The European Central Bank and the Eurosystem

The Eurosystem comprises the European Central Bank at its center as well as the national central banks of the twelve countries currently participating in monetary union. The European Central Bank was established in July 1998, six months before the beginning of Stage Three of economic and monetary union. Although decisions regarding monetary policy are made centrally by the Governing Council of the Eurosystem, the operational aspects of monetary policy-including open market operations, administration of the minimum reserve system, and management of the standing facilities-are undertaken in a decentralized fashion at the twelve national central banks. The main features of the Eurosystem's operating procedures are similar in many respects to those employed by the Bundesbank and other national central banks in the euro area in recent years.European Central Bank ; Banks and banking, Central - Europe ; Monetary policy - Europe

Credit cards: facts and theories

We use data from several waves of the Survey of Consumer Finances to document credit and debit card ownership and use across US demographic groups. We then present recent theoretical and empirical contributions to the study of credit and debit card behavior. Utilization rates of credit lines and portfolios of card holders present several puzzles. Credit line increases initiated by banks lead households to restore previous utilization rates. High-interest credit card debt co-exists with substantial holdings of low-interest liquid assets and with accumulation of retirement assets. Although available evidence disputes ignorance of credit card terms by card holders, redit card rates do not respond to competition. There is a rising trend in bankruptcy and delinquency, partly attributable to an increased tendency of households to declare bankruptcy associated with reduced social stigma, ease of procedures, and financial incentives. Co-existence of credit card debt with retirement assets can be explained through self-control hyperbolic discounting. Strategic default motives contribute partly to observed co-existence of credit card debt with low-interest liquid assets. A framework of “accountant-shopper” households, in which a rational accountant tries to control an impulsive shopper, seems consistent with both types of co-existence and with observed utilization of credit lines. JEL Classification: G11, E2

Comment on "Magnetic field effects on neutron diffraction in the antiferromagnetic phase of UPt3"

Moreno and Sauls [Phys. Rev. B 63, 024419 (2000)] have recently tried to reanalyze earlier neutron scattering studies of the antiferromagnetic order in UPt3 with a magnetic field applied in the basal plane. In their calculation of the magnetic Bragg peak intensities, they perform an average over different magnetic structures belonging to distinct symmetry representations. This is incorrect. In addition, they have mistaken the magnetic field direction in one of the experiments, hence invalidating their conclusions concerning the experimental results.Comment: Revised 5 June 2001: Added group theory analysis and modified discussion of S and K domain

The financial crisis and U.S. cross-border financial flows

The financial crisis that began in the summer of 2007 caused notable changes in the composition of U.S. cross-border financial flows, especially in the fall of 2008, when the crisis intensified. This article documents three major channels through which financial flows and associated portfolio positions were affected: (1) “flight to safety” shifts away from riskier securities and toward investments in safe and liquid markets, particularly U.S. Treasury securities; (2) unusual flows through the banking system resulting from a shortage of dollar liquidity abroad and a breakdown in interbank markets; and (3) a pullback from cross-border positions during the crisis.Financial crises ; Government securities

Debt Revolvers for Self Control

By 1998, about two-thirds of U.S. households held a bank-type credit card. Despite high interest rates, most revolve credit card debt. The majority of debt revolvers have substantial liquid assets, apparently violating arbitrage. We propose an "accountant-shopper" model that could provide an explanation for this puzzle. In our model, the "accountant self" (or spouse) of the household can control the expenditures of the "shopper self" (or spouse) by limiting the purchases the shopper can make before encountering the credit limit. Since the card balance is used for control purposes, the accountant self may also find it optimal to save in lower-return riskless assets. Using attitudinal responses and demographic data from the pooled 1995 and 1998 Surveys of Consumer Finances, we estimate a bivariate probit model of the decisions to have a credit card and to revolve debt on it, allowing for sample selection. The pattern of estimated coefficients is consistent with debt revolvers being motivated primarily by self-control considerations rather than intertemporal consumption smoothing.credit cards, consumer debt, portfolio puzzles, household portfolios

Recent developments in cross-border investment in securities

Securities have replaced bank lending in recent years as the primary means through which funds are invested internationally, and in the process, the share of U.S. securities owned by foreigners has grown markedly. Between 1974 and 2002, the proportion of the value of outstanding U.S. long-term securities (equities and long-term debt) that was foreign-owned increased from about 5 percent to about 12 percent. At the same time, U.S. holdings of foreign long-term securities also increased, although their growth did not match the rapid growth in foreign holdings of U.S. securities. At $1.8 trillion, the value of U.S. holdings of foreign long-term securities at the end of 2002 was less than half the value of foreign holdings of U.S. securities; this difference resulted in a negative net international position in long-term securities of$2.3 trillion. ; The U.S. system for measuring cross-border securities activity consists of annual surveys measuring holdings of securities and monthly reports measuring transactions in securities. This article reports the latest survey data on holdings as well as the more-recent transactions data. The discussion focuses on U.S. cross-border securities activity, but it also addresses the investment patterns of some other countries and describes the initiatives to improve the measurement of cross-border securities investments.Securities ; Investments, Foreign

The launch of the euro

The introduction on January 1, 1999, of the euro--the single currency adopted by eleven of the fifteen countries of the European Union--marked the beginning of the final stage of Economic and Monetary Union and the start of a new era in Europe. The creation of a single currency and a single monetary policy has provided both extraordinary challenges and exceptional opportunities within Europe. This article reviews the organization, objectives, and targets of the euro area's new central bank and discusses some of the early challenges it has faced in setting and implementing monetary policy with the new common currency. It discusses the initial functioning of the payment system and the interbank market and reviews the effects to date of the single currency on European bond and equity markets, on the banking system, and in euro-area transactions.Euro ; European Monetary System (Organization) ; European currency unit

Symmetry, incommensurate magnetism and ferroelectricity: the case of the rare-earth manganites RMnO3

The complete irreducible co-representations of the paramagnetic space group provide a simple and direct path to explore the symmetry restrictions of magnetically driven ferroelectricity. The method consists of a straightforward generalization of the method commonly used in the case of displacive modulated systems and allows us to determine, in a simple manner, the full magnetic symmetry of a given phase originated from a given magnetic order parameter. The potential ferroic and magneto-electric properties of that phase can then be established and the exact Landau free energy expansions can be derived from general symmetry considerations. In this work, this method is applied to the case of the orthorhombic rare-earth manganites RMnO3. This example will allow us to stress some specific points, such as the differences between commensurate or incommensurate magnetic phases regarding the ferroic and magnetoelectric properties, the possible stabilization of ferroelectricity by a single irreducible order parameter or the possible onset of a polarization oriented parallel to the magnetic modulation. The specific example of TbMnO3 will be considered in more detail, in order to characterize the role played by the magneto-electric effect in the mechanism for the polarization rotation induced by an external magnetic field.Comment: Conference: Aperiodic`0

Comparison of different panels sorting tasks with hierarchical multiple factor analysis

Hierarchical multiple factor analysis is a suitable tool for giving account of the evaluation of a same set of items by hierarchically structured sets of individuals. This method is applied to compare trained and non-trained panels in wine hall tests. Every panellist has to categorize the wines in clusters, describe them with free descriptive words and also give a hedonic score. Data coding leads to a wine × individual evaluation table in which the columns present a hierarchical structure. Hierarchical multiple factor analysis allows for exploring and visualizing the observed variability among both wines and panellists. Visualizing tools are also offered to evaluate the similarity between panels and sets of panels.Postprint (author’s final draft