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This article investigates liquidity risk management by banks, which has gained significant importance since the global financial crisis of 2008. The issue is of particular interest for countries like Poland, in which foreign capital plays a dominant role. Such an ownership structure poses certain risks to the local banking sector, which faces an increased probability of the withdrawal of funding or assets’ transfers abroad in case of a crisis. Both these factors can have a detrimental influence on the liquidity position of foreign-owned banks and hence negatively affect the financial stability of the whole banking sector. The aim of this study is to evaluate the impact of a dominating share of foreign investors in the Polish banking sector on the liquidity position of commercial banks. The study hypothesizes that the ownership structure of the Polish banking sector, in which there are banks predominantly controlled by foreign investors, does not pose a threat to the liquidity position of Polish banks. A supplementary research hypothesis is that the liquidity risk profile of foreign-owned banks differs from that of domestic banks. The sample consists of 14 foreign-owned banks and 5 domestic banks owned by local investors, which together constitute approximately 87% of the banking sector’s assets. The data covers the period of 2004–2014. The results of the regression models show no evidence of significant differences in terms of the dynamics of changes of the liquidity buffers between the foreign-owned and domestic banks, although the signs of the coefficients might suggest that the foreign-owned banks were decreasing the holdings of liquid assets at a slower pace over the examined period, compared to the domestic banks. However, no proof of the statistical significance of these findings has been found. The supplementary research hypothesis that the liquidity risk profile of foreign-controlled banks differs from that of domestic banks was rejected., {"references":["A. Kotowicz, Raport o sytuacji banków w 2015 r., Urząd Komisji Nadzoru Finansowego, Warszawa 2016.","http://www.nbp.pl/en/statystyka/czasowe_dwn/nalez_zobow_banki_en.zip, accessed on 25.07.2016.","O. Havrylchyk, The effect of foreign bank presence on firm entry and exit in transition economies, \"Journal of Banking & Finance\", 36, 2012, pp. 1710-1721.","H. Degryse, O. Havrylchyk, E. Jurzyk, S. Kozak, Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland, \"Journal of Banking & Finance\", 36, 2012, pp. 2949-2959.","J. Wu, A. C. Luca, B. N. Jeon, Foreign bank penetration and the lending channel in emerging economies: Evidence from bank-level panel data, \"Journal of International Money and Finance\", 30, 2011, pp. 1128-1156.","O. Müller, A. Uhde, Cross-border bank lending: Empirical evidence on new determinants from OECD banking markets, \"Journal of International Financial Markets, Institutions & Money\", 23, 2013, pp. 136-162.","W. Althammer, W. Haselmann, Explaining foreign bank entrance in emerging markets, \"Journal of Comperative Economics\", 39, 2011, pp. 486-498.","S-H Chen, C-C Liao, Are foreign banks more profitable than domestic banks? Home- and host-country effects of banking market structure, governance, and supervision, \"Journal of Banking & Finance\", 35, 2011, pp. 819-839.","Y. Xu, Towards a more accurate measure of foreign banking entry and its impact on domestic banking performance: The case of China, \"Journal of Banking & Finance\", 35, 2011, pp. 886-901.\n[10]\tR. Lensik, N. Hermes, The short-term effects of foreign bank entry on domestic bank behaviour: Does economic development matter?, \"Journal of Banking & Finance\", 28, 2004, pp. 553-568.\n[11]\tM. C. V. Manlagñit, The economic effects of foreign banks presence: Evidence from the Philippines, \"Journal of International Money and Finance\", 30, 2011, pp. 1180-1194.\n[12]\tN. van Horen, Foreign banking in developing countries; origin matters, \"Emerging Markets Review\", 8, 2007, pp. 81-105.\n[13]\tS. Claessens, N. van Horen, Being a foreigner among domestic banks: Asset or Liability?, \"Journal of Banking & Finance\", 36, 2012, pp. 1276-1290.\n[14]\tT. Poghosyan, Re-examining the impact of foreign bank participation on interest margins in emerging markets, \"Emerging Markets Review\", 11, 2010, pp. 390-403.\n[15]\tE. Detragiache, P. Gupta, Foreign banks in emerging market crises: Evidence from Malaysia, \"Journal of Financial Stability\", 2, 2007, pp. 217-242.\n[16]\tB. N. Jeon, M. P. Olivero, J. Wu, Multinational banking and the international transmission of financial shocks: Evidence from foreign bank subsidiaries, \"Journal of Banking & Finance\", 37, 2013, pp. 952-972.\n[17]\tV. Dinger, Do foreign-owned banks affect banking system liquidity risk?, \"Journal of Comparative Economics\", 37, 2009, pp. 647-657.\n[18]\tN. Konovalova, M. Kudlinska,M. Rozgina,E. Zelgagve, Problems of imbalanced liquidity in Latvian commercial banks and possible solutions, \"Journal of Business Management\", Issue 1, 2008, pp. 102-118.\n[19]\tO. Aspachs, E. Nier, M. Tiesset, Liquidity, banking regulatuion and the macroeconomy. Evidence on bank liquidity holdings from a panel of UK-resident banks, unpublished manuscript, BIS, 2005, source: www.bis.org/bcbs/events/rtf05AspachsNierTiesset.pdf, (accessed: 01.07.2016).\n[20]\tC. Deléchat, C. Henao, P. Muthoora, S. Vtyurina, The Determinants of Banks' Liquidity Buffers in Central America, Working Paper, International Monetary Fund, December 2012.\n[21]\tM. Pawłowska, D. Serwa, S. Zajączkowski, International transmission of liquidity shocks between parent banks and their affiliates: the host country perspective, \"NBP Working Paper\" No. 172, Warszawa 2014.\n[22]\tD. Kwiatkowski, P. C. B. Phillips, P. Schmidt and Y. Shin, Testing the null hypothesis of stationarity against the alternative of a unit root, \"Journal of Econometrics\" 54, 1992, pp. 159-178.\n[23]\tCommission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for credit institutions, Official journal of the European Union, L11, 17 January 2015.\n[24]\tG. C. Chow, Tests of equality between sets of coefficients in two linear regressions, \"Econometrica\", Vol. 28, 3 (July 1960)."]}

