Ask an Economist: Would Financial Reforms Help Developing Nations’ Banks?

Matias Vernengo

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Would financial reforms that seek to de-link services and overturn Volcker’s rule present an opportunity for banks in emerging countries who still follow these principles to overtake their more established northern counterparts?

Vernengo: The preliminary question to be asked would be why banks in the developed world have an edge in the first place.  Credit creation and international trade in different periods have been for the most part denominated in a single national currency that functions as world money.  The pound had that role during the Gold Standard and the dollar since World War II.  The advantage of financial institutions in the hegemonic country derives from the fact that they lend in the world currency, and have access to a risk free asset (domestic government bonds) and a lender of last resort that can act on a global basis.

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Ask an Economist: Would Financial Reforms Help Developing Nations' Banks?

Matias Vernengo

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Would financial reforms that seek to de-link services and overturn Volcker’s rule present an opportunity for banks in emerging countries who still follow these principles to overtake their more established northern counterparts?

Vernengo: The preliminary question to be asked would be why banks in the developed world have an edge in the first place.  Credit creation and international trade in different periods have been for the most part denominated in a single national currency that functions as world money.  The pound had that role during the Gold Standard and the dollar since World War II.  The advantage of financial institutions in the hegemonic country derives from the fact that they lend in the world currency, and have access to a risk free asset (domestic government bonds) and a lender of last resort that can act on a global basis.

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Ask an Economist: Reforming the IMF and World Bank

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. See all of the questions and answers here. A reader asked:

Q: Absolute poverty and increasing inequality remain serious issues in spite of WB/IMF development loans, even in countries with high economic growth.  What reforms would you suggest to ensure that aid actually reaches the people who are suffering? How can these organizations take steps to move away from the ideology of neo-liberalism towards developing scientifically-based economic policies that are pro-poor? How can the Bretton Woods Institutions best measure implementation of pro-poor government policies?

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Ask an Economist: How Much is the Yuan Overvalued?

Alejandro Nadal

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. A reader asked:

Q: There has been a lot of discussion recently about the over-valuation of the Chinese currency. How do we know how much it is overvalued? What would the implications be for US and Chinese workers if the government were to decide to devalue it?

NADAL: There is a debate on whether the Chinese yuan is over or undervaluated. The American Manufacturing Association sets the undervaluation of the yuan at 40%. But the Federal Reserve argues that the yuan appreciated 16% between June 2008 and February 2009. According to the Bank of International Settlements (BIS) in Basle the yuan appreciated between February 2007 and January 2010 the yuan appreciated by 10.7% while the US dollar lost 8% of its value.

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Ask an Economist: Lessons from the Financial Crisis

Ilene Grabel

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. A reader asked:

Q: What will be the impact of the economic crisis on the financial literacy of the Developing Countries?

Grabel: It may well be that financial literacy in developing countries improves as a consequence of the economic crisis. This may be due to the experiences of rich countries, where it turns out that levels of financial literacy were quite low.

Certainly there are many structural reasons why corporations, municipal governments, and households deployed exotic, opaque and highly risky financing strategies and instruments in the run up to the crisis. And we know that credit rating agencies understood the risks of these instruments and financing strategies to much less of an extent than we would have imagined prior to the crisis. Thus, we may see a reduction in the developing world of enthusiasm for replicating the financial models of the rich countries. This would be a kind of silver lining associated with the current crisis.

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Ask an Economist: Regulating Multinational Agribusiness

Timothy A. Wise

Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. A reader offered a detailed comment, partly in response to my post, “Agribusiness and the food crisis: a new thrust at antitrust.” Following is the reader’s comment (slightly edited for length) followed by a few responses to some of the important questions he raises, in particular about the limited regulation of uncompetitive practices across borders.

Q: “[There is a need for] further research on the abuse of monopoly and monopsony power of agro conglomerates…. The dismantling of commodity boards in developing countries in the 1980s in the context of structural adjustment programmes put the nail in the coffin of any attempt at regulating the commodity markets and ensuring equitable prices for producers…. The problem is that there is no universal anti trust law which can deal with the anti- competitive behaviour of TNCs and the international community has fallen … shy of adopting such legislation. Moreover, attempts at stabilizing commodity prices through negotiations between consuming and producing countries, which had begun in the 1970s in the context of the UN and UNCTAD, were subsequently shelved with the onset of the recession in the early 1980s and the emergence of market fundamentalism. Perhaps these issues would need to be revisited.”

