scholarly journals Stability of Gold Standard and Its Selected Consequences

2021 ◽  
pp. 33-56
Author(s):  
Michal Kvasnicˇka
Keyword(s):  
Gold Standard ◽  
Relative Size ◽  
Banking System ◽  
Jel Classification ◽  
Fractional Reserve ◽  
Gold Market ◽  
The World ◽  
Market Shocks ◽  
The Stability ◽  
Near Future

The gold standard was quite stable in the past: the price level changes were relatively small, and trade cycles mild. However, its past stability does not guarantee stability nowadays. We show that the stability of the gold standard to shocks stemming from the world gold market depends critically on the size of the monetary stock of gold relative to the extent of these shocks. Every change decreasing the relative size of the monetary stock of gold lowers its stability. We discuss some consequences of the thesis too: first, any system economizing on its gold reserves (e.g. the mature fractional reserve free banking system of the Scottish type) may undermine the stability of the gold standard. Second, an attempt to reestablish the gold standard may have to include a collective action of many countries of a great economic power. If a single small country tried to resume to the gold, its monetary stock of gold would probably be tiny relative to the world gold market shocks, and the economy could be destabilized by these shocks. It makes the return of the gold standard rather improbable in the near future. Key words: Gold Standard, Stability, Inflation, Trade Cycle. JEL Classification: E31, E39, E42, N10.

scholarly journals Unanswered quibbles: George Selgin still gets it wrong with fractional reserve free banking

2021 ◽  
Author(s):  
Philipp Bagus ◽  
David Howden
Keyword(s):  
Banking System ◽  
Real Income ◽  
Jel Classification ◽  
Free Banking ◽  
Fractional Reserve Banking ◽  
Credit Expansion ◽  
Investment Projects ◽  
Fractional Reserve ◽  
Monetary Equilibrium ◽  
El Sistema

In this article we reply to George Selgin’s counterarguments to our article «Fractional Reserve Free Banking: Some Quibbles». Selgin regards holding cash as saving while we focus on the real savings necessary to maintain investment projects. Real savings are unconsumed real income. Variations in real savings are not necessarily equal to variations in cash holdings. We show that a coordinated credit expansion in a fractional reserve free banking (FRFB) system is possible and that precautionary reserves consequently do not pose a necessary limit. We discuss various instances in which a FRFB system may expand credit without a prior increase in real savings. These facets all demonstrate why a fractional reserve banking system —even a free banking one— is inherently unstable, and incentivized to impose a stabilizing central bank. We find that at the root of our disagreements with Selgin lies a different approach to monetary theory. Selgin subscribes to the aggregative equation of exchange, which impedes him from seeing the microeconomic problems that the stabilization of «MV» by a FRFB system causes. Key words: Free banking, fractional reserve, monetary equilibrium, credit expansion, economic cycle. JEL Classification: B53, E32, E42, E5, G18, H11, K39, P3, P34. Resumen: En este artículo respondemos a George Selgin, que a su vez respondió a nuestro artículo «Fractional Reserve Free Banking: Some Quibbles». Selgin considera que los saldos de tesorería son ahorros, mientras nosotros nos fijamos en los ahorros reales necesarios para mantener proyectos de inversion. Ahorros reales son ingresos reales no consumidos. Variaciones en los ahorros reales no necesariamente coinciden con las variaciones en los saldos de tesoreria. Mostramos que una expansión crediticia coordinada es posible en un sistema bancario de reserva fraccionaria (FRFB) y que las reservas prudenciales no constituyen necesariamente un limite a la expansión co - ordinada. Discutimos varios escenarios en los que el sistema FRFB puede expandir los créditos sin un aumento previo en los ahorros reales. Todas estas facetas muestran que un sistema bancario de reservas fraccionarias —incluso uno de banca libre— es inherentemente inestable y produce incentivos para imponer un banco central estabilizador. Mostramos que el origen de nuestras diferencias con Selgin está en un enfoque diferente a la teoría monetaria. Selgin es partidario de la ecuación de intercambio que es muy agregada y que le impide ver los problemas microeconomicas que la estabilización de «MV» por parte del sistema FRFB produce. Palabras clave: Banca libre, reserva fraccionaria, equilibrio monetario, expansión crediticia, ciclo económico. Clasificación JEL: B53, E32, E42, E5, G18, H11, K39, P3, P34.

