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Monetary Policy Between Stability and Growth Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Nikola Fabris
The global financial crisis and the coronavirus pandemic were marked by expansionary policies of key central banks in an attempt to stop the recession. The degree of expansiveness of monetary policy was unprecedented. As a result of expansionary policies, global inflation has been present since 2021. The change in the macroeconomic environment has led to a turnaround in monetary policy pursuits and
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Swiss National Bank: Is the Recent Loss a Threat to Monetary Policy? A Research Note1 Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Vanessa Kämpf, Georg Stadtmann, Lilli Zimmermann
The Swiss National Bank (SNB) has announced it will refrain from profit distribution in 2022 owing to the accumulation of a huge financial loss. In this paper we examine key determinants of the SNB’s loss and shed light on its implications to monetary policy pursuit. In particular, we show that different accounting principles yield different results concerning the equity position of a central bank’s
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The Impact of Energy on Climate and Economic Stability: Forecast for Serbia Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Nemanja Backović, Miomir Jakšić, Bojan Ilić
In the conditions of modern business environment of energy companies, studies of their impact on environmental protection are becoming increasingly important. The growing concern at the macro level of the resulting climate change due to energy production is justified. The ecological component in the business of energy entities is becoming a priority for the sustainable development of energy, and therefore
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Central Bank Digital Currency Adoption Challenges, Solutions, and a Sentiment Analysis Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Peterson K. Ozili, Sergio Luis Náñez Alonso
We identify some factors limiting CBDC adoption and some of the possible solutions. We also assess the media sentiment about central bank digital currencies in general as well as about locally issued CBDCs. We find that there is a high correlation between the negative media sentiment about CBDCs in general and locally issued CBDCs. We also find that the negative media sentiment about the eNaira, DCash
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DLT Options for CBDC1 Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Sky Guo, Joseph Kreitem, Thomas Moser
This paper provides an overview of the distributed ledger technology (DLT) options available to central banks for issuing central bank digital currency (CBDC). We discuss the main requirements that a DLT solution must fulfill and analyze the various structures for implementation offered by DLT — public, permissioned and private — and the implications that each has for the central bank and the existing
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Assessing the Banking Sector of Bosnia and Herzegovina: An Analysis of Financial Indicators through the MEREC and MARCOS Methods Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Zoran Mastilo, Anđelka Štilić, Dejan Gligović, Adis Puška
The banking sector assumes a pivotal role in the economic development of nations. The assessment of financial indicators pertaining to banks holds fundamental importance in the evaluation of bank stability and sustainability. This research employs the MEREC (Method based on the Removal Effects of Criteria) and MARCOS (Measurement of Alternatives and Ranking according to COmpromise Solution) methodologies
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Do Financial Markets Allow the Independence of Central Banks? Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Damià Rey Miró, Pedro Piffaut, Ricardo Palomo Zurdo
The research work presented below addresses the possible concern of central bank independence through the development and application of econometric models. The complexity of the modelling has allowed a step further in corroborating that financial independence is not only linked to the appointments and pressures of the states regarding their economic policy but also the role that financial markets
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Monetary Policy Press Releases of 24 Inflation Targeting Central Banks – A Comparison of their Key Features and Complexity Journal of Central Banking Theory and Practice Pub Date : 2024-01-13 Piotr Szczerba, Anna Wojtyniak, Joanna Niedźwiedzińska, Wojciech Bogdanowicz
This paper describes the process of constructing a dataset of available online press releases related to monetary policy decisions published by central banks that have been pursuing a form of inflation targeting. A total of 3,807 documents were considered, as the review encompasses 24 central banks over the past 30 years. To prepare the dataset for text-mining analysis, a cleaning procedure has been
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Reputation Lasts Longer Than Life: How can Central Banks Quantify their Reputational Risk? Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Pradip Kumar Kafle
