Academic literature on the topic 'Banks and banking, Central – Liberia'

After the adoption of International Convergence of Capital Measurement and Capital Standards (widely known as Basel II requirements) in 2004 the risk management in commercial banks has changed dramatically. Lithuanian commercial banks are in transitional period now adapting their risk management systems to Basel II requirements. Market risk is considered one of the key risks in bank risk management structure, so proper management of market risk is essential for a modern bank. Currency exchange risk usually is the main component of market risk. Currency exchange risk management in Lithuanian commercial banks was not good enough; also the Central Bank's regulatory limits were liberal. But after the adoption of Basel II requirements, the entire risk management system is transforming and currency exchange risk management is affected. The objective of this paper is to demonstrate the transformations of currency exchange in Lithuanian commercial banks and propose an effective model for commercial banking. These transformations are performed in the regulatory system imposed by the Central Bank of Lithuania and through transformations of the bank's internal risk management system moving to internal (usually VaR based) models. VaR models are considered as modern methods for risk management. These models proposed by Central bank or other authorities for internal and statutory risk management in commercial banks. In this article, the proposed variation‐covariation VaR model was tested with real data using the back‐testing method. Back‐testing showed that the proposed model is reliable enough, because the number of mismatches was less than 5 % in all tested currency pairs during all testing. In most currency pairs mismatches percentage was lower than 3 %. Back‐testing results confirm that the VaR method is reliable enough for day‐to‐day using by financial institutions and traders.

The banking sector is the backbone of every economy. It determines not only the pace of growth of modern economic systems, but also the prosperity of nations. But its reliance on interest, liberal prudential guidelines and its very capitalist foundation make it incompatible with Islamic law – the faith practiced predominantly in some regions of Nigeria. Securing loans for investments comes with cut-throat conditions, riddled with cases of fraudulent and unfair practices. As a way around this, scholars began to think of how to expurgate those elements considered incompatible with the Shariah. Since the enactment of the Banks and Other Financial Institution’s Decree in 1991, which vaguely introduced the profit loss sharing principle of banking, nothing tangible was done to give effect to the provisions until 2011 when the Non-Interest Financial (NIFI) Services Guidelines was issued by the CBN. As a result of this development Jaiz Bank PLC was granted a license as a regional full-fledged Islamic bank, which metamorphosed into a national bank. This, however, was not without resistance as manifested in a suit against the CBN for issuing the guidelines. The paper, thus, attempts an analysis of the legal framework and how it can push up financial inclusion in Nigeria, adopting the doctrinal methodology approach to examine legislation, case-law and existing literature. It highlights some of the approaches of the Central Bank of Nigeria (CBN) and efforts to make the legal and institutional framework favourable for Islamic banking to thrive so that the substantial Muslim population can be brought into the formal financial stream to access funds for investments without upsetting the fundamental teachings of Islam. It further argues that that there is a strong correlation between the inadequacy of legal support for Islamic banking and high rate of financial exclusion particularly in the Muslim-dominated communities. Similarly, it reveals that there is not a shred of rational basis for the opposition to Islamic banking in Nigeria as it does not seek to foster any sinister agenda of “Islamising” the polity. As Nigeria is trying to push for more financial inclusion, Islamic banking can help improve existing credit delivery mechanisms for effective outreach to the teeming excluded population of Muslims. It, therefore, strongly recommends that a comprehensive legislation be enacted by the National Assembly (NASS) of Nigeria to support the prospects of this novel and popular banking model and also help promote and protect investments in the area. This will shove off financial inclusion in many ways.

The adverse macroeconomic consequences of financial crises have heightened research interests in their causes. However, little is known about the role of political influence as a cause of financial crises in small developing countries. This research explores the role of governance as one of the causes of failures in nine of Liberias twelve commercial banks during the financial crises during the period 1986 to 1999. In particular, this paper explores how the government used appointments primarily based on kinship to influence the banking sector and render the National Bank of Liberia ineffective in implementing its regulatory powers. The research found that regulatory standards, weakened by nepotism, led to corruption and mismanagement in the banking sector. In addition, through the governments political influence over the National Bank of Liberia, it was able to finance unsustainable fiscal deficits by borrowing from commercial banks and the National Bank of Liberia, culminating in severe financial crises.