Thesis aim of this draft background note is to provide public debt managers with an overview of the matters that need to be considered by debt management offices planning to provide a securities lending facility to their primary dealers.

This note discusses the stress tests that were carried out on Moldova’s banking system as part of the 2014 financial sector assessment program (FSAP) update. The objective of this exercise was to assess the resilience of the banking system to major sources of risk. The stress tests were conducted in collaboration with the National Bank of Moldova (NBM), and complement other approaches, such as the analysis of financial indicators and the assessment of the quality of supervision. The stress tests focused on the banking system and covered all 14 banks operating in the country. Four macroeconomic scenarios were considered in the financial stability assessment. The stress tests include a comprehensive assessment of risk factors. Potential credit risk losses on the loan book represent the most important risk factor for the banking system. The stress tests also assessed the liquidity in foreign currency, and yielded similar results. However, there are a couple of banks whose ability to meet the liquidity norms is based on relatively large-scale cross-border interbank placements, and there are some doubts about the genuine liquidity of these positions. This note is structured as follows: section one gives executive summary; section two presents a brief description of the banking sector in Moldova and stress test coverage; section three describes the macroeconomic scenarios used in the stress tests; section four details the different methodologies used in the solvency stress tests; section five describes the liquidity stress tests; and section six concludes.

This paper provides a more thorough empirical examination of the development and determinants of the liquidity position in the financial sector during the last financial crisis in the Baltic-Nordic region, which takes into consideration the whole economic cycle. The current study serves as an extension to an ex-ante study which was made in 2010. We look at fiscal and monetary policy implications of the liquidity problems arising in the crisis and stabilization process after that. The results show that the changes (and the speed of changes) of interest rates, GDP and money supply have occurred relatively fast, meaning that the rising area of the LM curve has been shorter than theory would predict. Market reactions took place quickly and simultaneously – there was no time for the slow restructuring, thus liquidity needs were higher than generally.

For many years, microfinance has been the poster child of governments, policymakers, and international organizations with the goal of lifting millions of people out of poverty. The notion that microfinance can pursue and achieve the intertwined goals of development and financial profitability without friction predominated. This dual opportunity, combined with a huge untapped market for financial services at the bottom of the pyramid attracted large amounts of funding from international capital markets, triggering unprecedented levels of growth. Until the global financial crisis, the sustainability of the resulting market growth had not been significantly questioned. As the crisis unfolded during the end of 2007, there seemed to be consensus among microfinance practitioners, analysts, and other industry experts that this crisis will be different. The microfinance industry braced itself for anticipated liquidity crunches, increase in costs of funds, and foreign exchange, as well as a sharp rise in portfolio arrears. This paper will: review recent publications that have drawn conclusions on the effects of the global financial crisis based on empirical data research; draw the conclusion that proper governance and risk management systems are essential and can have avoided many of the problems specific microfinance institutions (MFIs) faced during the financial crisis; and highlight Basel framework sections relevant to MFIs and demonstrate how these can be applied to strengthen MFIs.