It takes multiple decades of commitment and credibility to create repute but only a few seconds to tarnish it, as the instances of misinformation, disinformation and malinformation galore. In light of this, Central banks, as delicate and sensitive public institutions, are significantly vulnerable to such reputation risk due to their mandate for policy decisions and implementation. Thus, this study
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Achieving Sustainable Economic Growth in Sub-Saharan African Countries Using the Tool of Monetary Policy Effectiveness Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Areghan Isibor, Alexander Omankhanlen, Benjamin Ehikioya, Godswill Osuma, Adenike Oladipo, Adedoyin Bunmi-Alo, Kikiyanu Ajalaadebowale
The issue of achieving and sustaining a nation’s economic growth is an issue that is of concern to many nations of the world, especially the sub-Saharan African (SSA) nations. This was in line with the United Nations Sustainable Development Goal (SDG) 8 of Economic Growth. This study, therefore, examines how monetary policy tools can help the SSA governments achieve the SDG 8 goal and also sustain
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Unusual Changes in the U.S. Treasury Security Market During the Fourth Round of Quantitative Easing Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Kyle D. Allen, Scott E. Hein
The Covid-19 Pandemic and policy response rattled the US Treasury markets. Conventional US Treasuries, inflation adjusted US Treasuries, and the relationship between the two developed in ways such that ignoring changes in real interest rates yielded distorted inflation expectations estimates. Since the beginning of the pandemic, monetary policy kept nominal rates low and close to zero, but positive
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Raising Interest Rates for Improving Income Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Guillermo Peña
This paper illustrates a case where an increase of the interest rates improves the economic activity and reduces income inequality. This theoretical exercise deals with a simple model of disequilibrium with accountant identities of budget constraints. In addition, and following previous models, the effect of the COVID-19 shock is considered, by reflecting asymmetric repercussions that increase income
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The New Era of Capital Regulation Complexity Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Lukas Pfeifer
The paper describes the mechanism of overlapping leverage ratio requirement and macroprudential capital buffers and associated implications for the resilience of the banking sector. It examines to what extent capital buffers can be usable to absorb losses in the case of the Czech banking sector and what impact this may have on the lending capacity of the real economy. The non-usability portion of capital
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The Relationship Between Bank Concentration and Interest Rates Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Tijana Kaličanin, Zoran Grubišić, Sandra Kamenković
The aim of this paper was to analyse the relationship between market concentration and market interest rate. Taking into thought the relationship between the level of concentration within a market and the level of competition, it can be deduced that an increment in concentration results in a decrease in competition. In order to test the above mentioned relationship, the authors used a panel dataset
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Central Bank Independence: The Case of North African Central Banks Journal of Central Banking Theory and Practice Pub Date : 2023-09-06 Amina Haoudi, Ali Bennagem Touati
The independence of Central Banks is still considered to be a credibility factor in ensuring price stability. Thus, many central banks in transition countries have undergone a change in their statutes in order to achieve greater independence from governments. In this vein, within a decade, North African Central Banks have put in place a new institutional framework for their monetary policy. In this
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Modeling which Factors Impact Interest Rates Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Guizhou Wang, Kjell Hausken
The Taylor (1993) rule for determining interest rates is generalized to account for three additional variables: The money supply, money velocity, and the unemployment rate. Thus, five parameters, i.e. weights assigned to the deviation in the inflation rate, the deviation in real GDP (Gross Domestic Product), the deviation in money supply, the deviation in the money velocity, and the deviation in unemployment
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Importance of the Contingent Claims Analysis in Detecting Banking Risks: Evidence from the Greek Bank Crisis Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Constantinos Kyriakopoulos, Alexandros Koulis, Gerasimos Varvounis
In this paper we apply the Contingent Claims Analysis (CCA) to the banking sector in Greece with a particular focus on the years of the Greek debt crisis. Greece was selected primarily because its banking sector was hit hard due to the country’s government debt default and its large exposure to domestic loans. The results obtained on the SIB’s level and on the banking sector level gave us particular
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Does Credit Growth in the EMU Banking Sector Follow its Capital Adequacy?1 Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Draško Veselinovič, Janez Fabijan, Jaka Vadnjal
