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This paper seeks to answer whether the replacement of the Bahamas currency board by a central bank was a rational decision given the subsequent economic performance climate of the central bank and the Bahamian economy. The paper describes the currency board’s establishment; its switch from the pound sterling to the U.S. dollar as the anchor currency; and its replacement by a proto-central bank soon succeeded by the Central Bank of the Bahamas, which continues in existence today. Statements of the currency board from the Bahamas Gazette as well as other sources will help analyze the aforementioned periods and illustrate the effects each transition had on the economy. The paper will examine the later years of the currency board and test whether it behaved in an orthodox or unorthodox manner as well as exploring its relation to government finance.Keywords. Bahamas; Currency board.JEL. E59; N16; N26.

We provide the first spreadsheet data series and legislative history of note issue by the Commissioners of Currency, in Trinidad, and the Board of Commissioners of Currency, in Barbados. The paper assesses how orthodox the operations of these two currency boards were, analyzing both the legislation and statistics from their balance sheets. The two boards’ operations are compared in their structure and level of orthodoxy. There is also some limited discussion of the effects of the boards on the colonies’ economies. The paper makes the various balance sheet data available in machine-readable form for the first time, in a companion spreadsheet workbook.Keywords. Trinidad and Tobago; Barbados; Currency board.JEL. A10; E59; N16.

This essay examines the Malayan Currency Board from its formation in 1938 to its dissolution in 1967. It analyzes the orthodoxy of the board using high-frequency data, such as monthly statistics of currency notes in circulation. Accompanying the essay is a spreadsheet workbook which presents high-frequency data of the board in digital format for the first time, as well as balance sheets and other financial statements.Keywords. Brunei; Malaya; Malaysia; North borneo; Sarawak; Straits settlements; Singapore; Currency board.JEL. E59; N25; N26.

Trotz der von der EZB eingeleiteten "Zinswende" in der zweiten Jahreshälfte 2022 als späte Reaktion auf die deutlich unterschätzte Persistenz hoher Inflationsraten im Euroraum sind die Realzinsen sowohl in der ex post Betrachtung als auch in der ex ante Betrachtung keineswegs als restriktiv einzuschätzen. Die Banken haben allerdings recht rasch strengere Vergaberichtlinien beschlossen, und die Nachfrage im Wohnungsbau und bei den Hypothekarkrediten ist stark eingebrochen. Der Beitrag thematisiert vor diesem Hintergrund die Bedeutung von Zahlungsstromeffekten bei Annuitätenkrediten und analysiert hier vor allem den sog. front loading Effekt. Danach führen höhere Nominalzinsen selbst bei vollständig antizipierten Inflationsraten und unveränderten Realzinsen zu starken finanziellen Zusatzbelastungen in den ersten Phasen der typischerweise langen Kreditlaufzeit. Derartige Liquiditätseffekte können die Zahlungsfähigkeit bzw. die Zahlungsbereitschaft der privaten Investoren empfindlich verringern. Dies gilt vor allem bei Darlehen in Form der Prozentannuität, da hier zusätzlich ein Laufzeitenverkürzungseffekt auftritt. Solche Darlehen sind in Deutschland recht populär. Mit Blick auf die Zukunft besteht auch eine reale Gefahr für den Bestand an Wohnungsbaukrediten, wenn es zu einer Refinanzierung des großen Bestands an billigen Wohnungsbaukrediten kommt, ein Risiko, das auch Auswirkungen auf die makroökonomische und finanzielle Stabilität hat. Despite the ECB's turnaround in its interest rate policy in the second half of 2022 as a late reaction to the highly underrated persistence of high inflation rates in the Euro area real longer run market rates cannot be judged as restrictive neither in the ex post nor in the ex ante view. Nevertheless, bank lending provisions became tighter and both, the demand for housing investments and mortgage loans, went down sharply. Against this background our paper points to the significance of cash flow effects in the case of the widely used annuity loans in housing finance and above all emphasises the role of the so-called front loading phenomenon. From this point of view higher nominal market rates have the capacity to trigger strong extra financing burdens to housing investors in the first phases of the credit life, even in the case of fully anticipated inflation rates and unchanged real rates. Such liquidity effects put much pressure on the solvency or the willingness to pay. This is especially true for loans in the form of a percentage annuity, as an additional maturity shortening effect occurs here. Such loans are quite popular in Germany. Looking ahead, there is also a real threat to the stock of housing loans when it comes to a refinancing of the big stock of cheap housing-related credit, a risk, that also bears macroeconomic and financial stability implications.