The global financial crisis of 2008-2009 required most sovereign debt managers to adapt to rapidly changing market circumstances, by changing the mix of borrowing instruments and adopting techniques that minimize the impact of severe market dislocations and increased risk aversion. These actions, allied to prudent macroeconomic and debt management policies implemented by government in the years preceding the crises, were critical in helping countries meet their financing needs without undue strain on the financial markets. This toolkit draws on the approaches taken by a range of countries and provides sovereign debt policy makers with a rich set of potential actions to address crisis periods. A practical illustration on the use of some of these actions is conducted by analyzing the measures taken by Romania, Serbia and Turkey as a response to the recent crises. Authors draw lessons from these experiences and examine what other measures included in the toolkit could have been used to boost the crisis response impact in these economies, respecting country-specific contexts.

This article provides an empirical examination of the development and determinants of the liquidity position in the financial sector during the past financial crises in the Baltic-Scandinavian region. We look at fiscal and monetary policy implications of the liquidity problems arising in the crisis, using panel data from Datastream and IFS data collection. The results are consistent with the theoretical predictions for a small open economy with the expected sign of changes and developments in common economic indicators. The main finding is that the changes (and the speed of changes) of interest rates, GDP and money supply have occurred relatively fast, meaning that the rising area of the LM-curve has been shorter than theory would predict. Market reactions took place quickly and relatively simultaneously – there was no time for the slow restructuring, thus liquidity needs were higher than generally. The impact of crises on the liquidity position of the financial sector is also studied., Estonian Discussions on Economic Policy, Vol 18 (2010)

Early in the year, as the global economy was slowing and the euro area entered a recession, Russia's economy held steady. But now, as 2012 is entering its final quarter, growth is slowing. Just at a time when Russia's output levels have exceeded the pre-crisis peak, the economy is settling onto a lower trajectory, even though oil prices have stayed high. But let us start with the strong points. The economy had a good first half of the year. While growth was stalling in Europe and slowing in other emerging economies, it remained steady in Russia. Key economic indicators were near or at record levels: the current account surplus stayed high and the Central Bank of Russia added to its reserves, helping to bolster market confidence. Capital outflows, long regarded as one of the soft spots of Russia's economy, declined in the second and third quarters of 2012 from the peaks in the previous two quarters. Whereas many countries in Europe are struggling with large public debt and high fiscal deficits, Russia's federal government public debt is close to single digit and the fiscal balance is in surplus. Inflation and unemployment rates declined to their lowest level in two decades. As people's purchasing power improved and more people had jobs, fewer people were in poverty than at any time since the beginning of the economic transition. A challenging external environment and worsening sentiments among businesses and consumers translate into weak growth prospects. Excluding the crisis years of 1998 and 2009, growth in 2012 is set to decline to its lowest rate in a decade and a half. And 2013 is unlikely to look much better. The weak outlook means that strong, three-pronged policy action is essential to reinvigorate the economy. First, economic policies have to ensure stability. The recent tightening in monetary policy was an important step in this direction. Second, Russia has to build buffers against the external volatility. This means replenishing the reserve fund, moving towards inflation targeting and strengthening banking supervision. Finally, the government has to lift the growth potential of the economy. This means raising productivity and competitiveness, diversifying the economy, and improving transport connectivity, as discussed in the last section of this report, in line with its longer-term economic policy goals. Making headway on this agenda will enable Russia to lift growth above 4 percent and more.

With this Cameroon economic update, the World Bank is pursuing a program of short, crisp and frequent country economic reports. These economic updates provide an analysis of the trends and constraints in Cameroon's economic development. Each issue, produced bi-annually, provides an update of recent economic developments, as well as a special focus on a topical issue. The economic updates aim to share knowledge and stimulate debate among those interested in improving the economic management of Cameroon and unleashing its enormous potential. This fourth issue of the Cameroon economic update is entitled 'stepping out into the world a special focus on trade facilitation'. It reviews the challenges and opportunities related to trade facilitation in Cameroon. The coverage is not meant to be exhaustive, but puts an emphasis on particular areas that would require the country's sustained attention: a transformative trade facilitation agenda around which all stakeholders could be mobilized.