We put our hypothesis very straightforward, considering the euro area and the whole European Economic and Monetary Union (EMU) banking sector. The paper’s central hypothesis that capital adequacy of the EMU banking sector influenced credit growth and activities in the nonfinancial sector was confirmed; however, not entirely in all respects expected. We proved that, in general, there was a dependency
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Can Credit Related Macroprudential Instruments Be Effective in Reducing the Correlation Between Economic and Credit Growth? Cross-Country Evidence Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Mehmed Ganić
The study investigates effectiveness of selected credit related macro prudential instruments in reducing the correlation between economic and credit growth in European emerging countries between 2000 and 2017. Two GMM (Generalized Method of Moments) estimators are used to empirically investigate the validity of tightening policy actions. Although greater attention to MMPs is found in both European
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Does the Effectiveness of Monetary Policy Depend on the Choice of Policy Instrument? Empirical Evidence from South Korea Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Martha Cruz Zuniga, Dawit Senbet
This study provides robust evidence on how the choice of the policy instrument for monetary policy influences its impact on economic activity. We study the case of South Korea for the period 1980-2017. We use FAVAR models that allow a comprehensive exploration of different areas of economic activity by overcoming limitations on a number of variables that can be included in the analysis in a traditional
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Green Finance: Regulation and Instruments1 Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Vesna Martin
Green finance is the basis for the development of sustainable financing of environmental projects with the aim of respecting environmental and social aspects in making investment decisions. The development of green finance enables a green transition towards economic growth that will be sustainable in the long run because it is based on the principles of preserving the environment and reducing the risk
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Could the Issuance of CBDC Reduce the Likelihood of Banking Panic?1 Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Soraya Ben Souissi, Mahmoud Sami Nabi
This paper delves into the relationship between the issuance of Central Bank Digital Currencies (CBDC) and the likelihood of banking panic. The issuance of CBDC acts as a disturbing shock that incentivizes depositors to withdraw all/part of their deposits from the commercial banks, to swap it for CBDC which are offered by the central bank. We determine a variety of tools that central banks can use
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Does Central Bank Transparency Deter the Exchange Rate Volatility? New Evidence from Asian Emerging Markets Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Muhammad Aftab, Ahsan Mehmood
Exchange rate volatility has emerged as a significant challenge for Asian emerging markets since the adoption of the liberalization process. This study examines the influence of central bank transparency on exchange rate volatility using a sample of ten important Asian emerging markets. The study uses a fixed effect regression model covering the Asian financial crisis, global financial crisis, banking
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Demand for Cash and its Determinants - a Post-Crisis Approach1 Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Ilona Skibińska-Fabrowska
The use of cashless payment instruments has been on an increase over many years now. At the same time, demand for cash has been on the rise as well and we can observe a particularly high level of growth demand for banknotes during crisis times. The increase in demand for cash known as the “banknote paradox” is a phenomenon observed in many economies. It results from the existence of two streams of
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Project Management in Central Banks Journal of Central Banking Theory and Practice Pub Date : 2023-05-24 Milena Vučinić, Radoica Luburić
In this ever-changing environment of technological innovations central banks are strongly committed to fulfilling their key objectives of preserving monetary and financial stability, but also make efforts to adapt to new market requirements. On the path of technological transformation of financial systems, central banks face many challenges stemming from, inter alia, new less regulated and decentralized
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Testing the Factors that Determine the Profitability of Banks with a Dynamic Approach: Evidence from Turkey Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Mesut Doğan, Feyyaz Yildiz
The present study aims to identify the internal and external factors that affect the profitability of banks operating in Turkey. For this purpose, the study used data from 23 public, private, and foreign banks, covering the period from 2007 to 2020. Two dependent variables were used as the profitability indicators of banks, namely, the Return on Equity (ROE) and the Return on Assets (ROA). In order
