This paper was presented at the conference "Financial services at the crossroads: capital regulation in the twenty-first century" as part of session 4, "Incentive-compatible regulations: views on the ...precommitment approach." The conference, held at the Federal Reserve Bank of New York on February 26-27, 1998, was designed to encourage a consensus between the public and private sectors on an agenda for capital regulation in the new century.
The agricultural sector in Canada is relatively large, compared to those in most other G7 countries. In recent years, the federal and provincial governments have undertaken a number of sectoral ...reforms to meet the competitiveness and environmental challenges that it faces. The federal government has tried to end a marketing monopoly in the barley market and may do so for wheat as well. The next generation of agriculture and agri-food policy is being finalised, and implementation of the first part of a new framework, Growing Forward, has begun. But a steady stream of ad hoc programmes in recent years has had significant budgetary costs and no doubt created moral hazard among farmers. There is scope for further liberalisation in supply-managed sectors, which are heavily protected and subsidised by consumers. Moreover, Canada's bio-energy production, in particular the production of second-generation bio-ethanol (from cellulose), is under pressure in light of less costly bio-energy production overseas. Against this background, governments are striving to ensure the long-term viability of the sector. This Working Paper relates to the 2008 OECD Economic Survey of Canada (www.oecd.org/eco/surveys/canada). Moderniser la politique agricole du Canada Le Canada dispose d'un secteur agricole relativement important, par rapport à la plupart des autres pays du G7. Ces dernières années, des réformes ont été entreprises dans plusieurs domaines, au niveau fédéral et provincial, pour surmonter les problèmes de compétitivité et d'environnement auxquels est confrontée l'agriculture. Le gouvernement fédéral a tenté de mettre fin à un monopole sur la commercialisation de l'orge et pourrait envisager la même démarche pour le blé. La nouvelle politique agricole et agroalimentaire est en cours de finalisation et la mise en oeuvre de la première partie d'un nouveau cadre stratégique, Cultivons l'avenir, a commencé. Mais les programmes ad hoc qui se sont succédé depuis peu ont pesé lourdement sur le budget, non sans créer un aléa moral pour les agriculteurs. Il est possible d'aller plus loin dans la libéralisation des filières soumises à une gestion de l'offre, qui sont largement protégées et subventionnées par les consommateurs. Par ailleurs, la production canadienne de bioénergie, notamment de bioéthanol de seconde génération (à partir de cellulose), est concurrencée par une production bioénergétique étrangère moins coûteuse. C'est dans ce contexte que s'inscrivent les efforts déployés par les pouvoirs publics pour assurer la viabilité du secteur à long terme. Ce Document de travail se rapporte à l'Étude économique de l'OCDE du Canada, 2008 (www.oecd.org/eco/etudes/canada).
After a rapid expansion of financial transactions, both the authorities and financial institutions became aware of the risk involved in interbank settlement systems. To cope with the risk the systems ...in most economies have been designed so that large-sized payments are settled in the real time gross settlement (RTGS) mode, whereas small ones are dealt with in the designated time net settlement system. Yet the introduction of the RTGS system imposes substantial costs of maintaining intraday liquidity on participants, which creates a fear among European as well as Japanese banking communities that they might lose competitiveness against their US counterparts whose main settlement system, Fedwire, does not require collateral. We first compare these different settlement systems from the participant’s cost-benefit perspective and see if this concern always holds. Second, we develop the same framework to analyse the net settlement system, and then suggest if there is a rationale behind the coexistence of both the RTGS and net settlement systems.
After a rapid expansion of financial transactions, both the authorities and financial institutions became aware of the risk involved in interbank settlement systems. To cope with the risk the systems ...in most economies have been designed so that large-sized payments are settled in the real time gross settlement (RTGS) mode, whereas small ones are dealt with in the designated time net settlement system. Yet the introduction of the RTGS system imposes substantial costs of maintaining intraday liquidity on participants, which creates a fear among European as well as Japanese banking communities that they might lose competitiveness against their US counterparts whose main settlement system, Fedwire, does not require collateral. We first compare these different settlement systems from the participant's cost-benefit perspective and see if this concern always holds. Second, we develop the same framework to analyse the net settlement system, and then suggest if there is a rationale behind the coexistence of both the RTGS and net settlement systems.
The purpose of this paper is to examine narrow banking proposals. First, we survey the narrow banking proposals presented in the United States and Japan, and categorize them by means of two ...standards: (1) whether safe assets that a narrow bank is allowed to hold are limited to short-term assets, and (2) whether a narrow bank is allowed to engage in lending activity. Second, we examine the feasibility of each proposal for the purpose of achieving the stability of the financial system, making use of two theoretical models: Wallace (1996) and Kashyap, Rajan, and Stein (1998). Finally, we conclude that a desirable narrow bank is one that carries out both deposit-taking and lending activities, though restrictively, and is allowed to invest in short-term safe assets.
