Academic literature on the topic 'Institute of Bankers'

The International Conference on Islamic Economics in the 21st Century was the second international conference organized by the International Islamic University Malaysia {IIUM), in cooperation with the Islamic Research and Training Institute {IRTI) of the Islamic Development Bank (IDB). The conference was held 9- 12 August 1999 in Kuala Lumpur, Malaysia. The Malaysian Minister of Education Dato' Sri Mohd and the president of the IIUM, Najib Tun Abdul Razak, officially opened the conference. Several ambassadors to Malaysia from Islamic countries, academicians, and prominent Islamic bankers attended the opening session. Over 200 del­egates from more than 15 Muslim and non-Muslim countries attended the conference. Delegates represented academicians from private and public institutions of higher learning and officials from central banks and mone­tary authorities. The delegates included economists, corporate executives, government officials, officers involved in Islamic banking, investment bankers, fund managers, officials from zakat and waqf institutions, researchers in Islamic economics and related areas, and students of eco­nomics. Approximately 25 to 30 percent of the attendants were delegates representing countries other than Malaysia. Speakers and discussants included members of various universities and institutions such as the International Institute of Islamic Economics (Pakistan), the Islamic University of Palestine, Kausar University of Sciences (Pakistan), Rajshashi University (Bangladesh), King Abdel Aziz ...

CPAs have struggled with financial statement users placing too much confidence in nonpublic entities' limited-assurance documents. Despite Statement on Standards for Accounting and Review Services Number 1 (SSARS No. 1) issued in 1979, research shows that CPAs and statement users place confidence in and reliance on CPA compiled and reviewed statements. In 2000, the American Institute of Certified Public Accountants (AICPA) issued SSARS No. 8, Amendment to SSARS No. 1, Compilation and Review of Financial Statements, relating to plain-paper statements. We surveyed practicing CPAs and bankers to measure their confidence in and reliance on no-assurance engagements: compilations, plain-paper statements, and statements with accountants' reports/letters. We find that both CPAs and bankers report some level of confidence in and reliance on plain-paper statements. Both parties perceive greater confidence in and reliance on financial statements where a CPA is known to be minimally associated with the statements.

This study analyses the influence of high-performance work systems on organizational performance. As, previous studies have mostly focused on individual HR practices in determining the influence of HR practices on performance so research is needed to analyze the combined effect of HRM practices as system to understand the importance of HR on performance. Based on AMO framework, this study investigated the effect of HR system on organizational performance using employees’ perspectives in highly interdependent work settings. In this study, primary data was obtained from 218 bank branches in collaboration with Institute of bankers Pakistan and bank management in the form of managers’ and employees’ perceptions about HPWS and its effect on performance. Results suggest that HPWS was significantly linked to deposits, advances and unit level profitability. Results pointed out new insights to HPWSperformance literature from employees perspectives.

Previous studies on the relationship between bank restructuring and financial performance reveal conflicting results with few studies establishing the effect of financial services. Few studies have investigated the causality between bank restructuring and financial performance as intervened by deposits and customer loans. The positivism research philosophy and descriptive and inferential causal research design were used in this study. The hypothetical view of the study was that the relationship between bank restructuring and financial performance of commercial banks in Kenya is not intervened by deposits and customer loans. The 39 commercial banks that were consistently in business for the period 2002 to 2014 were included in the study. Bank restructuring was disaggregated into financial restructuring, capital restructuring, operational restructuring and asset restructuring. The empirical findings were as follows: There was a significant direct association between bank restructuring and financial performance which was intervened by deposits and customer loans as proxies for financial services. Deposits were found to be significant in intervening the relationship between bank restructuring and financial performance. Customer loans on the other had was not found to significantly intervene the relationship between bank restructuring and financial performance. A composite variable of financial services denoting the aggregate of the intervention of deposits and customer loans showed a significant intervening effect on the relationship between bank restructuring and financial performance. The study outcome therefore reveals that the hypothesis that the relationship between bank restructuring and financial performance is not intervened by financial services is rejected. The conclusion is that banks should focus more on deposits to caution against a decrease in financial performance. Additionally customer loans should not be ignored since the intervention though insignificant tends to negatively influence financial performance. The implication is that when banks focus more on the provision of financial services they are likely to compromise financial finance possibly because of the increased costs associated with providing financial services. Regulatory institutions such as the Central Bank of Kenya (CBK) and the Kenya Institute of Bankers can use the study results to enhance policy and prudential guidelines to increase profitability of the banks. The study recommends that there is need to increase financial services offered by banks to increase outreach other than improving profitability of banks.