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Are Gold and Bitcoin a Safe Haven for European Indices? Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Nikola Fabris, Milutin Ješić
Numerous turbulent events in the recent past have raised the issue of an asset that could play the role of safe haven. Although for many years it was considered that gold has the role of a safe haven, an increasing number of recent works challenge such a point of view. The emergence of cryptocurrencies after the Global financial crisis has opened up numerous questions, one of them being whether cryptocurrencies
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Revisiting of Interest Rate Channel: Nonlinear transmission of Monetary Policy Shocks to the Turkish Economy Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Durmus Cagri Yildirim, Tugba Turan
This study examines the effectiveness of non-linear monetary policy interest rate channel shocks for the Turkish economy using the threshold VAR analysis in the period of 2006-2019. The interest channel is examined with the two models for both consumption transfer and investment transfer models. The results show that the interest rate channel is effective in the high regime (high macroeconomic instability)
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Bank Regulation in the Selected Sub-Saharan African Countries: Dynamics and Trends Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Retselisitsoe I. Thamae, Nicholas M. Odhiambo, John M. Khumalo
This paper discusses the dynamics of bank regulation in the Sub-Saharan African (SSA) region during the period before the 1990s and post 1990s and describes the trends in bank regulatory measures between 1995 and 2017 using the updated databases of the World Bank’s Bank Regulation and Supervision Surveys. Before the 1990s, bank regulation in the majority of SSA countries was inadequate and that led
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Money Supply Determination Process for Japan Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Serdar Ongan, Ismet Gocer
This study re-investigates the money supply determination process for Japan. The methodology of this study, which differs from previous studies, is constructed on the assumption of potential nonlinear (asymmetric) relations between money supply and monetary base via money multiplier. To this aim, the nonlinear autoregressive distributed lag (ARDL) model by Shin, Yu and Greenwood-Nimmo, (2014) is applied
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Resilience and Path Dependency: Income Distribution Effects of GDP in Colombia Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Ahmet Faruk Aysan, Dilek Demirbas, Mustafa Disli, Monica Shirley Chaparro Parra
This study examines the effect of GDP per capita on the Gini index, which measures income concentration, in Colombia. The methodology used is an econometric analysis of time series with data extracted from the Inter-American Development Bank and the World Bank. The econometric results suggest that, at least during the period studied here, there is no evidence that GDP per capita has been an explanatory
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Effects of Exchange Rate, Output Gap, and Output Gap Volatility on Inflation Volatility in Turkey Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Mustafa Özer, Zoran Grubišić, Sevilay Küçüksakarya
This study first investigates the short and long-run effects of exchange rate, output gap and output gap volatility on inflation volatility in Turkey by using the ARDL bounds testing approach. Second, we also examine the causal relationship among these variables by using Toda-Yamamoto and frequency domain causality tests developed by Breitung and Candelon. The results of the ARDL estimates indicate
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Sustainability of the Currency Board in Bosnia and Herzegovina in the Conditions of a Negative Interest Rate on the Reserve Currency Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Rajko Tomaš
The Currency Board in Bosnia and Herzegovina (BiH) uses the euro as a reserve currency in the conditions of a negative nominal interest rate on deposits with the ECB. In this paper, we investigated the impact of negative interest rates on deposits and negative yields on bonds denominated in euro on the general advantages of the currency board and the consequences for the functioning of the currency
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Customer Satisfaction and Switching Intentions of Banking Services End-Users in Montenegro Journal of Central Banking Theory and Practice Pub Date : 2023-01-20 Milorad Jovović, Nikola Mišnić, Bojan Pejović, Marija Mijušković
Numerous research studies of the various companies’ business practices indicate a strong relationship between customer satisfaction, as an overall positive response generated after the use of the specific product or service, and their intention to continue using the products/services of the company. As a rule, satisfied and particularly delighted customers show intention to return and become loyal
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Impact of Reserve Option Mechanism on Exchange Rate Volatility During the FED’s Tapering Period Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Erkan Demirbas, Nurettin Can