scholarly journals Impact of Covid-19 on banking business

2021 ◽  
Vol 18 (2) ◽  
pp. 79-90
Author(s):  
Marijana Joksimović ◽  
Jozefina Beke-Trivunac
Keyword(s):  
Credit Risk ◽  
World Health Organization ◽  
Banking System ◽  
World Health ◽  
Global Level ◽  
The World ◽  
Banking Business ◽  
The Stability ◽  
Health Organization ◽  
Positive Effect

The Covid-19 virus pandemic, declared in 2020 by the World Health Organization, has a very large impact on banking business around the world. The most significant problem is the growth of credit risk and the huge growth of demand for liquid assets. The crisis has also increased the risks associated with the digitalization of banking business and brought new risks posed by the work of employees from home. The timely reaction of regulatory authorities, at the global level, and the willingness of the monetary and fiscal authorities of all countries to cooperate have shown a very positive effect on the stability of the banking system.

Financial and Monetary Stability Aspects of Global Stablecoins

2020 ◽  
Vol 53 (2) ◽  
pp. 159-185
Author(s):  
Stefan Schäfer ◽  
Oliver Read
Keyword(s):  
Exchange Rates ◽  
Banking System ◽  
Central Banks ◽  
Jel Classification ◽  
Monetary Stability ◽  
Digital Currency ◽  
National Currencies ◽  
Starting Point ◽  
The World ◽  
The One

Abstract Global stablecoins (GSCs) like Facebook’s Libra could prove much more instable than they might appear at first sight. Not only can their exchange rates against individual fiat currencies fluctuate substantially; theoretically, they also have the potential to replace national currencies, constitute “digital currency areas” and become the basis of a two-tier banking system with one and more GSC issuers, on the one hand, and, on the other hand, commercial banks that can create GSC deposit money. Against that background, all steps taken so far by supervisors and central banks can only be the starting point of what is necessary to effectively regulate the new normal of the world of money that is emerging. JEL Classification: E42, F65, G28, K24

scholarly journals DETERMINANT OF CAPITAL RATIO: A PANEL DATA ANALYSIS ON STATE-OWNED BANKS IN INDONESIA

2014 ◽  
Vol 16 (4) ◽  
pp. 395-414 ◽  
Author(s):  
Pamuji Gesang Raharjo ◽  
Dedi Budiman Hakim ◽  
Adler Haymans Manurung ◽  
Tubagus Nur Ahmad Maulana
Keyword(s):  
Panel Data ◽  
Panel Data Analysis ◽  
Banking System ◽  
Interest Rate Risk ◽  
Jel Classification ◽  
Panel Data Regression ◽  
Structure State ◽  
Asset Growth ◽  
The Stability ◽  
Level Of Significance

Capital has an important role in maintaining safety of banks and in order to create a sound banking system. Banks are required to have a sufficient amount of capital, both to support its business expansion as well as a buffer to prevent any unexpected loss that banks might face and absorb losses arising from a variety of risks. Eventhough consists of four banks, State owned banks in Indonesia are catalystor for the banking industry in Indonesia. The failure of state-owned banks can affect the stability of Indonesian banking system. This study aims to study and analyze determinants of capital ratio of state-owned banks. Several variables have been used in previous studies to be used a proxy. The study applied panel data regression model. The capital ratio of state-owned banks is affected by asset growth (LNSIZE), equity to total liabilities ratio (EQTL), non performing loan (NPL), interest rate risk (IRR), and operational cost to operational revenue ratio (BOPO) on a different level of significance.  Keywords: Capital structure, state-owned commercial banks, panel data JEL Classification: C23; G21; G32

scholarly journals FULL RESERVE REQUIREMENT BANKING SYSTEM FOR THE COMMUNITY ECONOMIC SUSTAINABILITY

ICCD ◽  
2019 ◽  
Vol 2 (1) ◽  
pp. 542-545
Author(s):  
Lukertina Sihombing ◽  
Eko Tama Putra Saratian ◽  
Mochamad Soelton ◽  
Dudi Permana ◽  
Noermijati Noermijati
Keyword(s):  
Community Service ◽  
Banking System ◽  
Economic Sustainability ◽  
Ordinary People ◽  
Reserve Requirement ◽  
Free System ◽  
Fiat Money ◽  
Fractional Reserve ◽  
General Rules ◽  
The World

