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 Banks

2021 ◽  
pp. 11-28
Author(s):  
Ulrich Bindseil ◽  
Alessio Fotia
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Balance Sheet ◽  
Banking System ◽  
Central Banks ◽  
Reserve Requirement ◽  
Money Creation ◽  
Reserve Banking ◽  
Bank Money

AbstractThis chapter develops further the role of a central bank and its interplay with commercial banks. Together, the two ensure the provision of liquidity to the economy, such that the real sectors are shielded from flows of funds originating from household and investors. We also disaggregate the banking system into two banks to represent deposit flows between banks and their impact on the central bank’s balance sheet, and to distinguish between what we call “relative” and “absolute” central bank intermediation. We then integrate deposit money creation by commercial banks into our system of financial accounts, and revisit some old debates, such as the limits of bank money creation and the role of related parameters that the central bank can set (not only the reserve requirement ratio, but also the collateral framework). Finally, we explain the concepts of “plain money” and “full reserve banking” within the financial accounts, and also discuss in this framework the recent proposals regarding central bank digital currency (CBDC).

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.

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 Securitization as a method of managing the liquidity of a commercial bank

2020 ◽  
pp. 33-40
Author(s):  
Aleksandr Andreevich Sidorov
Keyword(s):  
Commercial Bank ◽  
Russian Federation ◽  
Commercial Banks ◽  
Financial Risk ◽  
Banking Sector ◽  
Banking System ◽  
Business Environment ◽  
Scientific Methods ◽  
Banking Activity ◽  
The Russian Federation

The financial system of the Russian Federation is currently facing deterioration of the conditions of external business environment. The spread of the coronavirus infection COVID-19 turned 2020 into the most difficult year for development of banking system of the Russian Federation. This article is dedicated to the research analysis of practical role of securitization as a mechanism and method used in management of the internal liquidity of a commercial bank. The relevance of this study is substantiated by the need to improve the mechanisms of financial risk management, which emerge in activity of credit institutions that experience a shortfall of internal liquidity of the assets. Methodological framework is comprised of the general scientific methods of cognition of economic phenomena, which allowed viewing the relevant tools of managing the liquidity of commercial banks and indicating most topical issues and barriers. The research is based on the combination of normative and positive analysis, principles of uniformity of historical and logical, as well as analytical approach towards studying the economic phenomena that reflect the contradictory nature of social processes. The article examines the relevant problems of formation of the internal liquidity of banking sector of the Russian Federation; as well as theoretical aspects of the concept of “liquidity” of a commercial bank. Description Is given to the mechanism of managing the liquidity of a commercial bank. The author considers the fundamentals and characteristic of securitization as a method of managing liquidity of a bank, and lists the advantages of using securitization in ensuring internal liquidity of banking activity. The benefits of securitization as a method of managing the liquidity of commercial banks in the Russian Federation are analyzed.

scholarly journals Identification of Qualifying Factors of Influence in the Context of Financial Stability Management of a Commercial Bank

2021 ◽  
Vol 7 (522) ◽  
pp. 212-221
Author(s):  
O. M. Kovalova ◽  
Keyword(s):  
Commercial Bank ◽  
Financial Stability ◽  
Banking System ◽  
Information Provision ◽  
Resource Base ◽  
Credit Risks ◽  
Systematic Risks ◽  
Characteristic Features ◽  
Banking Institution ◽  
The Impact

The article is aimed at closer defining the theoretical provisions for improving the management of financial stability of a commercial bank and assessing its current state in the context of the impact of destabilizing factors. Scientific approaches to the definition of the category of «financial stability of a commercial bank» are considered, which allows to detail its characteristic features and form a comprehensive idea of the financial stability of a commercial bank as a system category, the timely estimation of benchmarks of which allows minimizing the impact of specific and systematic risks to the economic environment in conditions of high uncertainty. The article systematizes the normative legal acts regulating all potential aspects of the commercial bank's financial stability shift due to changes in the structure of capital, liquidity, solvency, credit risks and being part of the information provision for the analysis of financial stability of a commercial bank. The classification of factors influencing the financial stability of a commercial bank is generalized. The influence of the epidemiological crisis associated with the spread of COVID-19 on key benchmarks of the banking system in terms of assessing the financial stability of the banking institution is examined. The dynamics of changing the proportion of non-performing loans of commercial banks of Ukraine is analyzed, as lending creates the basis for ensuring a balance between temporarily free funds and the amount of resources required at the microlevel of the financial system for sustainable development. Particular attention is paid to the aspects of balance and sustainability of the resource base of the commercial bank, which led to a thorough analysis of the liabilities of the banking system from the position of influencing the financial stability of a commercial bank.

Latvian banks face tighter scrutiny and some may merge

2018 ◽  
Keyword(s):  
Central Bank ◽  
Commercial Bank ◽  
Business Model ◽  
Money Laundering ◽  
Commercial Banks ◽  
Business Models ◽  
Banking Sector ◽  
Content Type ◽  
High Profile ◽  
The Us

Significance Recent high-profile incidents have called into question the viability of the business model in large parts of Latvia’s banking sector. In February, the US Treasury accused ABLV Bank of laundering money for North Korea. Separately, Ilmars Rimsevics, governor of the Bank of Latvia (the central bank), was accused by a Latvian commercial bank of demanding bribes and taken into custody by the Bureau for Preventing and Combating Corruption (KNAB). Impacts Latvia’s reputation has suffered from the latest revelations and accusations of money laundering and corruption. There will be greater pressure on the Latvian authorities to be stricter on commercial banks whose main business is with non-residents. When this source of revenue dries up, some banks’ business models may have to change, also sparking some consolidation in the sector.

