...Reserve Bank of India RESERVE BANK OF INDIA www.rbi.org.in ž¸¸£·¸ú¡¸ ¹£ö¸¨¸Ä ¤Îˆ RBI Central Office Building, Mumbai RESERVE BANK OF INDIA www.rbi.org.in ž¸¸£·¸ú¡¸ ¹£ö¸¨¸Ä ¤Îˆ 2 Contents Overview: Who We Are � Celebrating Our Platinum Jubilee � The Reserve Bank: Tradition and Change � Celebrating 75 years: Highlights Organisation and Structure: How We Operate � Management and Structure Main Activities: What We Do � Monetary Authority � Issuer of Currency � Banker and Debt Manager to Government � Banker to Banks � Regulator of the Banking System � Manager of Foreign Exchange � Regulator and Supervisor of the Payment and Settlement Systems � Developmental Role Research, Data and Knowledge Sharing: How We Communicate � Communicating with the Public � RBI Publications Addressing Current and Future Challenges Customer Service: How Can We Help You? 3 4 5 6 8 9 11 12 15 18 20 22 24 26 28 31 32 33 34 36 Overview: Who We Are The Reserve Bank of India (RBI) is the nation’s central bank Since 1935, when we began operations, we have stood at the centre of India’s financial system, with a fundamental commitment to maintaining the nation’s monetary and financial stability. 3 From ensuring stability of interest and exchange rates to providing liquidity and an adequate supply of currency and credit for the real sector; from ensuring bank penetration and safety of depositors’ funds to promoting and developing financial institutions and markets, the...
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...Email: isassec@nus.edu.sg Website: www.isas.nus.edu.sg An Economic Analysis of Bangladesh’s Foreign Exchange Reserves M. Shahidul Islam 1 Executive Summary Following the rapid accumulation of foreign exchange reserves in recent months, there has been a growing interest in Bangladesh on the alternative uses of its reserves. However, different reserves adequacy measures based on global best practices confirm that its reserves holding is not markedly higher than what is required. The country’s reserves stand higher than the adequate level only when one considers the current account aspects of reserves benchmark which is perhaps appropriate for the country as its financial system is still autarkic. The dynamics in its balance of payments account also supports the fact. The paper highlights the fact that Bangladesh’s reserves build-up is the result of an ‘investment drought’ in the country. This is partly due to its underdeveloped financial systems, and partly due to other structural problems in the economy – entailing difficulties in properly channelling national savings to investments. As the Bangladesh central bank’s sterilised intervention increases, so will its cost of reserves accumulation. The reason is the interest rate arbitrage between Bangladesh and the United States. The United States government securities market, that absorbs the lion’s share of developing economies reserves, has been offering lower yields following the collapse in interest rate in the country in recent...
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...THE GROWTH EFFECTS OF FINANCIAL LIBERALISATION PROGRAMME IN EGYPT: DEVELOPMENTS AND DRAWBACKS (Key Words: financial liberalisation, economic growth, Egypt) DR. Ayman M. Ebrahim Faculty of Commerce and Business Administration Helwan University Ein Helwan , Cairo E-mail: ahendy@ksu.edu.sa hendyayman@hotmail.com ABSTRACT The paper begins with a review of theory and recent empirical evidence relating to financial liberalisation and economic development. Among the countries that underwent financial liberalisation programmes in the 1990s, Egypt appears to have performed well. Although the internal and external shock to the economy and the associated drawbacks in the financial liberalisation programme, over the past decade, which brought the experience of financial liberalisation, the Egyptian economic performance improved. Its aggregate growth rate was positive and macroeconomic variables moved in a favourable direction in accordance with the predictions of the financial liberalisation paradigm. The econometric test specification follows the nonlinear least-squares estimations methodology to test the co-movement of the underlying variables. INTRODUCTION The financial liberalisation paradigm encourages nominal interest rate liberalisation, the reduction or abolition of reserve requirements, the elimination of inflationary finance, the removal of other forms of taxation on...
