Monetary Policy in the Post Crisis Period: The Turkish Perspective

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Monetary Policy in the Post Crisis Period: The Turkish Perspective"

Transcription

1 Monetary Policy in the Post Crisis Period: The Turkish Perspective Hakan Kara Economic Research Forum Conference İstanbul April 19, 2013

2 Outline 1. Motivation of the New Policy Framework 2. New Instruments Interest Rate Corridor Reserve Option Mechanism 3. Evidence 4. Conclusion 2

3 Why do we need unconventional policies? (UP) Different motivations for the advanced and emerging economies Advanced economies conduct UP because a single interest rate framework is not enough to provide the desired stimulus Emerging economies conduct UP mainly as a response to UP of advanced economies 3

4 Capital Flows Equity and Bond Flows to Developing Economies (13-week moving average, billion US dollars) Source: EPFR. Last Observation: April 3,

5 Capital Flows: Turkey vs. Developing Countries 1,2 (Billion US dollars) 13-week moving average 6 1,0 Turkey All developing countries (right axis) 5 0,8 4 0,6 3 0,4 2 0,2 1 0,0 0-0,2-1 -0,4-2 -0,6-3 Source: EPFR, CBRT. Last Observation: 05 April

6 Oca.07 Tem.07 Oca.08 Tem.08 Oca.09 Tem.09 Oca.10 Tem.10 Oca.11 Tem.11 Oca.12 Tem.12 Oca.13 Capital Flows and Credit in Turkey Net Capital Inflows (12-month cumulative, billion USD) Net Annual Credit Use (adjusted for the effect of changes in exchange rates, billion TRL) Source: CBRT. Net credit use is annual change in total credit stock. Capital flows are 12-month cumulative. 6

7 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 Credit and Real Exchange Rate Cycles (HP filtered, standardized) 2 1,5 1 0,5 0-0,5-1 -1,5-2 Loans (t) REER (t+3) Source: CBRT. 7

8 Capital Flows and GDP Growth in Turkey Net Capital Flows/GDP GDP Growth Rate -8 Source: CBRT 8

9 Amplifying Role of Cross Border Capital Flows Improvement in Risk Perceptions Capital Inflows External Borrowing Currency appreciation Easier external finance Balance sheet effects and easing credit standards 9

10 MAIN GOAL: Searching for a new framework Design a new framework to Alleviate the impact of volatility in capital flows on the domestic economy Reduce the sensitivity of credit and exchange rate cycles to capital flows Break the vicious circle by weakening the amplifying channels, without hampering price stability objective. 10

11 The New Policy Framework 11

12 Policy Framework Price Stability Price Stability Financial Stability Policy Rate Structural Tools Cyclical Tools 12

13 Structural Tools Maturity Based Reserve Requirements Leverage Based Reserve Requirements Reserve Options Mechanism 13

14 Cyclical Tools Policy Rate Interest Rate Corridor TL Liquidity Management FX Liquidity Management 14

15 Transmission Mechanism INSTRUMENTS KEY INDICATORS OBJECTIVES Reserve Requirement Macroprudential Tools Credit Policy Expectations Price Stability Weekly Repo Interest Rate Policy Credit Growth Interest Rate Corridor Funding Strategy Liquidity Policy Exchange Rate Financial Stability 15

16 Exchange Rate, Credit and Financial Stability Gourinchas and Obstfeld (2012): Two factors emerge as the most robust and significant predictors of financial crises: rapid increase in leverage sharp real appreciation of the currency. Schularick and Taylor (2012) Role of leverage (credit growth) in financial vulnerability 16

17 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 Credit and Current Account Net Credit Use and Current Account Deficit (annual, percent of GDP) Net Credit Use / GDP (%) Current Account Deficit / GDP (%) Source: CBRT. Net credit use is annual change in total credit stock. Current account is in annual terms. 17

18 Exchange Rate, Credit and Price Stability Reducing the volatility of FX also helps price stability given the still-high exchange rate pass-through in Turkey Smoothing credit cycles help to dampen demand volatility and thus the fluctuations in the output gap 18

19 Financial and Price Stability Smoothing credit and exchange rate cycles not only supports financial stability by dampening the leverage cycles but also helps price stability given the high exchange rate pass-through in Turkey. Moreover, implies a more balanced growth path. 19

20 New Instruments 20

21 Practical Implementation of the New Framework Developing new instruments to weaken the impact of capital flows on credit and exchange rates. Two novel instruments: Asymmetric Interest Rate Corridor (ARC) Reserve Options Mechanism (ROM) 21

22 Asymmetric Interest Rate Corridor 22

23 Typical Operational Framework Under IT Framework Late Liquidity Lending Rate O/N Lending Rate Interest Rate Corridor O/N Borrowing Rate O/N Lending Rate to Market Makers CBT Policy Rate (One Week Repo) Secondary Market Interest Rate Late Liquidity Borrowing Rate 10:00 11:00 16:00 17:00 Hours Interbank + OMO Late Liquidity Window 23

24 Operational Framework Under Conventional IT (Simplified) CBT Lending Rate CBT Policy Rate (One Week Repo Rate) CBT Borrowing Rate Secondary Market Interest Rate 24

25 Capital Outflows (Risk off) CBT Lending Rate Secondary Market Interest Rate CBT Policy Rate (One Week Repo Rate) CBT Borrowing Rate 25

26 Capital Inflows (Risk on) CBT Lending Rate CBT Policy Rate (One Week Repo Rate) Secondary Market Interest Rate CBT Borrowing Rate 26

27 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Implementation of the Corridor QE2 and the active use of the interest rate corridor Intensification of Euro Area Crisis CBRT O/N lending rate CBRT O/N borrowing rate ISE O/N Rate CBRT Weekly Repo Rate ISE liquidity shortage (right axis, billion TL) Source: CBRT. 27

28 Reserve Requirement Policy TL Reserve Requirements FX Reserve Requirements 18 The Range of RRR Weighted Average RRR 14 The Range of RRR Weighted Average RRR QE2 EZ Crisis Source: CBRT. Last Observation: February 2013 Source: CBRT. Last Observation: February

