Transparenz und Forward Guidance: Stimulierung der Volkswirtschaft in der Eurozone?

The author delivers details on whether and how the effectiveness of the ECB’s policies can be improved through more transparency and “forward guidance”. Is publishing the minutes of Council meetings really a good idea? How should we assess the publication of the details of who has voted (and in what way) in the meetings? Is the ECB plagued by deficiencies in transparency, with an eye on the bank’s steadily growing responsibilities? Should the ECB stick to the instrument of “forward guidance” even beyond the crisis period? How predictable and assessable can and must monetary policy be? Can central banks endowed with too much guidance become a source of volatility? The ECB will adopt banking surveillance in the euro area: do particular transparency and accountability obligations result from this? And if yes, how can they be fulfilled? Finally, the author assesses the limits of the transparency and communication of central banks.     

We need to talk about strategy: How to conduct effective strategic dialogue

As researchers and consultants, we have spent the last few years helping a dozen major public and private organizations understand what went wrong with their strategic planning. We discovered that executives have a hard time with strategy because they are at a loss when the time comes to engage in strategic dialogue. Either their teams debate the organization’s values and goals when such issues should be settled, or they waste time on the details of specific projects that have yet to receive the green light. But whether the conversation is too broad or too narrow, strategy stays out of view. Drawing on recent developments in strategy-as-practice and decision-making literature, we propose a model that executives can follow to take control of strategy meetings and keep their teams on track. We ask them to focus on the right decision purpose, adjust the meeting’s communication style, and cast the right leader for the job. When these three simple rules are followed, the pillars of successful dialogue are aligned, and executives can finally talk about what matters most to them: strategy.     

Die aktuelle Kritik an der makroökonomischen Geldtheorie

There is no universal agreement on what money actually is. Money is created and used by the modern bank system, which can be split into the central bank, the commercial banks and the remaining sector of households, companies and states. The article focuses on bank deposits, which are created by commercial banks themselves. Bank deposits count as money in a modern economy such as Germany, where the bulk of money held by the public is in the form of deposits with banks. The other part is currency — bank notes and coins. Not accessible to the public (with some exceptions) are central bank reserves held by commercial banks with the central bank. There are two main problems which are currently being discussed by the Deutsche Bundesbank and by some more or less academic authors. First, what kind of relationship exists between base money (currency and reserves) and bank deposits? This relationship plays a crucial role in controlling and steering inflation and investment. Second, are banks lending the savings of their customers to other customers? This relationship is a cornerstone of the money multiplier theory. The answers to these two questions are not as trivial as they seem to be. Textbooks are of no help because they are the targets of the criticism made by central bank authors.     

Determinants of Federal Reserve lending to failed banks

Many of the banks that failed in the years 1985–1990 borrowed from the Federal Reserve for extended periods in their last year. This article tests hypotheses about the determinants of borrowings by banks that failed in these years. Results are consistent with the hypothesis that borrowings were greatest among the banks with the greatest liquidity needs in their last year. They do not support the hypothesis that the Fed favored member banks in its allocation of credit to troubled banks. The results indicate significant variation in lending practices across Federal Reserve districts, and there is weaker evidence of variation in lending practices across time.The rate of bank failure in the second half of the 1980s and early 1990s was high relative to failure rates in earlier decades. Many of the failed banks borrowed from the Federal Reserve for extended periods in their last year. Of the sample of failed banks in this study, 58% borrowed at some time in their last year, and 48% borrowed in their last three months. In most cases, the Federal Reserve would have been aware of the financial problems of these banks when lending to them, based on the supervisory ratings of the condition of the banks.Congress acted in 1991 to restrict Federal Reserve lending to undercapitalized banks, in the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). These restrictions were based on the view that Federal Reserve lending to undercapitalized banks increased the losses of the FDIC in bank failure cases.There was a lot of variation among the borrowers in terms of the length of time they borrowed and average borrowings relative to their total deposits. This variation makes it possible to test hypotheses about the borrowings of these banks near the time of their failure. One hypothesis is that the Federal Reserve made credit available to the troubled banks with the greatest liquidity needs. Banks with liquidity needs have exhausted most of their liquid assets, must draw down reserves to pay depositors who are withdrawing funds, and cannot raise funds in the private sector. Fed lending to the troubled banks with the greatest liquidity needs would have given supervisors time to determine which banks to close and the methods for resolving the failed bank cases.¹ Another hypothesis is that variation among the banks in the patterns of their borrowings reflected preferences of the Fed to aid some banks rather than others, such as banks that were members of the Federal Reserve System. Yet another hypothesis is that the variation in patterns of borrowings reflected differences in Fed practices across districts and across time in lending to troubled banks.Tests of these hypotheses do not indicate whether the practice of Federal Reserve lending to troubled banks was good policy.² These tests, however, may shed light on the factors that motivated the Fed to lend to troubled banks.     

