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Se analiza la corresponsalía bancaria internacional colombiana enfatizando el estudio en el Banco Caja Social. Se da apertura a una línea de investigación en Mercados Financieros Internacionales, dentro de la cual no se tienen antecedentes dentro del Programa de Negocios Internacionales de la Universitaria Agustiniana- Uniagustiniana. Para el desarrollo de la investigación se analizaron los sistemas de corresponsales internacionales bancarios, para aterrizar en la situación de la corresponsalía bancaria internacional en Colombia, Caso Banco Caja Social. Se identificaron posibles áreas de oportunidad para estos instrumentos financieros y la contribución de los mismos a la internacionalización financiera del país. Se compiló la información estadística reportada por las autoridades competentes, para el caso colombiano: Banco de la República, Asociación Bancaria y de Entidades Financieras de Colombia (Asobancaria), Superintendencia Financiera de Colombia (a partir de los Indicadores Generales de los Establecimientos de Crédito) e Informe de la Junta Directiva del Banco de la República. Se pudo evidenciar que optar por establecer contratos de corresponsalía bancaria internacional, puede beneficiar a los países creando alianzas estratégicas para participar en mercados externos. La mejora del marco regulatorio de los sistemas financieros mundiales, será clave para brindar mayor el nivel de confianza que requiere la banca corresponsal. De otro lado, el corresponsal Citibank cuenta con una gran cobertura a nivel internacional lo cual hace que todos los productos de financiamiento para el comercio internacional del Banco Caja Social sean competitivos en el exterior, lo que permitirá seguir manteniendo la alianza de corresponsalía que tienen ambas entidades. The Colombian international banking correspondent is analyzed, emphasizing the study in Banco Caja Social. It opens a line of research in International Financial Markets, within which there is no precedent within the International Business Program of the Agustiniana-Uniagustiniana University. For the development of the research, the systems of international banking correspondents were analyzed, to land on the situation of the international banking correspondent in Colombia, Case of Banco Caja Social. Possible areas of opportunity for these financial instruments and their contribution to the financial internationalization of the country were identified. Statistical information reported by the competent authorities was compiled, for the Colombian case: Banco de la República, Asociación Bancaria y de Entidades Financieras de Colombia (Asobancaria), Superintendencia Financiera de Colombia (from the General Indicators of Credit Establishments) and Report of the Board of Directors of Banco de la República. It was shown that choosing to establish international banking correspondent contracts can benefit countries by creating strategic alliances to participate in foreign markets. Improving the regulatory framework for global financial systems will be key to providing a higher level of trust required by correspondent banking. On the other hand, the Citibank correspondent has great coverage at the international level, which makes all the financing products for international trade of Banco Caja Social competitive abroad, which will allow to continue maintaining the correspondent alliance that both have entities.

International audience; This paper explores empirically the relationship among speculative financial futures (carry trade), nominal exchange rates, and interest rates differentials in developing and developed countries, during the periods of quantitative easing, tapering and quantitative tightening based on the changes of policy interest rates in the United States (US). The public data supplied by the US Commodity Futures Trading Commission Large Trader Reporting Data is taken as a proxy for foreign exchange carry trade. With a time-series model for each country, we estimate the Granger causality using Vector Autoregressive (VAR) models as proposed by Toda and Yamamoto (1995). We investigate three developing countries (Brazil, Mexico, and Russia) and seven developed countries (Australia, Canada, Euro area countries, Japan, New Zealand, Switzerland, and the United Kingdom). Our findings give support to a better understanding of the relationship between foreign exchange activity and monetary policy.

The paper investigates the relevance of the exchange rate on the reaction function of the central banks of 24 emerging market economies for the period 2000Q1 to 2015Q2. This is done by first employing fixed-effects ordinary least squares and then system generalized method of the moments techniques. Under fixed effects, the exchange rate is found to be an important determinant in the reaction function of emerging market economies. Allowing for the endogeneity of inflation, output gap, and exchange rate, the exchange rate remains a positive and significant determinant, but less quantitatively relevant across inflation-targeting countries. When the sample is partitioned into targeting and nontargeting countries, the exchange rate remains relevant in the reaction function of the latter group. The results remain robust to splitting the sample at the time of the financial crisis of 2007–09 and suggest that, after the crisis, the central banks of emerging market economies responded only to inflation movements in the interest rate reaction function.