29 Reserve Options Mechanism (ROM) 29

30 Definition of ROM ROM is a mechanism that provides the banks the option to hold a certain fraction of their TL RRs in FX and/or gold To what extent the banks will use ROM will depend on the relative cost of using the facility The CBRT can alter this cost by changing Reserve Option Coefficients (ROC) The cost will also depend on relative price of FX vs TL funding 30

31 Reserve Options Mechanism (ROM) Reserve Option Coefficients for FX Reserve Option Coefficients for Gold 3 3 2,5 2, ,5 1, ,5 0, Percentage of TL RR held in FX Percentage of TL RR held in Gold Source: CBRT. As of April 19,

32 Threshold ROC For each bank, there is a threshold ROC (𝑅𝑂𝐶 𝑡𝑟 ) that makes the bank indifferent between using and not using the facility. This level will depend on the relative cost of FX and TL funding: 𝑅𝑂𝐶 𝑡𝑟 𝑟𝑡 𝑇𝐿 = 𝐸 𝑒𝑡+1 𝑟𝑡 𝐹𝑋 𝑒𝑡 where, 𝑟𝑡 𝑇𝐿 : cost of TL funding, 𝑟𝑡 𝐹𝑋 : cost of FX funding 𝑒𝑡 : spot exchange rate at the beginning of the maintenance period 𝐸 𝑒𝑡+1 : expected exchange rate for the end of the maint. period. 32

33 Reserve Option Mechanism: Automatic Stabilizer Reserve Option Coefficients (ROC) Threshold ROC Effective Utilization Ratio Upper Limit for Reserve Option Ratio 33

34 Benefits of ROM Automatic stabilizer: dampens the impact of capital flow volatility on domestic macroeconomic variables Weakens the adverse feedback loop between capital flows, exchange rate, and bank lending Market friendly and efficient mechanism 34

35 An illustration of the interaction between, capital flows, credit, and exchange rate: The role of ROM 35

36 Amplifying Role of Cross Border Capital Flows Improvement in Risk Perceptions Capital Inflows External Borrowing Currency appreciation Easier external finance Balance sheet effects and easing credit standards 36

37 Exchange Rate is a function of credit (C) and risk premium (rp) Credit E(C;rp) 0 0 Appreciation Exchange Rate 37

38 At the same time capital inflow is a function of exchange rate Credit C(E) E(C;rp) 0 0 Appreciation Exchange Rate 38

39 Suppose initially the economy is at high exchange rate low credit state Credit C(E) C a E(C;rp) 0 0 E Appreciation Exchange Rate 39

40 A sudden improvement in the risk appetite Credit C(E) falling risk premium C 0 0 E Appreciation a E(C;rp) E(C;rp') Exchange Rate 40

41 May start a chain reaction Credit C(E) falling risk premium C 0 0 E Appreciation a E(C;rp) E(C;rp') Exchange Rate 41

42 And shift the economy to a low exchange rate high credit state Credit C(E) falling risk premium C' a' C 0 0 E' E Appreciation a E(C;rp) E(C;rp') Exchange Rate 42

43 Yet, the final impact would be more limited with ROM Credit C(E) falling risk premium falling risk premium under ROM C' C a' a C 0 a 0 E' E Appreciation E E(C;rp) E(C;rp') Exchange Rate 43

44 Have new instruments weakened the impact of capital flows to domestic macroeconomic variables? 44

45 01/07 03/07 05/07 07/07 09/07 11/07 01/08 03/08 05/08 07/08 09/08 11/08 01/09 03/09 05/09 07/09 09/09 11/09 01/10 03/10 05/10 07/10 09/10 11/10 01/11 03/11 05/11 07/11 09/11 11/11 01/12 03/12 05/12 07/12 09/12 11/12 01/13 Current Account and Capital Flows Current Account Deficit and Net Capital Inflows (12 Month Cumulative, Billion USD) 90 CAD Net Capital Inflows Net Capital Inflows (adjusted for ROM and RRR) Source: CBRT. Last Observation: February

46 Volatility of the Turkish lira and other EM currencies against USD (30 days moving average) 1,9 1,7 1,5 1,3 1,1 0,9 0,7 0,5 0,3 0,1 New Policy Instruments Other EM Currencies No FX interventions beyond this point Turkish lira * Countries with current account deficits are Brazil, Chile, Columbia, Czech Republic, Hungary, Indonesia, Mexico, Poland, Romania, South Africa, and Turkey. 46

47 Curtosis of the Implied Distribution of Turkish lira and other EM Currencies against USD (30 days moving average) * The shaded area denotes the maximum and minimum of the Kurtosis of FX expectations for 10 emerging economies with current account deficits. Source: Değerli and Fendoğlu (2013) 47

48 04/06 07/06 10/06 01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09 01/10 04/10 07/10 10/10 01/11 04/11 07/11 10/11 01/12 04/12 07/12 10/12 01/13 04/13 Inflation Expectations 10 9 Adoption of New Policy Framework months 6 24 months Source: CBRT. Last Observation: April

49 Conclusion New policy framework has been effective in reducing macro financial risks in Turkey without hampering inflation objective. 49

50 Monetary Policy in the Post Crisis Period: The Turkish Perspective Hakan Kara Economic Research Forum Conference İstanbul April 19, 2013

Monetary Policy in the Post-Crisis Period

Monetary Policy in the Post-Crisis Period Monetary Policy in the Post-Crisis Period A. Hakan Kara Research and Monetary Policy Department EAF Conference October 10, 2011 Contents I. Changing View of Central Banking II. Capital Flows to Emerging

More information

The Role of Central Banks in the New Global Economic Design

The Role of Central Banks in the New Global Economic Design The Role of Central Banks in the New Global Economic Design Murat Çetinkaya Deputy Governor December 12, 2012 Doha, Qatar Contents I. Monetary Policy: Responses Against Challenges II. Turkish Monetary

More information

CENTRAL BANK OF TURKEY Interbank Markets Operations. Eşref Mehmet GÖKSU Markets Department Manager of FX Department

CENTRAL BANK OF TURKEY Interbank Markets Operations. Eşref Mehmet GÖKSU Markets Department Manager of FX Department CENTRAL BANK OF TURKEY Interbank Markets Operations Eşref Mehmet GÖKSU Markets Department Manager of FX Department September 2011 1 Legislative Framework 2 Legislative Framework The Law on The Central

More information

Reserve Option Mechanism: Does it Work as an Automatic Stabilizer?