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Questions about IMF/World Bank Reform? Ask a TripleCrisis Economist. Deadline for questions: this Friday, April 16.

The 2010 Spring Meetings of the International Monetary Fund and the World Bank will be held over the weekend of April 24-25 at the World Bank and IMF Headquarters in Washington, D.C.  As in previous years, a Civil Society Policy Forum, a program of policy dialogues for Civil Society Organizations, will be held between April 22-25, 2010. In the wake of the triple crises in finance, development and the environment, the Bretton Woods institutions face increasing pressure for reform.

In advance of the meetings, the unique collection of international economists at the Triple Crisis Blog is taking your questions.  What arguments most need sound backing from economic analysts?  Which reform proposals are you unsure about?

Post your questions as comments on this blog posting, and Triple Crisis analysts will do their best to answer with blog posts.  Look for answers during the meetings and in the week before.  We’ll answer as many as we can.  We look forward to your questions.

Note: Open full post and scroll to the bottom to leave a comment. Comments are moderated, so they may not appear immediately, but they will appear promptly.

Protectionism, Brazil and Doha

Matias Vernengo and Timothy A. Wise

Ask a TripleCrisis Economist: Triple Crisis Blog has invited readers’ questions in advance of the April 24-25 IMF/World Bank meetings in Washingon. post your questions at Ask a TripleCrisis Economist. Here are two responses to an earlier posted question:

Q: Will Brazil’s recent threats of retaliatory protectionist measures motivate the US to institute more conciliatory agricultural policies and trade practices? And is there any hope that those sanctions or a US response might spur some talk of energizing the Doha talks?

VERNENGO: As it turns out, Brazil agreed to temporarily suspend the imposition of sanctions allowed by the World Trade Organization (WTO).  It is important to note, however, that the Brazilian measures should not be represented as protectionist.  One must remember that they are a retaliation authorized by the WTO, resulting from the American cotton subsidies.  In other words, the protectionist policies are the original subsidies provided by the US government.  Peripheral countries are often referred to as protectionist, but more often then not they pursue more open policies than their more developed trading partners.

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Questions about IMF/World Bank Reform? Ask a TripleCrisis Economist.

The 2010 Spring Meetings of the International Monetary Fund and the World Bank will be held over the weekend of April 24-25 at the World Bank and IMF Headquarters in Washington, D.C.  As in previous years, a Civil Society Policy Forum, a program of policy dialogues for Civil Society Organizations, will be held between April 22-25, 2010. In the wake of the triple crises in finance, development and the environment, the Bretton Woods institutions face increasing pressure for reform.

In advance of the meetings, the unique collection of international economists at the Triple Crisis Blog is taking your questions.  What arguments most need sound backing from economic analysts?  Which reform proposals are you unsure about?

Post your questions as comments on this blog posting, and Triple Crisis analysts will do their best to answer with blog posts.  Look for answers during the meetings and in the week before.  We’ll answer as many as we can.  We look forward to your questions.

Note: Open full post and scroll to the bottom to leave a comment. Comments are moderated, so they may not appear immediately, but they will appear promptly.

Questions about IMF/World Bank Reform? Ask a TripleCrisis Economist.

The 2010 Spring Meetings of the International Monetary Fund and the World Bank will be held over the weekend of April 24-25 at the World Bank and IMF Headquarters in Washington, D.C.  As in previous years, a Civil Society Policy Forum, a program of policy dialogues for Civil Society Organizations, will be held between April 22-25, 2010. In the wake of the triple crises in finance, development and the environment, the Bretton Woods institutions face increasing pressure for reform.

In advance of the meetings, the unique collection of international economists at the Triple Crisis Blog is taking your questions.  What arguments most need sound backing from economic analysts?  Which reform proposals are you unsure about?

Post your questions as comments on this blog posting, and Triple Crisis analysts will do their best to answer with blog posts.  Look for answers during the meetings and in the week before.  We’ll answer as many as we can.  We look forward to your questions.

Note: Open full post and scroll to the bottom to leave a comment. Comments are moderated, so they may not appear immediately, but they will appear promptly.