The current study finds out the impact of interest rate differentials on capital market. The difference between lending rate and deposit rate has been on the growing for previous few years which affects the saving behavior and investment behavior and growth of capital market. We have estimated that how interest rate factors influence the capital market of the Pakistani economy. The secondary data covering from 1975 to 2013 is collected. We have employed auto regressive distributed lags method (ARDL) for estimation. Different variables are used such as inflation, exchange rate, trade openness, money supply, indirect taxes and gross domestic product. This study finds that interest rate differentials is negatively related with market capitalization but positively related with savings and investment. However, it is also observed that factors such as inflation, exchange rate and indirect taxes are highly significant. This study concludes that interest rate difference is a key determinant of market capitalization in Pakistan. Such findings may imply that decreasing the interest rate differentials could be used as a vehicle for achieving long-term growth of capital market in Pakistan's case.

Kenya’s economic performance remains solid, underpinned by strong infrastructure spending and consumer demand, which are driving growth. Growth in 2015 is estimated at 5.4 percent, a 0.6 percent downward revision from its estimate in December 2014. The revision reflects the strong headwinds the economy is facing in the foreign exchange market and the monetary policy response to calm those fears.

First in a series, which aims to analyze the recent economic and financial situation in Côte d'Ivoire, this report analyzes the main macroeconomic developments and structural policies of the country from 2013 until mid-2014. It also reflects on the underlying factors of the strong economic recovery in Côte d'Ivoire since the end of the post-election crisis, to assess the likelihood of sustained economic growth and significant poverty reduction in the country. Finally, the report analyzes the effects of declining oil prices and the appreciation of the dollar against the euro and the CFA franc on the Ivorian economy. This edition does not examine the impact of strong economic growth on the Ivoirian population's well-being indicators such as, poverty, employment and inequality. Within the scope of this report, the objective is to understand the factors contributing to the strong economic recovery in Côte d'Ivoire. This economic update is targeted toward a larger audience, in order to stimulate constructive debate on public policy in the country and between the country and its development partners.

The economic crisis of 2008 had substantial impacts on the global economy. The European Monetary Union was affected as well, however, the economic impacts also stirred up political discussions concerning functioning of the European Union and its unity as divergence of economic means among the member countries intensified during the crisis. Inflation and real interest rate differentials have to substantial degree the ability to measure the divergence among the member countries of a monetary union. A number of empirical studies measuring the differentials in the Euro area were conducted since the start of the financial crisis in 2008. These studies show growing inflation and real interest rate differentials among the countries of the Euro area, argue that the European Monetary Union is becoming less stable and often question its future. This paper conducts similar empirical analysis; however, it differs from the above mentioned works of other authors by the larger time gap between the start of financial crisis and the time of conducting the analysis as it uses data until the year of 2013. This paper also contributes to current literature by the methodology it uses. The inflation and interest rate differentials in EMU are calculated by two methods and their results are subsequently compared, which has not been done before. The inflation and interest rate differentials are calculated for the USA as well in order to have an entity which can be considered as a hypothetical optimum currency area and to which the differentials of EMU could be compared. The results of the analysis in this paper will state whether the magnitude of inflation and interest rate differentials is too high and it will also either confirm the trend of divergence of inflation and real interest rates within the Euro area or show that this divergence is only a short-time period phenomenon of after-crisis years. As this is an important and very recent issue of European Monetary Union the results of this paper should form interesting contribution to current literature on this topic.

This paper investigates the sources of the dynamic relationship between real exchange rates and stock return differentials in relation to the US market for the developed and emerging Asian markets. We, first, derive the dynamic conditional correlation (DCC) of the two series, and then DCC is regressed on the trade balance and the interest rate differentials. In general, the trade balance is found to be a main determinant of the dynamic correlation for the Asian markets, whereas the interest rate differential is the driving force for the developed markets. The latter seems to reflect the high capital mobility.