The article presents the first in the Russian-language literature systemic research of the activities of foreign based banks in the countries of the Central Asia. A consideration of exogenous and endogenous risks in the banking sector has shown that internationalization of banking regulation and supervision substantially influences the financial status of foreign banks irrespective to their size, country of origin and experience of working at local markets. The revealed risks are systemized according to economic and legal dimensions. This allows to determine the limits of foreign banks’ efficient functioning in the region under consideration.

The changes in the modern monetary policy, which took place at the beginning of the twenty-first century, in response to the global financial crisis led to the transformation of the place and the role of central banks. The strategic aim of the central monetary institutions has become preventing financial instability. So far, central banks have defined financial stability as a public good, which took care independently of other monetary purposes (Pyka, 2010). Unconventional monetary policy resulted in changes the global central banking. The aim of the study is to identify a new paradigm of the role and place of the central bank in the financial system and its new responsibilities, aimed at countering financial instability.

Today, commercial banks of the most environmentally affected countries invest voluntarily in social and environmental activities that targets socially-responsive business in the form of green banking. However, state-owned banks often encounter challenges in doing so since they operate in centralized manner and often lack in resources, government support and client base compared to commercial banks. Moreover, green banking initiates major changes in working environment and alters the provision of banking services for bankers in developing countries like Bangladesh. Given such challenges, it is important to examine the attitude of bankers working in state-owned banks towards the adoption of green banking. Findings claim that central bank regulations, followed by facilitating conditions and environmental concerns, are some of the factors that influence bankers' overall perceptions. Results indicate that bankers are fairly pragmatic in developing general attitudes towards the use of green banking as part of their work activities in all state-owned banks.

The author makes comments on the state of the problem in part of the English-speaking scientific thought. The authors present a comparative analysis of risk management conducted in countries where the dual banking system is practised — Islamic (ethical) banking and conventional (western) banking. The study showed that a risk profile of an Islamic bank is not significantly different from the one of the conventional banks in practices. In the beginning, they point out the central thesis and prospects for the development of conventional and Islamic banking. The central part of the comments begins with the historical aspect of the comparison. According to him, despite the differences, they are based on the priority of financial and human values. Further, the authors carefully discuss the risk profile of Islamic banks and the unique risks facing Islamic banks. It was confronted with conventional risk management of banks based on the Basel Committee on Banking Supervision (BCBS). Today, the regulation applies to credit risk, market risk, operational risk and liquidity risk (Basel II and Basel III). After all, the author reaches two essential conclusions for his research.

Thesis (MBA)--Stellenbosch University, 2007.
The interaction between central bank role and fiscal policy is so crucial to the macroeconomic outcome of any economy. The role of fiscal policy is so strong in detennining central bank policies. This is why central bank behaviour is usually analyzed using a model, which incorporates an effect of fiscal pressure on monetary policy fonnulation. With primary deficit pressure by the fiscal authorities, the response to such government budget deficit plays an interactive role in affecting the tradewoff weights applied to the competing goals of monetary policy. The intenningling of these two policies creates a counter-cyclical reaction, which finds roots in the Central Bank of Liberia Act of 1999 that establishes the principal-agent relationship between the Central Bank of Liberia and the government. Liberia's emergence from intennittent periods of civil tunnoil and unrest has created the dire need for an upswing of its ravaged economy. This is especially explained by the high unemployment and illiteracy rate looming in the country. Additionally, there have been the successive failures of national government to put in place the requisite mechanisms for management and equitable distribution of the country's resources to its citizens. This study gives a diagnosis and the symptoms of Liberia's economic state. According to the World Bank, Liberia is listed in the category of Highly Indebted Poor Countries (HIPC). Poverty traces a vicious cycle from low income to low saving and investment to low output so back to low income. This study identifies the role the Central Bank of Liberia can play in the economic recovery process of Liberia. This study project will further examine and draw lessons from other developing economies, which are applicable to Liberia. In this direction, countries that are perfonning well in achieving moderate to high economic growth will be looked at in an attempt to draw meaningful lessons for Liberia's drive for the attairunent of economic growth. It is expected that there is no quick fix to economic recovery especially so for a third world country that has been plagued by numerous calamities resulting in the looting and pillaging of the country's resources. The recovery of Liberia from its economic woes will involve other stakeholders besides the Central Bank. This may include the sovereign government through its line ministries and sector-specific agencies as well as the multilateral and bilateral partners of Liberia making up the donor community. This study also reveals the shape of Liberia's economy with regards to the structure of the economy. The controlling of public debt and an encouragement of private debt for investment purposes is a right step in the right direction along the path of economic recovery. This study will also examine monetary policy instruments and their limitations as far as the implementation is concerned. Monetary policy can be implemented by changing the size of the monetary base. This directly changes the total amount of money circulating in the economy. A central bank can use open market operations to change the monetary base.