This study investigates the effectiveness of ROM. We conducted the GARCH (1,1) Model to determine whether ROM contributed to decreasing the volatility of USD/TL exchange rate for the period 2013-2014. We construct four Models where four different variables are separately used that represent the ROM tool, i.e. the amount of FX reserves of CBRT via ROM, and the share of the FX reserves via ROM in Gross
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Determinants of Banks Profitability: An Evidence from GCC Countries Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Shoaib Khan
The research objective of the study is to investigate the determinants of profitability of banks’ operating in GCC (Gulf Cooperation Council) countries. The existing studies highlight the banks’ internal attributes and external factors that significantly influence profitability. The unbalanced panel data of 59 banks from the Bank scope database operating in six countries of GCC is used. Profitability
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Quantitative Easing and Macroeconomic Performance in the United States Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Inda Mulaahmetović
This scientific paper examines the relationship between macroeconomic variables whose performance is measured under the implementation of Quantitative Easing in the US, by estimating vector autoregression (VAR) and Impulse Response Function with monthly data from US Federal Reserve, observed during the period January 1994-January 2022. Variables include: Consumer Price Index (CPIAUCSL); Industrial
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Central Bank Digital Currency: Scenarios of Implementation and Potential Consequences for Monetary System Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Patryk Kaczmarek
Computerization of social life enabled market participants to search for new forms of electronic payments. The share of cash in total payments is systematically decreasing, which poses the risk of being supplanted by other instruments, including cryptocurrencies. Central banks, therefore, faced the challenge of adjusting their issuing activities to the current social and market conditions, which resulted
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Board Members’ Educational Background and Financial Performance: Evidence from Eurozone Banks Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Vítor Manuel Morais Pereira, José António Candeias Bonito Filipe
This study examines the impact of the quality of board members’ educational background on the financial performance of a group of Eurozone banks. Return on average assets (ROAA), Return on average equity (ROAE), and Tobin’s Q are used as measures to assess bank financial performance. Three indices are used as proxies for board members’ educational qualifications: Eduindex, for all academic qualifications
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Who Should You Listen to in a Crisis? Differences in Communication of Central Bank Policymakers Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Jonne Lehtimäki, Marianne Palmu
Communication has become a vital part of modern monetary policy, and its importance is even higher during a crisis when a central bank has to calm the markets down. This paper studies the information content of different styles of communication from individual central bank policymakers in the European Central Bank and the Federal Reserve during a period of very high economic uncertainty, and whether
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CEE EU Central Banks’ Policy during the First Wave of COVID-19 Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Magdalena Kozińska
Faced with COVID-19 crisis, central banks have once again become one of the key players in the economies. The aim of this article is to analyse the actions of Central and Eastern European central banks within all their roles (monetary policy, micro-and macroprudential policy, deposit guaranteeing and resolution) during the first coronavirus wave. The analysis shows that they were active in various
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Does the Phillips Curve Exist? Evidence from the Middle East and North African Countries Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Muhammad Azam, Rasheed Khan, Saleem Khan
This study aims to explore the validity of Phillips curve for eight (8) countries from the Middle East and North Africa (MENA), namely Algeria, Egypt, Jordan, Kuwait, Malta, Morocco, Saudi Arabia, and Tunisia over the period of 1991–2019. The panel autoregressive distributed lag/pooled mean group (ARDL/PMG) estimation is employed in the study because of the nature of data. The results of ARDL/PMG reveal
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Changes in Basel Capital Requirements and Lending Ability of African Commercial Banks Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Damilola Oyetade, Adefemi A. Obalade, Paul-Francois Muzindutsi
This research examines the potential impact of Basel IV capital requirements (CAR) on bank lending ability in Africa. To achieve the objective, the study simulated Basel IV capital ratio using historical data to create sample representative banks as if the selected banks had implemented Basel IV CAR for the period 2000 and 2018 and used actual data for existing Basel II and III CAR. Dynamic panel regression