Reserve Option Mechanism: Does it Work as an Automatic Stabilizer? WORKING PAPER NO: 14/38 Reserve Option Mechanism: Does it Work as an Automatic Stabilizer? October 2014 Oğuz ASLANER Uğur ÇIPLAK Hakan KARA Doruk KÜÇÜKSARAÇ Central Bank of the Republic of Turkey 2014

More information

Alternative tools to manage capital flow volatility 1

Alternative tools to manage capital flow volatility 1 Alternative tools to manage capital flow volatility 1 Koray Alper, Hakan Kara and Mehmet Yörükoğlu 2 Abstract Heightened volatility in cross-border capital flows has increased exchange rate volatility

More information

MONETARY and EXCHANGE RATE POLICY for December 2014 Ankara

MONETARY and EXCHANGE RATE POLICY for December 2014 Ankara MONETARY and EXCHANGE RATE POLICY for 2015 10 December 2014 Ankara 1 OVERVIEW 1. The Central Bank of the Republic of Turkey s (CBRT) main objective is to achieve price stability. To this end, as in the

More information

The experience of Peru with financial dedollariza6on. Zenón Quispe Central Reserve Bank of Peru

The experience of Peru with financial dedollariza6on. Zenón Quispe Central Reserve Bank of Peru The experience of Peru with financial dedollariza6on Zenón Quispe Central Reserve Bank of Peru 01 Content 1. Dollarization: the main vulnerability of the Peruvian economy 2. Why are we dollarized? 3. Rebuilding

More information

HEAD OFFICE ANKARA, 28 January 2014

HEAD OFFICE ANKARA, 28 January 2014 HEAD OFFICE ANKARA, 28 January 2014 Please refer to B.02.2.TCM.0.00.00.00- Ali BABACAN DEPUTY PRIME MINISTER ANKARA As stipulated in the Article 42 of the Central Bank Law, in the case of a significant

More information

Chart I.1. Difference between Primary Surplus (PS) and Bond Yield Spreads in Selected EU 1 Countries

Chart I.1. Difference between Primary Surplus (PS) and Bond Yield Spreads in Selected EU 1 Countries LIST OF CHARTS Chart I.1. Difference between Primary Surplus (PS) and Bond Yield Spreads in Selected EU 1 Countries Chart I.2. Gross Debt Stock and Budget Deficits of Selected Countries as of 2010 1 Chart

More information

Reserve Requirements, Liquidity Risk and Credit Growth

Reserve Requirements, Liquidity Risk and Credit Growth WORKING PAPER NO: 14/24 Reserve Requirements, Liquidity Risk and Credit Growth July 2014 Koray ALPER Mahir BİNİCİ Selva DEMİRALP Hakan KARA Pınar ÖZLÜ Central Bank of the Republic of Turkey 2014 Address:

More information

Macroeconomic Management With Open Capital Accounts

Macroeconomic Management With Open Capital Accounts Macroeconomic Management With Open Capital Accounts György Szapáry Central Bank of Hungary IMF-Singapore Regional Training Institute Seminar, Crisis Prevention in Emerging kets, Singapore, y 1-11, Introduction

More information

The spillover effects of unconventional monetary policy measures in major developed countries on developing countries

The spillover effects of unconventional monetary policy measures in major developed countries on developing countries The spillover effects of unconventional monetary policy measures in major developed countries on developing countries Tatiana Fic National Institute of Economic and Social Research Objective The objective

More information

Macroprudential Instruments and Monetary Policy: The Brazilian Experience

Macroprudential Instruments and Monetary Policy: The Brazilian Experience Macroprudential Instruments and Monetary Policy: The Brazilian Experience Arnildo Correa Research Department VIII Meeting of Central Bank Monetary Policy Managers Lima Peru, 25-26 June 2012 The views presented

More information

TURKISH FINANCIAL MARKETS IN PRACTISE

TURKISH FINANCIAL MARKETS IN PRACTISE TURKISH FINANCIAL MARKETS IN PRACTISE SECOND MEETING OF TURKISH-RUSSIAN WORKING GROUP ON BANKING AND FINANCIAL COOPERATION September 2011 EMEL GÜNEŞ HEAD OF TREASURY, DENIZBANK TURKISH FINANCIAL SECTOR:

More information

Recent Developments and Outlook for the Mexican Economy Credit Suisse, 2016 Macro Conference April 19, 2016

Recent Developments and Outlook for the Mexican Economy Credit Suisse, 2016 Macro Conference April 19, 2016 Credit Suisse, Macro Conference April 19, Outline 1 Inflation and Monetary Policy 2 Recent Developments and Outlook for the Mexican Economy 3 Final Remarks 2 In line with its constitutional mandate, the

More information

Indonesia: stabilizing the exchange rate along its fundamental

Indonesia: stabilizing the exchange rate along its fundamental Indonesia: stabilizing the exchange rate along its fundamental Perry Warjiyo 1 Abstract For a small open economy like Indonesia, exchange rate movement does not always reflect fundamental value. Increasing

More information

MANDATORY RESERVES THE MAIN TOOL OF THE ROMANIAN MONETARY POLICY IN THE CONTEXT OF EU AND INTERNATIONAL DEVELOPMENT

MANDATORY RESERVES THE MAIN TOOL OF THE ROMANIAN MONETARY POLICY IN THE CONTEXT OF EU AND INTERNATIONAL DEVELOPMENT MANDATORY RESERVES THE MAIN TOOL OF THE ROMANIAN MONETARY POLICY IN THE CONTEXT OF EU AND INTERNATIONAL DEVELOPMENT Laurentiu Mihailescu doctoral studies Management Prof. Maria Dimitriu, PhD Gabriela Popa