The Philippine economy has emerged as one of the fastest growing economies in East Asia, with growth accelerating to 7.1 percent in the third quarter. The acceleration of domestic demand since the first quarter of 2012 reflects the country's strong macroeconomic fundamentals, stronger government finances, and high confidence in the Aquino government's commitment to reform. Sound macroeconomic fundamentals, as seen in low inflation, and large current account surpluses and foreign exchange reserves, have continued to shield the economy from external headwinds, while a more diversified export basket allowed total exports to grow, despite the decline in electronics exports. Overall, the economy is expected to expand by over six percent this year, up from 3.9 percent last year. However, more structural reforms are needed to create more and better jobs, as the overall labor market outcome has been less responsive to the higher economic growth. The economy needs to shift from consumption towards investment, both public and private. The special focus sections of this update demonstrate that the implementation of such reforms can have high payoffs in terms of jobs and inclusive growth. Finally, by scaling-up and broadening several open government/open data initiatives in the country, the strengthening of inclusive institutions would be greatly enhanced, in line with the core principles of this government.

This semiannual report, a product of the Office of the Chief Economist for the Latin America and the Caribbean (LAC) region of the World Bank, examines the nature of the very good overall performance of the LAC region in the aftermath of the 2008-09 global financial crisis and presents a comparative analysis of the post-crisis recovery patterns in the region vis-a-vis other regions. The first part of this report provides an overview of recent economic developments, an in depth look at the drivers of the post-crisis performance in the region, analyzes the external and domestic risks that could drag down growth performance in LAC, and discusses policy response options. The second part of the report documents the adverse impact of the crisis on the Caribbean region as well as its slow recovery. It distinguishes the poorer performance of English speaking Caribbean nations vis-a-vis non-English speaking ones, and highlights the dependence of the region on countries in the epicenter of the crisis, especially the United States, and the limited fiscal space that disabled a counter-cyclical policy response. The report concludes by emphasizing that skillful cycle management is necessary although far from sufficient to be able to turn what has to date been a cyclical recovery into a higher rate of trend growth. Moreover, countries experiencing a formidable windfall from the high commodity prices are in a unique position to seize the opportunity by judiciously saving and investing out of the windfall, they could relax the structural speed limits that have so far kept economic activity from rising to a higher long-run growth path.

Despite the recent slowdown, the underlying growth of the global economy remains solid. After a 4 percent growth in 2010, Russia's real output is expected to grow 4.4 percent in 2011, increasingly driven by domestic demand. Russia's households have absorbed the food price shock thanks to a combination of higher wages and pensions, and resort to private and public safety nets. The country emerged from the global recession with lower unemployment and poverty than feared. But global risks and uncertainties increased with the new oil shock. Although the short-term impact will be positive for Russia's export and fiscal revenues, there is no room for complacency. Macroeconomic policy should focus on the short-term objective of controlling inflation and medium-term fiscal adjustment towards long-term, sustainable level of non-oil fiscal deficit. Improving the efficiency of public expenditure to create fiscal space for productive infrastructure and strengthening the investment climate for the private sector remain among key long-term challenges. The ongoing rethinking of the government's long-term strategy and a period of high oil revenues provide an opportunity to focus on these long-term issues more forcefully than during the global crisis.

The findings presented in this paper come from our study of the effects of Brazilian macroeconomic policy on the Brazilian Farm [product] Price Index using an adapted version of Frankel’s (1986 & 2006) theoretical model. The study examined the connection between Brazilian farm prices and external variables (worldwide importation of agribusiness products, international commodity prices, and foreign real interest rates) and between Brazilian farm prices and domestic variables (GDP, the real exchange rate, and local interest rates).

