BERNANKE ON BANK CAPITAL: BUNDESBANK DISCUSSION PAPER

Bundesbank Discussion Paper

Bank capital regulation the lending

channel and business cycles

Newsletter Forschungszentrum Bundesbank

Tue 12/29/09

Dear customer,

the Bundesbank Research Centre has released a new

Discussion Paper (No 33/2009 Series 1).

Author/s:
Longmei Zhang

Title:
Bank capital regulation the lending channel and

business cycles

Abstract:
This paper develops a Dynamic Stochastic General Equilibrium (DSGE)model to study how the instability of the banking sector can amplify and propagate business cycles. The model builds on Bernanke, Gertler and Gilchrist (BGG) (1999), who consider credit demand friction due to agency cost, but it deviates from BGG in that financial intermediaries have to share aggregate risk with entrepreneurs, and therefore bear uncertainty in their loan portfolios. Unexpected aggregate shocks will drive loan default rate away from expected, and have an impact on both firm and bank’s balance sheet via the financial contract. Low bank capital position can create strong credit supply contraction, and have a significant effect on business cycle dynamics.

http://vo5555.newsletter.bundesbank.de/servlet/rd?l=Diskussionspapiere-JOKA-PJN1-M7DJ-ONL3-NWSL117

Bundesbank Discussion Paper

Bank capital regulation the lending channel and business cycles

http://vo5555.newsletter.bundesbank.de/servlet/rd?l=Diskussionspapiere-JOKA-PJN1-M7DJ-ONL3-NWSL117

Newsletter Forschungszentrum Bundesbank

Tue 12/29/09



GLOBAL REINSURANCE MARKET

IAIS press release:

Global reinsurers remain strong

despite challenges

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Wed 12/23/09

The global reinsurance market has demonstrated robustness and resilience despite the combined challenges of sustained catastrophic losses and the historically low investment environment that manifested in 2008.

This is the key finding of the International Association of Insurance Supervisors (IAIS) Global Reinsurance Market Report 2009, released today.

Reinsurers play an important role in the functioning of efficient insurance markets through their shock absorbing capacity, including coverage against major reinsured natural catastrophes. The report builds on the unique data provided by 51 leading global reinsurers worldwide, which have been actively engaged with the IAIS in generating knowledge on reinsurance in order to better understand, regulate and supervise this key financial industry.

In spite of 2008’s challenging environment, reinsurers returned an overall positive result, indicating industry strength and contributing to both the stability of the global insurance markets as well as ultimately the security of individual insurance customers. Reinsurers continued to focus on diversified risk taking, drawing on the fundamentals of the reinsurance business in order to navigate a particularly turbulent year for the economy in general, and the financial sector in particular.

Jeremy Cox, Chair of the Reinsurance Transparency Subgroup, the working party in charge of the study noted that “reinsurers suffered comparatively less damage on the asset side of their balance sheets in 2008 compared to other financial sectors”.

Peter Braumüller, Chair of the IAIS Executive Committee, emphasised that “despite the ongoing financial turmoil, the global reinsurance market has demonstrated robustness and resilience.” However, he stressed that the IAIS will continue to exercise macroprudential surveillance of the sector, carefully tracking key risks and trends in reinsurance, and sharing the findings with the international supervisory community.

The report is available on the IAIS website at www.iaisweb.org.

About the IAIS

Established in 1994, the IAIS represents insurance regulators and supervisors of some 190 jurisdictions in nearly 140 countries and has also more than 120 insurance professionals, insurers, reinsurers and trade associations as observers. The IAIS issues global insurance principles, standards and guidance papers, provides training and support on issues related to insurance supervision, and organises meetings and seminars for insurance supervisors. The IAIS works closely with other international institutions to promote financial stability.

Press enquiries: Jeremy Cox

Chair, Reinsurance Transparency Group

Tel: +1 441 295 5278

E-mail: jcox@bma.bm

or Pat Phillip-Bassett Tel: 1 441 278 0263

IAIS press release:

Global reinsurers remain strong despite challenges

www.iaisweb.org

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Wed 12/23/09

THE PHENOMENON OF "SAME BED DIFFERENT DREAMS" APPLIED HISTORICALLY AS WELL AS PERSONALLY

The Phenomenon of “Same Bed,

Different Dreams” as Expressed in the

1929 Novel Dodsworth by Sinclair Lewis

The phenomenon of “same bed, different dreams” applies to Sam Dodsworth and his wife Fran Voelker but also to America and Europe on a panoramic scale.

