ScienceGuy

Summarizing the paper ( click here ) titled “Instant payment systems and competition for deposits”. The Paper is authored by Sergey Sarkisyan. Click here to read my summary

FE D chair Powell gave the MPC speech on 1 Nov 23'. Here are some crucial points from his speech: On recent events:      >>>  Economic activity expanding at a fast rate - factors: surge in consumer spending. However, housing markets flat; business investments flatting out     >>> The labour  market is tight but is balancing out. Nominal wage growth balancing. Unemployment is low and job vacancies still exceed the supply but have overall declined      >>> I nflation is moderating but still above expectations; PCE rose 3.45 while core PCE was at 3.7%;  Longer-term inflation seems well-anchored     >>> Tighness in labour market may lead to further tightening of monetary policy     >>> Rise in long-term yields has effects on the tightening financial conditions and will also have an effect on the broader path of monetary policy, for example, higher mortgage rates      >>> Potential growth seems to be temporarily risen than usual (whi

FE D chair Powell gave the MPC speech on 23 March 23'. Here are some crucial points from his speech: On recent events:      >>>  T here are some serious difficulties, however, with a small number of banks       >>>  History is evident that if such events are un-attended, they may have contagion to healthy parts of the financial system as well       >>>  Hence, the FED working with Treasury and FDIC to strengthen confidence in the banking system      >>>  Together, these institutions have created a “bank term funding program” that works alongside the discount window. This would allow banks to get access to the required liquidity  Monetary Policy:        >>>  Fed funds rate risen by 25bps       >>>  Inflation remains high and the labour market remains tight       >>>  US growth in the previous year had been below the long-term trend       >>>  Consumer spending appears to have picked up this quarter, however, it

Summarizing the paper ( click here ) titled “ Banks’ Credit and Investment Dynamics: Assessing Portfolio Rebalancing and Crowding-out ” under the Reserve Bank of India Working Paper Series. *  The Paper is authored by Sanjay Singh, Garima Wahi and Muneesh Kapur. Click here to read my summary The paper analyses the asset portfolio dynamics of Indian banks and the impact of their investment in G-secs on their profitability. The empirical analysis indicates that weak economic conditions and stressed asset quality encourage banks to increase their investments in government securities suggesting a portfolio rebalancing channel. Higher investment by banks in government securities in the face of higher government borrowings indicates the operation of a crowding-out channel. Its impact can be mitigated to an extent by the central bank’s market operations. The crowding-out is lower for banks with better asset quality and higher capital adequacy. An increase in the share of government securiti

Shadow banking system fascinated me, especially post-2008 crisis when I realised their importance in the system. NBFCs are not allowed by the central banks, to operate in the same way as the regular banks, e.g., while banks are allowed to accept deposits (like savings accounts), NBFCs are not allowed to do so. Also, unlike banks, NBFCs do not have to follow stringent guidelines that the central bank sets for the banks.  There's a reason why NBFCs are called "shadow banks" - because they operate in the shadows of the scheduled banking system. Although there are some, broad-level regulations for the NBFCs mostly they remained out of the purview of central banks. This was also because NBFCs were not looked at with great concern, as their growth was in the "shadows" - at a distance from the regulatory eyes. The central banks - the ultimate regulators, until recently didn't realise how big the NBFC system had become and how much of an integral part of the system

Click here   to read the summarized Richard Werner's paper titled " H ow do banks create money, and why other firms cannot do the same? An explanation for coexistence of lending and deposit taking ". "Thanks to the recent banking crises interest has grown in banks and how they operate. In the past, the empirical and institutional market micro-structure of the operation of banks had not been a primary focus for investigations by researchers, which is why they are not well covered in the literature. One neglected detail is the banks' function as the creators and allocators of about 97% of the money supply (Werner, 1997, 2005), which has recently attracted attention (Bank of England, 2014a,b; Werner, 2014b,c). It is the purpose of this paper to investigate precisely how banks create money, and why or whether companies cannot do the same. Since the implementation of banking operations takes place within a corporate accounting framework, this paper is based upon a com