From Increasing Gas Efficiency to Enhancing Creativity: It Pays to Go Green

What are the common denominators for success when we consider increasing gas efficiency and enhancing creativity in organizations? As an analogy, the principles of increasing gas efficiency are applicable to enhancing creativity in organizations: Plan activities in advance, allocate sufficient time, resources, and set a SMART goal with clear priority and focus. Identify talent in ourselves and others and do not fall into the temptation of following others. Big ideas take time. Maintain momentum, avoid interruptions, incorporate new technologies, information, and feedback, and modify action to achieve goals. We have 100% control of our thoughts and action. Stop idling, take action, and do it now. If everyone contributes just a little, the cumulative effect over time can be huge. If we have the knowledge, skills, and abilities (KSA) for doing the right things that will benefit humanity and the whole world, but fail to do them, is this ethical? We, the managers, need to focus on what we have done and what we have failed to do, change our thinking, change our behavior, and accomplish our goals.     

Financial Hub？Be Patient!

In 2009, the central government confirmed the strategic sig- nificance of Shanghai as an international financial center. Until now, Shanghai＇s financial cluster has attracted more and more foreign banks to establish roots in Shanghai, which has contribut- ed to their rapid development in recent years.     

From conventional to unconventional monetary policies: The failure of the market‐maker of last resort

This paper analyses the new role of market‐maker of last resort openly assumed by central banks since the 2008 financial crisis revealed the increasing impact of noninterest‐income activities on banks' balance sheets. A brief review of the distinction between conventional and unconventional monetary policies shows that the inflexion point from lender of last resort to market‐maker of last resort is given by the extension of central bank intervention to other markets than the bank reserves markets. Herein, it is explained how the market‐maker of last resort role is as counterproductive as its predecessor in putting the economy back on track. We show that the main problem of both conventional and unconventional monetary policies is that they distort price signals, particularly asset prices, in their attempt to reignite economic growth. Instead of correcting cyclical fluctuations, the policies of the market‐maker of last resort prevent the cyclical divergences between financial and goods sectors from readjusting.     

The Impact of the Multinational in the Development: An Ethical Challenge

Multinational enterprises have continued their increase during the last decades. What these companies do and how they do, determines not only the economic development of countries, but also their social and cultural development. This enormous power implies responsibility and new challenges.If we also take into account the role of multinational enterprises in what has been called sustainable development, we see that their importance is still more decisive.In order to guide the performances of multinational enterprises that operate in developing countries, several supranational organizations like the ILO, the OECD, the EU and the UN have elaborated some recommendations to unify criteria and to set out some minimum standards to favor an integral development of these countries. In this document we present three of those with the greatest impact and we analyze them from the approach of an ethical sustainable human development.     

浅谈当前中国城市商业银行的发展思路

中国城市商业银行历经十几年的发展,已成为现代商业银行体系中最具生机和活力的一分子。当前,城市商业银行正处于改革发展的关键时期,应抓住机遇,在对自身准确定位的基础上,及时发现自己的不足,并积极寻求解决之道,不断进行自我完善和发展,迎接更大的挑战。     

Lessons from the Financial Crisis: New Rules for Central Banks and Credit Rating Agencies?

The US mortgage crisis, which has spiralled into what is now seen as the most serious global financial upheaval since the 1930s, has provoked criticism of the Federal Reserve for its failure to recognise, and act on, the real estate bubble. Credit rating agencies, too, have come under heavy fire for having actively contributed to the present crisis. Should central banks pay special attention to, and try to influence, the development of asset prices? Is statutory regulation of rating agencies required? If so, what form should it take? Is the European Commission’s recently issued draft up to its purpose?     

Do banks loan money?

There is an obvious and important difference between bank loans and typical personal loans, viz., that banks charge interest in order to make a profit. Accordingly, what banks do is more accurately described as selling or renting money than as loaning money. Moreover, it is advantageous to banks misleadingly to describe their activity as loaning. For this assimilates their activity to the case of personal loans and helps to create an impression that banks do us a favor by loaning us money and that we owe them gratitude for so doing. Since these impressions are false, banks ought cease to describe what they do in this way.     

Herausforderungen der geldpolitischen Kommunikation

Since many of the most important central banks have pushed their policy rates close to the zero lower bound and have also stretched their quantitative easing measures close to their limits, central bank communication is currently the most important policy tool to influence market expectations. But, if it is such an important tool, what should an optimal communication design look like? Which aspects are important and what are the limitations of this tool? The article revisits these questions in the light of the role of monetary policy in the recent financial crisis.     

