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Welcome to the Central Bank Insider Archives. We are pleased to be able to provide you with this intimate look at central banking events, policies, and staff. Commentary is updated as available (generally bi-weekly) and archived monthly. The source commentary "Newsmakers" is reprinted at USAGOLD with permission and by courtesy of Central Banking Publications Ltd.
29 January 2001
WHAT'S NEW AT CENTRAL BANKING
* Launch of Centralbanknet.com
* Risk Management For Central Bankers
* Governors On The Record
NEWS THIS WEEK
* ECB rates on hold
for now, Fed moves key - Welteke
* Fraga says US slowdown will have no major impact on Brazil
* Mexico Ortiz sees 2001 inflation 6.5% despite VAT
* Riksbank new board member is economist, ex-MEP
* Macedonia central bank intervenes to prop denar
* Cyprus angered at Yugo claim on Milosevic cash
* Czech house wants cbank aim cut from constitution
* RBNZ Brash -Svensson report due 'within next few weeks'
* Iceland cbank intervenes anew as crown falls more
* Greenspan suprises with support for Bush tax cuts
* Eichel plans to strengthen role of Buba president
* Lithuanian cbank okays draft bill for litas repeg
* ...and Reinoldijus Sarkinas reappointed
* Indonesia plans talks with IMF, World Bank
* BoJ Gov dismissed worries over financial stability
* IMF welcomes Sri Lankan rupee free float
* Bank of Israel posts $1.6bn excess expense in 2000
* UK's MPC voted 5-4 to leave rates steady in Jan
* Jakarta court to decide Feb 1 on cbank head's case
* Bank of Russia forms internet regulation division
* Sylvia Piterman leaves Bank of Israel
ARTICLES OF THE WEEK
* Chile: Inflation targeting
conference papers
* Central Bank of Bosnia and Herzegovina newsletter
* Compilation of seigniorage article
* Glossary of payment system terminology
* Core principles for payment systems up for comment
**************************************
WHAT'S NEW!
**************************************
Launch of Centralbanknet.com
Central Banking Publications
is lauching an internet news service for central banks at http://www.centralbanknet.com
- as well as daily news on central banks emailed to your desktop,
there will be reviews of all the latest academic papers related
to central banking and financial regulation, an events page to
keep you informed of conferences and meetings, a forum to ask
questions....and lots, lots more. If you are interested, please
take a look at the website or send me an email. There are special
subscription rates for central banks.
**************************************
Risk Management for Central Bankers
Central Banking Publications
has published a new book on risk management in central banks,
with a foreword by ECB vice president Christian Noyer. There are
numerous articles by key central bankers and market practitioners:
Carlos Bernadell & Ciaran Rogers from the ECB, Richard Allen
from the Bank of England, Amporn Sangmanee & Jarumanee Raegkhum
from the Bank of Thailand, Roberto de Beaufort from the Central
Bank of Colombia, Jennifer Johnson-Calari from the World Bank,
Brian Quinn former head of banking supervision at the Bank of
England, Robert Lindley at the CPSS at the BIS, Christian Mulder
at the IMF and many more. The book also has full contact details
of those central bankers responsible for risk management (including
email addresses).
To find out more, click on
http://www.centralbanking.co.uk/publications/directories/rmcb.htm
**************************************
Governors on the Record
Another new book just out published
by Central Banking Publications is "Governors on the Record".
The worldís most important and influential central bank
governors and financial statesmen have granted in-depth on-the-record
interviews to Central Banking journal, presenting a unique picture
of their current thinking. For the first time these 33 interviews
are gathered into a single collection. Includes Jean-Claude Trichet,
Joseph Yam, Hans Meyer, Paul Volcker, Sir Eddie George, Ernest
Welteke and Tommaso Padoa-Schioppa.
To find out more, click on:
http://www.centralbanking.co.uk/publications/books/governors.htm
**************************************
NEWS THIS WEEK
**************************************
ECB rates on hold for now, Fed moves key - Welteke
The European Central Bank's
interest rate policy is on hold for the time being, though another
sharp cut from the U.S. Federal Reserve would force European policymakers
to carefully assess their stance, Bundesbank President ECB board
member Ernst Welteke said January 26. "There are no signals
yet that we should change our monetary policy," told reporters
on the margins of the World Economic Forum in Davos.