People's Bank of China (PBC) has carried out a major and comprehensive reform of the China National Payments System (CNPS). The PBC implemented the China National Advanced Payment System (CNAPS), which consists of the High-Value Payment System (HVPS) and the Bulk Electronic Payment System (BEPS). The HVPS system currently operates in a tiered way with a national processing center (NPC) and 32 local processing centers (LCPs). The HVPS system is interconnected to many trading, payments, and securities settlement systems (SSS) to allow for central bank money settlement. In addition, there is numerous cheque clearing houses around the country administered by the PBC local offices or delegated to banks. China Union Pay (CUP) handles the clearance of cards transactions whose balances are settled in the HVPS. Also automated clearinghouses (ACHs) and other systems handle clearance and settlement for a variety of payment instruments. The HVPS is a systemically important payment system, as it is the backbone of the national payments system in China. The HVPS handled transactions for a value of CY 804 trillion in 2009, approximately 24 times the Gross Domestic Product (GDP) value. Thus, the HVPS is being assessed against the ten Core Principles for Systemically Important Payment Systems (CPSIPS) of the Committee for Payment and Settlement Systems (CPSS) and the four responsibilities of the central banks in applying the CPSIPS. The BEPS is not currently a systemically important payment system. However, its importance for an efficient settlement of the interbank payment system is growing. The present document is the assessment of the systemically important payment systems in the People's Republic of China (PRC) based on the CPSS CPSIPS. The document also contains an analysis of some developmental issues related to the reform of the payments system as a whole. The assessment was conducted in the context of the first field mission of the Financial Sector Assessment Program (FSAP) to the PRC (June 2010).

With this Cameroon economic update, the World Bank is pursuing a program of short, crisp and frequent country economic reports. These economic updates provide an analysis of the trends and constraints in Cameroon's economic development. Each issue, produced bi-annually, provides an update of recent economic developments as well as a special focus on a topical issue. The economic updates aim to share knowledge and stimulate debate among those interested in improving the economic management of Cameroon and unleashing its enormous potential. The notes thereby offer another voice on economic issues in Cameroon, and an additional platform for engagement, learning and change.

These economic updates analyze the trends and constraints in Cameroon's economic development. Each issue, produced bi-annually, provides an update of recent economic developments as well as a special focus on a selected topical issue. The economic updates aim to share knowledge and stimulate debate among those interested in improving the economic management of Cameroon and unleashing its enormous potential. The notes thereby offer another voice on economic issues in Cameroon, and an additional platform for engagement, learning and change. The latest information confirms the expected recovery in economic activity in Cameroon. The upturn in the global economy and measures taken by the authorities to stimulate domestic production, real gross domestic product (GDP) growth in 2010 is estimated to have reached 3.2 percent (compared to 2 percent in 2009). As expected, most of this recovery was driven by the tertiary sector, which accounted for more than half of the estimated growth. The sector benefitted from a pick-up in timber-related transport and continued strong activities in mobile telephony stemming from a greater use of fiber optic, promotional campaigns during the Soccer World Cup, and the roll-out of new products. The recovery in the primary sector, with an estimated growth rate of about 4 percent in 2010, was led by a strong expansion in the timber sector, as well as in food crops. The non-oil secondary sector, meanwhile, is also estimated to have grown by about 4 percent, driven by a continued pick-up in construction activities and a rebound in food processing. Cameroon is a relatively small and mature oil producer, where oil production is declining. Depleting reserves, aging equipment, and more recently postponements of some development projects and investments because of the financial crisis explain this profile. The contribution of this sector to GDP growth has been mostly negative in recent years and oil production is estimated to have contracted by a further 12 percent in 2010 (to 23.2 million barrels).

Russia has seen even higher oil windfall in the past few months, which translates into likely fiscal surpluses this year and next. The government should not miss the opportunity provided by a large oil windfall to substantially improve its long-term fiscal position, further reduce inflation, and, therefore, ensure a strong basis for durable stability and healthy growth in the future. Rising domestic demand and credit activity are increasingly supporting solid growth. Overall, labor market conditions improved recently while poverty was broadly flat during and after the crisis, but unemployment and poverty in many regions remain difficult. Further reductions in poverty will require greater policy focus and persistence in implementing more effective and targeted programs, especially in the poorest regions. Two new special-topic analyses focus on export diversification in Russia, and food and energy inflation in Europe and Central Asia region. In the first, results show that productivity is the key to exports and that lack of competition and entrepreneurial innovation are relevant obstacles to the emergence of new, potentially exportable products. In the second, it is shown that food and energy prices in Russia and other countries in Europe and Central Asia are contributing significantly to consumer price inflation, complicating anti-inflation policy and poverty reduction.

