The New Basle Capital Accord and Developing Countries: Issues, Implications and Policy Proposals

Risk-management, Internal-ratings, Pro-cyclicality, Net impact

GDP-Indexed Bonds: Making It Happen

There has been increasing interest in exploring financial instruments that could limit the cyclical vulnerabilities of developing countries and reduce the likelihood of defaults and debt crises. GDP-indexed bonds fall into this category and may also generate a wider range of benefits for issuer countries, investors and the global financial system. The authors also examine the concerns and obstacles relating to the introduction of this instrument, suggesting that some may be exaggerated while others could be overcome. The paper calls for international public action to help develop markets for GDP-linked bonds and proposes a number of actions, some of which would require collaboration between Governments, multilateral development banks and the private sector.GDP-indexed bonds, cyclical vulnerabilities, issuers, investors, public good, international public action

A counter-cyclical framework for a development-friendly international financial architecture

The major task of a development-friendly international financial architecture is to mitigate pro-cyclical effects of financial markets and open “policy space” for counter-cyclical macroeconomic policies in the developing world. This paper explores a series of policy instruments for this purpose: counter-cyclical prudential regulatory and supervisory frameworks; market mechanisms that better distribute the risk faced by developing countries through the business cycle; multilateral instruments that encourage more stable private flows; and better provision of counter-cyclical official liquidity. It also suggests that regional macroeconomic consultation, and common reserve funds or swap arrangements among developing countries can play a role in this regard.volatility, contagion, financial crises, counter-cyclical macroeconomic policies, counter­cyclical prudential regulation, GDP-indexed and local currency bonds, regional macroeconomic cooperation.

The Financial Crisis and Its Impact on Developing Countries

This working paper has been commissioned by the Poverty Group, Bureau for Development Policy at UNDP, to identify the transmission mechanisms of the financial crisis from developed to developing countries and to provide broad policy recommendations at the national, global and regional level. The paper identifies three mechanisms that play a key role in spreading the consequences of the financial crisis to the developing world: remittances, capital flows and trade. The policy responses take MDG achievement and poverty reduction as the central policy concern. The paper indicates that a fair number of countries have policy space to protect vulnerable groups in the short run as well as to undertake investments to build resilience and reach these goals in the longer term. Other countries will need additional development assistance to protect development achievements. The authors point to a number of factors that need to be taken into account in determining what mix of policies to deploy including the macroeconomic, fiscal and policy stance of countries and their dynamics. The paper also proposes far-reaching reforms to address the global financial crisis, which would help to put the global macroeconomic, fiscal and financial coordination mechanisms on a firmer footing.The Financial Crisis and Its Impact on Developing Countries

Capital account regulations for stability and development: a new approach

This repository item contains a single issue of Issues in Brief, a series of policy briefs that began publishing in 2008 by the Boston University Frederick S. Pardee Center for the Study of the Longer-Range Future.In the wake of the financial crisis numerous emerging market and developing countries have been deploying what have traditionally been referred to as ‘capital controls’ to curb excessive speculation on their currencies and domestic assets. In response to those efforts, French President Nicolas Sarkozy called on the International Monetary Fund to develop a set of guidelines for the use of capital controls. The goal is for the President to present such guidelines at the G-20 Summit in Cannes this year. The IMF has published a preliminary set of guidelines to that end. This policy brief provides a critical review of those guidelines and offers an alternative protocol for a development friendly-approach to capital account regulation. In this policy brief, the co-conveners of the Pardee Center Task Force on Managing Capital Flows for Long-Run Development argue that capital account regulations (CARs) should be viewed as an essential tool in the macroeconomic policy toolkit. Based on discussions that occurred at the Task Force meeting in September 2011, the authors present an alternative set of guidelines for how and when CARs should be employed, and call for international financial institutions and international trade agreements to ensure that policy space remains available to allow developing countries to employ CARs when deemed necessary for financial stability and economic development

