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CGD Policy Blogs
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 5: Effects on Capital Market Development and the Real Economy
While the immediate and direct effects of implementing Basel III regulatory reforms in emerging markets and development economies (EMDEs) are in these countries’ banking systems, there might also be effects beyond them on other segments of the financial system. In this blog post, I will focus on two specific areas of concern—risk management and capital market development, and spill-overs from banking structural reforms in advanced countries.
Is it time to ring the alarm bell on a declining US commitment to global health security? For most of the past year, I would have said no. But after the last few weeks, I’m starting to think so. And the simultaneous news of a new Ebola outbreak in the Democratic Republic of Congo underscores the stakes at play here.
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 4: Challenges on Infrastructure and SME Lending
The adoption of Basel III by developing countries raises the question of what the impact of such regulatory reform will be on volume, cost, and composition of domestic credit in these economies and for the development of financial systems more generally. This is against the background of many emerging markets not yet having fully exploited the potential for financial development and inclusion in their economies.
A recent blog post by Ricardo Hausmann caught my eye because it addresses issues that I’ll be focusing on during my visiting fellowship here at the Center for Global Development. Hausmann—a former Venezuelan minister of planning—discusses the difficulty of closing the infrastructure gap in developing countries, and highlights the dilemma of whether governments should finance infrastructure projects through public-private partnerships or through their national budgets. He’s right about the dilemma, but his solution isn’t workable for fragile and low-income countries where infrastructure needs are greatest.
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 3: An Unlevel Playing Field Between Domestic and Foreign Banks Might Increase Governments’ Funding Costs
Responding to the latest assessment of Mexico’s implementation of the Basel III recommendations, the Mexican authorities argued that regulations for countries hosting foreign banks’ subsidiaries and for the parent countries of the subsidiaries should be aligned “in order to prevent distortions due to the asymmetric treatment of similar risk exposures by home and host jurisdictions,” which could result in an unlevel playing field between foreign subsidiaries and domestic banks.
The world’s poorest people have been getting richer recently. But they remain incredibly poor. The 10 percent of the world’s population still consuming $1.90 or less a day are subsisting on a small fraction of the resources available to people at the US poverty line. So you’d hope that the governments of the countries where they live would be trying to raise their consumption levels. But the reality is more complex.
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 2: Effects on Trade Finance
Just as Basel III, among other factors, played a role in the decline in the volume of cross-border lending from advanced economies to EMDEs, it created incentives for a shift in the composition of these flows. Banks’ exposures to certain business lines have been affected, including those that are crucial for development like trade finance and infrastructure finance (the latter will be the subject of a future blog).
A sense of urgency was present at a recent World Bank Spring meeting on financial inclusion. This is not surprising, given the Bank’s ambitious goal of Universal Financial Access by 2020. Two years to go and globally about 1.7 billion adults remain unbanked—close to 1 billion of them are women. It’s clear that to meet this goal, we all must focus our efforts on women.
London is one of the world’s premier destinations for kleptocrats and corrupt oligarchs seeking to launder ill-gotten gains into property, investments, private school fees and influence. There is no reliable estimate of the total value of laundered funds that impacts on the UK. However the National Assessment of Serious Organised Crime says there is “a realistic possibility the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds” (this includes both domestic and international sources).