Growth has slowed down since the second quarter, but exceeded expectations. Considering the 1) political turmoil; 2) robust growth during the rebound; and 3) slowdown in advanced economies, the Thai economy was expected to contract by more than it did in the second and third quarters. The output of the manufacturing sector expanded in the second quarter, led by still-growing exports and robust private consumption. Demand indeed appears to have been higher than production, as some orders had to be filled by drawing down on inventories. However, a sharp contraction in tourism led Gross Domestic product (GDP) overall to contract in the quarter. The FY10 fiscal deficit was much smaller than initially feared when the budget was proposed. The budget for FY10 was prepared at the trough of the global financial crisis in February 2009 and anticipated only 1.35 trillion baht in revenues. Inflation levels have been low and stable but persistent increases in food prices could pose risks. Overall, slower growth in advanced economies will translate into lower GDP growth Thailand for the next two to three years. Notwithstanding a deceleration in the second half because of the waning global inventory cycle, year-on-year growth in 2010 is expected at 7.5 percent due to the low base of 2009 and the strong first half. Quarter-to-quarter growth will pick up modestly in 2011 to average over 4 percent, but the relatively high base in 2010 results in a year-on-year growth rate of 3.2 percent for 2011.

Egypt's growth accelerated in the second half of FY10. Real Gross Domestic Product (GDP) growth in FY10 reached 5.8 percent, up from 4.4 percent in FY09 and 4.8 percent in FY10, taking up overall GDP growth to an average of 5.3 percent for the full FY10. Egypt's macroeconomic outlook is stable. Assuming that domestic demand holds up, and Egyptian exports continue their observed recent trend, we expect that the Egyptian economy grows in the range of 6.0 to 6.2 percent in FY11. This is underpinned by strong commitment to maintain structural reforms momentum, and a relatively stable global economy. However, unemployment will remain a challenge as growth as high as 6 percent will barely absorb the increasing number of new entrants to the labor market. Unemployment will continue to be an overriding concern and will gradually fall to around 8.7 percent in FY11. Finally, inflationary pressures are expected to rise, as global prices are likely to filter to domestic consumer prices, domestic demand will gain more solid ground, and gradual adjustment of energy prices will be implemented. Interest rates are not thus expected to rise, yet real interest rates will remain low or negative. This outlook is consistent with that of standard and poor's ratings services which affirmed in 2010.

The global crisis is now in the rear view mirror and world growth is being restored. In sharp contrast with past episodes of global turmoil, this time the recovery is led by the periphery, specifically by the larger and more dynamic emerging markets (Brazil, China, India, South Korea, Malaysia, Philippines, and Thailand). For this group of emerging markets (EMs), the contraction in economic activity was much smaller than that of rich countries, the recovery started earlier, and the rebound has been much steeper. Latin America and the Caribbean (LAC) are second among emerging regions, after Asia, in the strength of the recovery. The first part of the report focuses on macroeconomic and financial aspects, emphasizing the outlook going forward. Finally, the second part examines some aspects of the adjustment in labor markets during this crisis in comparison to previous ones.

The Indonesian economic quarterly reports on and synthesizes the past three month s key developments in Indonesia s economy. It places them in a longer-term and global context, and assesses their implications for the outlook for Indonesia s economic and social welfare. Its coverage ranges from the macro economy to financial markets to indicators of human welfare and development. Indonesia s economy appears to be broadly backed on track. Economic activity has been picking up, inflation has remained moderate, financial markets have risen, and the newly reelected government, having established the strong fundamentals that supported Indonesia through the global crisis, appears to be now gearing up for new investments in Indonesia s physical infrastructure, human services and institutions of state. Indonesia seems well-positioned to get back on its pre-crisis growth trajectory, with the possibility of further acceleration and more inclusive growth. The sustainability of the global recovery is still not entirely clear and portfolio flows into emerging markets, which have surged in the last nine months, may as easily be reversed as policy makers elsewhere move to unwind the large monetary and fiscal stimulus efforts initiated over the last year.

