Traditionally, global standard-setting bodies (SSBs) and the country-level policy makers who seek to follow their direction have focused on financial stability, the integrity of financial systems, and the protection of financial consumers.
... See More + While some still see financial inclusion as a trade-off against these other objectives, over the duration of CGAP V there has been a growing understanding that synergies among financial Inclusion, Stability, Integrity and Protection (I-SIP) are also achievable.During CGAP V, the Global Policy Architecture (GPA) Initiative aimed to increase understanding of the interdependence of the I-SIP objectives and to mainstream financial inclusion in the work of the relevant SSBs, informed by experience from emerging market and developing economies (EMDEs). This called for helping policy makers—especially at the country level—to optimize the linkages among I-SIP objectives, maximizing synergies and minimizing trade-offs. It also called for a recognition that the digital finance revolution, which is reaching scale in increasing numbers of countries, is changing the nature and often the level of the risks with which policy makers must contend.
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The development objective of the Financial Sector Support Project (FSSP) for Kenya is to strengthen the legal, regulatory, and institutional environment for improved financial stability, access to, and provision of, affordable and long-term financing.
... See More + The restructuring reflects changes in the financial sector priorities and the authorities’ strategy for the use of FSSP funds and revisions to the results framework to better align project indicators and targets with the project development objective (PDO).
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Theory suggests that the effect of banking market concentration on financial stability is mediated by several competing variables. Using a sample of 68 countries from 1997 to 2015, this paper proposes a unified empirical framework to test for the simultaneous presence and impact of the mediators through which concentration is expected to impact financial stability.
... See More + The results indicate that the magnitude and net effect of the mediators depend upon the level of concentration. At lower levels of concentration, increasing concentration improves banking system stability via profitability. At higher levels of concentration, increasing concentration makes the banking system more fragile because of the cost of credit, diversification and the ease of monitoring. For intermediate levels, concentration has no significant effect on financial stability, as the competing moderators cancel each other out. The results suggest that an intermediate level of concentration may be optimal for welfare.
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Policy Research Working Paper WPS8615 OCT 16, 2018
Deposit insurance is a widely adopted policy to promote financial stability in the banking sector. Deposit insurance helps ensure depositors' confidence in the financial system and prevents contagious bank runs, but it also comes with an unintended consequence of encouraging banks to take on excessive risk.
... See More + This paper reviews the economic costs and benefits of deposit insurance and highlights the importance of institutions and specific design features for how well deposit insurance schemes work in practice.
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Policy Research Working Paper WPS8589 SEP 19, 2018
This issue of Indonesia Daily Economic Update for September 12, 2018 contains the following economic highlights: (i) Bank Indonesia (BI) reported that the retail sales index went down from 216.0 in July to 207.8 in August.
... See More + However, the index grew by 2.8 percent yoy; (ii) The Indonesia Deposit Insurance Corporation (LPS) has decided to raise its guaranteed interest rates for Rupiah deposits in commercial banks by 25 bps to 6.5 percent, while raising the rates for microcredit banks and foreign exchange deposits by 50 bps to 9.0 percent and 2.0 percent, respectively; and (iii) The government is to issue foreign-denominated bonds in early 2019.
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This issue of Indonesia Daily Economic Update for July 18, 2018 contains economic highlights, including: The Indonesia Deposit Insurance Corporation (LPS) has decided to raise its guaranteed interest rates for rupiah deposits in banks, microcredit banks and foreign exchange deposits by 25 bps to 6.25 percent, 8.50 percent and 1.5 percent, respectively; and The Ministry of Finance reported that the realization of state revenue and grants as of June 2018 grew 16.0 percent yoy to IDR 833.4 trillion, completing 44 percent of what is targeted in the 2018 national budget.
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Indonesia’s real sector recorded mixed outcomes with the Manufacturing Purchasing Manager’s Index (PMI) rising to a 23-month high in May 2018. High frequency indicators such as motorcycle sales grew much slower than the previous month.
... See More + On the prices side, headline inflation eased due to a slower increase in raw food prices. Core inflation remained stable, while administered price inflation continued to track downwards. Foreign exchange reserves were down from the previous month, partly due to repayment of external debts and Bank Indonesia’s attempts to manage currency volatility. Indonesian financial assets also recorded mixed outcomes as the Rupiah appreciated and Jakarta Composite Index rose, while bond yields on average, increased across all tenors. Both credit growth and deposit growth accelerated.
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The Programmatic Development Policy Credit (PDPC) series supports Guyana’s reform efforts to reinforce sound financial sector development and to strengthen fiscal management.
... See More + The proposed operation is the first in a series of two operations. The series builds on three pillars of policy reforms. The first pillar supports the Bank of Guyana’s (BOG’s) ability to manage financial stress including establishing a deposit insurance scheme. The second pillar supports both regulatory reform for the insurance sector as well as domestic and international payment transactions. The third pillar supports stronger fiscal management through a sovereign wealth fund (SWF) for intergenerational savings, better debt management, and improved public investment management. The first credit will be in the amount of SDR 24.4 million (US$35 million equivalent). The PDPC forms part of a developing engagement with the Co-operative Republic of Guyana spanning financial sector, fiscal, and oil and gas sector management. Complemented by the increased financial envelope due to the IDA18 Replenishment, this policy dialogue led to the development of the PDPC series as well as a now planned FY19 Systematic Country Diagnostic (SCD) and Country Partnership Framework (CPF). The first operation in the series supports the Government of the Co-operative Republic of Guyana’s (GCRG’s) strong financial sector reform efforts while recognizing through triggers the GCRG’s efforts to accelerate fiscal reform. The newfound wealth will increase demands on fiscal policy, long-term savings, and domestic investments. Fiscal policy will need to be designed to manage the additional sources of volatility in both economic activity and fiscal revenues. Although natural resource extraction has long been a feature of the Guyanese economy, the increase in discovered wealth raises the question of intergenerational savings and the extent to which revenues from extracted resources should be set aside for future generations. To the extent the wealth is not invested abroad, it must be invested wisely in the Co-operative Republic of Guyana. For the private sector that requires an efficient financial sector that allocates the resources to the most economical investments, and for public investment it requires an efficient public investment management system. The GCRG’s commitment to prudent debt management needs to be supported by a modernization and streamlining of the legislative and institutional framework. With the increase in wealth and progressive market access of the country, The Co-operative Republic of Guyana will need to develop a unified and modernized legal framework for debt management and implement a comprehensive medium-term debt strategy to ensure that borrowing is aligned with macroeconomic policy objectives and undertaken at acceptable levels of risk and cost.
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This issue of Indonesia daily economic update for May 15, 2018 contains economic highlights, including that the government has released the Presidential Decree No. 40/2018 on the renewal of Core Tax System which is planned to be effective in 2021, that the Indonesia Deposit Insurance Corporation (LPS) has decided to maintain its guaranteed interest rates of 5.75 percent for foreign exchange deposits and 8.25 percent for rupiah deposited in microcredit banks, and that exports recorded a 9 percent year-on-year growth while imports grew faster by 35 percent in April, resulting in a USD 1.6 billion trade deficit.
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