National development banks and sustainable infrastructure; the case of KfW

This repository item contains a working paper from the Boston University Global Economic Governance Initiative. The Global Economic Governance Initiative (GEGI) is a research program of the Center for Finance, Law & Policy, the Frederick S. Pardee Center for the Study of the Longer-Range Future, and the Frederick S. Pardee School of Global Studies. It was founded in 2008 to advance policy-relevant knowledge about governance for financial stability, human development, and the environment.KfW was initially founded in 1948 to finance the reconstruction of war-torn Germany after World War II. The initial capital of the KfW was financed by Marshall Plan resources, provided by the US government. Additional expansions of capital have been basically funded from profits of KfW itself which reflects the efficiency with which it operates, and the high commercial, as well as developmental, quality of its loans. KfW has expanded significantly over the years, both in Germany and internationally. It has become the second largest commercial bank in Germany. Its large scale and its function as a German government instrument to implement a clear energy strategy has allowed it to play a key role in Germany to finance major energy transformation in the country and one of the most important energy transformations in Europe (known as Energie wende).[TRUNCATED

Is the Brady Plan an Effective Approach to Dept Management?

summary This article briefly describes the Brady Plan, as well as the background to its emergence. It then evaluates the role which regulatory and fiscal managements have in influencing debt reduction, and proposes that fiscal arrangements — in Europe and Canada — be modified to encourage more effective debt reduction. Résumé Le Plan Brady est?il une façon efficace d'aborder le problème de la gestion des dettes Cet article décrit brièvement le Plan Brady, ainsi que les antécédents de sa naissance. L'article examine également quelle influence ont les institutions en matière de légalité et fiscalité dans la réduction des dettes, et propose que des mesures fiscales, en Europe et au Canada, soient modifiées afin d'encourager une plus grande réduction des dettes. Resumen ¿Constituye el Plan Brady un enfoque efectivo para el manejo de la deuda? Este artículo describe brevemente el Plan Brady, así como el trasfondo que permitió su creación. Evalúa luego el rol que tienen los manejos regulatorios y fiscales para influir en la reducción de la deuda, proponiendo que los arreglos fiscales — tanto en Europa como en Canadá — sean modificados para estimular más efectivamente la reducción de la deuda

3. The Costa Rican Debt Deal: Is Small Beautiful?

SUMMARY Stephany Griffith?Jones' paper examines the Costa Rican deal, reached in the context of the Brady Plan; this package has substantive debt and debt service reduction elements, with no ‘new money’ from the private banks. The paper examines the particular features of Costa Rica. (such as the total small size of its debt and its geo?political importance to the US), which, together with the government's bargaining skills, seems to explain the high quality of the package. RESUME L'article de Stephany Griffith?Jones étudie le marché de Costa Rica, dans le contexte du Plan Brady; ce marché a des dettes importantes et comprend des éléments d'un système de réduction de dettes, sans “nouvelles finances” provenant des banques privées. L'article étudie les caractéristiques particulières de Costa Rica (telles que la petite taille de son déficit et son importance géo?politique pour les Etats?Unis), qui, avec les talents du gouvernements en matière de négotiations semblent expliquer la haute qualité de ce marché. RESUMEN El artículo de Stephany Griffith?Jones examina el caso de Costa Rica en el contexto del Plan Brady. Este paquete tiene elementos de substancial reducción de la deuda y de su servicio, sin “dinero nuevo” de los bancos privados. Analiza las características particulars de Costa Rica, tales como el pequeño volumen del total de la deuda y su importancia geopolítica para los Estados Unidos, lo que junto con la capacidad negociadora del gobierno parecen explicar la alta calidad del paquete

B. The New Bank of England Rules for Provisioning

SUMMARY Stephany Griffith?Jones' article presents in some detail the new 1990 Bank of England matrix, which provides detailed rules for British banks' provisioning against possible Third World losses. RESUME L'article de Stephany Griffith?Jones présente en détail la nouvelle matrice de 1990 de la Banque d'Angleterre, qui fournit des règlements détaillés en ce qui concerne l'approvisionnement de capitaux utilisés en cas de pertes financières éventuelles du Tiers Monde. RESUMEN El artículo de Stephany Griffith?Jones presenta, con algún detalle, la nueva matriz del Banco de Inglaterra de 1990, la que proporciona normas pormenorizadas de previsión para los bancos británicos frente a posibles pérdidas del Tercer Mundo