Dodsworth

Dodsworth is a satirical novel by American writer Sinclair Lewis first published by Harcourt Brace & Company in 1929. Its subject, the differences between US and European intellect, manners, and morals, is one that frequently appears in the works of Henry James.

The phenomenon of “same bed, different dreams” applies to Sam Dodsworth and his wife Fran Voelker but also to America and Europe on a panoramic scale.

Plot summary

Samuel Dodsworth is an ambitious and innovative automobile designer, who builds his fortunes in Zenith, Winnemac. In addition to his success in the business world, he had also succeeded as a young man in winning the hand of Fran Voelker, a beautiful young socialite. While the book provides the courtship as a backstory, the real novel begins upon his retirement. At the age of fifty and facing retirement due to his selling of his successful automobile company (The Revelation Motor Company) to a far larger competitor, he sets out to do what he had always wanted to experience: a leisurely trip to Europe with his wife. His forty-one year old wife, however, motivated by her own vanity and fear of lost youth, is dissatisfied with married life and small town Zenith, wants to live in Europe permanently as an expatriate, not just visit for a few months to allow Dodsworth to visit some manufacturing plants looking for his next challenge. Passing up advancement in his recently sold company, Dodsworth leaves for Europe with Fran but her motivations to get to Europe become quickly known.
Soon, both Sam and Fran are caught up in vastly different lifestyles. Fran falls in with a crowd of frivolous socialites while Sam plays more of an independent tourist and eventually meets Edith Cortright, a woman who is everything his wife is not: self-assured, self-confident, and able to take care of herself. As they follow their own pursuits, their marriage is strained to the breaking point. Both Sam and Fran are forced to choose between marriage and the new lifestyles they have pursued. Fran is clearly Lewis’ target here while Sam ambles along as a stranger in a strange land until the epiphany of getting on with his life hits him in the last act. Sam Dodsworth is a rare Lewis character: a man of true conviction and purpose. This purpose and conviction is relied on significantly as the book (and film) concludes with the two main characters going in quite different directions.

Adaptations

The novel was adapted for the stage in 1934 by Sidney Howard and filmed in 1936 by William Wyler. It also provided the basis for a 1950 British television drama starring Ruth Chatterton and Walter Abel, and a 1995 musical adaptation that was staged in Fort Worth, Texas with Hal Linden and Dee Hoty .

Dodsworth is a 1936 American drama film directed by William Wyler. Sidney Howard based the screenplay on his 1934 stage adaptation of the 1929 novel by Sinclair Lewis. Through the title character, it examines the differences between US and European intellect, manners, and morals.

Contents:
1. Synopsis
2. Production notes
3. Principal cast
4. Principal production credits
5. Critical reception
6. Awards and nominations
7. References
8. External links

The Phenomenon of “Same Bed, Different Dreams” as Expressed in the 1929 Novel Dodsworth by Sinclair Lewis

The phenomenon of “same bed, different dreams” applies to Sam Dodsworth and his wife Fran Voelker but also to America and Europe on a panoramic scale.

Dodsworth

AMERICAN NATIONAL SELF-IDENTITY ISSUES IN SINCLAIR LEWIS' 1929 NOVEL "DODSWORTH"

Dodsworth (Harcourt Brace 1929)

AMERICAN SELF-IDENTITY PUZZLES IN SINCLAIR

LEWIS’ 1929 NOVEL “DODSWORTH”

Americans understand themselves less and are less understood by the world than any nation that’s ever existed.

(Dell paperback 1957 page 75 Chapter 9 Dodsworth)

Is America the Rome of the world…?

(Dodsworth same edition page 105 Chapter 11)

Dodsworth (Harcourt Brace, 1929)

Product Details:

· Hardcover: 377 pages

· Publisher: Harcourt, Brace and Company; 1st edition

· March 1, 1929
· Language: English

· ISBN-10: 9997412370

· ISBN-13: 978-9997412379

Description

Touring Europe with his beautiful but spoiled wife Fran, millionaire Sam Dodsworth, known as the American Captain of Industry, witnesses the clash of American and English cultures at the same time his marriage falls apart.

