International money markets: eurocurrencies

Eurocurrencies are international markets for short-term wholesale bank deposits and loans. They emerged in Western Europe in the late 1950s and rapidly reached a global scale. A Eurocurrency is a form of bank money: an unsecured short-term bank debt denominated in a currency (for instance, US dollars) but issued by banks operating offshore, in a geographical location or a legal space situated outside of the jurisdiction of the national authorities presiding over that currency (for instance, the Federal Reserve). In Eurocurrency markets, banks intermediate mainly between foreign residents. They borrow funds by "accepting" foreign currency deposits and lend foreign currency-denominated funds by "placing" deposits with other banks, by granting short-term loans or investing in other liquid assets. Historically, Eurodollars accounted for the largest share of Eurocurrencies, although other international currencies (Deutsche Marks, Japanese yens, and especially Euros since 1999) played an important role. Eurocurrency markets were a manifestation of financial integration and interdependence in a globalizing economy and performed critical functions in the distribution and creation of international liquidity. At the same time, their fast growth was a recurrent source of concerns for central bankers and policymakers due to their implications for macroeconomic policies and financial stability. This chapter analyzes different aspects of the historical development of Eurocurrency markets and their role in the international monetary and financial system. The first part discusses theoretical interpretations, presents estimates of markets' size, describes their structure, and explains the determinants of their growth. The second part analyzes the spread between Eurodollar rates and other US money market rates, the role of arbitrage, the evolution of risk factors, and the causes of historical episodes of stress and contagion in the interbank market. The last part discusses political economy issues, such as the role of governments and market forces in the emergence of Eurodollars in the 1950s and the failed attempts to impose multilateral controls on Eurocurrency markets in the 1970s

The Peter Pan paradigm

Genetic and environmental agents that disrupt organogenesis are numerous and well described. Less well established, however, is the role of delay in the developmental processes that yield functionally immature tissues at birth. Evidence is mounting that organs do not continue to develop postnatally in the context of these organogenesis insults, condemning the patient to utilize under-developed tissues for adult processes. These poorly differentiated organs may appear histologically normal at birth but with age may deteriorate revealing progressive or adult-onset pathology. The genetic and molecular underpinning of the proposed paradigm reveals the need for a comprehensive systems biology approach to evaluate the role of maternal-fetal environment on organogenesis

Ageing and Financial Stability

Abstract: Although the precise details are subject to major uncertainty, it seems likely that the process of population ageing will involve major shifts in financing, which may give rise to financial turbulence and systemic risk. The locus and scale of these effects will also depend on the predominant approach to retirement income provision. It is argued that the financial-stability risks arising from continuing with unsustainable pay-as-you-go systems would be more threatening than those arising from funding. Fiscal crises can have incalculable consequences for private financial markets, while pension funding involves more an adaptation by regulatory authorities to a more securitised and institutionalised financial system, that is likely to develop in any case. Concerning policy, for social security, the key issue is reform, so that the fiscal difficulties and their consequences for financial stability foreshadowed above do not arise. For institutional investors involved in funding, policy issues arising include the need for prudent person asset regulation, absence of guarantees generating moral hazard and international diversification of institutional portfolios, so that they are less dependent on the performance of the domestic economy than would otherwise be the case. Banks would not be immune to the side-effects of the various patterns ageing will generate, and an awareness of such risks as well a

Dynamics of learning and the financial instability hypothesis

SIGLEAvailable from Bibliothek des Instituts fuer Weltwirtschaft, ZBW, Duesternbrook Weg 120, D-24105 Kiel W 111 (249) / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman