Swiss sovereign money vote points up bank reform

2018 ◽  
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Budget Deficits ◽  
Banking Reform ◽  
Content Type ◽  
Economic Agents ◽  
Monetary Systems ◽  
Bank Reform

Significance The Vollgeld (sovereign money) proposal, which claimed to make the banking system safer by preventing commercial banks creating money through requiring thems to keep 100% of their deposits at the central bank, was complex and economically flawed, However, it attracted anti-system and anti-bank votes and has generated debate in Switzerland and abroad on financial stability and monetary systems. Impacts The Vollgeld idea has never been implemented anywhere, posing uncertainty about economic agents' reactions and the overall impact. The reform, if used to finance budget deficits, would challenge the central bank's independence. Even if the proposal is refined, the power that 'Vollgeld' would give the central bank to determine lending will remain unpopular. Pressure for banking reform and awareness of regulation have risen worldwide since the 2008-09 crisis making other initiatives likely.

Iran’s banking reforms will falter

2017 ◽  
Keyword(s):  
Central Bank ◽  
Dispute Resolution ◽  
Banking Sector ◽  
Banking System ◽  
Banking Reform ◽  
Content Type ◽  
Global Standards ◽  
Central Asian ◽  
European Banks ◽  
Dispute Resolution Mechanism

Subject Iran’s banking sector in urgent need of reform. Significance Tehran's banks face major corruption scandals, and a complex policy environment. In July 2016, the Central Bank of Iran (CBI) announced major plans to reform the country’s banking system in line with global standards. Iranian banks have been cut off from the international financial system since 2012, owing to sanctions. After the 2015 nuclear deal, Iran expected that the lifting of sanctions would reverse this situation. However, despite interest among Central Asian and Turkish banks, progress has been limited. Impacts European banks will be slow to engage with Iran, fearing unpredictable US penalties. Differing US and Iranian interpretations of sanctions lifting under the nuclear deal may come up before the dispute resolution mechanism. Macroeconomic strains will put depreciatory pressure on the currency. If President Hassan Rouhani fails to win re-election in May, the chances of banking reform would be much lower.

Central bank digital currencies: Potential risks and benefits

2020 ◽  
pp. 147-159
Author(s):  
Elena V. Sinelnikova-Muryleva
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Payment Systems ◽  
Economic Agents ◽  
Risks And Benefits ◽  
Monetary Authorities ◽  
Proper Design ◽  
Potential Risks

A growing activity has recently been watched in the sphere of central bank digital currencies (CBDC) creation, dictated by the desire of monetary authorities to increase the efficiency of payment systems and create an alternative to stablecoin projects like Libra. The paper discusses various types of CBCDs. Special attention is paid to potential risks and benefits associated with the emission of CBDCs, as well as their consequences for the banking sector and monetary policy. The first important issue associated with CBDC emission is the potential reduction of the role of the traditional banking system. The second issue is the change in the functioning of the monetary transmission channels as a result of the CBDCs emission. The third problem arises from the fact that in the event of a crisis some economic agents will prefer to transfer their funds from commercial banks to the CBDCs because they are less risky. This situation is expected to lead to instability of balances on deposit accounts in commercial banks. The problems listed are closely interrelated, and the significance and balance of risks and benefits associated with CBDCs emission are not completely obvious. At the same time CBDCs have a potential to become a new effective tool of monetary authorities in case of their proper design.

scholarly journals Central bank digital currencies: experience of pilot projects and conclusions for the NBU

2020 ◽  
Vol 2020 (4) ◽  
pp. 97-115
Author(s):  
Yuliia Shapoval ◽  
◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
The Bahamas ◽  
Bank Of England ◽  
The Impact

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

scholarly journals Reserve assets as sources of replenishing resource base of banking sector and improving its stability

2019 ◽  
Vol 2019 (4) ◽  
pp. 130-136
Author(s):  
Haidar Diphil Shubbar ◽  
Andrey Vladimirovich Girinsky
Keyword(s):  
Central Bank ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking Sector ◽  
Foreign Currency ◽  
Banking System ◽  
Resource Base ◽  
Reserve Requirement ◽  
Reserve Requirements

The paper focuses on the importance of using reserve assets in order to increase the bank financial stability and the banking system as a whole. The essential requirements for reserving commercial banks have been presented. The methods of regulating the required reserves have been studied. The specific features of applying the required reserves in banking activities (reserve requirements and liquidity, monetary policy, reserve requirements as a monetary tool, reserve requirements as a fiscal tool) have been revealed. The schedule of averaging periods of required reserves for 2019 is being considered. The general principles which credit organizations are guided by when creating reserves are the following: obligatory availability of reserves for all credit organizations throughout their existence; forming reserves in relation to liabilities to legal entities and individuals; possibility of removing from the list obligations for which reserves have been created. It has been mentioned that the main objectives of the reserve requirement system are to provide banks with sufficient liquidity and to regulate the money supply. Particular attention is paid to the Central Bank as a reserve requirements regulator. In accordance with the changes of the Central Bank of July 1, 2019, the established standards on reserve requirements for deposits in national currency are set at 4%, in foreign currency at 14%. Manipulating the required reserve rate will provide the Central Bank with the opportunity to adjust the liquidity and solvency both of an individual bank and the entire banking system. The method of averaging required reserves includes the possibility for a commercial bank not to transfer reserves to the Central Bank based on a certain sum of money. The averaging coefficient is set at 0.25 to the standard volume of required reserves

scholarly journals Central bank digital currencies: experience of pilot projects and conclusions for the NBU

2020 ◽  
Vol 2020 (4) ◽  
pp. 103-121
Author(s):  
Yuliia Shapoval ◽  
◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Financial Stability ◽  
Banking System ◽  
Developed Countries ◽  
The Bahamas ◽  
Bank Of England ◽  
The Impact

An overview of the definitions of central bank digital currency (CBDC), formulated by researchers of the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Bank of England, is presented, and the essence of the CBDC is revealed. It is stated that the existing electronic money is a digital form of obligations of financial intermediaries, and CBDC is a form of emission and obligations of central banks. The types and forms of CBDC are generalized, namely: retail or wholesale, account-based or token-based ones. The structure and functionality of the register, payment authentication, access to infrastructure, and governance are defined as factors taken into account during CBDC designing. Similar models of launching national CBDC by the Bank of England (economy-wide access or financial institutions access, and financial institutions plus CBDC backed narrow bank access) and BIS (direct, indirect, hybrid) are under consideration. The synthetic CBDCs are marked as a theoretical concept of CBDC. The overview of projects of the People's Bank of China – "e-renminbi", the Central Bank of the Uruguay – "e-peso", the Central Bank of the Bahamas – "sand dollar" and the Eastern Caribbean Central Bank affirm the interest of developing countries in launching national retail CBDCs. It was found that apart from the Riksbank with the successful "e-krona" project, most of the monetary authorities of developed countries (BIS, Bank of Japan, Bank of Canada, Deutsche Bank, FRS) are just planning or starting to experiment with the issuance of digital securities, which demonstrates their concern about the restructuring of the banking system and the changes of global role of traditional currencies. Among the positive consequences of the introduction of CBDC for the domestic banking system are the emergence of an alternative payment instrument, the implementation of effective monetary policy through increased influence on interest rates, and regulation of the legal regime of crypto currencies. At the same time, the introduction of CBDC involves certain changes in financial intermediation (replacement of the deposits of commercial banks with the CBDC, the performance of functions inherent to commercial banks by the central bank or fintech companies), and will require powerful technical capabilities, including those related to protection from cyber risks. The results of the study point to the need for a cautious approach to the implementation of the Ukrainian CBDC only after the NBU assesses the public demand for new forms of money and the impact of the launch of CBDC models on price and financial stability, and compares available payment technologies that can achieve the same goals as the CBDC.

Factors related to the Central Bank instructions on money laundering

2017 ◽  
Vol 20 (3) ◽  
pp. 274-291 ◽  
Author(s):  
Osama Omar Jaara ◽  
Abdelrahim M. Kadomi
Keyword(s):  
Central Bank ◽  
Money Laundering ◽  
Internal Control ◽  
Commercial Banks ◽  
Banking System ◽  
Statistical Technique ◽  
Advanced Technology ◽  
Highly Qualified ◽  
Content Type ◽  
Available Information

Purpose This paper aims to investigate Jordan’s framework specifics of the anti-money laundering (AML) policy and factors related to the Central Bank instructions on money laundering. Design/methodology/approach A questionnaire has been distributed to a random data sample of 100 branch bank managers and supervisors who have a sufficient experience in this issue, and a t-test statistical technique has been used. Findings The results revealed that commercial banks of Jordan are committed to the instruction of the central bank, and they are highly qualified in all investigated measures. Practical implications This study supports the Central Bank of Jordan’s efforts in combating money laundering, which encourage all commercial banks of one country to follow the same adopted regulations to identify and report transactions of suspicious behaviour: investigate capability of the tellers and customer account representatives to report such activities, use AML software, filter customer’s data classify available information according to levels of suspicion or based on the uncertain customers without being subject to the institutional secrecy jurisdiction and to work under cooperative management. Originality/value It has been recommended to utilize more advanced technology, intensify training and ensure for more knowing clients’ knowledge. The importance of this paper is to insure the following: first, the banking system is obliged to recognize and report suspicious money laundering transactions, regarding up to date the FATFA equivalence status of other countries; second, increase the awareness and ensure the central bank efforts’ success; third, assure the adequacy of different issues such as the internal control system tools; devices or tools availability; and sufficient employees’ qualifications in facing launderers attempts; fourth, to be sure that suspected transactions are checked against any commercial bank records; finally, to be sure that commercial banks are giving enough considerations to all the AML proactive actions such as the regulations of checking while opening an account, accepting money on deposit, giving loans, issuing a debit card, traveller’s check and collecting enough information about new clients.

Proposed Mexican financial legislation sparks concerns

2021 ◽  
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Legal Change ◽  
Content Type ◽  
Investor Confidence ◽  
Potential Impact

Significance The move, however, has proven controversial, generating a backlash over its potential impact on commercial banks and the central bank (Banxico), which sees it as a threat to its autonomy. The proposals come amid an unusual surge in remittances flowing into the country. Impacts Any legal change that is seen as affecting Banxico’s autonomy would damage investor confidence significantly. AMLO may stop legislation changes if they cause a depreciation of the peso. Mexico’s economy looks set to become far more reliant on remittance income than it has been in past years.

Non-banking financial intermediation and phenomena of shadow money in modern economy

2021 ◽  
Vol 27 (8) ◽  
pp. 1694-1709
Author(s):  
Vladimir K. BURLACHKOV
Keyword(s):  
Commercial Banks ◽  
Financial Intermediation ◽  
Banking System ◽  
Banking Regulation ◽  
Developed Countries ◽  
Bank Credit ◽  
Shadow Banking ◽  
Economic Agents ◽  
Shadow Banking System ◽  
Lending Activity