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...Arguments against flexible exchange rates include the arguments that they cause uncertainty, they inhibit international trade and that they allow destabilizing speculation. Arguments against fixed rates include that they cause uncertainty, they inhibit international trade and they allow destabilizing speculation. Contrast the situation in one country with a fixed exchange rate with one country that has a floating rate and explain the impact of the fixed and floating rates. Introduction Prior to 1970, fixed, or say pegged exchange rate regime was adopted by almost all countries worldwide. Afterwards, some countries have gradually made the transition from fixed to flexible exchange rates, which allow currency to float freely. In the following section, the definition of both fixed and flexible exchange rates will be introduced. Thereafter, the situation in Australia, which floating exchange rate regime will be compared with that of in Hong Kong, which uses fixed exchange rate regime. Moreover, the impact of different exchange rate regimes on economic entities will be discussed. Types of exchange rate Fixed/Pegged exchange rate A fixed exchange rate is usually pegged the value of a currency to a strong foreign currency such as US dollar or Euro (Hunt and Terry, 2011). This kind of rates is sets and maintained by the local government (e.g. central bank). In order to maintain a stable rate, the government trades its own currency on the foreign exchange market in return for the...
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...Objective The general objectives of this study are to describe recent trade problems and examine why these problems are related to, and affected by exchange rates. The study first examines the exchange rate and how it is determined. The study will explore, in detail, the agencies that determine these rates. This study will also present the pros and cons of different prices of goods and services in different countries. Specifically, this paper: (1) defines recent trade problems and how they are affected by the exchange rate; (2) describes the steps taken within the agencies that determine the exchange rates; (3) examines the impact of these rates, both good and bad; (4) analyzes the costs of similar goods in the U.S. and in foreign markets; (5) discusses the pros and cons of the exchange rate and how it affects trade; (6) examines various exchange rate systems: floating, fixed, and dirty floating. Limitations of the Study The topics of exchange rate and trade both have a variety of factors that cause changes. As with any study that attempts to explore current developments in the economy, it is hard to keep information current. It is also virtually impossible to report on the status of every single government that is involved in the exchange market. One of the limitations of this study is to report on up-to-date values of currency while choosing a sample of governments that accurately represent...
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...today will be confined to the regulatory framework in India in regard to forex, debt and credit derivative markets and the regulatory imperatives arising in dealing with these instruments and their future development, particularly in the context of global developments. The financial markets, including derivative markets, in India have been through a reform process over the last decade and a half, witnessed in its growth in terms of size, product profile, nature of participants and the development of market infrastructure across all segments - equity markets, debt markets and forex markets. Derivative markets worldwide have witnessed explosive growth in recent past. According to the BIS Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity as of April 2007 was released recently and the OTC derivatives segment, the average daily turnover of interest rate and non-traditional foreign exchange contracts increased by 71 per cent to US $ 2.1 trillion in April 2007 over April 2004, maintaining an annual compound growth of 20 per cent witnessed since 1995. Turnover of foreign exchange options and cross-currency swaps more than doubled to US $ 0.3 trillion per day, thus outpacing the growth in traditional instruments such as spot trades, forwards or plain foreign RBI Monthly Bulletin November 2007 * Keynote address delivered by Smt. Shyamala...
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...INTERNATIONAL FOREIGN EXCHANGE RESERVES BULGARIAN NATIONAL BANK Celebrating the BNB 130th Anniversary INTERNATIONAL FOREIGN EXCHANGE RESERVES Edited by Tsvetan Manchev, Doctor in Economics BULGARIAN NATIONAL BANK 2009 International Foreign Exchange Reserves Abbreviations BNB GDP BIS b.p. EIB EC EU ESCB ECB LBNB М1 М2 М3 IMF ERMII Fed − the Bulgarian National Bank − gross domestic product − the Bank for International Settlements − basis points − the European Investment Bank − the European Commission − the European Union − the European System of Central Banks − the European Central Bank − the Law on the Bulgarian National Bank − narrow money − М1 plus quasi money − broad money − the International Monetary Fund − Exchange Rate Mechanism II − the Federal Reserve System © The Bulgarian National Bank, 2009 © 2009 by Tsvetan Manchev et al. ISBN 978-954-8579-30-8 Published by the Bulgarian National Bank 1, Knyaz Alexander I Square 1000 Sofia telephone +359 2 9145-750 facsimile +359 2 980 2425, 980 6493 www.bnb.bg 2 International Foreign Exchange Reserves Contents Introduction ......................................................... 11 PART ONE. Chapter 1. 1. 2. 3. 4. 5. THE THEORETICAL FOUNDATIONS Nature and Function .......................................... 19 Definition ............................................................. 19 Gold as a Foreign Reserve Assets ...................... 20 Reasons to Own and Use Foreign Reserves ...... 23 The...