Thesis (MBA)--Stellenbosch University, 2007.
ENGLISH ABSTRACT: The primary purpose of the research study is to establish whether the supervisory regime of the Central Bank of Liberia (hereinafter referred to as CBL) is adequate to provide effective and efficient bank supervision that will ensure stability in the financial system. Stability in the financial sector and safety and soundness of the banking industry are of paramount importance due to its linkages with all other sectors of the economy. Adequate supervision and prudential regulations are central in ensuring financial sector stability. This research focuses on the prudential regulations and other supervisory directives used in the supervision of licensed bank-financial institutions, in terms of capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk, the supervisory approach and the legal framework. The adequacy of the prudential regulations and other supervisory directives are determined by comparing with international standards. The results revealed that the prudential regulations largely meet international standards. Thus, the supervisory regime is adequate and capable of providing stability in the banking industry. Banks are exposed to various kinds of risks in the conduct of their trading operations; therefore, management is required to maintain a capital position that will cover the nature and extent of risks to the bank:. The capital consists of two tiers; Tier I (primary) capital and Tier 2 (secondary) capital. Banks are required to permanently maintain a capital adequacy ratio that matches their total exposure to risk at the level of at least 8%. The prudential regulations of the Central Bank of Liberia places assets into two risk baskets while international organizations like the Bank for International Settlement has four or five risk baskets based on the category of borrower, sovereigns, banks or corporates. Earning assets reflect the bank's quality and existing potential of exposure to counter-party associated with loan and investment portfolios, as well as off-balance sheet transactions. Banks are required to make adequate provisioning against deteriorating loan portfolios and general provisions for performing loans. Sound and competent management is the most significant requirement for the strength, potency and growth of any financial institution. Indicators of the quality of management's competence are primarily specific to individual institutions. Moreover, it is not easy to draw any conclusion vis-à-vis management soundness on the basis of monetary indicators, as characteristics of a good management are rather qualitative in nature. Strong earnings and profitability profiles of a financial institution reflect its capacity to absorb losses, fund expansion, be competitive in the banking industry, replenish and/or increase capital base and pay dividends to shareholders. Good earnings quality is relied upon by banking institutions as their first line of defense against capital reduction due to credit losses, interest rate risk, operational risk and decline in asset value. Liquidity is often considered as an attestation of solvency for banking institutions. Banks must maintain a minimum level of liquidity to settle obligations such withdrawals and for giving out loans. Liquidity is a strong early warning signal, the shortage and/or the lack of which erodes public confidence in a bank. Banks must guide against structural maturity mismatch. Imprudent lending practice increases a bank's exposure to liquidity risk. All licensed banks are statutorily required to maintain a minimum daily liquidity ratio of 15%, which is a measure of the banks' liquid assets vis-à-vis deposits. Each commercial bank is required to maintain reserve requirements representing 18% of average deposits. A suitable legal framework is a prerequisite for effective banking supervision. Supervisors can be expected to act, free from political pressures, only if they cannot be dismissed for doing their job. The New Financial Institutions Act 1999 and the Central Bank Act 1999 give the Central Bank powers to grant and revoke bank. licenses, supervise commercial banks and have unlimited access to privileged information. There is a need to further strengthen the supervisory capacity in terms of providing continuous short-term training and long-term or post-graduate studies.