More information

FESSUD FINANCIALISATION, ECONOMY, SOCIETY AND SUSTAINABLE DEVELOPMENT. Working Paper Series. No 111

FESSUD FINANCIALISATION, ECONOMY, SOCIETY AND SUSTAINABLE DEVELOPMENT. Working Paper Series. No 111 FESSUD FINANCIALISATION, ECONOMY, SOCIETY AND SUSTAINABLE DEVELOPMENT Working Paper Series No 111 Global Constraints on Central Banking : The Case of Turkey Ahmet Benlialper & Hasan Cömert ISSN 2052-8027

More information

International Monetary Policy Transmission Előd Takáts and Abraham Vela Bank for International Settlements. BIS Papers No 78. Carl Musozya.

International Monetary Policy Transmission Előd Takáts and Abraham Vela Bank for International Settlements. BIS Papers No 78. Carl Musozya. International Monetary Policy Transmission Előd Takáts and Abraham Vela Bank for International Settlements. BIS Papers No 78 Carl Musozya. Introduction. Effects of advanced economy monetary policy on the

More information

MACROECONOMIC OVERVIEW

MACROECONOMIC OVERVIEW MACROECONOMIC OVERVIEW MAY 20 Koç Holding CONTENTS Global Economy... 3 Global Financial Markets... 3 Global Economic Growth Forecasts... 3 Turkey Macroeconomic Indicators... Economic Growth... Industrial

More information

Monetary Policy in Denmark. Niels Lynggaard Hansen Danmarks Nationalbank May 2010

Monetary Policy in Denmark. Niels Lynggaard Hansen Danmarks Nationalbank May 2010 Monetary Policy in Denmark Niels Lynggaard Hansen Danmarks Nationalbank May 2010 Agenda Background to Denmark s fixedexchange-rate policy Monetary policy in practice The financial crisis and unconventional

More information

Central Banking in Making during the Post-Crisis World and the Policy-Mix of the Central Bank of the Republic of Turkey

Central Banking in Making during the Post-Crisis World and the Policy-Mix of the Central Bank of the Republic of Turkey Central Banking in Making during the Post-Crisis World and the Policy-Mix of the Central Bank of the CBRT 5 Journal of Central Banking Theory and Practice, 2013, 2, pp. 5-18 Received: 26 April 2013; accepted:

More information

Monetary Policy of the Bank of Russia

Monetary Policy of the Bank of Russia Monetary Policy of the Bank of Russia Ksenia Yudaeva, Ph.D., First Deputy Governor Geneva, February 25 2 Inflation Targeting in Russia: Motivation & Challenges Motivation: Unanchored inflation Expectations

More information

DEVELOPMENTS IN 1990 s

DEVELOPMENTS IN 1990 s MACROECONOMIC MANAGEMENT WITH OPEN CAPITAL ACCOUNTS: THE TURKISH CASE FAIK OZTRAK Director TUSIAD-Koc University, Economic Research Forum HIGH LEVEL SEMINAR ON CRISIS PREVENTION, SINGAPORE, JULY 1, 26

More information

The Czech Economy and Monetary Policy: Deflationary Risks and the Exchange Rate as a Monetary Policy Instrument Luboš Komárek

The Czech Economy and Monetary Policy: Deflationary Risks and the Exchange Rate as a Monetary Policy Instrument Luboš Komárek The Czech Economy and Monetary Policy: Deflationary Risks and the Exchange Rate as a Monetary Policy Instrument Luboš Komárek 75th East Jour Fixe - 1 Years of EU Enlargement Vienna, 25th April 214 I. Did

More information

Portrait of the Crisis: Risks and Opportunities for Investors

Portrait of the Crisis: Risks and Opportunities for Investors Portrait of the Crisis: Risks and Opportunities for Investors Hung Tran IIF, Counsellor and Senior Director of Capital Markets and Emerging Markets Policy Garanti Masters Private Banking Conference Istanbul,

More information

Economic Outlook and Recent Developments in Latin America and Chile

Economic Outlook and Recent Developments in Latin America and Chile Economic Outlook and Recent Developments in Latin America and Chile Rodrigo Vergara Governor Central Bank of Chile, October 1 Introduction Latin America has made great advances in the s. The commodity

More information

International Monetary Policy

International Monetary Policy International Monetary Policy 2 Preliminary concepts 1 Michele Piffer London School of Economics 1 Course prepared for the Shanghai Normal University, College of Finance, April 2011 Michele Piffer (London

More information

IMF World Economic Outlook with a focus on India and Emerging Market Comparators

IMF World Economic Outlook with a focus on India and Emerging Market Comparators IMF World Economic Outlook with a focus on India and Emerging Market Comparators Thomas Richardson IMF Senior Resident Representative India/Nepal/Bhutan Meghnad Desai Academy of Economics October 9, 2015

More information

DenizBank Economic Update

DenizBank Economic Update Economy Financial Markets Banking Sector Focus Farewell to Unorthodox Policy Stance Economic Research and Strategy Saruhan Özel, Ph.D. Ercan Ergüzel Berke Gümüş Doğukan Ulusoy 1 External Sector Growth

More information

MGE#12 The Balance of Payments

MGE#12 The Balance of Payments MGE#12 The Balance of Payments The Current Account, the Capital Account and the Balance of Payments Introduction to the Foreign Exchange Market Savings, Investment and the Current Account 1 From last session

More information

Mexico: The challenges of capital inflows. Manuel Sánchez, Deputy Governor

Mexico: The challenges of capital inflows. Manuel Sánchez, Deputy Governor Manuel Sánchez, Deputy Governor Adam Smith Seminar, Schloss Spiez, Switzerland, June 26, 2013 Contents 1 Taxonomy of capital inflows 2 Risks and the prevention of problems 3 Economic outlook 2 Like other

