scholarly journals Global Financial Stability Report, April 2020

2020 ◽  
Author(s):  
Keyword(s):  
Interest Rates ◽  
Financial Institutions ◽  
Financial Stability ◽  
Price Volatility ◽  
Investment Funds ◽  
Domestic Markets ◽  
Portfolio Flows ◽  
Financial Conditions ◽  
Physical Risk ◽  
Low Interest Rates

The April 2020 Global Financial Stability Report (GFSR) assesses the financial stability challenges posed by the coronavirus (COVID-19) pandemic. Chapter 1 describes how financial conditions tightened abrubtly with the onset of the pandemic, with risk asset prices dropping sharply as investors rushed to safety and liquidity. It finds that a further tightening of financial conditions may expose vulnerabilities, including among nonbank financial institutions, and that bank resilience may be tested if economic and financial market stresses rise. Vulnerabilities in global risky corporate credit markets, including weakened credit quality of borrowers, looser underwriting standards, liquidity risks at investment funds, and increased interconnectedness, could generate losses at nonbank financial institutions in a severe adverse scenario, as discussed in Chapter 2. The pandemic led to an unprecedented and sharp reversal of portfolio flows, highlighting the challenges of managing flows in emerging and frontier markets. Chapter 3 shows that global financial conditions tend to influence portfolio flows more during surges than in normal times, that stronger domestic fundamentals can help mitigate outflows, and that greater foreign participation in local currency bond markets may increase price volatility where domestic markets lack depth. Beyond the immediate challenges of COVID-19, Chapter 4 explores the profitability pressures that banks are likely to face over the medium term in an environment where low interest rates are expected to persist. Chapter 5 takes a broader perspective on physical risks associated with climate change. It finds that these risks do not appear to be reflected in global equity valuations and that stress testing and better disclosure of exposures to climatic hazards are essential to better assess physical risk.

scholarly journals Transformation of Central Banking. Annual Research Conference of the NBU. Key Issues

2016 ◽  
pp. 6-18 ◽  
Author(s):  
Sergiy Nikolaychuk ◽  
Roman Pidvysotskyy
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
Transition Process ◽  
Central Banks ◽  
Central Banking ◽  
Academic Community ◽  
Research Conference ◽  
Low Interest Rates ◽  
Key Issues ◽  
Community Issues

In May 2016, the National Bank of Ukraine (NBU) held its Annual Research Conference of the NBU on Transformation of Central Banking for the first time. Over 300 participants shared in the work of the representative international forum, including experts from central banks and international financial organizations, as well as representatives of the Ukrainian and international academic community. Issues discussed during the conference included the recent development trends of in central bankings, ranging from the monetary policy at low interest rates and under the threat of deflation, financial stability and management of capital flows, and the effect of new financial technologies and cultural features on the transition process in central banks.

Global Spillovers in a Low Interest Rate Environment

2019 ◽  
Author(s):  
Sushant Acharya ◽  
Paolo Pesenti
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Policy Debate ◽  
Monetary Policies ◽  
International Spillovers ◽  
The Great Recession ◽  
Financial Conditions ◽  
Global Demand ◽  
Low Interest Rates ◽  
Rate Environment

Global policy spillovers can be defined as the effect of policy changes in one country on economic outcomes in other countries. The literature has mainly focused on monetary policy interdependencies and has identified three channels through which policy spillovers can materialize. The first is the expenditure-shifting channel—a monetary expansion in one country depreciates its currency, making its goods cheaper relative to those in other countries and shifting global demand toward domestic tradable goods. The second is the expenditure-changing channel—expansionary monetary policy in one country raises both domestic and foreign expenditure. The third is the financial spillovers channel—expansionary monetary policy in one country eases financial conditions in other economies. The literature generally finds that the net transmission effect is positive but small. However, estimated spillovers vary widely across countries and over time. In the aftermath of the Great Recession, the policy debate has devoted special attention to the possibility that the magnitude and sign of international spillovers might have changed in an environment of low interest rates worldwide, as the expenditure-shifting channel becomes more relevant when the effective lower bound reduces the effectiveness of conventional monetary policies.

STRATEGIES OF DEVELOPMENT OF THE FINANCIAL SECTOR AND FINANCIAL INDUSTRY IN UKRAINE ON AN INNOVATIVE BASIS

2018 ◽  
Author(s):  
Olga Batrak ◽  
Keyword(s):  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Service Providers ◽  
Financial Sector ◽  
Added Value ◽  
Financial Resources ◽  
Creative Economy ◽  
Financial Industry ◽  
Investment Funds

The relevance of the article is determined by the need to balance certain segments of the financial and real sectors of the economy, build their infrastructure, increase innovation through the implementation of the achievements of the financial industry. The main scientific result of the article is to define the financial sector and the financial industry, to establish causal links between them and development strategies. The financial sector is a subsystem of the financial market and is represented by its national regulator, financial and infrastructural participants, namely: corporations that accept deposits; money market funds and investment funds, pension funds, insurance corporations, captive and auxiliary financial corporations, other financial intermediaries. In contrast to the existing definitions, the proposed one is based on the classification of institutional sectors of the Ukrainian economy. The connection between the financial and real sectors is formalized as mutually complementary parts, which together make up the national economy, ensure the circulation of material and financial resources, the creation of added value. At the same time, they perform specific functions: the financial sector - distribution and transaction, the real - generating and transforming. The financial industry is a complex category that combines a set of financial institutions with their quality and technical and technological characteristics (intellectual capital, innovation, financial technology) in a creative economy. The financial sector and the financial industry reflect the dualistic nature of the functioning of financial institutions as financial service providers, on the one hand, and business process owners, on the other. Therefore, their strategies have a common premise and goal - financial stability, macroeconomic development should ensure the sustainability of public finances, the formation of long-term financial resources, lending to the economy. The common strategic goals are: financial inclusion, supported by digital and financial literacy, development of financial markets and non-cash economy, innovative development and economic system based on financial technologies.