AFRIKAANSE OPSOMMING: Die hoofdoel van hierdie navorsingsverslag is om te bepaal of die toesighoudende stelsel van die Sentrale Bank van Liberie (hierna verwys na CBL) toereikend is om doeltreffende en doelmatige banksupervisie te verskaf wat stabiliteit in die finansiële stelsel sal verseker. Stabiliteit in die finansieie sektor, en die veiligheid en betroubaarheid van die bankbedryf is uiters belangrik as gevolg van die verwantskap met alle ander sektore van die ekonomie. Voldoende supervisie en verstandige regulasies vorm die kern van stabiliteit in die finansiële sektor. Hierdie navorsing is gerig op die verstandige regulasies en ander toesighoudende bepalings wat gebruik word in die supervisie van gelisensieerde bank-finansiële instellings ten opsige van kapitaaltoereikendheid, bategehalte, bestuur, verdienste, likiditeit en sensitiwiteit ten opsigte van markrisiko, die benadering tot toesighouding en die regsraamwerk. Die toereikendheid van die verstandige regulasies en ander toesighoudende bepalings word bepaal deur dit met internasionale standaarde te vergelyk. Die resultale toon aan dat die verstandige regulasies grootliks aan internasionale standaarde voldoen. Die toesigboudende stelsel is dus toereikend en daartoe in staat om stabiliteit aan die bankbedryf te verskaf. Banke word blootgestel aan verskeie soorte risiko in die uitvoer van hul handelsbedrywighede. Daar word dus van die bestuur verwag om 'n kapitaalbasis te handhaaf wat die aard en omvang van die risiko vir die bank sal dek. Die kapitaal bestaan uit twee vlakke: Vlak I (primêre) kapitaal en Vlak 2 (sekondêre) kapitaal. Daar word van banke verwag om permanent 'n kapitaaltoereikendheidsverhouding te handhaaf wat ooreenkom met hul totale blootstelling aan risiko op 'n vlak van ten minsle 8%. Die verstandige regulasies van die Sentrale Bank van Liberie plaas bates in twee risiko-mandjies terwyl internasionale organisasies soos die Bank for International Settlement vier tot vyf risiko-mandjies het wat op die kategorie van die lener, selfbesturende entiteit, bank of korporasie gegrond is. Opbrengsgewende bates dui op die bank se gehalte en bestaande potensiaal vir blootstelling aan teenpartye wat verband hou met lenings- en beleggingsportefeuljes sowel as buitebalanstransaksies. Daar word van banke verwag om toereikende voorsiening teen verslegtende leningsportefeuljes te maak en om algemene voorwaardes vir presterende lenings te stel. Betroubare en bevoegde bestuur is die heel belangrikste vereiste vir die krag, vermoë en groei van enige finansiële instelling. Aanwysers van die gehalte van die bestuur se bevoegdheid is hoofsaaklik op individuele instellings van toepassing. Verder is dit nie maklik om enige gevolgtrekking ten opsigte van 'n bestuur se betroubaarheid te maak op grond van monetêre aanwysers nie, omdat die kenmerke van 'n goeie bestuur eerder kwalitatief van aard is. Sterk opbrengste en winsgewendheidsprofiele van 'n finansiële instelling dui op sy kapasiteit om verliese te absorbeer, fondse uit te brei, mededingend in die bankbedryf te wees, sy kapitaalbasis aan te vul en/of te vergroot, en dividende aan aandeelhouers te betaal. Bankinstellings maak staat op goeie opbrengsgehalte as hul eerste verdedigingslyn teen kapitaalvermindering as gevolg van kredietverliese, rentekoersrisiko's, bedryfsrisiko's en 'n afname in batewaarde. Likiditeit word dikwels beskou as 'n bevestiging van solvensie vir bankinstellings. Banke moet 'n minimum vlak van likiditeit handhaaf om verpligtinge soos onttrekkings na te kom en om lenings toe te staan. Likiditeit is 'n sterk vroeë waarskuwingsteken, en die tekort en/of gebrek daaraan knou openbare vertroue in die bank. Banke moet waak teen 'n strukturele wanafstemming van looptye. Onverstandige uitleenpraktyk verhoog 'n bank se blootstelling aan likiditeitsrisiko. Alle gelisensieerde banke word statutêr verplig om 'n minimum daaglikse likiditeitsverhouding van 15% te handhaaf, wat 'n maatstaf is van 'n bank se likiede bates teenoor deposito's. 'n Toepaslike regsraamwerk is 'n voorvereiste vir doeltreffende banksupervisie. Daar kan van toesighouers verwag word om sonder enige politieke druk op te tree slegs indien hulle nie afgedank kan word omdat hulle hul plig doen nie. Die New Financial Institutions Act van 1999 en die Central Bank Act van 1999 gee aan die Sentrale Bank die mag om banklisensies toe te staan en herroep, om toesig oor kommersiële banke te hou en om onbeperkte toegang tot beskermde inligting te kry. Daar is 'n behoefte om die toesighoudende kapasiteit deur die verskaffing van deurlopende korttermynopleiding en langtermyn- of nagraadse studie uit te bou.