Sinclair Lewis’s 1929 novel DODSWORTH has staying power:

–The hero, automobile pioneer Samuel Dodsworth, wonders whether there a dimension to corporate life beyond sheer hard work and sticking to what one knows best. If so what is it? Travel? Leisure? The life of the mind? Good conversation? An absorbing hobby? A wife supportive of both his business and non-business quests?

–Is travel in the sense of sheer moving from here to there, from one place to another, out roughing it on the long trail, the ultimate solution? Must man move incessantly in order to be happy? In New York City, after some months in a more relaxed, contemplative Europe, Dodsworth saw Manhattan as “veritably the temple of a new divinity, the God of Speed.”

That God of Speed “demanded a belief that Going Somewhere, Going Quickly, Going Often, were in themselves holy and greatly to be striven for. A demanding God, this Speed, … who once he had been offered a hundred miles an hour, straightway demanded a hundred and fifty” (Ch. 16).

Comment: Eugene Morgan in “The Magnificent Ambersons” is an earlier-vintage car pioneer.

AMERICAN SELF-IDENTITY PUZZLES IN
SINCLAIR LEWIS’ 1929 NOVEL “DODSWORTH”

BANK FOR INTERNATIONAL SETTLEMENTS BIS REVIEW NO. 168: MACROPRUDENCE

BIS Review

BIS Review No 168 available

Bank for International Settlements

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Wed 12/23/09

Please find BIS Review No 168 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm.

What’s included?

BIS Review No 168 (23 December 2009)

Masaaki Shirakawa: Macroprudence and the central bank

Mark Carney: Current issues in household finances

Ivan Iskrov: Strengthening the regulatory and supervisory capacity of the financial regulators

Mohammed Laksaci: Investment financing in Algeria

Njuguna Ndung’u: Developments in the Kenyan domestic bond market

Lucas Papademos: Opening remarks at the press briefing on the occasion of the publication of the December 2009 ECB Financial Stability Review

Anna Maria Tarantola: Supervision of foreign banks in Italy

e-mail press@bis.org.

BIS Review

Bank for International Settlements

BIS Review No 168 available

http://www.bis.org/review/index.htm

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Wed 12/23/09

"PRIVATE DEMAND STILL WEAK IN THE ADVANCED ECONOMIES"

Dallas Fed

International Economic Update

December 2009

Global and Monetary Policy Institute

Federal Reserve Bank of Dallas

Globalization & Monetary Policy Institute (dal.webmaster@dal.frb.org)

Tue 12/22/09

Private Demand Still Weak in the Advanced Economies

While emerging markets enjoyed robust growth in the third quarter, private demand is still lagging in the advanced economies, whose positive growth was mainly due to government spending and net exports. Despite the recovery in oil prices, inflation is expected to remain mild over the next few years.
Monetary policy rates are low for now; quantitative-easing measures are expiring in some countries and expanding in others.

Read More: http://dallasfed.org/institute/update/2009/int0908.cfm

Globalization and Monetary Policy Institute

http://dallasfed.org/pubs/e-sub/e-institute.cfm

Please e-mail us at dal.webmaster@dal.frb.org

Federal Reserve Bank of Dallas 2200 N. Pearl St.

Dallas TX 75201

International Economic Update

Private Demand Still Weak in the Advanced Economies

Globalization & Monetary Policy Institute (dal.webmaster@dal.frb.org)

Tue 12/22/09

BASEL COMMITTEE: GLOBAL CAPITAL REGULATIONS

Basel Committee on Banking Supervision

Press release

Press enquiries: +41 61 280 8188

press@bis.org

www.bis.org

Basel Committee on Banking Supervision

Press release:

Basel Committee announces

consultative proposals to strengthen

the resilience of the banking sector

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Thu 12/17/09

At its 8–9 December meeting, the Basel Committee on Banking Supervision approved for consultation a package of proposals to strengthen global capital and liquidity regulations with the goal of promoting a more resilient banking sector. Along with the measures taken by the Committee in July 2009 to strengthen the Basel II Framework, the proposals announced today are part of the Committee’s comprehensive response to address the lessons of the crisis related to the regulation, supervision and risk management of global banks.