NOTE: THIS ARTICLE WAS PUBLISHED WITH THE INFORMING SCIENCE INSTITUTE. Aim/Purpose............................................................................................................................................................................. This study seeks to examine the effect of ethical leadership on corporate governance, corporate performance and corporate social responsibility in selected Nigerian deposit money banks. Background............................................................................................................................................................................. Business ethics, corporate governance and corporate social responsibility developed as movements to check unethical and corrupt practices in organizations and by extension improve the performance of the organizations. However, the application of these measures has not yielded the desired results. This is evident in the number of top executives of corporate giants like Enron of the United States of America and Satyam of India that have been embroiled in unethical practices. In Nigeria, the corporate corruption and scandal involving top management of deposit money banks has given rise to mergers, acquisition and failure of some of the banks. Thus, this study argues that there is a missing link in the application of these measures. That missing link is ethical leadership. Methodology............................................................................................................................................................................. The study employed survey research design. Stratified sampling technique was employed to select the respondents that completed the questionnaire. The generated data were analyzed using linear regression. Contribution............................................................................................................................................................................... The study established that a robust organization can be developed by main-streaming corporate governance, corporate performance and corporate social responsibility using a nurtured ethical leader. Findings..................................................................................................................................................................................... The results reveal that ethical leadership has significant positive effects on corporate governance, corporate performance and corporate social responsibility. Recommendations for Practitioners......................................................................................................................................... Management should show more commitment in the selection and development of leaders and followers. All the stakeholders should be equally involved in the formulation of corporate governance principles. A nurtured ethical leader should be employed to mainstream corporate governance, corporate performance and corporate social responsibility through the organizational culture. Recommendation for Researchers............................................................................................................................................ The use of objective measures or better still subjective measures is suggested as a way of generalizing the present findings. Impact on Society...................................................................................................................................................................... The findings of this study will expose deposit money bank stakeholders to the consequences of ethical and unethical practices. It will create in bankers the need to abide by ethical leadership and to be whistle-blowers. The findings are expected to engender more stern monitoring measures by the banks’ regulatory agency. These measures are further expected to ensure the reinvention of the banks’ organizational culture so much so that they will contain the core values of code of ethics, corporate governance, performance and social responsibility. The outcome of the study is expected to make the regulatory agency more proactive rather than being reactive to deposit money bank matters. This will consequently put a stop to the fall in the taxes accruable to government in the event of bank failure. Future Research......................................................................................................................................................................... To generalize the findings for the whole of Nigeria, similar study should be conducted in other geopolitical zones of the country.

ZusammenfassungDie krisengetriebene Re-Regulierung verursacht Transaktionskosten, die besonders für kleine und mittelgroße Kreditinstitute (KMU-Banken) erhebliche Belastungen darstellen. Vertreter der betroffenen Kreditinstitute, aber auch von Regulierungsinstitutionen, haben hierauf mit Vorschlägen für eine abgestufte, proportionale Bankenregulierung reagiert. Aufgrund des hohen Anteils kleiner Institute dürfte gerade der genossenschaftliche Bankensektor davon profitieren. Der nachfolgende Kurzbeitrag würdigt dahingehende Vorschläge.