The late 1940s to the 1960s featured a sustained debate about currency boards in underdeveloped (or, in today’s parlance, developing) economies and their desirability compared to the alternative of central banking. Critics of currency boards found fault with them for the foregone cost of their “idle reserves,” their implied deflationary bias, their lack of discretionary monetary policy, and their lack of a lender of last resort, among other things. Defenders of the currency board system argued that the criticisms were either incorrect or irrelevant. After carefully reviewing the debate, I opine on it, coming down mainly on the side of the defenders of currency boards.Keywords. Currency board; Debate.JEL. B27, E59, F33, N10.

It is common practice in data envelopment analysis to assess commercial banks by the efficiency that they display in their operations under different outlooks on their behaviour; yet, even the intermediation approach does not measure actually the success with which commercial banks or a banking sector fulfil their mission of financial intermediaries. Such an assessment is traditionally accomplished by means of the loan-to-deposit ratio that captures rather size or depth of financial intermediation, but no link is sought to best practices that are observed in the banking sector. The paper proposes a model of financial intermediation that permits assessing on a comparative basis the attainment in financial intermediation. The devised index of financial intermediation recognizes through weights that diverse outcomes of financial intermediation exhibit differentiated importance to the economy and is closely connected with the weighted slacks-based measure (WSBM). The WSBM that emerges in this respect encompasses only production variables that define financial intermediation (i.e. deposits and intermediated outputs) whilst other production variables are treated as non-discretionary. The model can be applied in variants for a single commercial bank in one specific year (Model I) or for aggregated bank-years such as one particular bank over the entire period or various banks in one year (Model II). The ideas are demonstrated on a data set of Slovak commercial banks for the period between 2008 and 2016 and the difference of the proposed approach with traditional efficiency measurement under the intermediation approach is discussed.

هدف از این تحقیق بررسی تأثیر مدل رفتاری مبتنی‌بر هدف در توصیف پس‌انداز قرض‌الحسنه در بانکداری اسلامی بوده است. این تحقیق ازنظر هدف، پژوهشی کاربردی و در دسته تحقیق­های عِلی قرار دارد. جامعه موردپژوهش شامل مشتریان بانک قرض‌الحسنه مهر ایران در شهر اراک بوده که برای سنجش وضعیت موجود از پرسشنامه24 سؤالی استفاده شد. همچنین برای طراحی پرسشنامه از پژوهش ستیوبودی و دیگران (2016) استفاده‌شده است که پس از تأیید روایی و پایایی جهت جمع‌آوری داده‌ها مورداستفاده قرار گرفت. در این تحقیق برای بررسی روابط بین اجزاء مدل از معادلات ساختاری و از نرم­افزار لیزرل برای تجزیه­و­تحلیل فرضیه­ها استفاده گردید و با توجه به تجزیه‌و‌تحلیل داده‌ها نتایج نشان داد که نگرش، پیش‌بینی احساسات مثبت و هنجارهای ذهنی بر تمایل مشتری و قصد رفتاری مشتری به پس‌انداز قرض‌الحسنه تأثیر مثبت دارد، همچنین تمایل مشتری به پس‌انداز قرض‌الحسنه بر قصد رفتاری مشتری به پس‌انداز قرض‌الحسنه تأثیر مثبت دارد. همین‌طور پیش‌بینی احساسات منفی بر تمایل مشتری به پس‌انداز قرض‌الحسنه تأثیر منفی ندارد و نگرش، پیش‌بینی احساسات مثبت و هنجارهای ذهنی از طریق تمایل به پس‌انداز قرض‌الحسنه بر قصد رفتاری مشتری تأثیر دارد، ولی پیش‌بینی احساسات منفی از طریق تمایل به پس‌انداز قرض‌الحسنه بر قصد رفتاری مشتری تأثیر ندارد.