More information

DenizBank Economic Update

DenizBank Economic Update Economy Financial Markets Banking Sector Focus The Central Bank is Still Dovish Economic Research and Strategy Saruhan Özel, Ph.D. Ercan Ergüzel Berke Gümüş Doğukan Ulusoy 1 External Sector Growth Economy

More information

RESEARCH NOTES IN ECONOMICS

RESEARCH NOTES IN ECONOMICS No: 213-3 / January 29, 213 RESEARCH NOTES IN ECONOMICS In Search of a Reasonable Credit Growth Rate for Turkey 1 Hakan Kara Hande Küçük S. Tolga Tiryaki Canan Yüksel Abstract: This study presents a cross-country

More information

Note on the foreign exchange market operations of the South African Reserve Bank

Note on the foreign exchange market operations of the South African Reserve Bank Note on the foreign exchange market operations of the South African Reserve Bank Daniel Mminele 1 Abstract Capital inflows to emerging market economies increased substantially following the global financial

More information

Current Account Deficit Dynamics: Different This Time? Sarp Kalkan Economic Policy Analyst

Current Account Deficit Dynamics: Different This Time? Sarp Kalkan Economic Policy Analyst Current Account Deficit Dynamics: Different This Time? Sarp Kalkan Economic Policy Analyst TEPAV Evaluation Note February 2011 Current Account Deficit Dynamics Along with the rapid economic recovery, current

More information

Turkish Arab Economic Forum June 29, 2012. Mehmet Şimşek. Minister of Finance

Turkish Arab Economic Forum June 29, 2012. Mehmet Şimşek. Minister of Finance Turkish Arab Economic Forum June 29, 2012 Mehmet Şimşek Minister of Finance 1 Outline Turkey: Short Term Outlook Managing a Soft Landing Fallout from the Euro Crisis Turkey & MENA REBALANCING Growing ON

More information

Global Factors in Capital Flows and Credit Growth by Valentina Bruno, American University Hyun Song Shin, Princeton University Griswold Center for

Global Factors in Capital Flows and Credit Growth by Valentina Bruno, American University Hyun Song Shin, Princeton University Griswold Center for Global Factors in Capital Flows and Credit Growth by Valentina Bruno, American University Hyun Song Shin, Princeton University Griswold Center for Economic Policy Studies Working Paper No. 237, June 2013

More information

Monetary policy in Russia: Recent challenges and changes

Monetary policy in Russia: Recent challenges and changes Monetary policy in Russia: Recent challenges and changes Central Bank of the Russian Federation (Bank of Russia) Abstract Increasing trade and financial flows between the world s countries has been a double-edged

More information

Monetary and Macroprudential Policies in Saudi Arabia

Monetary and Macroprudential Policies in Saudi Arabia Monetary and Macroprudential Policies in Saudi Arabia Ahmed Al-Darwish, Naif Alghaith, Pragyan Deb, Padamja Khandelwal Saudi Arabian Monetary Agency & International Monetary Fund May 2014 SAMA Quarterly

More information

EM Portfolio Flows Tracker 3.0 Methodology SEPTEMBER 1, 2016

EM Portfolio Flows Tracker 3.0 Methodology SEPTEMBER 1, 2016 EM Portfolio Flows Tracker 3. Methodology SEPTEMBER 1, 216 The IIF s EM Portfolio Flows Tracker is a monthly indicator that provides timely estimates of total portfolio debt and equity inflows to emerging

More information

Monetary Operations Framework at the Bank of Thailand. 1 October 2015

Monetary Operations Framework at the Bank of Thailand. 1 October 2015 Monetary Operations Framework at the Bank of Thailand 1 October 2015 Outline Bank of Thailand monetary policy and operation framework 1. Reserve requirement 2. Open market operations (OMOs) 3. Standing

More information

High interest rates have contributed to a stronger currency

High interest rates have contributed to a stronger currency Financial markets and Central Bank measures: 1 High interest rates have contributed to a stronger currency The króna has appreciated after the extension of the exchange rate band and the Central Bank s

More information

United States House of Representatives. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises

United States House of Representatives. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises United States House of Representatives Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises Credit Default Swaps on Government Debt: Potential Implications of the Greek Debt

More information

Pre-crisis lessons and post-crisis challenges for SEE economies. Christos Papazoglou Bank of Greece

Pre-crisis lessons and post-crisis challenges for SEE economies. Christos Papazoglou Bank of Greece Pre-crisis lessons and post-crisis challenges for SEE economies Christos Papazoglou Bank of Greece A comparative analysis of three regions in Emerging Europe: SEE, CE4 and the Baltics Contents A Closer

More information

Foreign Currency Market in IRAN Overview & Forecast

Foreign Currency Market in IRAN Overview & Forecast Research, Planning and Budgeting Division Economic Research Unit Feb. 2016 Foreign Currency Market in IRAN Overview & Forecast Q4-2015 No4 Research, Planning and Budgeting Division Economic Research Unit

More information

Chart 9.1 Non-performing loans ratio and structure of non-performing loans (right) 25% 80 06/08 03/11 03/09 12/07 12/08 06/09 09/09 12/09 09/08 06/11

Chart 9.1 Non-performing loans ratio and structure of non-performing loans (right) 25% 80 06/08 03/11 03/09 12/07 12/08 06/09 09/09 12/09 09/08 06/11 Financial Stability Report 21 H1 9. MONITORING BANKING SECTOR RISKS 9.1 CREDIT RISK (88) Loan portfolio quality improved and banks were more active in writingoff the loss loans from their balance sheets.