The current edition of the Rwanda economic update is titled seeds for higher growth and specially features the agriculture sector. The importance of agriculture's contribution to growth in Rwanda remains considerable, despite the emergence of other significant growth drivers, such as services. Rwanda's agriculture sector will play an essential role in attaining the country's development vision of sustainable growth and increased poverty reduction, due to its employment weight. The agriculture feature of this update edition outlines key channels through which agriculture contributes to the economy. The second part of the update provides the regular overview of recent macroeconomic developments. While the special feature on agriculture will analyze the evolving role of the sector over the past five years, the second part on recent economic developments will focus on events during 2010.

The Lao PDR has been a one-party, socialist state since the overthrow of the monarchy by the communist Pathet Lao in 1975, which was preceded by a long period of civil and regional strife. After a decade of relative isolation and close military cooperation with Vietnam, the new economic mechanism, introduced in 1986, ushered in an era of market-based reforms, which has continued to the present day. Lao PDR is one of the poorest countries in East Asia, with a 2006 per capita income of US$ 500. In 2004, 71 percent of its population of 5.7 million lived on less than US$ 2/day and 23 percent on less than US$ 1/day. However Lao PDR has grown rapidly since the inauguration of reforms two decades ago. During the 1990s growth averaged 6 percent per annum despite severe imbalances during the Asian crisis. Following successful stabilization, growth continued to average close to 6 percent during 2001-2004, accelerating in 2005-2007 to over 7 percent. Inflation remained well below 10 percent since 2005. Although Lao PDR qualifies for the Heavily Indebted Poor Countries (HIPC) initiative, the Government has chosen to maintain normal creditor relations. The latest debt sustainability analysis confirms that, while risk of debt distress is high, medium term debt service is manageable, contingent on continued reform and prudent fiscal management. Foreign direct investment has almost quadrupled between 2004 and 2007, and exceeds US$ 800 million annually, mostly in hydropower and mining. Growth in Lao PDR has been pro-poor. Based on the national poverty line, the poverty headcount has fallen from almost half to one-third of the population during the decade ending in 2002-2003. The country's performance on other elements of poverty reduction as summarized in the millennium development goals is mixed.

Розроблено методичне забезпечення аналізу ліквідності банку з метою ранньої діагностики та локалізації можливих загроз. The article deals with the research of the bank liquidity complex analysis methodology. Necessity of the bank liquidity complex analysis is proved. It is offered to distribute the analysis depending on directions of bank liquidity management: in the conditions of stability and in the conditions of crisis. It is defined, that an obligatory condition of a bank liquidity management efficiency is implementation of traditional and crisis tools of its liquidity analysis.

The Serbian insurance sector remains small and underdeveloped. Over the last three years, the market experienced very little growth in real terms mainly due to weak economic growth, premium payment difficulties in the industrial sector, which forced many corporate policyholders to cancel their insurance, and fierce price competition among the growing number of players. With consumption of 76 Pounds and 10 Pounds per capita for non-life and life insurance, respectively, Serbia lags behind most of its neighbors in Southeastern and Central Europe. In 2009 the industry accounted for only 4.6 percent of total assets and 5.6 percent of total capital in the Serbian financial sector. Although in 2008 the total gross premium written (GPW) for both life and non-life was SRD 52.2 billion (dinars), representing a 5.3 percent annual inflation-adjusted increase over the previous year, in 2009 the sector is likely to experience an 8 percent contraction due to the impact of the economic crisis.

У сучасних умовах, коли криза захопила всю фінансову систему, спостерігається погіршення платіжної позиції банків. Якщо раніше у банківській діяльності головним ризиком вважався кредитний, то в даний час все більшої уваги приділяють ризику ліквідності. Відповідно, управління ліквідністю являється не просто складовою банківського менеджменту, а його пріоритетним напрямком.

The Asian financial crisis in the late 1990s not only highlighted the welfare consequences of transparency in the financial sector but also linked this relatively narrow problem to the broader context of transparency in governance. It has been observed that objections to transparency, often on flimsy pretexts, are common even in industrialized countries. This article argues that transparency is indispensable to the financial sector and describes its desirable characteristics: access, timeliness, relevance, and quality. The authors emphasize the need to weigh the costs and benefits of a more transparent regulatory policy, and they explore the connection between information imperfections, macroeconomic policy, and questions of risk. The article argues for developing institutional infrastructure, standards, and accounting practices that promote transparency, implementing incentives for disclosure and establishing regulations to minimize the perverse incentives generated by safety net arrangements, such as deposit insurance. Because institutional development is gradual, the authors contend that relatively simple regulations, such as limits on credit expansion, may be the most reasonable option for developing countries. They show that transparency has absolute limits because of the lack of adequate enforcement and argue that adequate enforcement may be predicated on broader reforms in the public sector.