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Interbank Network as a Channel of Credit Contagion in Banks: Is Moral Hazard Transferable? Journal of Central Banking Theory and Practice Pub Date : 2022-09-23 Željko Jović, Milena Lutovac Đaković
The objective of this research is to examine the inter-bank network of clients as a channel for credit risk transmission by groups of banks in Serbia characterized by different levels of credit risk (clusters). Two of the four observed groups of banks have experienced increase in NPLs through the channel of contagion spread in the interbank network. The spread of the infection through the banking network
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Bank-Specific and Macroeconomic Determinants of Bank Liquidity Creation: Evidence from MENA Countries Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Anas Alaoui Mdaghri,Lahsen Oubdi
Abstract This study measures liquidity creation within a sample of 153 banks operating in 12 Middle Eastern and North African (MENA) countries from 2008 to 2017. We found that these banks created a total of $461.32 billion in liquidity in 2017, approximately 1.51 times the total liquidity created in 2008, mainly driven by commercial banks in Gulf Cooperation Council (GCC) countries. We also conducted
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The Influence of Capital Requirement of Basel III Adoption on Banks’ Operating Efficiency: Evidence from U.S. Banks Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Gabriel A. Ogunmola,Fengsheng Chien,Ka Yin Chau,Li Li
Abstract The United States is recognized as the largest economic entity in the world and its financial system has developed steadily through the guidance of the Federal Reserve System for over one hundred years. However, in recent years, the global economic downturn, coupled with the global COVID-19 pandemic, has led to an unprecedented economic depression and rapid decline in the United States financial
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Evaluating the Role of the Exchange Rate in Monetary Policy Reaction Function of Advanced and Emerging Market Economies Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Nikola Fabris,Milena Lazić
Abstract The subject of this paper is the evaluation of monetary policy reaction function on panel data of 37 world economies, both advanced and emerging markets, during the period of 1995Q1 – 2018Q3. The paper aims to evaluate the role and importance of the exchange rate in monetary policy reaction function depending on the level of economic development. For this purpose, a relevant set of unbalanced
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Fintech, Risk-Based Thinking and Cyber Risk Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Milena Vučinić,Radoica Luburić
Abstract Financial technology innovations (Fintech) are changing the provision of traditional financial services. Although they bring with them various benefits and opportunities, they also have weaknesses and pose potential threats to financial systems. The paper examines the latest developments in the area of Fintech and outlines the potential benefits and associated risks. It highlights the vital
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An Application of Index Number Theory to Interest Rates: Evidence from Selected Post-Soviet Countries Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Karen Poghosyan,Ruben Poghosyan
Abstract In this paper, we use index number theory to decompose changes in total interest rate due to changes in the interest rate component and the weight component. We discuss the optimal calculation of a binary index using axiomatic index number theory. Based on this theory we compare alternative indexes and as a result, we choose the Marshall-Edgeworth index because most axioms are satisfied by
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The Model of a Shared Interest Rate for a Group of Countries to Circulate a Digital Currency: Featuring the BRICS Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Mikhail V. Zharikov
Abstract The purpose of the research is to offer a comparative analysis of a libertarian and gradual approach to introducing a market interest rate. The topic is time-relevant since the economies of the emerging markets today face difficult challenges posed by economic, financial and health-care crises, impending price stability, future growth and money market equilibrium. A digital currency is a special
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Gold as a Factor of Change in Central Bank Reserves in Periods of the Financial Markets Turbulence: the Case of Kazakhstan Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Vyacheslav Dodonov
Abstract The article examines the impact of changes in the gold part of the reserves of the National Bank of Kazakhstan on their total volume with an emphasis on the factor of changes in the price of gold. The value of the factor of the price of gold increases during periods of global financial crises when Kazakhstan, as an oil exporting country, is under strong pressure on the current account and
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Adoption of Cloud Services in Central Banks: Hindering Factors and the Recommendations for Way Forward Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Darell Edmond,Vijay Prakash,Lalit Garg,Seema Bawa