26-January-2001
**************************************
Fraga says US slowdown will have no major impact on Brazil
A slowdown in the U.S. economy
won't have a major impact on Brazil, in part because of the diversity
of Brazil's export markets, central bank governor Arminio Fraga
said Jan. 26. "Scenarios of economic deceleration, without
a major crisis or anything extreme, are manageable for us,"
Fraga told reporters on the margins of the World Economic Forum
in Davos, adding that the chances of such a crash are "very
improbable."
26-January-2001
**************************************
Mexico Ortiz sees 2001 inflation 6.5% despite VAT
Official Mexican inflation targets
for 2001 won't be changed whatever the impact of a value-added
tax to be imposed shortly on certain goods, central bank governor
Guillermo Ortiz said Jan. 26, 2001. Mexico is to impose VAT on
food and medicines by an unknown amount, but this won't deflect
from the central bank's goal of keeping inflation "as close
as possible to...or below" 6.5%, Ortiz said. "The Bank
of Mexico will make sure that this (tax increase) will not translate
into higher inflation expectations," Ortiz said on the margins
of the World Economic Forum in Davos.
26-January-2001
**************************************
Riksbank new board member is economist, ex-MEP
Kristina Persson, an economist
and former MEP, was appointed on Jan. 26, 2001, to fill a vacant
seat on the Swedish Riksbank central bank's seven-member board
of governors, which sets monetary policy, the bank said. Persson,
55, who has worked at the finance ministry and been a member of
both the Swedish and European Parliaments for the Social Democrats,
was elected for a period of six years starting February 2001,
the Riksbank said in a statement.
26-January-2001
**************************************
Macedonia central bank intervenes to prop denar
The National Bank of Macedonia
(NBM) said on Jan. 26, 2001, it will begin intervention on the
domestic foreign exchange market, selling marks to meet surging
demand which has eroded the national currency, the denar. "The
denar came under pressure from rising foreign currency demand,
which banks and exchange bureaux are unable to meet now. The central
bank must intervene to stop the fall of the denar," a central
bank official said.
26-January-2001
**************************************
Cyprus angered at Yugo claim on Milosevic cash
One-time Serbian ally Cyprus
on Jan. 26 angrily rejected assertions that it was not co-operating
with inquiries to track down funds siphoned overseas by former
Yugoslav president Slobodan Milosevic. Cypriot Foreign Minister
Ioannis Cassoulides said he had instructed his ambassador in Belgrade
to lodge a protest over comments made by Yugoslavian central bank
governor Mladjan Dinkic. Dinkic had on Jan. 25 said Switzerland,
Greece and Cyprus were not co-operating with inquiries to trace
secret accounts held by the former Yugoslav president, whose former
employers Beogradska Banka were once one of the largest offshore
banks on the island.
26-January-2001
**************************************
Czech house wants cbank aim cut from constitution
The lower house of the Czech
parliament agreed on Jan. 26, 2001, to cut the central bank's
policy aim out of the constitution, a part of a wider revamp of
central bank laws by the country's two main parties. But the constitutional
amendment is expected to be killed in the upper house, the Senate,
where parties supporting it are far short of the needed 60 percent
majority. The amendment was pushed through by the ruling Social
Democrats and their parliamentary allies, the Civic Democrats,
with 123 votes to 35 in the lower house.
26-January-2001
**************************************
RBNZ Brash -Svensson report due 'within next few weeks'
A New Zealand government-appointed
independent review into the country's monetary policy making will
publish its findings within a few weeks, Reserve Bank Governor
Don Brash said on Jan. 26, 2001. The review is being conducted
by Lars Svensson, professor of international economics at Stockholm
University's Institute for International Economic Studies. Brash
was speaking to a Christchurch business audience. One aspect of
the current monetary policy framework, which featured strongly
in submissions to Svensson's review, Brash said, relates to the
way in which the Reserve Bank Act places all monetary policy decision-making
in the hands of the governor. That means the question of the appropriate
decision-making structure is likely to feature prominently in
the forthcoming report, he said.
26-January-2001
**************************************
Iceland cbank intervenes anew as crown falls more
Iceland's central bank said
on Jan. 25 it intervened in the local foreign exchange market
for the second day in a row, buying one billion Icelandic crowns
($11.51 million) to halt the crown's recent slide.
25-January-2001
**************************************
Greenspan suprises with support for Bush tax cuts
Federal Reserve Board Chairman Alan Greenspan delivered some surprising support for President George W. Bush's call for a $1.6 trillion tax cut, saying tax cuts will benefit the economy in the long run. "In today's context, where tax reduction appears required in any event over the next several years..., starting that process sooner rather than later likely would help smooth the transition to longer-term fiscal balance," Mr. Greenspan said in remarks before the Senate Budget Committee.
