Blog

A Loophole Allows Banks – But Not Other Companies – to Create Money Out of Thin Air

One of the Main Causes of Our Economic Problems

Source:

Washington's Blog

January 15, 2016

The central banks of the United States, England, and German – as well as 2 Nobel-prize winning economists – have all shown that banks create money out of thin air … even if they have no deposits on hand.

The failure of most governments and most mainstream economists to understand this fact – they instead believe the myth that pe

In next couple of years there will be sweeping changes to existing Basel III Accord what will pave way for a new game changing regime called Basel 4. In obvious intent, the new Accord will raise risk-based capital ratio, revise risk weighting and move away from too much emphasis on model-based approach. One of key measures will be leverage Ratio.

It will stay ahead of 3% ratio as a front-stop measure. Another key measure will be balancing risk sensitivity with simplicity in the new regime. The Ba

 Low interest rates, new regulations and an unstable economic situation have impacted revenues and profits of retail deposits in North America.   Therefore, the upcoming GFMI 3^rd Edition Retail Deposit Optimization & Strategic Management Conference comes at a very important and optimal time for banks.

Silvio Stroescu, Managing Director, Investments & Deposits at Tangerine Bank recently spoke with GFMI about key topics to be discussed at this upcoming meeting, scheduled to take place April 27-29,

The Basel Committee on Banking Supervision has circulated a consultative document on corporate governance principles for banks in October 2014, issued for comments by 9th January 2015. This is an enhanced version of earlier paper issued in 2010 in response to credit crisis.

The main objective of corporate governance to enhance long-term shareholders’ value through right oversight mechanism. However, the implementation of corporate governance has always been a challenge, considering the opacity an

Integration is a hot topic this year for risk professionals. In PRMIA’s 2013 survey of buy-side risk management trends, a lack of front-to-back integration of systems emerged as the second biggest technology challenge, pipped only by the need to create a complete view of risk from multiple risk systems.

Poor integration compromises risk management quality

Why the need for front-to-back integration? The financial and Eurozone crises have highlighted the need to manage risk more proactively and in a

As financial institutions have become more complex, so have their risk management systems – and that’s a problem.

Organisations that have grown through acquisition and diversification typically find themselves running a huge number of different systems: whether for different asset classes, different types of risk and/or for different operating entities.

That complexity is causing major issues. Research carried out by the Professional Risk Managers International Association (PRMIA) in March 2013 re

The Basel Committee, which creates regulations for banks, has published a set of principles regarding effective risk data aggregation and risk reporting, which will provide a fantastic business case for risk professionals to improve their risk frameworks. I’ve included highlights below, but you can take a look at the full report here.

The principles for effective risk data aggregation and risk reporting will be mandatory for globally systemically important banks (G-SIBs) from 2016, and the Basel

The new category of domestic systemically important banks will increase the data management and disclosure burden on qualifying institutions, at a time when many are already feeling the strain.

Banks that escaped classification as G-SIFIs in 2011 may have breathed a sigh of relief at the time, but for many, that relief will have been short-lived. In October last year, the Basel Committee on Banking Supervision (BCBS) set out its proposed framework for an additional category of systemically import

Today’s banking industry must deal with an evolving regulatory landscape by developing new and innovative strategies for acquiring and optimizing capital. Banks must find a new way to raise capital, maintain a functional capital structure, and continue providing the products and services their customers demand while staying profitable. The new deadline for implementing the Basel III capital requirements makes capital management the most important issue for banks today.

Bogie Ozdemir, Vice Preside

Properly stress testing measures of risk is a complicated activity that few companies have done well. In this blog we take a look at a complete framework for stress testing.

The spreadsheet map can be downloaded from this [LNK]

Over the last few days, several people have discussed various scenario analysis techniques with me and going on general opinion, this risk assessment technique is very popular among operational risk analysts. Definitely no doubt there, but what scenario analysis means to one analyst, can often be something entirely different to another.

What does scenario analysis really mean to operational risk analysts?

Click here to continue reading

The ten success stories of Basel II are not unique in anyway and there are plenty of other aspects to the Basel II initiative that supported an improved risk function in banks. None the less, these ten risk framework efforts seem to keep appearing as common "this is an excellent element to our risk framework and has evolved our risk management practice in the bank".

Click here to see the top 10 successes and failures

On the G31000 LinkedIn risk forum, we have decided to open up a new "chat room" that is dedicated to the application of the ISO 31000 enterprise risk management standard to Banking, Insurance, Supply Chain Finance, Markets and Investment.

Really good paper on procyclicality and the problems with Basel III countercycle buffers

Perhaps one of the biggest issues facing banks with Basel III is how to address Procyclicality, especially if the bank is not running an Advanced IRB credit risk framework. Actually, just obtaining information about the different accepted practices on how to measure Procyclicality within a lending portfolio isn't so easy.

Just the other day however, I was pointed in the direction of a really good summary and p

I am a big believer in the categorisation of risk events and while this may not be popular among many of the non-banking members of the risk community, even more so with ISO 31000 practitioners, I still believe it is an important exercise to carryout.

Either way; I have taken to list ten reasons why causal event categorisation is crucial for the operation of a sound enterprise risk management framework.

The top ten can be found at this LINK

Some risks are cyclical in nature which can be modeled on a risk clock.

In this blog we build up a risk clock and look at why businesses are not good at forecasting cyclical risk events.

Click here to continue reading

The Dodd-Frank Act and Basel III are going to change the way banks raise, allocate and manage capital. Banks need to prepare for these changes now and develop effective strategies for achieving capital optimization and sustainable return on equity. The GFMI, a marcus evans, Capital Adequacy and Strategy Conference, September 12-14, 2012 in New York, NY, will help banks to understand what the legislation means for capital adequacy, as well as what they need to do to achieve the optimum level of c

Earlier on this year, the Bank for International Settlements released a paper which stated directly: "No macro stress test carried out ahead of the crisis identified the build-up of vulnerabilities"

This is a very harsh reality and highlights one of the key areas risk management needs to address. In this article we look at why stress testing risk systems hasn't been working for the banking sector.

Click here to continue reading