Der Transmissionsmechanismus der Geldpolitik

Despite heavily expansionary monetary policy, lending in the euro area has not increased noticeably in the last few years. This paper examines the banking lending channel as a transmission mechanism of monetary policy, and comes to the conclusion that banks have sufficient liquidity at their disposal, but mainly due to higher credit risks and tighter regulatory requirements do not use their liquidity for further lending. To make things worse, these obstacles have an even stronger effect in the peripheral countries, where lending needs to be boosted in particular, than in the core countries of the eurozone.     

Social Investing: Mainstream or Backwater?

Social investing, though not yet fully mainstream, has the potential to obtain such status. Questions relating to the future of social investing include the following. (1) What properly falls within the ambit of social investing? Assuming that no single definition of social responsibility is feasible, what then are the limits? (2) What do we need to know about investor psychology concerning social investing? What motivates people to buy socially screened investments and why do they sometimes act inconsistently? (3) How can we improve the measures of social performance? Is it possible to develop GAAP and GAAS equivalents for social reporting? (4) Should social reports by firms be audited? If so, how? (5) What sorts of public policies are necessary to support the social screening of investments?     

For your eyes only: U.S. technology companies,sovereign states,and the battle over data protection

Who owns an individual's electronic communications data, who should have access to it, and what can be done with it? The battle of privacy versus security is currently raging between U.S. technology companies and national security forces. U.S. technology companies are adopting corporate foreign policies to respond to sovereign states’ efforts to access customer data, which could change and possibly even destroy their business models. This article discusses the struggles faced by these companies and the policies influencing the possible outcome, as will be determined in the European Union within the next few years.     

Business policy,ethics and society

This section will cover (a) definition of business policy: strategic decisions in the enterprise; (b) ethical behaviour above and beyond the requirements of the law: what might this involve e.g. in respect of products and markets in which the business is prepared to operate? (c) does business have a responsibility towards ‘society’? For example, should businesses decide without being legally required to do so, to undertake activities which they think are in the national interest even if this may appear to conflict with strictly commercial interests? (d) if ethical/social decisions are required, who is to make them — at what levels of an enterprise — e.g. does the board make them all or are they also expected below board level? This section will also cover: (e) practical examples in the light of changing attitudes towards business and market behaviour in the 1980's and 1990's; (f) implications of attitudes towards corporate crime and of behaviour which may not be illegal but which may be regarded as ‘unacceptable’: this will be discussed with examples from experience in Australia and other countries. The section will first explain the meaning of the phrase ‘business policy’ and will briefly outline the kinds of strategic decision which have to be made in business enterprises. It will go on to consider whether there are things a business ‘ought’ or ‘ought not’ to do even if they are within the law. The section will illustrate these problems with examples in the light of changing attitudes towards business policy and market behaviour in the 1980's and 1990's. It will take into account some recent cases of corporate crime in Australia and elsewhere and also of behaviour which while neither against the law or outside the power of the board, might be thought ‘inappropriate’.     

Underpinning the benefits of green banking: A comparative study between Islamic and conventional banks in Bangladesh

This study aims to compare environmental motives and performance of conventional and Islamic banks in Bangladesh. Green compliance index was developed based on the Bangladesh Bank (the central bank of Bangladesh) guidelines whereas information regarding governance variables is collected from the annual reports of 9 Islamic and 31 conventional banks. Results show Islamic banks are more environmentally friendly compared to their conventional counterparts. Board size is negatively related to green compliance whereas board independence and auditor's type do not have any significant influence on green compliance for both clusters of banks. Compliance with green banking policies enhances the reputation for Islamic banks and accountability and profitability for conventional banks. Results of this study provide useful information for regulatory authorities to formulate policies that are conducive to enhance bank's environmental performance.     

The Motivation of Entrepreneurs: Are Employed Managers and Self-employed Owners Different?

Are managers entrepreneurs? What motivates them to run a firm? Are managers different from self-employed firm owners? In which points do they differ? And why is it that they are different? The following article examines these questions based on a survey of German engineering firms in which managers and self-employed owners answer why they are motivated to run a firm and what hinders their firms from growing more rapidly.     

Innovations in the international financial markets

The appearance of the international financial markets is changing rapidly; new instruments are constantly being hatched and marketed, often with considerable success. However, the ingenuity of the markets does not always meet with applause; the banking supervisory authorities and central banks view the rapid pace of innovation with concern and the banking community also displays occasional unease. On balance, do the positive aspects outweigh the negative ones?     

Banking and the Real Economy

Ed Clark discusses the importance of banking in the real economy, the weakening of trust of banks on the part of the public, and what banks must do to reclaim that trust. In particular, he cites the need for adequate capitalization and the need for cultural change within banking. There must be a shift back to a focus on the needs of customers rather than the potential gains from casino-like activity. He also discusses changes that have taken place in technology and operating practices in basic banking to provide better service to customers. He expresses a need for more informed bank regulation to avoid asset bubbles.