Zusammenfassung: In Nordrhein-Westfalen reicht die Wirtschaftsförderung durch staatliche Banken bis in das frühe 19. Jahrhundert zurück. Mehrere der Ziele und Instrumente der damals agierenden Institute leben in der NRW.BANK fort. Im Zeitverlauf haben geänderte wirtschaftliche und politische Rahmenbedingungen jedoch auch zu neuen Geschäftsfeldern und Förderinstrumenten geführt. Heute sind es insbesondere das Niedrigzinsumfeld, die Digitalisierung sowie sich ändernde Vertriebsstrukturen in der Kreditwirtschaft und ganz aktuell die Corona-Pandemie, die bei der NRW.BANK – wie auch bei anderen Instituten – Modernisierungsmaßnahmen für ein zukunftsfähiges Förderinstrumentarium erforderlich machen. Summary: In North Rhine-Westphalia, economic development by state banks dates back to the early 19th century. Several of the objectives and instruments of the institutions operating at the time continue to be pursued and used by NRW.BANK to this very day. Over time, however, changes in the economic and political environment have also led to new business areas and promotional instruments. Today, it is above all the low-interest rate environment, digitalisation, changing distribution structures in the banking industry and, most recently, the coronavirus pandemic which make it necessary for NRW.BANK – and other institutions as well – to modernise its range of sustainable promotional instruments.

ZusammenfassungZu den Konsequenzen der Krisenprozesse auf den Finanzmärkten zählt unter anderem eine massive Regulierung bestimmter Finanzintermediäre. Insbesondere sind Anzahl und Befugnisse bankaufsichtlicher Organisationen seit 2007 ausgebaut worden. Im Zuge dessen wird zu selten aus ökonomischer Sicht analysiert, inwieweit die einzelnen Regulierungen zu rechtfertigen sind. Der Beitrag fokussiert eines der neuen Regulierungsinstrumente und prüft, inwieweit es im Sinne einer Marktdisziplinierung tatsächlich wirksam wird: Hierzu wird erstmals der jüngste Stresstest der europäischen Bankenregulierer per Ende 2014 analysiert. Dabei geht der Beitrag mit Hilfe der Ereignisstudienmethodik der Forschungsfrage nach, ob und inwieweit dieser reformierte Stresstest einen Informationsgehalt für diejenigen Kapitalmarktteilnehmer besessen hat, die (potenzielle) Aktionäre der bewerteten Banken waren. Aus der Event Study resultieren abnormale Renditen von hoher Signifikanz, die klare Aussagen hinsichtlich der Hypothesen über einen Zusammenhang von Testergebnis und Kursentwicklung und damit letztlich über den Informationsgehalt des Stresstests zulassen. Die Veröffentlichung der Stresstest-Resultate hat demnach grundsätzlich Einfluss auf den Wert der getesteten Banken. Zudem unterscheiden sich die Resultate für durchgefallene Banken von denen der anderen Institute.

The goal of this study is to propose a concept of Assessment Centre as an effective recruitment tool for a personal banker in the financial institution. The theoretical part describes general process of a recruitment and a Assessment Centre method. The effectivity of this method is compared with other recruitment methods. It also depicts the objectives of the method and mentions utilized methods. Attention is paid to particular AC stages, from finding out demands and requirements of the Assessment Centre up to evaluation of the data, which had been obtained during AC. The aim of the practical part is to bring a concept of AC for a recruitment of a personal banker in particular financial institution and to assess whether the AC method is suitable for recruitment in that case, together with economic evaluation in comparison with classic recruitment method.

A failure of systemically important bank was up to the present time in most cases avoided through providing financial support by government because there were concerns about destroying the financial stability followed by decline in economic activity because of size, interconnectedness and limited substitutability of the failing bank. However, the implicit governmental guarantees for systemically important banks create many distortions in an economy which are desirable to eliminate. Considering restriction of moral hazard, no increase in systemic risk and preservation of social benefits of G-SIBs the parallel implementation of higher capital requirements and recovery and resolution policy seems to be the most effective measure from proposed regulatory measures for systemically important banks. The future benefits and costs of these measures will be dependent in a high degree on the form and way in which the new rules will be incorporated by governments to their national regulatory frameworks.

