one form or another. At first glance the question seems to be justified. You might think that operating the banknote printing machines for a few more hours would solve all the economy's problems. -
List of Certain Foreign Institutions Classified As Official for Purposes of Reporting on the Treasury International Capital (TIC) Forms
NOT FOR PUBLICATION DEPARTMENT OF THE TREASURY JANUARY 2001 Revised Aug. 2002, May 2004, May 2005, May/July 2006, June 2007 List of Certain Foreign Institutions classified as Official for Purposes of Reporting on the Treasury International Capital (TIC) Forms The attached list of foreign institutions, which conform to the definition of foreign official institutions on the Treasury International Capital (TIC) Forms, supersedes all previous lists. The definition of foreign official institutions is: "FOREIGN OFFICIAL INSTITUTIONS (FOI) include the following: 1. Treasuries, including ministries of finance, or corresponding departments of national governments; central banks, including all departments thereof; stabilization funds, including official exchange control offices or other government exchange authorities; and diplomatic and consular establishments and other departments and agencies of national governments. 2. International and regional organizations. 3. Banks, corporations, or other agencies (including development banks and other institutions that are majority-owned by central governments) that are fiscal agents of national governments and perform activities similar to those of a treasury, central bank, stabilization fund, or exchange control authority." Although the attached list includes the major foreign official institutions which have come to the attention of the Federal Reserve Banks and the Department of the Treasury, it does not purport to be exhaustive. Whenever a question arises whether or not an institution should, in accordance with the instructions on the TIC forms, be classified as official, the Federal Reserve Bank with which you file reports should be consulted. It should be noted that the list does not in every case include all alternative names applying to the same institution. -
Sudden Stops and Currency Drops: a Historical Look
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: The Decline of Latin American Economies: Growth, Institutions, and Crises Volume Author/Editor: Sebastian Edwards, Gerardo Esquivel and Graciela Márquez, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-18500-1 Volume URL: http://www.nber.org/books/edwa04-1 Conference Date: December 2-4, 2004 Publication Date: July 2007 Title: Sudden Stops and Currency Drops: A Historical Look Author: Luis A. V. Catão URL: http://www.nber.org/chapters/c10658 7 Sudden Stops and Currency Drops A Historical Look Luis A. V. Catão 7.1 Introduction A prominent strand of international macroeconomics literature has re- cently devoted considerable attention to what has been dubbed “sudden stops”; that is, sharp reversals in aggregate foreign capital inflows. While there seems to be insufficient consensus on what triggers such reversals, two consequences have been amply documented—namely, exchange rate drops and downturns in economic activity, effectively constricting domes- tic consumption smoothing. This literature also notes, however, that not all countries respond similarly to sudden stops: whereas ensuing devaluations and output contractions are often dramatic among emerging markets, fi- nancially advanced countries tend to be far more impervious to those dis- ruptive effects.1 These stylized facts about sudden stops have been based entirely on post-1970 evidence. Yet, periodical sharp reversals in international capital flows are not new phenomena. Leaving aside the period between the 1930s Depression and the breakdown of the Bretton-Woods system in 1971 (when stringent controls on cross-border capital flows prevailed around Luis A. -
Domestically Owned Versus Foreign-Owned Banks in Israel
Domestic bank intermediation: domestically owned versus foreign-owned banks in Israel David Marzuk1 1. The Israeli banking system – an overview A. The structure of the banking system and its scope of activity Israel has a highly developed banking system. At the end of June 2009, there were 23 banking corporations registered in Israel, including 14 commercial banks, two mortgage banks, two joint-service companies and five foreign banks. Despite the spate of financial deregulation in recent years, the Israeli banking sector still plays a key role in the country’s financial system and overall economy. It is also highly concentrated – the five main banking groups (Bank Hapoalim, Bank Leumi, First International Bank, Israel Discount Bank and Mizrahi-Tefahot Bank) together accounted for 94.3% of total assets as of June 2009. The two largest groups (Bank Leumi and Bank Hapoalim) accounted for almost 56.8% of total assets. The sector as a whole and the large banking groups in particular are organised around the concept of “universal” banking, in which commercial banks offer a full range of retail and corporate banking services. Those services include: mortgages, leasing and other forms of finance; brokerage in the local and foreign capital markets; underwriting and investment banking; and numerous specialised services. Furthermore, until the mid-1990s, the banking groups were deeply involved in non-financial activities. However, a law passed in 1996 forced the banks to divest their controlling stakes in non-financial companies and conglomerates (including insurance companies). This development was part of a privatisation process which was almost completed in 2005 (with the important exception of Bank Leumi). -
