CrossFlow: Cross-Organizational Workflow Management for Service Outsourcing in Dynamic Virtual Enterprises

In this report, we present the approach to cross-organizational workflow management of the CrossFlow project. CrossFlow is a European research project aiming at the support of cross-organizational workflows in dynamic virtual enterprises. The cooperation in these virtual enterprises is based on dynamic service outsourcing specified in electronic contracts. Service enactment is performed by dynamically linking the workflow management infrastructures of the involved organizations. Extended service enactment support is provided in the form of cross-organizational transaction management and process control, advanced quality of service monitoring, and support for high-level flexibility in service enactment. CrossFlow technology is realized on top of a commercial workflow management platform and applied in two real-world scenarios in the contexts of a logistics and an insurance company

CrossFlow: Integrating Workflow Management and Electronic Commerce

The CrossFlow1 architecture provides support for cross-organisational workflow management in dynamically established virtual enterprises. The creation of a business relationship between a service provider organisation performing a service on behalf of a consumer organisation can be made dynamic when augmented by virtual market technology, the dynamic configuration of the contract enactment infrastructures, and the provision of fine grained service monitoring and control. Standard ways of describing services and contracts can be combined with matchmaking technology to create a virtual market for such service provision and consumption. A provider can then advertise its services in the market and consumers can search for a compatible business partner. This provides choice in selecting a partner and allows the deferment of the decision to a point in time where it can be made on the most up-to-date requirements of the consumer and service offers in the market. The penalty for deferred decision making is the time to set up the infrastructure in each organisation for the dynamically established contract. Thus, a further aspect of CrossFlow was to exploit the contract in the dynamic and automatic configuration of the contract enactment and supervision infrastructures of the respective organisations and in linking them in a dynamic fashion. The electronic contract, which results from the agreement between the newly established business partners, completely specifies the intended collaboration between them. Given the importance of the business process enacted by the provider, this includes fine-grained monitoring and control to allow tight co-operation between the organisations

Scandinavia: Central Bank Swaps to Iceland, 2008

By 2008, the Icelandic banking system had become so large and heavily exposed to foreign liabilities that the Central Bank of Iceland (CBI) lacked sufficient foreign reserves to serve as a credible lender of last resort. During the first quarter of 2008, the CBI, in an effort to bolster reserves, began soliciting other central banks for swap agreements, the first of which was Danmarks Nationalbank. On May 16, 2008, Danmarks Nationalbank, Norges Bank, and Sveriges Riksbank agreed to bilateral swap facilities in which the CBI could borrow euros against Icelandic krona for a maximum of EUR 1.5 billion (USD 2.3 billion), or EUR 500 million from each Scandinavian central bank. Though the arrangement was intended to be precautionary, the CBI could draw upon the swaps if necessary to preserve financial stability. On October 14, 2008, one week after Iceland’s three largest banks failed, the CBI drew EUR 200 million from each of the swap lines with Danmarks Nationalbank and Norges Bank, using the proceeds to secure trade in essential goods. These drawings helped bridge to an eventual International Monetary Fund (IMF) support package for Iceland, which was finalized on November 19, 2008. On November 3, 2008, Norges Bank announced an extension of its bilateral swap line with the CBI, and on November 20, following the IMF agreement, Danmarks Nationalbank and Sveriges Riksbank also extended their swap lines with the CBI from the end of 2008 through the end of 2009. By the end of 2008, the CBI’s drawings on the swap lines totaled EUR 450 million, split evenly among the three Scandinavian central banks. The CBI repaid these borrowings by the end of 2009