More information

Alternative Tools to Manage Capital Flow Volatility

Alternative Tools to Manage Capital Flow Volatility WORKING PAPER NO: 13/31 Alternative Tools to Manage Capital Flow Volatility July 2013 Koray ALPER Hakan KARA Mehmet YÖRÜKOĞLU Central Bank of the Republic of Turkey 2013 Address: Central Bank of the Republic

More information

Chapter 17. Preview. Introduction. Fixed Exchange Rates and Foreign Exchange Intervention

Chapter 17. Preview. Introduction. Fixed Exchange Rates and Foreign Exchange Intervention Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention Slides prepared by Thomas Bishop Copyright 2009 Pearson Addison-Wesley. All rights reserved. Preview Balance sheets of central banks Intervention

More information

Markets, Investments, and Financial Management FIFTEENTH EDITION

Markets, Investments, and Financial Management FIFTEENTH EDITION INTRODUCTION TO FINANCE Markets, Investments, and Financial Management FIFTEENTH EDITION Ronald W. Melicher Professor of Finance University of Colorado at Boulder Edgar A. Norton Professor of Finance Illinois

More information

Eighth UNCTAD Debt Management Conference

Eighth UNCTAD Debt Management Conference Eighth UNCTAD Debt Management Conference Geneva, 14-16 November 2011 Debt Resolution Mechanisms: Should there be a Statutory Mechanism for Resolving Debt Crises? by Mr. Hakan Tokaç Deputy Director General

More information

H1 2012 Earnings Presentation. BRSA Bank Only

H1 2012 Earnings Presentation. BRSA Bank Only BRSA Bank Only Macro Outlook Q1 GDP growth at 3.2%, mostly backed by net exports. Budget deficit was TRY 6.7 billion in H1 12, one third of Latest GDP figure is supportive of the soft landing the government

More information

Financial Globalization: Implications for Data Needs

Financial Globalization: Implications for Data Needs 20 th Meeting for the IMF Committee on Balance of Payments Statistics, October 29, 2007 (BOPCOM 07/07) Financial Globalization: Implications for Data Needs Ceyla Pazarbasioglu Chief, Capital Markets and

More information

Foreign currency lending: the flow and the stock problem

Foreign currency lending: the flow and the stock problem Foreign currency lending: the flow and the stock problem Júlia Király Ádám Banai 2nd NBRM Research Conference "Policy Nexus and the Global Environment: a New Consensus Emerging from the Crisis?" 26 April

More information

The history of the Bank of Russia s exchange rate policy

The history of the Bank of Russia s exchange rate policy The history of the Bank of Russia s exchange rate policy Central Bank of the Russian Federation Abstract During the post-soviet period of 1992 98, the monetary policy of the Bank of Russia was essentially

More information

Macroprudential Policies in Korea

Macroprudential Policies in Korea 1 IMF-Riksbank Conference Stockholm, November 13~14, 2014 Macroprudential Policies in Korea Tae Soo Kang Disclaimer This presentation represents the views of the author and not necessarily those of the

More information

The Mexican Economy in the Global Economic Juncture

The Mexican Economy in the Global Economic Juncture Mr. Javier Guzmán Calafell, Deputy Governor, Banco de México Santander EM Day, Macro & Corporates Conference London, 7 June 2016 Outline 1 2 3 4 5 External Conditions Evolution of the Mexican Economy Inflation

More information

The Impact of the Financial Crisis on South Africa

The Impact of the Financial Crisis on South Africa Africa Economists Retreat, December 5, 2008 The Impact of the Financial Crisis on South Africa Phindile Ngwenya and Michele Zini PREM Pretoria Country Office Outline The Economic Background Recent Developments

More information

BANCO CENTRAL DE RESERVA DEL PERÚ

BANCO CENTRAL DE RESERVA DEL PERÚ The Implementation of Monetary Policy: Lessons from the Crisis and Challenges for Coming Years Julio Velarde President Central Reserve Bank of Peru SEACEN-CEMLA Conference Kuala Lumpur, Malaysia October

More information

uncertainty. Credit flows are especially pro cyclical

uncertainty. Credit flows are especially pro cyclical Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence Hélène Rey London Business School, CEPR and NBER Jackson Hole Symposium 2013 Global financial cycle: capital flows Strong

More information

Lazard EMERGING MARKETS EQUITY

Lazard EMERGING MARKETS EQUITY FEATURING Lazard EMERGING MARKETS EQUITY Currently, emerging-markets equities (as measured by the MSCI Emerging Markets Index) have generated higher financial productivity and carry an almost 20 percent

More information

Chapter 17. Fixed Exchange Rates and Foreign Exchange Intervention. Copyright 2003 Pearson Education, Inc.

Chapter 17. Fixed Exchange Rates and Foreign Exchange Intervention. Copyright 2003 Pearson Education, Inc. Chapter 17 Fixed Exchange Rates and Foreign Exchange Intervention Slide 17-1 Chapter 17 Learning Goals How a central bank must manage monetary policy so as to fix its currency's value in the foreign exchange

More information

Recent Developments in Local Currency Bond Markets (LCBMs) 1. October 2013

Recent Developments in Local Currency Bond Markets (LCBMs) 1. October 2013 Recent Developments in Local Currency Bond Markets (LCBMs) 1 October 2013 Given the importance of local currency bond markets (LCBMs), including in the context of the work now underway on financing for

More information

The Mexican Economy: Facts and Opportunities

The Mexican Economy: Facts and Opportunities Manuel Sánchez Santander Global Fixed Income Summit London, England, September 20, 2012 Contents 1 Structural features 2 Recent developments and outlook 3 Inflation and monetary policy 4 Economic challenges

More information

The global economy Banco de Portugal Lisbon, 24 September 2013 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist

The global economy Banco de Portugal Lisbon, 24 September 2013 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist The global economy Banco de Portugal Lisbon, 24 September 213 Mr. Pier Carlo Padoan OECD Deputy Secretary-General and Chief Economist Summary of presentation Global economy slowly exiting recession but

More information

Practice Exam 3 Fall 2015

Practice Exam 3 Fall 2015 Global Macroeconomics ::Solutions:: Practice Exam 3 Fall 2015 Do not open this exam until instructed to do so. You have 75 minutes to complete this exam You may use a calculator; you may not use any other

More information

Fixed Exchange Rates and Exchange Market Intervention. Chapter 18

Fixed Exchange Rates and Exchange Market Intervention. Chapter 18 Fixed Exchange Rates and Exchange Market Intervention Chapter 18 1. Central bank intervention in the foreign exchange market 2. Stabilization under xed exchange rates 3. Exchange rate crises 4. Sterilized