Central banks engage in a multiplicity of activities. Their current roles are historically determined, in that each central bank came into being at a certain stage of its country's development and has exercised its functions consistently with its nation's development objectives. Consequently, central bank functions vary in degree and from place to place. However, despite the different conditions under which they operate, most central banks exhibit a tendency to conform to an almost identical pattern, particularly in respect of those practices and principles developed by the Bank of England, which came to be accepted as traditional central bank functions. This thesis takes up the traditional central bank functions and compares them with the new and expanding roles of central banks in the developing world. The tool for illuminating this review is the important issue of government immunity. As agents of their governments, central banks sometimes breach their contractual obligations and then the issue of immunity comes up. In determining the immunity of foreign states, their agents and instrumentalities, the courts characterize their activities as either private or public acts. This process of characterization has proved difficult in its application to central bank activities. This is because there is no uniform central bank function. Consequently, it is difficult to determine when a central bank is performing a central bank function. The restrictive immunity approach presupposes that central bank functions could easily be characterized as either commercial or central bank functions. However, a contrary view is presented in this thesis. This thesis takes the position that central bank activities are not uniform and therefore cannot be subject to a general theory of restrictive immunity. A comparative approach is adopted in analysing the different evolutionary patterns of central bank development, the scope of protection that central banks enjoy under the current law in sovereign immunity in the U.S., Canada, the U.K. and other international conventions. The study ends with an appraisal of the scope of central bank immunity and the problems associated with the characterization process and concludes that in the absence of uniform central bank functions, and an agreement on the proper sphere of governmental activity, the restrictive immunity approach is inadequate for the resolution of central bank immunity issues. Consequently a programme of bilateral treaties is suggested as a better alternative.
Law, Peter A. Allard School of
Graduate