Abstract Current research on cloud computing often focuses on the technology itself and the benefits that one company can use and choose from cloud services. Most of the research has focused on mainstream enterprises and limited regard to Central Banks’ (CBs’) Cloud Computing Adoption (CCA). CBs are continually exploring opportunities to enhance IT efficacy while minimizing expenditures and ensuring
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Adaptive Early Warning Systems: An Axiomatic Approach Journal of Central Banking Theory and Practice Pub Date : 2022-04-30 Diptes C. P. Bhimjee
Abstract The U.S. Subprime Crisis and the subsequent Great Recession have highlighted a renewed interest in the proper design and implementation of Early Warning Systems (E.W.S.), in order to help deter the onset of subsequent extreme financial events, through the implementation of adequate crisis detection mechanisms. The present article describes the Adaptive Early Warning Systems (A.E.W.S.) axiomatic
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International Transmission of Conventional and Unconventional Monetary Policy and Financial Stress Shocks from the Euro Area to Russia Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Silvo Dajčman,Alenka Kavkler,Sergey Merzlyakov,Sergey E. Pekarski,Dejan Romih
Abstract This paper studies the international transmission of the euro area´s monetary policy and financial stress to Russia. The results show that financial stress in the euro area damages Russian economic activity and stock prices, but not its trade balance. The contractionary euro area monetary policy shock decreases Russian GDP, leads to real appreciation of the euro against the Russian rouble
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Market Power and Bank Profitability: Evidence from Montenegro and Serbia Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Zoran Grubišić,Sandra Kamenković,Tijana Kaličanin
Abstract This study investigates the relationship between profitability and market power in the banking sector using data from the financial reports of the banks that operated in Serbia and Montenegro, covering the period from the first quarter of 2010 to the last quarter of 2019. In order to investigate this relationship, determinants of bank profitability are split between internal and external.
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Ready or not? Constructing the Monetary Union Readiness Index Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Szilárd Erhart
Abstract While all EU Member States can join the group's monetary union, the euro area, some members are far more ready for the adoption and use of the single European currency. Here, we construct a new Monetary Union Readiness Index (MURI) for the EU Member States. The theoretical framework of the index is built on the economic theory of Optimal Currency Areas and EU regulations such as the Treaty
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Analysis of the Assets, Credits and Deposits Concentration within the Croatian Banking System based on Selected Concentration Indices Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Mihovil Anđelinović,Mihaela Milec,Ksenija Dumičić
Abstract This paper analyses the concentration of the banking system in Croatia and the impact of concentration on stability of the economic system as a whole over the period since 2002 to 2017. The level of concentration is usually related to the competitiveness of a particular sector, in this case the banking system, which affects the development and health of the country's entire economic system
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Role of Regulatory Governance in Financial Stability: A Comparison of High and Low Income Countries Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Saif Ullah,Sayed Irshad Hussain,Agha Amad Nabi,Khurram Ali Mubashir
Abstract This study explores the effect of regulatory governance on financial stability using cross-sectional data from 55 countries. The findings show that regulatory governance and various subcomponents of regulatory governance are positively correlated with financial stability in the selected countries. The results, based on the ordinary least square method, explain that the regulatory governance
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Central Bank Intervention in the Inflation Targeting Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Borivoje D. Krušković
Abstract This paper analyses the impact of central bank interventions in the inflation targeting regime. The results of empirical studies in this paper show if there is a shock of the exchange rate, which would lead to depreciation of the exchange rate, a central bank may decide to mush instability on the foreign exchange market with foreign exchange interventions, thereby preventing the sudden exchange
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The Credit Cycle and Measurement of the Natural Rate of Interest Journal of Central Banking Theory and Practice Pub Date : 2022-01-01 Elena Deryugina,Maria Guseva,Alexey Ponomarenko
Abstract We conduct a Monte Carlo experiment using an ad-hoc New Keynesian model and a tractable agent-based model to generate artificial credit cycle episodes. We show that fluctuations in the implicit measures of the natural rate of interest obtained using a conventional trivariate Kalman filter on these artificial datasets occur in the vicinity of credit cycle peaks without any underlying changes