Sudden Stops and Currency Crises: the Periphery in the Classical Gold Standard
Sudden Stops and Currency Crises: The Periphery in the Classical Gold Standard Luis Catão* Research Department International Monetary Fund First Draft: November 2004 Abstract While the pre-1914 gold standard is typically viewed as a successful system of fixed exchange rates, several countries in the system’s periphery experienced dramatic exchange rate adjustments. This paper relates the phenomenon to a combination of sudden stops in international capital flows with domestic financial imperfections that heightened the pro-cyclicality of the monetary transmission mechanism. It is shown that while all net capital importers during the period occasionally faced such “sudden stops”, the higher elasticity of monetary expansion to capital inflows and disincentives to reserve accumulation in a subset of these countries made them more prone to currency crashes. JEL Classification: E44, F31, F34 Keywords: Gold Standard, Exchange Rates, International Capital Flows, Currency Crises. ___________________ * Author’s address: Research Department, International Monetary Fund, 700 19th street, Washington DC 20431. Email: [email protected]. I thank George Kostelenos, Pedro Lains, Agustín Llona, Leandro Prados, Irving Stone, Gail Triner, and Jeffrey Williamson for kindly sharing with me their unpublished data. The views expressed here are the author’s alone and do not necessarily represent those of the IMF. - 2 - I. Introduction The pre-1914 gold standard is often depicted as a singularly successful international system in that it managed to reconcile parity stability among main international currencies with both rapid and differential growth across nations and unprecedented capital market integration. Nevertheless, several countries in the periphery of the system experienced dramatic bouts of currency instability. -
Is Our Current International Economic Environment Unusually Crisis Prone?
Is Our Current International Economic Environment Unusually Crisis Prone? Michael Bordo and Barry Eichengreen1 August 1999 1. Introduction From popular accounts one would gain the impression that our current international economic environment is unusually crisis prone. The European of 1992-3, the Mexican crisis of 1994-5, the Asian crisis of 1997-8, and the other currency and banking crises that peppered the 1980s and 1990s dominate journalistic accounts of recent decades. This “crisis problem” is seen as perhaps the single most distinctive financial characteristic of our age. Is it? Even a cursory review of financial history reveals that the problem is not new. One classic reference, O.M.W. Sprague’s History of Crises Under the National Banking System (1910), while concerned with just one country, the United States, contains chapters on the crisis of 1873, the panic of 1884, the stringency of 1890, the crisis of 1893, and the crisis of 1907. One can ask (as does Schwartz 1986) whether it is appropriate to think of these episodes as crises — that is, whether they significantly disrupted the operation of the financial system and impaired the health of the nonfinancial economy — but precisely the same question can be asked of certain recent crises.2 In what follows we revisit this history with an eye toward establishing what is new and 1 Rutgers University and University of California at Berkeley, respectively. This paper is prepared for the Reserve Bank of Australia Conference on Private Capital Flows, Sydney, 9-10 August 1999. It builds on an earlier paper prepared for the Brookings Trade Policy Forum (Bordo, Eichengreen and Irwin 1999); we thank Doug Irwin for his collaboration and support. -
Do Enlarged Deficits Cause Inflation: the Historical Perspective
Do Enlarged Deficits Cause Inflation: The Historical Perspective Michael D. Bordo and Mickey D. Levy Shadow Open Market Committee April 14, 2021 Two-Century Review of Deficits and Inflation • The current pandemic and massive fiscal deficits and monetary expansion has great resonance from history • We assess historic and modern episodes and find similar themes of deficit financing and monetary ease associated with inflation • Links between fiscal deficits and inflation are most apparent and pronounced in wartime but occasionally occur in peacetime • The subdued inflation in the decade since the great financial crisis (2008-2009) despite high deficits and monetary ease may have been more of an exception rather than the rule 2 Debt and Inflation in the US and UK • Figure 1 shows the longer-run record of debt/GDP in the UK and US • The debt/GDP ratio spiked during major wars and then receded • The decades-long run up in US debt during peacetime is the exception to the historic pattern, largely reflecting income support programs (in the US, entitlement spending) • Figure 2 shows the longer-run record on inflation • Inflation spiked during wars and receded during peacetimes, with the primary exception being the Great Inflation of 1965-1980 3 Figure 1. Government Debt (% of GDP) Panel A. United States Panel B. United Kingdom Source: George Hall and Thomas Sargent (2020) “Government Debt and Taxes in Eight Source: data kindly provided by Ryland Thomas, Bank of England U.S. Wars and Two Insurrections” Handbook of Historical Economics. We thank George Hall for providing the data. 4 Figure 2. -