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...costs of reserve accumulation * Theories of reserve accumulation * History of Foreign Exchange Reserves * Adequacy and Excess reserves * List of countries by Foreign Exchange Reserves * New Realities of Forex Reserves and Management * Conclusion * Reference SIGNIFICANCE OF FOREIGN EXCHANGE RESERVES Introduction Foreign-exchange reserves (also called forex reserves or FX reserves) are assets held by central banks and monetary authorities, usually in different reserve currencies, mostly the United States dollar, and to a lesser extent the euro, the United Kingdom pound sterling, and the Japanese yen, and used to back its liabilities, e.g., the local currency issued, and the various bank reserves deposited with the central bank, by the government or financial institutions. Deposits of a foreign currency held by a central bank. Holding the currencies of other countries as assets allow governments to keep their currencies stable and reduce the effect of economic shocks. The use of foreign exchange reserves became popular after the decline of the gold standard. Definition In a strict sense, foreign-exchange reserves should only include foreign currency deposits and bonds. However, the term in popular usage commonly also adds gold reserves, special drawing rights (SDRs), and International Monetary Fund (IMF) reserve positions. This broader figure is more readily available, but it is more accurately termed official international reserves or international...
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...Poor’s, the rating agency, cut its sovereign credit rating for America by one notch, downgrade AAA to AA+. If China does not want to loss more money and decrease the risk, they have to decrease the foreign exchange reserve, so that some Chinese experts suggested decreasing the export. Because they believe that export will bring more and more foreign exchange reserve and export exists a number of problems. So this news event is a challenge of Chinese encouragement of export policy. But the other Chinese experts argue that we can not decrease the export, because China is a developing country which is mainly rely on export and we can not ignore that the export brings China a lot of opportunities. Though export is still exist a lot of problems, but we can use some theory to find the solution. The government can use the methods of increasing the domestic consumption spending to keep the growth of GDP and keep the employment rate. The government should encourage the residents to increase the consumption and enlarge the domestic demand. And government should encourage the export the advance proprietary technology products and restrict the export of low level technology products to eliminate the barriers of trade Introduction Nowadays, export plays an import role in the development of economic. General Administration of customs of the People’s Republic of China announced that Chinese trade surplus arrived 31 billion American dollars in July of 2011 and it is more than 9 billion...
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...Reserve Bank of India: Functions and Working RESERVE BANK OF INDIA www.rbi.org.in ž¸¸£·¸ú¡¸ ¹£ö¸¨¸Ä ¤¸ÿˆ 2 Foreword The Reserve Bank of India, the nation’s central bank, began operations on April 01, 1935. It was established with the objective of ensuring monetary stability and operating the currency and credit system of the country to its advantage. Its functions comprise monetary management, foreign exchange and reserves management, government debt management, financial regulation and supervision, apart from currency management and acting as banker to the banks and to the Government. In addition, from the beginning, the Reserve Bank has played an active developmental role, particularly for the agriculture and rural sectors. Over the years, these functions have evolved in tandem with national and global developments This book aims to demystify the central bank by providing a simple account of the Reserve Bank’s operations and the multidisciplinary nature of its functions. The Bank today focuses, among other things, on maintaining price and financial stability; ensuring credit flow to productive sectors of the economy; managing supply of good currency notes within the country; and supervising and taking a lead in development of financial markets and institutions. The book serves to highlight how the Reserve Bank’s decisions touch the daily lives of all Indians and help chart the country’s economic and financial course. We hope that readers would find the book...
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...Global Reserve Currency? Abstract China’s economy is growing ever larger, but is that enough to get the Chinese Renminbi (more commonly known as Yuan) to be accepted as a global market currency? This paper will look into the liberalization, but with Chinese characteristics, of five determining factors in becoming a country who’s currency is a global reserve currency. These factors are as follows: economic size, macroeconomic policies, flexible exchange rates, financial market development, and finally having an open capital account, and will ultimately prove the China is not quite the rising economic power some believe it to be (citation, 2012). Market Liberalization… with Chinese Characteristics In China, it is currently the year of the dragon, a symbol of good fortune and sign of intense power. With this symbol of fortune and power many Chinese are hoping for a year of economic prosperity, especially for the growth of the Renminbi, or more commonly known as the Yuan. In recent years, China has maintained that it’s “special” economy is pursuing a “market economy, but with Chinese characteristics”. Some of these characteristics include encouraging more of an international use of the currency, while being famous for their inflexibility with exchange rates, and not fully opening up the economy to the free flow of capital. However, the Yuan’s acceptance as a reserve currency will be based on China’s economic size, macroeconomic policies, flexible exchange rates...