scholarly journals Risk management in a commercial bank

2020 ◽  
pp. 75-82
Author(s):  
S. V. Solonina ◽  
A. A. Labov
Keyword(s):  
Risk Management ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Management System ◽  
Financial Stability ◽  
Management Strategies ◽  
Banking System ◽  
Point Of View ◽  
Capital Adequacy ◽  
Credit Institutions

The study presents the problems of risk management of a commercial Bank as the most important element in the overall banking management system. The relevance of the study is due to the current economic and political situation in the country, as well as the instability of market conditions, which significantly complicated the risk management system in commercial banks, which contributed to the deterioration of their financial condition. The processes taking place in the global financial market in recent years have a significant impact on the banking system, significantly increasing Bank risks and reducing the financial stability of credit institutions. Differences are highlighted that reflect the priority aspects in assessing the risk management of a commercial Bank from the authors ‘ point of view. Risk management strategies in credit institutions are considered. A comparative analysis of the methodologies used to assess the risks and capital adequacy of commercial banks in Russia and abroad has been carried out, and features of their use have been identified.

scholarly journals Banking sector reforms in Kenya: Progress and challenges

2012 ◽  
Vol 10 (1) ◽  
pp. 88-96
Author(s):  
Sheilla Nyasha ◽  
Nicholas M. Odhiambo
Keyword(s):  
Central Bank ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking System ◽  
Capital Adequacy ◽  
Financial Systems ◽  
African Countries ◽  
High Interest Rate ◽  
The Past

This paper gives an overview of the banking sector in Kenya; it highlights the reforms since the country‟s independence in 1963; it tracks the growth of the banking sector in response to the reforms implemented over the past four decades; and finally, it highlights the challenges facing the banking sector in Kenya. The country‟s banking sector consists of more than 40 commercial banks, with the Central Bank of Kenya, which is the country‟s central bank, at the apex. Since the 1980s, the Kenyan government has implemented a number of banking sector reforms – in order to safeguard and improve the banking sector. The response to these reforms by the banking sector has been varied. As a result of these reforms, there has been a shift in the dominance from the State-owned banks to the private commercial banks. There has also been an improvement in the Central Bank‟s oversight of the financial institutions, and an enforcement of the banks‟ capital-adequacy requirements. By the standards of African countries, Kenya currently has one of the most developed banking systems in Africa. The country has enjoyed a substantial bank-based financial sector development over the years, and its institutional framework has also grown stronger. However, like many other developing countries‟ financial systems, the Kenyan banking system still faces wide-ranging challenges, such as high interest rate spreads and financial inclusion challenges

scholarly journals Methodological Aspects of the Financial Stability of Iraq’s Banking System

2020 ◽  
pp. 208-218
Author(s):  
Haider H. Dipheal Shubbar ◽  
Keyword(s):  
Central Bank ◽  
Financial Distress ◽  
Financial Stability ◽  
Banking Sector ◽  
System Development ◽  
Banking System ◽  
Capital Adequacy ◽  
Financial Monitoring ◽  
High Level ◽  
Methodological Aspects

This article discusses the methodology the Central Bank of Iraq developed to assess the financial stability of commercial banks. This topic is relevant because, in modern economic conditions, the Central Bank of Iraq is forced to tighten requirements to credit institutions. Banks use not only their own funds, but also the funds of the population, legal entities, so they must be reliable and stable. Financial stability directly characterises the reliability of banks, so it must be strictly controlled. The Central Bank of Iraq has created its own methodology for assessing the financial stability of the banking sector. Its use should improve the quality of the created banking system development strategies and the financial monitoring of these strategies’ implementation. The Iraqi banking sector has a high level of capital adequacy, which helps to reduce the likelihood of financial distress in it.

scholarly journals Organizational and financial mechanism for ensuring financial and economic security of the banking-system

2021 ◽  
Vol 2021 (2) ◽  
pp. 248-255
Author(s):  
Natalia Riazanova ◽  
Keyword(s):  
Commercial Bank ◽  
Banking Sector ◽  
Institutional Environment ◽  
Banking System ◽  
Mortgage Lending ◽  
Economic Security ◽  
Bank Loans ◽  
Resource Base ◽  
Banking Secrecy ◽  
Financial Mechanism

an organizational and financial mechanism for ensuring the financial and economic security of a commercial bank is proposed, which, in real time and in situations that cannot be controlled using traditional methods, will minimize potential risks and change the internal institutional environment, positively affecting the financial and economic security of the country's banking system. It is shown that economic growth as a factor of national security is supported by the effective functioning of the banking system and the priority of long-term bank loans provided in the form of investments, which makes it possible to determine the relationship between the growth of the country's economy and the level of financial and economic security of the banking system. The main approaches to ensuring the financial and economic security of the banking system are considered, which include the structure of the primary interests of a commercial bank and indicators of the level of financial and economic security of the banking sector of Ukraine in order to ensure economic stabilization and strengthen the economic potential of the bank. It was noted that an adequate and fundamental marketing strategy will help to promote the growth of the bank's profitability, attract additional customers, form a resource base and reduce risk in banking. Mortgage lending is considered as the most effective tool for attracting funds from the population to the investment sector and meeting their needs for housing. A distinctive feature of the presented organizational and financial mechanism is the use of strategic management methods to form economic resources, improve the image and level of security of information systems, organize effective management of the bank's personnel, which will create conditions for ensuring the proper level of protection against negative factors and threats and increasing the competitiveness of the bank due to increasing the efficiency of the provision of banking services, preserving banking secrecy and the client base, creating new banking products

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