The Treaty of Maastricht envisages a European System of Central Banks with the European Central Bank (ECB) as its centre-piece, designed to be independent and pursuing the primary objective of price stability. This study is concerned with the independence of central banks and its related issues. A focus is put on the question of whether the degree of central bank independence determines a country's inflation performance. Furthermore, the definition, determination, and measurement of central bank independence are developed. The results of an international survey made it possible to identify criteria which, in the eyes of the responding central bankers, are crucial in determining central bank independence. Moreover, it was possible to construct a new weighting system, based on various indices of which one is called the central bank independence index (CBI), which reacts more sensitively to a change in a central bank act than other indices. Therefore it is possible to determine independence more precisely than previous methods. Analysing this new "weighting approach" it was found that there is a negative correlation between central bank de jure independence and a nation's inflation level and, when comparing the CBI to existing indices, the former performs better in explaining a country's rate of inflation. Applying these findings to the future ECB the conclusion reached is that the ECB will have a high degree of de jure central bank independence, compared to those central banks in the study, thus it will help in achieving a low-level inflation within the European Union. Nevertheless, there is also an indication that, although granting legal independence to the ECB, the Treaty of Maastricht provides various articles, which might undermine the Bank's de jure independence.

Thesis (Ph. D.)--Dept. of Economics and Social Sciences Consortium. University of Missouri--Kansas City, 2006.
"A dissertation in economics and social sciences." Advisor: L. Randall Wray. Typescript. Vita. Title from "catalog record" of the print edition Description based on contents viewed Dec. 19, 2007. Includes bibliographical references (leaves 422-452). Online version of the print edition.

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).

Economic theory predicts that the development of the financial sector should have a positive impact on the overall economic development. Research has predominantly confirmed this expectation, with the remark that at earlier stages of economic development this impact should be higher, while a disproportionate banking sector has detrimental effect on growth through its impact on attracting highly skilled workforce, increased presence of moral hazard and the associated banking crises. This issue has been studied only occasionally in the case of the former socialist economies of Central and Eastern Europe and the former USSR. This paper represents an attempt to analyze the impact of the banking sector and securities markets development on the economic growth of these countries. A sample of 22 countries is assembled, using data from 1995 to 2018 and a panel regression and a GMM technique are used to derive conclusions on the researched topic. The analysis has shown that the banking sector has played a positive role in the economic growth throughout the analyzed period, while the role of the stock market is not significant. This is in line with the previous studies which have confirmed that the positive role of the securities markets should be expected only at higher levels of economic development. Also, the impact of the overall financial sector is deemed to be positive.

Purpose – the main aim of the study is an assessment of the banking sector in Poland, including the size of the sector, banking institutions forming the sector and consolidation processes taking place in the sector against the background of banking sectors in other countries. The paper also indicates ownership changes as a consequence of consolidation processes in the banking sectors after the global financial crisis of 2008−2012. Research methodology – the following research methods were used: cause and effect analysis, comparative analysis, case studies, observation method, secondary data analysis, and synthesis method. Findings – the research allowed to find out that the banking sector in Poland is growing at a rate significantly exceeding the growth rate in other European countries. However, rapid development does not mean a radical increase in the importance of this sector in Europe. Concentration ratios of the Polish banking sector show continuous but slight increases, although their level is still quite low compared to other European Union countries. Moreover, in Poland, a decreasing number of banks, observed in recent years, reduces a share of foreign investors in the structure of the sector. This means a high activity of domestic investors in taking over bank capital. Research limitations – the main research limitation is that the study mainly focuses on changes as well as comparative analysis of the concentration ratio (CR5). While further research should be expanded by more measures to compare ownership structure and the profitability of Polish and the European Unionʼs banking sectors. Practical implications – the results might be useful for central banks and supervisory authorities when it comes to their role in changes in the ownership structure of banking sectors. Originality/Value – the main value of the article is the in-depth analysis of the ownership structure of the Polish banking sector in the background of the European ones

Recent financial crises hit many countries. The impact on Visegrad countries in credit area was not damaging. The main reason was stability and soundness of financial (banking) sectors in these countries and an adequate response of central banks as well as flexible management of commercial banks. Commercial banks, usually daughter companies of western banks, used above all domestic deposits for financing credits. This played a key role in credit area and helped to keep the financial system stable. It is important to underpin that responses to the crisis have been rather heterogeneous in central European countries and there are quite big disparities among Visegrad countries, too. In the paper developments and responses of the commercial banks to the crisis and their stability have been discussed on the basis of deposits, loans of monetary financial institutions to the non-financial sector, households, governments, lending for house purchase and credit for consumption in several EU countries. Net position of banks vis-á-vis foreign banks is taken into account, too.