United States: New York Clearing House Association, the Panic of 1884

The New York Clearing House Association (NYCH), whose membership included most banks in New York, acted as a lender of last resort during the National Banking Era (1863–1913). In the Panic of 1884, following idiosyncratic deposit runs that forced three NYCH member banks to close, the NYCH membership unanimously agreed to issue clearinghouse loan certificates (CLCs) that banks could use as a temporary substitute for currency in the payment of interbank clearinghouse balances. The NYCH required the borrowing bank to post sufficient collateral to secure the loan, subject to a minimum 25% haircut (excluding US government bonds secured at par) and to pay 6% interest. In aggregate, the NYCH issued $24.9 million in CLCs between May 15 and June 6. Outstanding CLCs peaked at$21.9 million on May 24. By July 1, all banks retired their CLCs, except for Metropolitan National Bank. Metropolitan National entered liquidation later that year with more than $5 million in uncanceled CLCs; the NYCH canceled these final CLCs in September 1886. With the exception of Metropolitan National Bank, the NYCH’s issuance of CLCs coincided with a short and contained panic in New York City. Unlike in the Panic of 1873, New York banks did not temporarily suspend payments to depositors or pool their cash reserves to meet their liquidity needs. The US Treasury did not intervene by purchasing government bonds but did offer to repay$10 million in debt a month early to provide some relief to the market

Russia: Reserve Requirements, GFC

In August 2008, Russian banks and financial markets experienced significant capital outflows after Russia invaded neighboring Georgia. The collapse of Lehman Brothers on September 15 led to further outflows and a 25% drop in Russia’s main stock index. On September 17, regulators halted stock-market trading. Later that day, the Central Bank of the Russian Federation (CBR) announced cuts to the three required reserve ratios (RRRs) it imposed on commercial banks—based on their ruble liabilities to foreign banks, ruble liabilities to individuals, and other liabilities—by 400 basis points, effective September 18, in an effort to promote banking sector liquidity. The CBR said then that it would raise RRRs back to their previous levels by March 1, 2009. However, less than one month later, the CBR implemented a second unscheduled RRR cut, this time lowering all three RRRs to a common 0.5% ratio. The CBR said that the RRR cuts released RUR 260 billion (USD 10.2 billion) into the banking system on September 18 and RUR 100 billion on October 15. In 2009, the CBR raised RRRs by a total of 200 bps in four equal increases on the first of May, June, July, and August. The new 2.5% RRR on all reservable liabilities remained in place until 2011

Russia: Lombard and Overnight Loans, 1998

On August 17, 1998, following a wave of speculative attacks on domestic ruble assets, the Russian government announced a default on its ruble debt maturing before the end of 1999, and the Central Bank of Russia (CBR) declared a devaluation of the ruble by widening the fixed exchange rate band. The announcements left Russian banks without their main source of collateral—government treasuries—to obtain funds from the CBR’s liquidity facilities. Russia’s payment system and interbank market froze as banks hoarded liquidity and, in some cases, restricted withdrawals in response to depositor runs. To restore liquidity to commercial banks and unfreeze the payment system, the CBR relied on four major lending programs: (1) its standing lending facility, the Lombard facility; (2) overnight/intraday (O/I) lending, which it had introduced in June 1998; (3) repurchase agreements (repos); and (4) rehabilitation loans, cheap credit to systemically important banks collateralized by bank equity. This case focuses on the Lombard facility and the O/I loans. Following the default and devaluation in August 1998, the CBR lowered interest rates and allowed banks to roll over unredeemed overnight loans, effectively extending the maturity of the liquidity it offered. While the CBR’s liquidity relief and other measures—such as the easing of banks’ reserve requirements—succeeded in unfreezing the payment system, the overall lack of transparency and oversight of banks receiving assistance continued to undermine trust in Russian banks