A Bank of Israel Digital Shekel Potential Benefits, Draft Model, and Issues to Examine
A Bank of Israel Digital Shekel Potential Benefits, Draft Model, and Issues to Examine The Bank of Israel Steering Committee on the Potential Issuance of a Digital Shekel May 2021 Table of Contents Executive Summary ............................................................................................................ 3 Introduction ........................................................................................................................ 7 1. What is a central bank digital currency? ..................................................................... 10 2. Recent developments regarding central bank digital currencies ................................... 14 2.1 Introduction ........................................................................................................ 14 2.2 Joint publication by seven leading central banks and the BIS................................ 15 2.3 Main developments around the world .................................................................. 17 3. Potential benefits and motivations for issuing a Bank of Israel digital currency ........... 22 3.1 Introduction ........................................................................................................ 22 3.2 Main motivations ................................................................................................ 23 3.3 Additional possible reasons for issuing a CBDC .................................................. 29 4. Draft model of a Bank of Israel digital currency, and issues to be examined ............... -
Causes and Lessons of the Mexican Peso Crisis
Causes and Lessons of the Mexican Peso Crisis Stephany Griffith-Jones IDS, University of Sussex May 1997 This study has been prepared within the UNU/WIDER project on Short- Term Capital Movements and Balance of Payments Crises, which is co- directed by Dr Stephany Griffith-Jones, Fellow, IDS, University of Sussex; Dr Manuel F. Montes, Senior Research Fellow, UNU/WIDER; and Dr Anwar Nasution, Consultant, Center for Policy and Implementation Studies, Indonesia. UNU/WIDER gratefully acknowledges the financial contribution to the project by the Government of Sweden (Swedish International Development Cooperation Agency - Sida). CONTENTS List of tables and charts iv Acknowledgements v Abstract vi I Introduction 1 II The apparently golden years, 1988 to early 1994 6 III February - December 1994: The clouds darken 15 IV The massive financial crisis explodes 24 V Conclusions and policy implications 31 Bibliography 35 iii LIST OF TABLES AND CHARTS Table 1 Composition (%) of Mexican and other countries' capital inflows, 1990-93 8 Table 2 Mexico: Summary capital accounts, 1988-94 10 Table 3 Mexico: Non-resident investments in Mexican government securities, 1991-95 21 Table 4 Mexico: Quarterly capital account, 1993 - first quarter 1995 (in millions of US dollars) 22 Table 5 Mexican stock exchange (BMV), 1989-1995 27 Chart 1 Mexico: Real effective exchange rate (1980=100) 7 Chart 2 Current account balance (% of GDP) 11 Chart 3 Saving-investment gap and current account 12 Chart 4 Stock of net international reserves in 1994 (in millions of US dollars) 17 Chart 5 Mexico: Central bank sterilised intervention 18 Chart 6 Mexican exchange rate changes within the exchange rate band (November 1991 through mid-December 1994) 19 Chart 7 Mexican international reserves and Tesobonos outstanding 20 iv ACKNOWLEDGEMENTS I would like to thank UNU/WIDER for financial support for this research which also draws on work funded by SIDA and CEPAL. -
Banking Globalization, Monetary Transmission, and the Lending
The International Banking Research Network: Approaches and Initiatives Claudia M. Buch (Deutsche Bundesbank) Linda Goldberg (Federal Reserve Bank of New York) Joint IBRN-IMF Workshop | Washington DC | October 15, 2019 National Bank of Poland Oesterreichische Nationalbank Deutsche Bundesbank Sveriges Riksbank Norges Bank Central Bank of Russia Bank of Danmarks Nationalbank Canada Bank of England Central Bank of Ireland De Nederlandsche Bank Banque de France US Federal Reserve Banco de España Bank of Japan Banco de Portugal Bank of Korea Reserve Hong Kong Swiss National Bank Bank of Banco de Monetary Authority India México Banka Slovenije Banca D’Italia Central Bank of Central Bank of the Bank of Greece Colombia Republic of Turkey Banco Central do Brasil Bank of Israel Reserve Bank of Australia Central Bank of Chile International Organizations Bank for Organisation for Economic Financial International International European Central Bank European Systemic Risk Board Cooperation and Stability Board Monetary Fund Settlements Development 2 How does the IBRN operate? 3 Collectively determine policy- relevant issue Analyze (confidential) bank- level datasets Use common methodology, complement with cross- country perspective Share code, results, and perform meta analysis 4 What are the key research questions and outputs? 5 International transmission Adjustment of bank of monetary policy lending to liquidity risk through bank lending Interaction between Cross-border lending monetary and prudential effects of policies for bank lending macroprudential