In 2008-09 the banking sectors of four Central and East European States and three Baltic States have experienced a large-scale financial crisis in the EU for the first time since becoming foreign-owned. Amongst the new EU member states Baltic States and Hungary were the worst affected economies. The paper first explores why the extent of crisis varied among these seven states by distinguishing major differences in the pre-crisis bank lending practices which reflect different macroeconomic developments and exchange rate policies in these states. Based on the analysis of bank performance indicators since 2008 and my interviews with representatives of major banks active in the region, the important role of foreign banks in mitigating the risks of financial contagion is outlined. The implication from the crisis is examined mainly from the perspective of the financial supervision and regulation in the enlarged EU. By inspecting the concrete experience of financial supervision authorities in the Baltic States the paper shows why the host country supervisors were not able to curb excessive lending and risk-taking by large Scandinavian banks. Since it is expected that the new EU regulatory and supervisory framework will reinforce the financial stability in the case of large cross-border banking groups, the paper addresses the issues in the financial crisis prevention, management are resolution in the new EU member states which will improve based on the new EU regulatory and supervisory framework for credit institutions.

Monetary union is one of the advanced stages of international economic integration and involves shared monetary and exchange rate policies that are executed collectively across union members. This common policy warrants price stability and requires a common supranational monetary authority. Existence of an established banking sector is crucial for effective execution of policy decisions taken by said monetary authorities. Eurasian Economic Union (EAEU) is officially established on January 1st of 2015 and is an example for a regional economic integration. Aim of the Union, which is comprised of Russia, Kazakhstan, Belarus and Republic of Armenia; is to increase collaboration among economies, to improve the living standards of the participating nations and to promote stable development. This study is based on assessment banking industries of member countries, working towards common monetary authority during the transition to EAEU economic integration between years 1995 and 2014. Data acquired from World Bank and member countries' central banks is used to determine the capabilities and limitations of partaking economies based on generally accepted financial strength indicators. In conclusion; Russian Federation and the Republic of Kazakhstan are observed to be the principal EAEU members due to their advanced and strong banking industries. Increasing fragilities over the years, amplified also by developments in global markets, are evident in member countries; especially in Belarus and Armenia. Significance of achieving price stability in founding country Russian Federation is emphasized for successfully establishing a common monetary authority.

Irrespective of whether advanced economies (AEs) or emerging market economies (EMEs), the number one problem of the global economy is not being able to generate a satisfactory growth. Income levels is in some countries are barely above the per-crisis level. Despite ample liquidity due to quantitative monetary policies, consumption and investment demands are weak. Because high level of indebtedness deter economic agents from using credit. Credit markets still do not function well either. Quantitative easing policies have been successful in containing further deterioration. Despite ample liquidity inflation has not risen, but it did delivered the expected growth. Because banking system in AEs is weak and monetary transmission mechanisms are not functioning well. As for EMEs, commodity prices and World trade appears to be weak; economic growth are slowing down, capex is visibly falling in heavy industrial sectors due to already existing excess capacity. The academia as well as the business community are worried about the appropriateness of the present policies in case another recession comes, central banks will have little ammunition to deal with it. The option being talked of now is what is dubbed as “helicopter Money”. Turkey being an open economy, has been and will be effected by the developments in the global economy through trade, capital flows and expectation channels. By international standards, Turkey have a reasonable growth rate of 3 to 4 %, implying a new growth era where high growth cycle ended due to changing global financial conditions and its structural problems. Future growth performance will depend on the level of investments and savings to finance it. As her own saving is low, foreign capital flows is crucial. High inflation and interest rate are the two negatives, but it has a strong fiscal position, debt / GDP is 32.3%, the budget is almost balanced, producing primary surplus which proved it is resilience in the face of recent failed coup and the negative attitudes displayed by the rating agencies.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.