Are local complementary currencies doomed? We analyse the conditions underlying the existence of these alternative monetary arrangements from the perspective of the two-sided platform theory. Considering their benefits to depend on the cross-externality generated by the presence of buyers and sellers using the alternative means of payment, we show that the possibility of the sustainability of such arrangements is weak. The result is established in a very general setting and with few restrictions on the parameters. Except in the presence of subsidies, the odds are low for local complementary currencies to survive.

The concept of settlement balances is simple in its definition but complex when attempting to understand how they interplay between a central bank and the financial system. Settlement balances can be defined as interest-bearing deposits that belong to participants of Canada’s payment system and that are an integral part of the high-value payment system. In response to the economic shock caused by the COVID-19 pandemic, the Bank of Canada undertook a range of extraordinary policy actions to provide exceptional liquidity to support the economy and ensure a stable and efficient Canadian financial system. The Bank’s extraordinary policy actions led to a rapid increase in the Bank’s asset holdings, followed by a corresponding increase in liabilities—mostly in the form of settlement balances. In fact, settlement balances grew by more than 1,500 times their pre-pandemic amount. The significant increase in settlement balances has piqued public interest; people want to better understand them. More specifically, people want to explore how settlement balances are created and the Bank’s role in that process, and what effects elevated levels can have on the Bank’s balance sheet and the financial system more broadly. This paper deconstructs settlement balances into four key concepts. It also provides historical context, explores the current state of settlement balances at the Bank of Canada, explains the factors that will influence their future evolution, and looks at the regulatory impacts of some of the actions taken. This work seeks to broaden the public’s understanding of the Bank’s role in promoting a safe and stable financial system in Canada., Le concept de soldes de règlement est simple, par définition, mais complexe lorsqu’on tente de comprendre leur interaction avec la banque centrale et le système financier. Les soldes de règlement peuvent être définis comme des dépôts productifs d’intérêt détenus par des participants au système de paiement du Canada et qui sont partie intégrante du système de paiements de grande valeur. En réaction au choc économique causé par la pandémie de COVID-19, la Banque du Canada a pris une gamme de mesures extraordinaires visant à fournir des liquidités exceptionnelles pour soutenir l’économie et assurer la stabilité et l’efficience du système financier canadien. Ces mesures ont conduit à une hausse rapide des actifs de la Banque, suivie d’une augmentation correspondante des passifs – principalement sous la forme de soldes de règlement. En fait, le montant des soldes de règlement est plus de 1 500 fois supérieur à ce qu’il était avant la pandémie. La hausse considérable des soldes de règlement a suscité l’intérêt du public : la population veut mieux comprendre ce que sont les soldes de règlement. Plus précisément, elle veut saisir comment les soldes de règlement sont créés et le rôle de la Banque à cet égard, ainsi que les effets du niveau élevé des soldes sur le bilan de la Banque et le système financier en général. Le présent document décompose les soldes de règlement en quatre grands concepts. De plus, il retrace le contexte historique, analyse les soldes de règlement actuels à la Banque du Canada, explique les facteurs qui influenceront leur évolution future et étudie l’impact sur la réglementation de certaines des mesures prises. L’objectif est de mieux faire comprendre au public le rôle joué par la Banque dans la promotion d’un système financier canadien fiable et stable.

This study aims to assess whether or not the presence of credit bureaus is associated with more or fewer financing constraints while considering the interfering effect of corruption in a sample of 18 countries in Eastern Europe and the Middle East and North Africa (MENA) region during the period 2011-2014. We consider various financial constraint measures and corruption indices, and assess the stability of the relationship for different levels of economic development and corruption. The estimation outcomes suggest that countries with higher levels of corruption might produce less transparent and falsified information that would make access to sources of financing more difficult for firms. Our findings suggest that curbing corruption creates more efficient credit bureaus that, in turn, decrease financial constraints for firms. The subsample estimations confirm these findings and show that the higher and longer-term corruption in MENA countries than in Eastern European countries make credit bureaus' less effective, imposing more financial constraints. Our findings remain robust with different corruption indices and with the addition of new control variables such as firms' sales and size, government and exporting firms, and per-capita GDP, inflation, trade, population and human capital. 2022 Economic Research Forum. Scopus