More information

Taking stock of China s external debt: low indebtedness, but rapid growth is a concern

Taking stock of China s external debt: low indebtedness, but rapid growth is a concern 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 ECONOMIC ANALYSIS Taking stock of China s external debt: low indebtedness,

More information

Global liquidity and procyclicality*

Global liquidity and procyclicality* Global liquidity and procyclicality* Hyun Song Shin Bank for International Settlements The State of Economics, The State of the World World Bank conference, 8 June 2016 * The views expressed here are mine,

More information

Factoring Exchange Rate Policy into your Investment Strategy: Risks Facing Andean Countries

Factoring Exchange Rate Policy into your Investment Strategy: Risks Facing Andean Countries Factoring Exchange Rate Policy into your Investment Strategy: Risks Facing Andean Countries September 2011 Dr. Eliot Kalter President, E M Strategies Senior Fellow, The Fletcher School Ekalter@EMStrategies.com

More information

Naturally, these difficult external conditions have affected the Mexican economy. I would stress in particular three developments in this regard:

Naturally, these difficult external conditions have affected the Mexican economy. I would stress in particular three developments in this regard: REMARKS BY MR. JAVIER GUZMÁN CALAFELL, DEPUTY GOVERNOR AT THE BANCO DE MÉXICO, ON THE MEXICAN ECONOMY IN AN ADVERSE EXTERNAL ENVIRONMENT: CHALLENGES AND POLICY RESPONSE, SANTANDER MEXICO DAY 2016, Mexico

More information

Specifics of national debt management and its consequences for the Ukrainian economy

Specifics of national debt management and its consequences for the Ukrainian economy Anatoliy Yepifanov (Ukraine), Vyacheslav Plastun (Ukraine) Specifics of national debt management and its consequences for the Ukrainian economy Abstract This article is about the specifics of the national

More information

CESEE DELEVERAGING AND CREDIT MONITOR 1

CESEE DELEVERAGING AND CREDIT MONITOR 1 DELEVERAGING AND CREDIT MONITOR 1 February 1, 1 BIS reporting banks continued to scale back their funding to Central, Eastern and South Eastern Europe () in Q3 13, at broadly the same pace as in Q 13,

More information

Caucasus and Central Asia: Oil Price Decline and Regional Spillovers Darken the Outlook

Caucasus and Central Asia: Oil Price Decline and Regional Spillovers Darken the Outlook Caucasus and Central Asia: Oil Price Decline and Regional Spillovers Darken the Outlook Economic activity in the Caucasus and Central Asia (CCA) will continue to decelerate in 215 mainly as a consequence

More information

Brazil Economic Outlook

Brazil Economic Outlook Economic Outlook London Alexandre Tombini Governor October 2013 1 Main topics Inflation Growth UMP Exit 2 Inflation adversely affected by supply shocks YoY % Jan 11 Mar 11 May 11 Jul 11 Sep 11 Nov 11 Jan

More information

DenizBank Economic Update

DenizBank Economic Update Economic Research and Strategy Saruhan Özel, Ph.D. Ercan Ergüzel Berke Gümüş Doğukan Ulusoy Economy Financial Markets Banking Sector Focus Rising Current Account Deficit Raises Eyebrows A Variety of Precautionary

More information

The Impact of Surplus Liquidity

The Impact of Surplus Liquidity The Impact of Surplus Liquidity Garreth Rule CCBS PFTAC Course on Monetary Transmission Channels, Liquidity Conditions, and Determinants of Inflation Central Bank of Solomon Islands 18 23 July 2012 The

More information

Supply and Demand Factors of Stagnant Bank Lending in the U.S. and Europe: Comparison with Japan s Post-Bubble Period

Supply and Demand Factors of Stagnant Bank Lending in the U.S. and Europe: Comparison with Japan s Post-Bubble Period -E- upply and Demand Factors of tagnant Bank Lending in the U.. and Europe: Comparison with Japan s Post-Bubble Period International Department atoe Aoki, Tatsuya Hasegawa and hingo Watanabe December This

More information

Globalization and Monetary Policy

Globalization and Monetary Policy Globalization and Monetary Policy John B. Taylor Stanford University Fifteenth Cycle of Economic Lectures Banco de Guatemala 22 June 2006 Outline: Three Themes Increased Need for Systematic Strategies

More information

DenizBank Economic Update

DenizBank Economic Update November, 211 Economy Financial Markets Banking Sector Focus Current Account Deficit Worries Unfounded Economic Research and Strategy Saruhan Özel, Ph.D. Ercan Ergüzel Berke Gümüş Doğukan Ulusoy 1 External

More information

Cross-Border Capital Flows Statistics and Its Implication for Monitoring in China

Cross-Border Capital Flows Statistics and Its Implication for Monitoring in China First IMF Statistical Forum Statistics for Global Economic and Financial Stability Cross-Border Capital Flows Statistics and Its Implication for Monitoring in China Wang Xiaoyi State Administration of

More information

tepav The Economic Policy Research Foundation of Turkey December2014 R201408 Fatih Özatay 1 Director, TEPAV Finance Institute

tepav The Economic Policy Research Foundation of Turkey December2014 R201408 Fatih Özatay 1 Director, TEPAV Finance Institute REPORT tepav The Economic Policy Research Foundation of Turkey December2014 R201408 Fatih Özatay 1 Director, TEPAV Finance Institute THE POLICY RESPONSE 2 The global financial crisis caused sharp output

More information

CESEE DELEVERAGING AND CREDIT MONITOR 1

CESEE DELEVERAGING AND CREDIT MONITOR 1 CESEE DELEVERAGING AND CREDIT MONITOR 1 November 4, 214 Key Developments in BIS Banks External Positions and Domestic Credit In 214:Q2, BIS reporting banks reduced their external positions to CESEE countries

More information

Turnaround in the foreign exchange market króna strengthens

Turnaround in the foreign exchange market króna strengthens Financial markets and Central Bank actions¹ Turnaround in the foreign exchange market króna strengthens At first after the Central Bank reduced its policy rate in November the króna continued to slide

More information

Course: Economics I (macroeconomics) Study text. 13th Chapter. Monetary Policy. Author: Ing. Vendula Hynková, Ph.D.