FINANCIAL LITERACY AND FINANCIAL INCLUSION EFFECTS ON STABILITY AND COMPETITIVENESS INDICATORS IN THE BANKING SECTOR: CROSS COUNTRY EVIDENCE FOR AFRICA AND THE WORLD

2021 ◽  
pp. 2150009
Author(s):  
JOÃO JUNGO ◽  
MARA MADALENO ◽  
ANABELA BOTELHO
Keyword(s):  
Credit Risk ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Financial Stability ◽  
Banking Sector ◽  
Financial Education ◽  
Financial Inclusion ◽  
The Stability ◽  
The Impact

Financial inclusion has allowed financial products with very high-interest rates and complex conditions to become increasingly affordable. Financial inclusion programs, which aim to reach all social strata, strongly expose financial institutions to risk and particularly credit risk. That said, additional interventions such as financial education of those included are needed. We aim to examine the impact of financial literacy and financial inclusion of households on bank performance. Specifically, we want to examine the impact of financial literacy on credit risk, competitiveness among banks and financial stability. The FGLS estimation results suggest that financial literacy and financial inclusion reduce credit risk and enhance the stability of banks, and regarding competitiveness, our results were inconclusive as they show different effects for each competitiveness indicator, although they point to improved competitiveness in some cases. This research allows policymakers to understand that individual financial attitudes can be reflected in the general welfare of financial institutions and encourages the intensification of programs aimed at improving household financial literacy.

scholarly journals Financial Crisis and Regulatory Challenges

2009 ◽  
Vol 2 (2) ◽  
Author(s):  
Michel Prada
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Financial Services ◽  
Financial Stability ◽  
Emerging Countries ◽  
Regulatory Strategy ◽  
Low Interest Rates ◽  
The Uk ◽  
The International Monetary Fund ◽  
Regulatory Challenges

A number of reports have established a diagnosis of the financial crisis. The first was produced by the Financial Stability Forum, in April 2008 and was the basis for the preparation of the first G 20 meetings in 2008. The International Monetary Fund (IMF) and the G 30 produced updated analysis in 2008 and 2009. More recently, the Larosière Group, although mainly focused on E.U. issues, also addressed global concerns , as well as the Adair Turner report which presented the new regulatory strategy of the UK Financial Services Authority (FSA). The main features of this unprecedented financial crisis are linked to immense and growing global imbalances between the Asian and US economies which provided the world with abundant liquidity, low interest rates together with low inflation (due to low wages in emerging countries) and a geographic mismatch between savings and investment needs and opportunities.

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.

Global Liquidity - Issues for Surveillance

Policy Papers ◽  
2014 ◽  
Vol 14 (86) ◽  
Author(s):  
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Portfolio Flows ◽  
Financial Innovations ◽  
Cross Border ◽  
Financial Conditions ◽  
Global Liquidity ◽  
Potential Risks ◽  
Measures Of Risk ◽  
Country Specific

The paper starts by presenting evidence of commonality in global financial conditions. This commonality is then related to specific drivers of global financial conditions through a range of transmission channels, including cross-border banking and portfolio flows. Empirical analysis shows a range of price and quantity factors, including measures of risk, bank leverage, and interest rates in financial centers, to drive in part these flows. Country specific policies, including exchange rate and prudential frameworks, are shown to affect the transmission of global conditions. Much remains unknown though, including how evolving structures of global funding, changing institutions, and ongoing financial innovations affect the mechanics of liquidity creation, the channels of liquidity transmission, and potential risks going forward.

scholarly journals The Difference Between Preferred & Common Stocks in Europe from the Market Perspective

2020 ◽  
Vol 12 (3) ◽  
pp. 64-81
Author(s):  
Tomas Brabenec ◽  
◽  
Frantisek Poborsky ◽  
Sean Patrick Saßmannshausen ◽  
◽  
...  
Keyword(s):  
Interest Rates ◽  
Price Volatility ◽  
Essential Information ◽  
Current Period ◽  
Coefficients Of Variation ◽  
Common Stocks ◽  
Low Interest Rates ◽  
Beta Coefficient ◽  
The Difference ◽  
Relationship Of

Companies listed on the stock market must devote a great deal of attention to their market position. They must increase their competitive advantage in the undeniably key process of the issuance of stocks. As the issuance of preferred stocks has increased after the last crisis and in the current period of low interest rates in Europe, they are becoming more favoured investment instruments, we decided to analyse the real properties of preferred stocks in Europe in order to increase the efficiency of joint-stock companies. Using a dataset comprising all companies having both common and preferred stocks issued and traded on European markets between 2009- 2016, we determined the relationship of risk (measured by beta coefficients) and price volatility among common and preferred stocks and bonds in Europe. Our findings show beta coefficients of preferred stocks as systematically lower than beta coefficients of common stocks. Considering a difference of up to 10% as negligible, however, preferred stocks showed a similar or higher beta coefficient than corresponding common stocks of the same company in 53% of cases, whereas for 33% of cases, the difference is only ±10%. Coefficients of variation in prices showed a similar relationship, with only a negligible portion of preferred stocks bearing fixed (stable) dividends. This result implies that currently traded preferred stocks in Europe in fact do not possess such characteristics they are typically said to have, and in many cases they incur as comparable a risk as do common stocks. This essential information should help to increase the efficiency and competitiveness of joint-stock companies.

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.

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