In this paper, the author explores the balance sheet of the Exchange Stabilization Fund (ESF) over its first 85 years as a lens though which to analyze the fund. An accompanying spreadsheet workbook provides data from the annual balance sheet of the ESF since the fund’s inception in 1934. These data are available in electronic form for the first time, which will be of interest to those wishing to do quantitative analyses of its role in U.S. monetary policy.Keywords. Exchange Stabilization Fund (ESF), Balance sheet, Assets, Liabilities, Gold, Foreign exchange intervention.JEL. E52, E59, N12.

This study examines the relationship between bank credits and performance and growth of manufacturing sub-sectors. Industrial Production Index was used for a different approach as a dependent variable. Indications of the autoregressive distributed lag (ARDL) bound co-integration test support the theory that bank credits are more effective than loan rates on industrial production of sub-sectors. Moreover, the increase in bank credit leads to the rise of industrial production in all the sub-sectors, except Machinery. According to the Toda Yomamato causality test results, there are different degrees of causalities in means of the importance of bank loans for industrial production. On the other hand, in all sub-sectors except machinery and chemical sub-sectors, causality relations were observed at different grades beginning from loan interest rates to industrial production. As a result, this study concludes with the evidence of supply leading hypothesis via the financial sector leads and causes economic growth.

This study aims to analyse how the monetary policies of the Republic of North Macedonia and the Republic of Albania, as one of the two critical macroeconomic policies, have reacted in response to COVID-19 for the year 2020. Last year, the year 2020, the pandemic caused these two countries to react through monetary policy. This research examines how central banks of both countries have changed traditional monetary policy tools for tackling the pandemic, starting with open market operations, required reserve ratio, the overnight loans interest rate, and the available deposits interest rate. The research continues with analyzing whether they were used and what non-traditional tools were applied in that period. The study analysis concludes which monetary policies have been pursued in the Republic of North Macedonia and the Republic of Albania, whether there have been non-traditional tools and how the scope for interbank interest rate volatility has changed. Our study revealed that both countries had pursued an expansive monetary policy, there were also non-traditional tools, and the scope for interbank interest rate volatility has shifted towards narrowing. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

In order to understand why there is a continuous increase in euro banknote circulation even though the use of cash for transactions is decreasing in the euro area - a phenomenon known as the paradox of banknotes - the members of the Overseas workstream of the Eurosystem Research Network on Cash (EURECA) have conducted a study on the foreign demand for euro banknotes. The results of this study are based on desk research using data collected in the Eurosystem and from other organisations, and using both proven and innovative techniques.

Purpose: The purpose of this paper is to formulate a multiple regression model by considering those factors which are positively affecting the growth of Micro, Small and Medium Enterprises (MSMEs) in India. Methodology: The data used in this study are primary in nature which are collected through questionnaire method. The questionnaire involves the nature and size of business and opinion of the owners and managers of 454 MSMEs in Katihar district, a semi-urban area of Bihar in India, regarding the various favourable factors of digital banking on a Likert scale of 1 to 10. Findings: The findings of the study suggest the various favourable factors of digital banking with significant coefficients i.e. Level of Easiness in accepting payments, Level of Easiness in making payments, Level of Easiness in Managing the expenditure of Business, Level of Time Saving, and Level of Check on Misappropriation or Theft of Cash are contributing towards the growth of MSMEs in India. Research Implications: This research will be helpful to the bank managers and policy makers to encourage the MSMEs of semi-urban areas to use digital banking by stressing on only significant favourable factors and also to take necessary steps so that the MSMEs could reap the full benefits of digital banking. The study could give a new insight regarding the extent of contribution of digital banking towards the growth of MSMEs in rural and semi-urban area.