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...determinants of demand functions for import in Nigeria using variables Real Gross Domestic Product (RGDP), External Reserves (EXTR), Real Exchange Rate (REXCH), and Index of Openness (OPNS) as determinant factors. The central aim of the study is to investigate the behavior of Nigeria’s aggregate import demand and its determinant (function) and then analyse the data from the period 1970 to 2008 and based on the above objectives, proffer policy proposals based on the results obtained from the analysis, for the optional management and control of Nigeria’s import demand. All the data used for the total import. Independent variables were obtained from the Central Bank of Nigeria (CBN) year 2008 golden jubilee edition of statistical bulletin. The error correction model (ECM) approach was employed for analysis. The results reveal that the error correction model (ECM(-1)) is significant. This shows that a long run relationship exist among the quantity of import demand and its determinants over sample period of 1970 to 2008. The statistical significance of the lagged error correction model ECM(-1) suggests that the aggregate import demand adjust to correct longrun disequilibrium between itself and its function EXTR, RGDP, REXCH and OPNS. In the shortrun, Real Gross Domestic Product is the major determinant of import demand in Nigeria. Introduction The importance of international trade in the development process has been of interest to development economists. In the recent years, because of the...
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...Title: The Federal Reserve Name: Jane Doe Course: Eco 320/Understanding Prof. John Smith Date: 11/28/2012 It would not be an overstatement to say that the U.S Economy is very strong at least compare to other countries. One is sure that listening to the news and the politicians in Washington, DC they render a different opinion. But these tactics are just to scare people and make believe on ideals that have nothing to do with the actual state of the Economy. The fact is we now live in a global economy and what happen in Europe can have a major affect in the U.S economy. The European Union is not very stable at this moment and probably never will be stable, because the adaption of the Euro has failed on its main objective. The U.S Dollar is still the preferred and trusted paper for the world to conduct trade. The role of the Federal Reserve is to keep that trust and confidence in the U.S Dollar at home and abroad. To gain more prospective on the role of the Federal Reserve it is imperative to answer and explain the following questions: Evaluate the role and effectiveness of the Federal Reserve in stabilizing the current economy. The American economy is a complex balance of services, financial, manufacturing, agricultural, and banking industries. For this reason, the U.S. is a global economy, relying upon foreign investments and trade to create and retain wealth. Over the years, America has evolved from farming-based, to industrial, to a services-based economy...
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...The Federal Reserve Ryan Butler 23 August 2011 Evaluate the role and effectiveness of the Federal Reserve in stabilizing the current economy. The American economy is a complex balance of services, financial, manufacturing, agricultural, and banking industries. For this reason, the U.S. is a global economy, relying upon foreign investments and trade to create and retain wealth. Over the years, America has evolved from farming-based, to industrial, to a services-based economy. As a result, the banking system from its inception has weathered the many growing pains associated with a new government and currency, instituting regulations and a centralized bank to examine the economy, and implement policies intended to offset factors negatively affecting the general financial health of the country. Now, as the United States moves towards a globally interdependent marketplace, the stakes are much higher than they were when Congress established the Federal Reserve in the early 1900’s. A country’s debt can now become the world’s debt, and the role of the U.S. federal banking system is now considerably more under pressure and scrutiny than ever before. As we have been seeing with the current liquidity crisis in the U.S., and how it has affected U.K. and Asian markets, strong, comprehensive policy-making is now crucial to sustaining long-term economic viability. Even despite the growing need for quick, precise actions by the Federal Reserve System, the decision-making regarding the...
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...------------------------------------------------- Regulators In India * Reserve Bank of India(RBI) * Securities Exchange Board in India(SEBI) * Insurance Regulatory Development Authority(IRDA) * Financial Intelligence Unit (FIU) * FSDC OVERVIEW A regulator is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. An independent regulatory agency is a regulatory agency that is independent from other branches or arms of the government. Regulatory agencies deal in the area of administrative law—regulation or rulemaking (codifying and enforcing rules and regulations and imposing supervision or oversight for the benefit of the public at large). The existence of independent regulatory agencies is justified by the complexity of certain regulatory and supervisory tasks that require expertise, the need for rapid implementation of public authority in certain sectors, and the drawbacks of political interference. Some independent regulatory agencies perform investigations or audits, and some are authorized to fine the relevant parties and order certain measures. Regulatory agencies are usually a part of the executive branch of the government, or they have statutory authority to perform their functions with oversight from the legislative branch. Their actions are generally open to legal review. Regulatory authorities are commonly set up...
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