Course: Economics I (macroeconomics) Study text. 13th Chapter. Monetary Policy. Author: Ing. Vendula Hynková, Ph.D. Course: Economics I (macroeconomics) Study text 13th Chapter Monetary Policy Author: Ing. Vendula Hynková, Ph.D. 13 Monetary policy Monetary policy is part of and a tool of macroeconomic policy. It is

More information

Indonesia s monetary policy: coping with volatile commodity prices and capital inflows

Indonesia s monetary policy: coping with volatile commodity prices and capital inflows Indonesia s monetary : coping with volatile commodity prices and capital inflows Perry Warjiyo 1 Introduction Global commodity prices and volatile capital flows are among the key challenges facing Indonesian

More information

Econ 202 Section 4 Final Exam

Econ 202 Section 4 Final Exam Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40

More information

The Global Economic Outlook: Advanced and Emerging Economies

The Global Economic Outlook: Advanced and Emerging Economies 43 rd Meeting of IDB Chief Economists of Central Banks and Finance Ministries The Global Economic Outlook: Advanced and Emerging Economies 13 April 2016 Catherine L. Mann OECD Chief Economist www.oecd.org/economy/economicoutlook.htm

More information

ISBANK EARNINGS PRESENTATION 2016 Q1

ISBANK EARNINGS PRESENTATION 2016 Q1 ISBANK EARNINGS PRESENTATION 2016 Q1 2016 Q1 Recent Developments in the Economy Binler Global Outlook Main Indicators of Turkey US EA Moderate expansion in the US economy Solid labor market data Still

More information

World Economic Outlook

World Economic Outlook World Economic Outlook Transitions and Tensions Rupa Duttagupta Deputy Division Chief Research Department, IMF United Nations, Project LINK Meetings, October 21, 213 1 Global growth dynamics are in transition

More information

The financial turbulence and Norway what lessons can be drawn? Governor Øystein Olsen Eiendomsdagene Norefjell 19 January 2012

The financial turbulence and Norway what lessons can be drawn? Governor Øystein Olsen Eiendomsdagene Norefjell 19 January 2012 The financial turbulence and Norway what lessons can be drawn? Governor Øystein Olsen Eiendomsdagene Norefjell 19 January 1 The run-up to the financial crisis 1. Sharp rise in debt and asset prices low

More information

ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014

ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014 ECONOMIC REVIEW(A Monthly Issue) March, April, 2015 2014 Economics & Strategic Planning Department http://www.bochk.com Effects The of Reasons CNH Exchange Why the Rate Singapore on Offshore Economy RMB

More information

Why ECB QE is Negative for Commodities. Investment Research & Advisory. Deltec International Group

Why ECB QE is Negative for Commodities. Investment Research & Advisory. Deltec International Group Atul Lele alele@deltecinv.com +1 242 302 4135 David Munoz dmunoz@deltecinv.com +1 242 302 4106 David Frazer dfrazer@deltecinv.com +1 242 302 4156 Why ECB QE is Negative for Commodities Recent ECB Quantitative

More information

Monetary Policy Outlook in a Negative Rates Environment Mr. Javier Guzmán Calafell, Deputy Governor, Banco de México J.P. Morgan Investor Seminar

Monetary Policy Outlook in a Negative Rates Environment Mr. Javier Guzmán Calafell, Deputy Governor, Banco de México J.P. Morgan Investor Seminar Mr. Javier Guzmán Calafell, Deputy Governor, Banco de México J.P. Morgan Investor Seminar Washington, DC, 15 April 2016 Outline 1 External Conditions 2 Macroeconomic Policy in Mexico 3 Evolution and Outlook

More information

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia

Project LINK Meeting New York, 20-22 October 2010. Country Report: Australia Project LINK Meeting New York, - October 1 Country Report: Australia Prepared by Peter Brain: National Institute of Economic and Industry Research, and Duncan Ironmonger: Department of Economics, University

More information

Public Debt in Developing Countries

Public Debt in Developing Countries Public Debt in Developing Countries Has the Market-Based Model Worked? Indermit Gill and Brian Pinto The World Bank Capital Flows and Global External Imbalances Seminar April 4 2006 In Principle: Government

More information

The Vienna Initiative

The Vienna Initiative The Vienna Initiative KNF Conference on Household Lending Warsaw, October 20, 2010 Mark Allen Senior IMF Resident Representative for Central and Eastern Europe The problem Parent Banks severely affected

More information

Low repo rate supports upturn in inflation. Governor Stefan Ingves Bank & Finans Outlook 18 March 2015

Low repo rate supports upturn in inflation. Governor Stefan Ingves Bank & Finans Outlook 18 March 2015 Low repo rate supports upturn in inflation Governor Stefan Ingves Bank & Finans Outlook 18 March 2015 Sweden - a small open economy in an uncertain world Large oil price fluctuations Negative interest

More information

SURVEY ON HOW COMMERCIAL BANKS DETERMINE LENDING INTEREST RATES IN ZAMBIA

SURVEY ON HOW COMMERCIAL BANKS DETERMINE LENDING INTEREST RATES IN ZAMBIA BANK Of ZAMBIA SURVEY ON HOW COMMERCIAL BANKS DETERMINE LENDING INTEREST RATES IN ZAMBIA September 10 1 1.0 Introduction 1.1 As Government has indicated its intention to shift monetary policy away from

More information

Monetary Policy and Credit Cards: Evidence from a Small-Open Economy

Monetary Policy and Credit Cards: Evidence from a Small-Open Economy Monetary Policy and Cards: Evidence from a Small-Open Economy by Hakan Yilmazkuday Department of Economics DETU Working Paper 1-1 September 21 131 Cecil B. Moore Avenue, Philadelphia, PA 19122 http://www.temple.edu/cla/economics/

More information