This study analyses the current debate around central bank-backed digital currency (CBDC). A comparative study was carried out considering countries for and against implementing a CBDC and their reasons, looking for common causes, differences, etc. The conclusion was that there are opposite tendencies between defenders and detractors of establishing a CBDC. However, today&mdash, and taking into account the positions of three large banking institutions (the Federal Reserve of the United States of America, the Bank of Japan and the Bank of England) on establishing (at least in the short term) a CBDC)&mdash, it seems that large-scale implementation is still far off. On the contrary, the Chinese Central Bank and banking systems of other countries that have less weight in the world, such as Uruguay, Lithuania and the Bahamas, seem to go against the trend of rejection and are seriously considering its implementation. Although this matter has been dealt with in the theoretical field, more pilot tests such as the one carried out by Uruguay are necessary in order to understand specific effects on the economy, on one hand, and on acceptance of its use by the population, on the other.

This study investigates the impact of the COVID-19 pandemic on banking sector profitability in Uganda for the period spanning Q1 2000 to Q1 2021, using the autoregressive distributed lag (ARDL Bound) testing approach to co-integration while controlling for bank specific and macroeconomic determinants of bank profitability. Bank profitability is proxied by return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study finds that the COVID 19 pandemic has a significant negative effect on bank profitability only in the long run. Generally, the explanatory variables used in the study have short run and long run effects on bank profitability, although the impact is not uniform across the different measures of bank profitability. In the short run, bank profitability is generally negatively and significantly affected by the non-performing loans ratio, liquidity ratio, and market sensitivity risk, while the Treasury Bill interest rate and lending rate have a significant positive effect on bank profitability. In addition, the study finds that bank profitability has a tendency to persist in the short run, although persistence is only moderate, suggesting that the Ugandan banking sector may not have large deviations from a perfectly competitive market structure. In the long run, bank profitability is broadly positively and significantly affected by the non-performing loan ratio;, real GDP, lending rate and Treasury Bill interest rate while market sensitivity risk and the exchange rate significantly and negatively affect bank profitability. Surprisingly, the study finds inflation does not significantly affect bank profitability over both the short- and long-term.

Purpose– A major lesson of the European Monetary Union crisis is that serious disequilibria in a monetary union result from arrangements not designed to be robust to a variety of shocks. With the specter of this crisis looming substantially and scarring existing monetary zones, the purpose of this paper is to complement existing literature by analyzing the effects of monetary policy on economic activity (output and prices) in the CEMAC and UEMOA CFA franc zones.Design/methodology/approach– VARs within the frameworks of Vector Error-Correction Models and Granger causality models are used to estimate the long- and short-run effects, respectively. Impulse response functions are further used to assess the tendencies of significant Granger causality findings. A battery of robustness checks are also employed to ensure consistency in the specifications and results.Findings–H1. monetary policy variables affect prices in the long-run but not in the short-run in the CFA zones (broadly untrue). This invalidity is more pronounced in CEMAC (relative to all monetary policy variables) than in UEMOA (with regard to financial dynamics of activity and size).H2. monetary policy variables influence output in the short-term but not in the long-run in the CFA zones. First, the absence of cointegration among real output and the monetary policy variables in both zones confirm the neutrality of money in the long term. With the exception of overall money supply, the significant effect of money on output in the short-run is more relevant in the UEMOA zone, than in the CEMAC zone in which only financial system efficiency and financial activity are significant.Practical implications– First, compared to the CEMAC region, the UEMOA zone’s monetary authority has more policy instruments for offsetting output shocks but fewer instruments for the management of short-run inflation. Second, the CEMAC region is more inclined to non-traditional policy regimes while the UEMOA zone dances more to the tune of traditional discretionary monetary policy arrangements. A wide range of policy implications are discussed. Inter alia: implications for the long-run neutrality of money and business cycles; implications for credit expansions and inflationary tendencies; implications of the findings to the ongoing debate; country-specific implications and measures of fighting surplus liquidity.Originality/value– The paper’s originality is reflected by the use of monetary policy variables, notably money supply, bank and financial credits, which have not been previously used, to investigate their impact on the outputs of economic activities, namely, real GDP output and inflation, in developing country monetary unions.