Subject. The article addresses the non-banking financial intermediation (shadow banking system) as it is successfully expanding nowadays both in developed countries and emerging economics. Objectives. The study aims at conducting a comprehensive analysis of the specifics of non-banking financial intermediation, revealing its impact on economic agents’ activities, causes and consequences, and elaborating the methodological framework for effectiveness of modern monetary policy. Methods. I employ methods of scientific abstraction, induction, deduction, synthesis, and comparative analysis. Results. In the modern national economy, along with the money, created by the central bank and commercial banks, there are highly liquid financial instruments called shadow money. The scope of its application is shadow banking (financial intermediation) outside the banking system. The use of shadow money is caused by high demand for credit resources. Conclusions. The high activity of shadow banking and increased turnover of shadow money resulted from a transfer to Basel standards of banking regulation in the 1990s, which affected the lending activity of commercial banks. Under these conditions, the demand for loans provided by non-bank credit and financial institutions increased. The market of non-bank credit products was formed. However, the process of lending in the shadow banking is associated with high risks and non-stability of shadow money, widely used in this sphere.

scholarly journals CENTRAL BANK DIGITAL CURRENCY: ECONOMIC AND LEGAL CHARACTERISTICS

2019 ◽  
pp. 94-100
Author(s):  
T.S. Hudima ◽  
V.A. Ustymenko
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Legal Framework ◽  
Central Banks ◽  
Digital Currency ◽  
Business Entities ◽  
The Right ◽  
Article 5

The article is devoted to identifying the peculiarities of the central bank digital currency (CBDC), explaining their impact on the monetary policy of the state, and identifying the prospects for the transformation of domestic banking legislation in connection with the implementation of the CBDC. It is noted that the scope of competence of the Central Bank and the legal basis for the issuance of the CBDC will depend on the economic and legal features of the digital currency, the degree of its impact on the monetary policy, the financial stability of the country’s economy and so on. In the process of forming the appropriate legal field and defining the conceptual apparatus in the sphere of emission and circulation of the CBDC, the peculiarities of the use of the latter in economic transactions and the specific functions not inherent in ordinary means of payment should be taken. СBDC initiatives will help: 1) progressively narrow the banking system at the level of the Central Banks (such as the Chicago Plan) by allowing individuals and businesses to deposit directly into the accounts of the Central Banks; 2) increasing confidence of economic entities and individuals in the financial system; 3) strengthening the financial stability of the economy (both domestically and globally). Granting business entities or individuals the right to store digital money directly with the Central Bank can give rise to two main directions of influence on monetary policy: first, to strengthen its transmission mechanism; secondly, lead to banks being disrupted. This may lead to some legal issues regarding (1) the NBU’s area of competence; (2) the constitutional foundations of the legal economic order (Article 5 of the ECU). In particular, it cannot be ruled out that centralization of the production, servicing, and management of the СBDC turnover may violate the principles of competition in business activities, prevent abuse of monopoly position in the market, etc. Keywords: monetary policy, central bank digital currency, financial stability, competence, legal framework, economic operations, issue.

scholarly journals Outline of the Evolution of the Hungarian Monetary Policy from the Restoration of the Two-level Banking System to the Present Day

2021 ◽  
Vol 6 (1) ◽  
pp. 103-116
Author(s):  
Csaba Lentner
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Stability ◽  
Banking System ◽  
Second Phase ◽  
Third Phase ◽  
Monetary Regime ◽  
New Type ◽  
Real Essence ◽  
Different Characteristics

This study outlines the development of Hungary’s monetary policy, and the course and changes in its objectives and instruments since the beginning of the market economy transition in the late 1980s. The author’s basic thesis is that the period since the two-level banking system was reinstated after four decades of a planned economy system, in 1987, can be basically divided into three development phases with significantly different characteristics. The first phase was an ‘attempt to introduce’ an imported monetary mechanism, or perhaps an urge to comply with it, while the second phase was an approach of a monetary regime change launched in 2013 and supporting economic growth and financial stability strongly and directly, which lasted until the appearance of the traumatic elements of the Covid-19 pandemic crisis. The third phase is evolving today, under the circumstances of adapting to the conditions of the real essence of the twenty-first century, i.e. a new type of international competitiveness, which is pursued by the Central Bank of Hungary as stipulated by the Fundamental Law and the cardinal Central Bank Act of Hungary.

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