Diploma thesis focuses on liquidity risk management of commercial banks in the Czech banking market in 2002-2015. This main goal is achieved through a comprehensive analysis within a framework that uses several different methods. A theoretical framework for bank liquidity management is drawn up for a theoretical evaluation, summary of the current literature and a summary of the regulatory framework including the newly introduced Basel III requirements and indicators is put together. The research part is focused on assessing the development and current state of liquidity of Czech banks by analyzing of liquidity ratios and regression analysis of panel data. The level of liquidity and the size of the liquid pillow is judged to be sufficient and stable from the results of the individual analyses. The net position of Czech banks on the interbank market on an international scale also reflects a good level of liquidity. The major determinants of Czech bank liquidity in the period under review were mainly capital adequacy, bank size, loan portfolio quality, growth rate of GDP and interest rates.

The diploma thesis deals with stress testing as a specific tool which is used by European Banking Association for banking sector financial stability assessment. The main aim is to provide reader with analysis of EBA stress testing. Both the EBA methodology and 2016 results are analyzed in second part. Due to high costs spend on stress testing process I consider practical usage from the bank point of view as very important. This issue is discussed in fourth part of this thesis.

The Diploma thesis deals with a comparative analysis of credit institutions operating on the Czech banking market. The first part of the thesis characterizes the banking system of the Czech Republic, the legal status of different institutional types and specifies range of their activities. The second part of the thesis focuses on the positions of the institutions against the supervisor and clients. The last part of the diploma thesis analyses the process of transformation of credit unions to banks, as well as reasons for this transformation and its possible consequences.

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This Objective of this study is to investigate challenges in the determination of the Required Referential Net Equity, of financial institutions, with the entry into force of the new Central Bank regulations that meet the recommendations of the Committee on Banking Supervision Basel III. The application of standards subject to the Resolution 3897/2010 revoked by Resolution 4194/2013 will address the implementation and management of liquidity risk, the new methodology of calculating the Reference Equity and the introduction of additional core capital, among other issues. Changes brought by the withdrawal of tax credits for purposes of computing the capital and changes in the form of acceptance of subordinated debt will have a strong impact on all financial institutions, with repercussions on the levels of capitalization and leverage. In this Risk management in banking and capital management with emphasis on the determination of the reference net equity required. The results suggest the need to strengthen the management of new sources of capital and line-of-business and customers, as circular 3644, especially for the average banks
O objetivo desse estudo ?? investigar as principais mudan??as na determina????o do Patrim??nio de Refer??ncia Exigido das institui????es financeiras, com a entrada em vigor das novas regulamenta????es do Banco Central, que atendem as recomenda????es do Comit?? de Supervis??o Banc??ria de Basileia III. A aplica????o das normas que s??o objeto da Resolu????o 3897/2010 revogada pela Resolu????o 4194/2013 tratar??o da implementa????o e do gerenciamento do risco de liquidez e Cr??dito, da nova metodologia de apura????o do patrim??nio de refer??ncia e da introdu????o do adicional de capital principal, entre outras quest??es. Mudan??as como a dedu????o gradativa do saldo dos cr??ditos tribut??rios diretamente do Capital e altera????es na forma de aceita????o das d??vidas subordinadas t??m forte impacto sobre todas as institui????es financeiras, com repercuss??o nos seus n??veis de capitaliza????o e alavancagem. Nesse contexto, foi realizado revis??o da literatura sobre os assuntos: Basileia I, II e III, riscos na gest??o banc??ria e gerenciamento de capital com ??nfase na determina????o do Patrim??nio de Refer??ncia Exigido. Os resultados encontrados sugerem a necessidade de refor??ar a gest??o de novas fontes de capital e de linhas de neg??cios e clientes, conforme circular 3644, sobretudo para os bancos m??dios