ASEAN Swap Arrangement, 1977–2021

Established on August 5, 1977, by the five central banks of the Association of Southeast Asian Nations (ASEAN), the ASEAN Swap Arrangement (ASA) was one of several regional financial safety nets developed during a decade defined by macroeconomic instability, with the collapse of the gold standard and an oil crisis. Each of the five ASEAN members (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) agreed to contribute one-fifth to a commitment pool of USD 100 million to provide short-term dollar swaps to any pool member experiencing temporary foreign exchange liquidity issues. The ASA provided swaps with maximum maturities of three months, subject to renewal. A member central bank served as the administrator of swap activation, renewals, and agreement disputes and modifications. In 1978, the ASEAN central banks increased the commitment pool to USD 200 million. Between 1977 and 2000, ASEAN members borrowed on the pool five times to address minor payment difficulties; it was not activated at all during the Asian Financial Crisis of 1997–1998. In 2000, as part of the Chiang Mai Initiative, the ASA added five additional ASEAN member countries (Brunei, Cambodia, Laos, Myanmar, and Vietnam) and increased the pool to USD 1 billion. In 2005, the pool doubled to USD 2 billion, and did not increase again through 2021. Since 1977, the ASA memorandum of understanding had a term of between one and five years. It was repeatedly renewed or supplanted with a new agreement. However, the most recent agreement expired on November 16, 2021, and has yet to be renewed. The small size of the ASA limited its capacity to address significant foreign exchange problems but nonetheless proved a symbol of early regional cooperation

Czech Republic: Reserve Requirements, 1997

In the first quarter of 1997, fiscal and current account deficits in the Czech Republic put pressure on the koruna’s pegged exchange rate as capital flowed out of the domestic economy. Although the Czech National Bank (CNB) committed to tight monetary policy to protect the peg, on April 11, the CNB announced a lowering of the minimum reserve requirement (RR) ratio from 11.5% to 9.5%, effective May 8. The RR ratio (RRR) reduction (RRR) reflected a compromise with the government, which had petitioned the central bank to ease monetary policy. To improve the balance of payments, the government also implemented budget cuts along with several other economic correction measures. Most novel among these measures was a scheme that required importers to deposit funds temporarily with the central bank, which helped sterilize the liquidity produced by the RRR reduction. Nevertheless, the koruna continued to face intense speculative attacks. On May 26, the CNB abandoned the peg and switched to a managed float. The CNB said that the May 1997 RRR reduction released CZK 20 billion (USD 660 million) of liquidity into the system during the crisis, although about half of that was offset by the import deposit scheme

United States: New York Clearing House Association, The Panic of 1890

Before the advent of the Federal Reserve System, private clearinghouses provided emergency liquidity support to the banking system during panics. The most notable of these institutions, the New York Clearing House Association (NYCH), supported its member banks by issuing clearinghouse loan certificates (CLCs), short-term collateralized loans guaranteed by the NYCH, as an alternative liquidity source during banking panics; member banks used CLCs exclusively for the purpose of temporarily settling payments with other NYCH members. During the Panic of 1890, the NYCH issued $16.65 million of CLCs between November 12 and December 22, 1890. The Loan Committee received requests from and authorized CLC issuance to member banks with corresponding collateral pledges, which were subject to a minimum 25$15.21 million outstanding on December 12, 1890, were all redeemed by February 7, 1891. With the help of substantial liquidity from the Treasury and the bailout of troubled banks by two banking syndicates, the NYCH liquidity support via CLCs contained the panic, and ultimately, only a small number of banks failed. Unlike several other crises in the National Banking Era (1863–1913), New York banks did not temporarily suspend payments to depositors

Hong Kong: Temporary Liquidity Measures, 2008

In September 2008, Hong Kong’s interbank market tightened after the Bank of East Asia experienced a deposit run, prompting the Hong Kong Monetary Authority (HKMA) to roll out five novel liquidity measures. The first three of these measures expanded the scope of HKMA’s discount window, offering term loans of up to three months, accepting additional collateral options, and lowering the rate charged. In the last two measures, the HKMA created one facility that allowed banks to request foreign exchange swaps and another that permitted the HKMA to extend collateralized term loans at market rates using its discretion. Although these measures lasted only six months, the HKMA later decided to incorporate the discretionary term lending and forex swap facilities into its permanent monetary policy framework. It allowed discount window lending to revert to its original terms. The HKMA cited greater activity under the discretionary facilities compared to the enhanced discount window as cause for the change in exit strategy. Moreover, during the six-month tenure of the enhanced discount window, banks did not use two of the three enhancements, namely the longer loan terms and expanded collateral options