25-January-2001
*************************************
Eichel plans to strengthen role of Buba president
German Finance Minister Hans
Eichel Jan. 25 presented his proposal for streamlining the Deutsche
Bundesbank, aimed at strengthening the position of the bank's
president at the expense of the nine regional bank heads. But
likely opposition to the plans in the upper house of parliament
suggests a protracted legislative process that could still add
some changes to the reform proposal.
25-January-2001
**************************************
Lithuanian cbank okays draft bill for litas repeg
Lithuania's central bank said
on Jan. 25 its board approved a draft amendment to law aimed at
clearing the path for a
shift in the litas currency's peg to the euro from the dollar without devaluation. "The main
goal of this amendment is to ... give Lithuania the opportunity
to choose the euro as an anchor currency and to do this process
without devaluation or revaluation of the litas," the bank
said in a statement.
25-January-2001
**************************************
...and governor Reinoldijus Sarkinas reappointed
In a separate move, the Lithuanian
parliament voted Jan. 23 to appoint Reinoldijus Sarkinas for a
second five-year term as the governor of the central Bank of Lithuania.
His new term begins on Feb. 15, 2001. The motion passed with 74
votes in favour, no votes against and two abstentions. Lithuania's
President Valdas Adamkus has said he decided to re-nominate Sarkinas,
54, as central bank governor in order to maintain the stability
of the state's financial system. The central bank has had five
governors since Lithuania regained its independence from Moscow
in 1990. Sarkinas, formerly a finance minister, so far has been
the only governor to serve the full term of five years.
23-January-2001
**************************************
Indonesia plans talks with IMF, World Bank
Indonesia will hold talks with
top IMF and World bank officials during the World Economic Forum
(WEF) in Davos to determine if it can secure funds to help prop
up its shattered economy. Chief economics minister Rizal Ramli
is due to meet World Bank chief James Wolfensohn and IMF first
deputy managing director Stanley Fischer to discuss a $400 million
loan which was held back in December 2000 because of the slow
pace of economic reform.
25-January-2001
**************************************
BoJ Gov dismissed worries over financial stability
Bank of Japan Governor Masaru
Hayami has downplayed concerns that the country's financial stability
could be put at risk by falling stock prices. Speaking on Jan.
25 at the Upper House audit committee, the central bank chief
said, "there is no need to be alarmed that worries over the
financial system will arise before the March 2001 fiscal year-end."
25-January-2001
**************************************
IMF welcomes Sri Lankan rupee free float
The International Monetary Fund
Jan. 24 welcomed Sri Lanka's free float of the local currency, saying the exchange rate could now be determined more freely
by market forces. "The
new exchange rate arrangement is in keeping with the broader reform
agenda of Sri Lanka to develop a more open, market-based economy," a statement from the IMF said.
24-January-2001
**************************************
Bank of Israel posts $1.6bn excess expense in 2000
The Bank of Israel said on Jan.
24 its expenses exceeded income by 6.7 billion shekels ($1.6 billion)
in 2000 compared with an 8.7 billion shekel deficit in 1999. "This
was the result of two main factors: The first, an excess of 3
billion shekels in interest expenses, compared with an excess
of 5.2 billion in 1999," the central bank said in a statement.
"The second factor is a loss of 3.7 billion shekels on exchange
rate differentials, compared with 3.5 billion shekels in 1999,
as a result of the shekel's appreciation," the statement
said.
24-January-2001
**************************************
UK's MPC voted 5-4 to leave rates steady in Jan
Britain's central bank was split almost down the middle over
whether to cut interest rates this month, with five of the nine
members voting to leave rates steady at 6.0 percent while four
wanted to lower borrowing costs. The Bank of England's chief economist
Charles Bean, along with external member Christopher Allsopp,
joined the two members - Sushil Wadhwani and DeAnne Julius - who
had voted for a cut last month.
24-January-2001
**************************************
Jakarta court to decide Feb 1 on cbank head's case
Indonesia's Central Jakarta
Court said on Jan. 24 it would decide next week whether to continue
the corruption trial of central bank governor Syahril Sabirin.
Sabirin has labelled absurd the accusations which link him to
a long-running scandal over huge fees paid to a politically well-connected
bank to collect loans for a major local bank.
24-January-2001
**************************************
Bank of Russia forms internet regulation division
In preparation for regulating
banking operations on the Internet, the Bank of Russia has created
a special division within its department for monitoring banks.