These reforms carry forward the 7 September 2009 mandate of the Governors and Heads of Supervision, the oversight body of the Basel Committee. The reform programme has also been endorsed by the Financial Stability Board and by the G20 leaders at their Pittsburgh Summit.

Mr Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank, stated that “the capital and liquidity proposals will result in more resilient banks and a sounder banking and financial system. They will promote a better balance between financial innovation and sustainable growth”.

The Committee’s consultative documents cover the following key areas:

· Raising the quality, consistency and transparency of the capital base. This will ensure that the banking system is in a better position to absorb losses on both a going concern and a gone concern basis. In addition to raising the quality of the Tier 1 capital base, the Committee is also harmonising the other elements of the capital structure.

· Strengthening the risk coverage of the capital framework. In addition to the trading book and securitisation reforms announced in July 2009, the Committee is proposing to strengthen the capital requirements for counterparty credit risk exposures arising from derivatives, repos and securities financing activities. The strengthened counterparty capital requirements will also increase incentives to move OTC derivative exposures to central counterparties and exchanges. The Committee will also promote further convergence in the measurement, management and supervision of operational risk.

· Introducing a leverage ratio as a supplementary measure to the Basel II risk-based framework with a view to migrating to a Pillar 1 treatment based on appropriate review and calibration. The leverage ratio will help contain the build-up of excessive leverage in the banking system, and introduce additional safeguards against model risk and measurement error. To ensure comparability, the details of the leverage ratio will be harmonised internationally, fully adjusting for any remaining differences in accounting.

· Introducing a series of measures to promote the build-up of capital buffers in good times that can be drawn upon in periods of stress. A countercyclical capital framework will contribute to a more stable banking system, which will help dampen, instead of amplify, economic and financial shocks. In addition, the Committee is promoting more forward-looking provisioning based on expected losses, which captures actual losses more transparently and is also less procyclical than the current “incurred loss” provisioning model.

· Introducing a global minimum liquidity standard for internationally active banks that includes a 30-day liquidity coverage ratio requirement underpinned by a longer-term structural liquidity ratio. The framework also includes a common set of monitoring metrics to assist supervisors in identifying and analysing liquidity risk trends at both the bank and system wide level. These standards and monitoring metrics complement the Committee’s Principles for sound liquidity risk management and supervision issued in September 2008.

The Committee is also reviewing the need for additional capital, liquidity or other supervisory measures to reduce the externalities created by systemically important institutions.

The Committee is mindful of the need to introduce these measures in a manner that raises the resilience of the banking sector over the longer term, while avoiding negative effects on bank lending activity that could impair the economic recovery. To this end, the Committee is initiating a comprehensive impact assessment of the capital and liquidity standards proposed in the consultative documents. In a number of proposals, the Committee is still considering different options, which will be included in the impact assessment. Mr Wellink stressed that “decisions on the final proposals and their calibration will be made only after a thorough analysis of the impact assessment and the comments received on the consultative documents. The Committee will ensure that implementation of the new standards is consistent with financial market stability and sustainable economic growth”.

The impact assessment will be carried out in the first half of 2010. On the basis of this assessment, the Committee will then review the regulatory minimum level of capital and the reforms proposed in this document to arrive at an appropriately calibrated total level and quality of capital. The calibration will consider all the elements of the Committee’s reform package and will not be conducted on a piecemeal basis. The fully calibrated set of standards will be developed by the end of 2010 to be phased in as financial conditions improve and the economic recovery is assured, with the aim of implementation by end-2012.[1] The Committee will put in place appropriate phase-in measures and grandfathering arrangements for a sufficiently long period to ensure a smooth transition to the new standards.

The Committee’s reform package can be accessed through the following links: Strengthening the resilience of the banking sector and International framework for liquidity risk measurement, standards and monitoring.

Comments on the consultative documents should be submitted by 16 April 2010 by email (baselcommittee@bis.org) or post (Secretariat of the Basel Committee on Banking Supervision, Bank for International Settlements, CH-4002 Basel, Switzerland).