Artificial Intelligence (AI) as a growing digitization technique appears in many contexts as something new and foreign. AI is considered by many as the driving force in the future of digitalization. The finance industry is one of the industries that may be affected since they already have several digitization tools today. Banks have an important function in our society and therefore it’s important for companies and also consumers, to understand what the application of AI can offer. The purpose of this study is to generate a greater understanding of how Artificial Intelligence (AI) is being used in Swedish banks today, which ethics- and regulatory aspects that can affect the implementation of AI and how banks take the future use of AI in consideration. The study is based on a qualitative method where five explorative and semi structured interviews with different banks have been conducted. Respondents consists of two niche banks and three more established banks where 35-60 minutes interviews have been done while the respondents explained how they use AI in daily activities, how they consider ethical aspects regarding the use of AI and how they see the future use of AI in daily activities. This study has come to the conclusion that the banks use AI in different ways and that they value AI differently. Well established banks work more with IT-support for the organization where support is of great importance while the niche banks works with AI from a more holistic perspective with credit- and loan processes in focus. It appears that banks also want to use AI in consideration of money laundering and compliance. This study also presents how banks take the law, ethical aspects and work environment in consideration and how these factors is affected or not affected with the application of AI.

Artificial Intelligence (AI) as a growing digitization technique appears in many contexts as something new and foreign. AI is considered by many as the driving force in the future of digitalization. The finance industry is one of the industries that may be affected since they already have several digitization tools today. Banks have an important function in our society and therefore it’s important for companies and also consumers, to understand what the application of AI can offer.   The purpose of this study is to generate a greater understanding of how Artificial Intelligence (AI) is being used in Swedish banks today, which ethics- and regulatory aspects that can affect the implementation of AI and how banks take the future use of AI in consideration. The study is based on a qualitative method where five explorative and semi structured interviews with different banks have been conducted. Respondents consists of two niche banks and three more established banks where 35-60 minutes interviews have been done while the respondents explained how they use AI in daily activities, how they consider ethical aspects regarding the use of AI and how they see the future use of AI in daily activities. This study has come to the conclusion that the banks use AI in different ways and that they value AI differently. Well established banks work more with IT-support for the organization where support is of great importance while the niche banks works with AI from a more holistic perspective with credit- and loan processes in focus. It appears that banks also want to use AI in consideration of money laundering and compliance. This study also presents how banks take the law, ethical aspects and work environment in consideration and how these factors is affected or not affected with the application of AI.

This chapter aims to contribute to the debate on financial system reform. The first part describes what is perceived to be a massive regulatory failure, a breakdown that goes all the way from regulatory fundamentals to prudential implementation. The second part discusses some implications of recent events for financial sector regulation. It argues that to avoid a repetition of the financial crisis, we need both to change public policies that contributed to the crisis (particularly the mortgage crisis) and to institute financial reforms. Desirable reforms of public policy regarding real estate lending include promoting consumer protection and reducing subsidies. Financial regulation must also be international. The creation of supranational regulatory structures has become increasingly urgent in a world in which institutions and counterparties are truly international.

Mathematical models are a valuable tool to study different water related problems. 1Dimensional and 2Dimensional mathematical models are widely used in river engineering studies. 1D and 2D mathematical models are set-up for Buna River using SOBEK software developed from Deltares Institute, the Netherlands. Buna River is part of the water system of Shkodra Lake, Drini and Buna River. This water system is the largest in Albania, and receives significant amounts of annual precipitation ranging from 1600 mm to 4000 mm. This water system discharges all its waters into the Adriatic Sea through Buna River bed, which has a total length of around 44 km. Around 1.5 km from flowing out of Shkodra Lake, Buna River joins Drini River, and then meanders in a low land area before discharging into the sea. Validation is a very important step in the process of building a mathematical model for a water system. Validation of 1D and 2D mathematical models for Buna River is done by using the hourly water level data from on-line stations for an event. The results of both models are evaluated based on graphical comparison and statistical tests such as: Root Mean Square Error, Mean Absolute Error, and Correlation Coefficient. The 1D mathematical model shows a better performance for the flow inside the river banks (bankfull discharge) due to a more accurate representation of the river bathymetry

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%.