Bankers have greeted this news enthusiastically, with the hope
that the new division will establish clear rules of the game and
foster the growth of a new form of banking services. Alexei Simanovsky,
head of the central bank's monitoring department, told reporters
last week that the new division should study banking services
offered on the Internet and develop standards for those operations.
24-January-2001
**************************************
Sylvia Piterman leaves Bank of Israel
Sylvia Piterman, who has worked
at the Bank of Israel for over 25 years, and almost 10 of those
years as Director of the Foreign Currency Department, will be
leaving the bank in the very near future. Following her departure
Mr. Barry Topf will become Acting Director and will assume all
her responsibilities. Mr Topf has worked with Ms Piterman for
many years and a smooth and quick transition is expected.
22-January-2001
**************************************
ARTICLES OF THE WEEK
**************************************
Chile: Inflation targeting conference papers
Central Bank of Chile held its
Fourth Annual Conference from November 30-December 1 2000. The
topic was "10 Years of Inflation Targeting: Design, Performance,
Challenges". This Conference had the participation of leading
economists such as Bennet McCallum, Frederick Mishkin, Ben Bernanke
and Jacob Frenkel (among others), as well as participants from
central banks all around the world. All the speeches can be downloaded
from the central bank website
http://www.bcentral.cl/Estudios/Conferencias/2000/i2000.htm
http://www.bcentral.cl/Estudios/Conferencias/2000/i30112000.htm
**************************************
Central Bank of Bosnia and Herzegovina newsletter
The Central Bank of Bosnia and
Herzegovina now releases a monthly newsletter about the activities
of the central bank. This includes news on the meetings of the
governor Peter Nicholl with other regional central bank heads,
news on progress with payment system reform and latest monetary
policy news. It is also available on the bank's website
http://www.cbbh.gov.ba - You can also get a copy emailed to you
by contacting the head of the press office Duska Jurisic on CONTACT@CBBH.GOV.BA
**************************************
Compilation of Seigniorage article
The December Denmark National
Bank quarterly review has a very interesting article by Erik Haller
Pedersen and Tom Wagener on the various methods that can be used
for compilation of seigniorage income statistics. The introduction
to the paper follows: "Historically, issuing money has been
a royal prerogative, one of the reasons being that it generates
considerable revenue, called seigniorage. From the sovereign's
point of view this could be seen as equivalent to tax revenue.
Today the Danmarks Nationalbank Act states that the Nationalbank
is responsible for issuing banknotes, while minting is the prerogative
of the Treasury under the Coinage Act. Since 1975, the Nationalbank
has been in charge of the production and administrative aspects
of minting. After allocations, the seigniorage falls to the Treasury
via the Nationalbank's allocation of profits. This article discusses
the problems related to compiling an exact measure of seigniorage."
To see the full article, click on:
http://www.nationalbanken.dk/nb/nb.nsf/alldocs/Smonetary_review_4q_00/$File/
nb02.htm
**************************************
Glossary of payment system terminology
The Committee on Payment and
Settlement Systems (CPSS) just published a comprehensive glossary
of payment system terminology as a reference document for the
standard terms used in connection with payment and settlement
systems. It combines various glossaries appended to earlier reports
by the CPSS and the European Central Bank (ECB). Understanding
the terminology of payment systems is a key requirement, not only
for those involved in day-to-activities connected with these systems
but also for the policymakers, financial institutions, academics
and others interested in these subjects. By bringing together
all the terms and concepts associated with payment and settlement
systems, this publication aims to provide readers with a single
and easily accessible source with which to reference the generally
accepted definitions of standard payment system terminology. The
glossary is available on the BIS website at http://www.bis.org
It can be directly accessed at http://www.bis.org/publ/cpss00b.htm
**************************************
Core principles for payment systems up for comment
The final reports on the CPSS
"Core Principles for Systemically Important Payment Systems"
and the joint CPSS/IOSCO consultative report on the "Recommendations
for Securities Settlement Systems" have now been published.
Both reports are available on the BIS website (Core Principles:
http://www.bis.org/publ/cpss43.htm; Recommendations for SSS: http://www.bis.org/publ/cpss42.htm).
The consultative period for the Recommendations ends 9 April 2001.
16-January-2000
© Copyright 2002 Central Banking Publications. All rights reserved. Reprinted at USAGOLD by permission.
Benedict
Mander
Email: bmander@centralbanking.co.uk
Central Banking Publications Ltd
6 Langley Street, London WC2H 9JA, UK
Tel: +44 (0)20 7836 3625
Fax: +44 (0)20 7836 3608
http://www.centralbanking.co.uk
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