About the Basel Committee

The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. It seeks to promote and strengthen supervisory and risk management practices globally. The Committee comprises representatives from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

The Basel Committee’s governing body is comprised of central bank governors and (non-central bank) heads of supervision from its member countries. The Committee’s Secretariat is based at the Bank for International Settlements in Basel, Switzerland.

[1] The July 2009 requirements for the trading book, resecuritizations and exposures to off-balance sheet conduits are to be implemented by the end of 2010.

Communications,

Bank for International Settlements

E-mail: press@bis.org

Website: www.bis.org

Phone: +41 61 280 8188

Bank for International Settlements (BIS)

Basel Committee on Banking Supervision

Press release:

Basel Committee announces consultative

proposals to strengthen the resilience of the

banking sector

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Thu 12/17/09

BANK FOR INTERNATIONAL SETTLEMENTS BIS REVIEW NO. 166: FINANCIAL CRISIS RECEDING?

BIS Review

Bank for International Settlements

BIS Review No 166 available

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Fri 12/18/09

Please find BIS Review No 166 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm.

What’s included?

BIS Review No 166 (18 December 2009)

Jean-Pierre Roth: The financial crisis is receding – what will the future bring?

Jean-Claude Trichet: Macro-prudential supervision in Europe

Patrick Honohan: Regulatory policy development and new regulatory activity

Rasheed Mohammed Al-Maraj: Inaugural Plenary Session – “Regulatory perspectives”

Ric Battellino: Some comments on bank funding

Gane A Simbe: Developing strategies for talent management in Pacific Public Services – the challenges of the current environment

Gertrude Tumpel-Gugerell: The way forward with monetary, fiscal and macroprudential policies

e-mail press@bis.org.

BIS Review

Bank for International Settlements

BIS Review No 166 available

http://www.bis.org/review/index.htm

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Fri 12/18/09



BANK FOR INTERNATIONAL SETTLEMENTS BIS REVIEW NO. 167: ISLAMIC FINANCE AND THE FINANCIAL CRISIS

BIS Review

Bank for International Settlements

BIS Review No 167 available

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Mon 12/21/09

Please find BIS Review No 167 attached as an Adobe Acrobat (PDF) file. Alternatively, you can access this BIS Review on the Bank for International Settlements’ website by clicking on http://www.bis.org/review/index.htm.

What’s included?

BIS Review No 167 (21 December 2009)

Jean-Pierre Roth: Global and Swiss economic outlook

Philipp Hildebrand: Review of the international financial system

Thomas Jordan: Swiss monetary policy and provisions

Norman T L Chan: The risk of asset-price bubbles

Rasheed Mohammed Al Maraj: Islamic finance and the financial crisis

Ewart S Williams: Preparing enhanced insurance regulations for Trinidad and Tobago

Elizabeth A Duke: Envisioning a future for housing finance

e-mail press@bis.org.

BIS Review

Bank for International Settlements

BIS Review No 167 available

http://www.bis.org/review/index.htm

Press, Service (press@bis.org)

Publications, Service (Publications@bis.org)

Mon 12/21/09

CAMBRIDGE FORECAST GROUP ESSAY: PAUL VOLCKER

Cambridge Forecast Group:

DEVELOPING WORLD AS MAIN GEAR

Paul Volcker appeared several times on the PBS TV program, “Charlie Rose” at the end of September 2009.

He mentioned repeatedly that nobody ever expected the emerging world to assume such an important role in the emergence of a new world economy.

CFG and Volcker had a telephone conference in 1979 when he was head of the New York Fed before he moved to Washington to assume the post of Fed Chairman.

The telephone conference with Volcker was based on a discussion of the first CFG Newsletter, “Cambridge Forecast Report” which is readable by clicking below.

This 1979 newsletter is precisely about the centrality of the developing world in the emerging world economy, the very thing that Volcker found so puzzling and unexpected on “Charlie Rose.”

CAMBRIDGE FORECAST GROUP: CFG NEWSLETTER NUMBER 1 JUNE 1979 MEGA …

http://cambridgeforecast.wordpress.com/2009/02/07/cfg-1979-newsletter-number-1/

Cambridge Forecast Group:

DEVELOPING WORLD AS MAIN GEAR