This is a community service related to the development of economic society through socialization on one of the three main pillars and principle in the economics and financial problems. Nowadays, people in the world have begun to care about the dangers of three pillars and its impact on the economy. They are interest, fiat money and fractional reserve requirement in the banking system. Ironically, there are still many ordinary people do not understand the general rules of the fractional reserve requirement in the banking system. In returning the economic and monetary to riba-free system, it is necessary to learn deeply about this subject. For this reason, there is a need for socialization to the wider community to increase good understanding of the three pillars, especially about the fractional reserve requirement in the banking system. This community service is expected to the community get finance literacy well and certainly can be considered in family financial planning.

scholarly journals Free banking, the real-balance effect, and Walras’ Law

2021 ◽  
pp. 241-258
Author(s):  
Ludwig van den Hauwe
Keyword(s):  
Key Words ◽  
Banking System ◽  
Jel Classification ◽  
Free Banking ◽  
Real Balance ◽  
The Real ◽  
Fractional Reserve ◽  
Monetary Systems ◽  
Palabras Clave ◽  
Erroneous Interpretation

The author of this article draws special attention to two particular claims of the free bankers concerning the supposed working characteristics of a fractional-reserve free banking system which may strike the reader as questionable. The first of these relates to the alleged absence of a real-balance effect under free banking. The second relates to the free bankers’ reference to Walras’ Law as providing a rationale for the free banking system’s «offsetting» actions when confronted with changes in the public’s demand to hold bank liabilities. This rationale is defective since it is based on an erroneous interpretation of Walras’ Law. The author’s conclusion does not imply that it is not at all possible, from a rational viewpoint, to make a plausible case for this variant of free banking, only that the argument should be freed from certain questionable tenets. Key words: Free banking, monetary systems, real-balance effects, Walras’ Law. JEL Classification: E0; E32; E42; E5; E51; E52. Resumen: El autor de esta nota llama la atención sobre dos alegaciones particulares relativas a las supuestas características operativas de una banca libre con reserva fraccionaria que podrían resultar cuestionables al lector. La primera se refiere a la supuesta ausencia de efectos de saldo real en la banca libre. El segundo guarda relación con la referencia de los teóricos de la banca libre con reserva fraccionaria a la Ley de Walras que constituiría la base lógica de las acciones «de compensación» de la banca libre al enfrentarse a cambios en la demanda de medios fiduciarios por parte del público. Esta base lógica es defectuosa puesto que parte de una interpretación errónea de la Ley de Walras. La conclusión del autor no implica que no sea posible en absoluto, desde un punto de vista racional, elaborar una argumentación plausible para esta variante de la banca libre, sino que la argumentación debe estar libre de determinados argumentos cuestionables. Palabras clave: Banca libre, sistemas monetarios, efectos de saldo real, Ley de Walras. Clasificación JEL: E0; E32; E42; E5; E51; E52.

scholarly journals Volatility of agrarian markets aimed at the price development

2011 ◽  
Vol 57 (No. 1) ◽  
pp. 35-40 ◽  
Author(s):  
D. Matošková
Keyword(s):  
Supply And Demand ◽  
Price Volatility ◽  
Variation Coefficient ◽  
Food Markets ◽  
Price Development ◽  
Volatility Transmission ◽  
The World ◽  
Food Commodities ◽  
Market Shocks ◽  
The Stability

Significant price volatility has been observed at the world agri-food markets in these latter years. It has been caused by the triggers of the so-called market shocks that negatively influenced the stability of supply and demand of agri-food commodities. The contribution analyzes the causes of the price volatility incidence, it calls attention to the potential jeopardy of the price volatility transmission on the territory of Slovakia and it finds appropriate measures for its elimination. The price volatility of the Slovak agri-food commodities was reviewed pursuant to the variation coefficient calculation in three consecutive five-year intervals.

Sign in / Sign up

Export Citation Format

Share Document