This paper strives to appraise -- in terms of contributions to economic development -- Japan's postwar financial system, a system that has been exposed to a variety of environmental changes over time ...including globalization. Having been designed to foster growth, the postwar financial system did contribute to Japan's rapid economic expansion. As such, it served an instrumental role in bringing about what was termed the "Japanese Miracle." However, the 1980s and thereafter witnessed the surge and collapse of a Japanese economic bubble under this same system. With the mounting burdens of non-performing loan that ensued, the financial system has since been remained as an issue of concern in the Japanese economy's "lost decade." As recent research indicates, an economic system that is successful within one set of environmental conditions could lead to failure if those conditions change. Such environmental changes need not be purely external. The overall institutional arrangements surrounding the system may misfit with the changing environment and ultimately make the original system somewhat incompatible or obsolete. The financial system of postwar Japan has been described as a classic example of this phenomenon. This paper looks back to the key development of Japan's postwar financial system, and then makes some conclusions about the main features of Japan's system.
A study is presented that puts forth a framework for incentive-compatible regulation that would enable regulators to ensure that riskier banks maintain higher capital holdings. Under the ...precommitment approach (PCA), a bank announces the appropriate level of capital that covers the maximum value of expected loss that might arise in its trading account. A model of mechanism design is developed in which the regulator offers a menu of contracts representing different levels of capital and the corresponding penalty rates. The regulator can implement incentive-compatible contracts in which banks with one level of riskiness voluntarily separate themselves from banks with other levels of riskiness. The key element is how much information the regulator needs to assess banks' risk characteristics. Incentive-compatible regulation will not replace the traditional role of the regulator as an ex ante monitor of banks - the provision of incentive-compatible contracts and the monitoring by the regulator can be complementary.
The agricultural sector in Canada is relatively large, compared to those in most other G7 countries. In
recent years, the federal and provincial governments have undertaken a number of sectoral ...reforms to meet
the competitiveness and environmental challenges that it faces. The federal government has tried to end a
marketing monopoly in the barley market and may do so for wheat as well. The next generation of
agriculture and agri-food policy is being finalised, and implementation of the first part of a new
framework, Growing Forward, has begun. But a steady stream of ad hoc programmes in recent years has
had significant budgetary costs and no doubt created moral hazard among farmers. There is scope for
further liberalisation in supply-managed sectors, which are heavily protected and subsidised by consumers.
Moreover, Canada’s bio-energy production, in particular the production of second-generation bio-ethanol
(from cellulose), is under pressure in light of less costly bio-energy production overseas. Against this
background, governments are striving to ensure the long-term viability of the sector. This Working Paper
relates to the 2008 OECD Economic Survey of Canada (www.oecd.org/eco/surveys/canada).
Le Canada dispose d’un secteur agricole relativement important, par rapport à la plupart des autres pays
du G7. Ces dernières années, des réformes ont été entreprises dans plusieurs domaines, au niveau fédéral et
provincial, pour surmonter les problèmes de compétitivité et d’environnement auxquels est confrontée
l’agriculture. Le gouvernement fédéral a tenté de mettre fin à un monopole sur la commercialisation de
l’orge et pourrait envisager la même démarche pour le blé. La nouvelle politique agricole et
agroalimentaire est en cours de finalisation et la mise en oeuvre de la première partie d’un nouveau cadre
stratégique, Cultivons l'avenir, a commencé. Mais les programmes ad hoc qui se sont succédé depuis peu
ont pesé lourdement sur le budget, non sans créer un aléa moral pour les agriculteurs. Il est possible d’aller
plus loin dans la libéralisation des filières soumises à une gestion de l’offre, qui sont largement protégées
et subventionnées par les consommateurs. Par ailleurs, la production canadienne de bioénergie, notamment
de bioéthanol de seconde génération (à partir de cellulose), est concurrencée par une production
bioénergétique étrangère moins coûteuse. C’est dans ce contexte que s’inscrivent les efforts déployés par
les pouvoirs publics pour assurer la viabilité du secteur à long terme. Ce Document de travail se rapporte à
l’Étude économique de l’OCDE du Canada, 2008 (www.oecd.org/eco/etudes/canada).
The operation of the financial system can have a key impact on economic growth and the stability of the economy. It affects long-term economic growth through its effect on the efficiency of ...intermediation between the savers and final borrowers of funds; through the extent to which it allows for monitoring of the users of external funds, affecting thereby the productivity of capital employed; and through its implications for the volume of saving, which influences the future income-generating capacity of the economy. It affects the stability of the economy because of the high degree of leverage of its activities and its pivotal role in the settlement of all transactions in the economy, so that any failure in one segment risks undermining the stability of the whole system.
À partir d'un échantillon de 25 pays de l'OCDE, nous nous efforçons de déterminer dans cette étude dans quelle mesure une réglementation favorisant un fonctionnement concurrentiel et efficient des ...systèmes financiers a un effet positif significatif sur la croissance de la productivité et de la production dans différents secteurs. Plus précisément, suivant une approche utilisée par Rajan et Zingales (1998), nous vérifions si les secteurs qui sont plus tributaires de sources de financement externes tendent à se développer plus rapidement dans les pays dont la réglementation favorise davantage la concurrence sur les marchés des services bancaires et des instruments financiers. Les indicateurs de réglementation utilisés sont élaborés à partir d'informations recueillies par la Banque mondiale sur la réglementation des marchés de services bancaires et de valeurs mobilières. Ils mettent en lumière des variations sensibles de réglementation entre pays, en particulier en ce qui concerne les règles de base relatives aux transactions sur valeurs mobilières. L'analyse empirique réalisée indique que la réglementation des systèmes financiers influe de manière significative sur la croissance de la production, à la fois au sens statistique et économique.
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