Real Gross Domestic Product (GDP) growth rate was 9.9 percent in 2007. Economic growth has been primarily driven by agriculture (which contributed 3.4 percentage points to economic growth), and services (which contributed 4.3 percentage points). In the agriculture sector, the December 2007 annual livestock census reported an increase of 15 percent of livestock from 34.8 to 40.3 mln livestock, with the number of goats, sheep and cattle increasing by 18, 15 and 14 percent respectively. While most of the foreign direct investment (FDI) coming into Mongolia continues to go to mining, its value-added only grew by only 1.7 percent this year (mainly came from coal extraction). On the non-bank side, the financial regulatory commission has been making efforts to improve the legal and regulatory framework, however, its weak institutional capacity and resource constraints continue to be a major impediment in effective supervision. Several key laws relating to the financial sector need to be finalized. Efforts have been made towards resolving immediate issues relating to the closed savings and credit cooperatives, developing the insurance industry and developing a framework and institutions to develop the mortgage market. However, several laws and enabling regulation still need to put in place before benefits of increase in financial sector efficiency (lower cost of financing) can be fully realized.

This paper discusses the role of money market operations by the Chinese central bank in a transition period of the monetary policy framework. We argue that in recent years, especially before and after the change in the foreign exchange rate regime in July 2005, money market operations have been focused mainly on China-US interest rate differentials, which significantly influence the RMB exchange rate. On the other hand, the task of demand control for the purpose of price stability continues to rely on direct control measures taken by the central bank and other government agencies with respect to bank lending and investment.

This paper uses co-integration method and error-correction model to re-examine the relationship between real exchange rate and expected interest rate differentials, including cumulated current account balance, over floating exchange rate periods. As indicated by the dynamic model, I find that there is a long run relationship among the variables using Johansen co-integration method. Final conclusion is that the empirical evidence is provided to show that our error-correction model leads to a good real exchange rate forecast.

This paper develops a model to explain the determinants of financial dollarization. Expanding on the existing literature, our framework allows interest rate differentials to play a role in explaining financial dollarization. It also accounts for the increasing presence of foreign banks in the local financial sector. Using a newly compiled data set on transition economies we find that increasing access to foreign funds leads to higher credit dollarization, while it decreases deposit dollarization. Interest rate differentials matter for the dollarization of both loans and deposits. Overall, the empirical results lend support to the predictions of our theoretical model.

This paper proposes a Multivariate-Arch in Mean model to analyze the potential channels through which domestic fiscal and monetary policy as well as changes in the international economic environment may affect interest rate differentials across countries. This technique is illustrated by analyzing the behavior of short-term interest rates in a number of European countries prior to the introduction of the common currency. The key feature of our results is that macroeconomic variables exert both a direct and indirect influence on the short-term interest rate differential. This indirect effect is captured through the conditional volatility of the differential, which is itself a statistically significant determinant of the level of the differential. This relationship is likely to be overlooked by more traditional models that focus solely on the first order moments of the process.

With persistence in macroeconomic variables two aspects of exchange rate credibility emerge whose relative importance varies over time. Both aspects have opposite implications for the relation between fundamentals and credibility. Hence, the effect of policy measures on interest rate differentials becomes ambiguous. In this paper a Markov-switching VAR that allows for parameter shifts across regimes is employed to test the hypothesis of regime-dependent determination of credibility for major EMS currencies. Regime-dependent impulse response functions reveal substantial differences in the response of spreads to macroeconomic shocks across regimes.

Once you allow for persistence in macroeconomic variables, two aspects of exchange rate credibility emerge whose relative importance can vary over time. Hence, the effect of policy measures on interest rate differentials becomes ambiguous. In this paper, a Markov-switching VAR that allows for parameter shifts across regimes is employed to test the hypothesis of regime-dependent determination of credibility for major EMS countries. The model separates two regimes that are distinct with respect to the time series properties of the interest rate spread. Regime-dependent impulse response functions reveal substantial differences in the response of spreads to macroeconomic shocks across regimes.

Ce texte fait le point sur l'état des connaissances théoriques et empiriques quant aux différentiels de taux d/intérêt (et autres déviations par rapport aux conditions internationales de non-arbitrage). Il met particulièrement l'accent sur ce que ces différentiels peuvent nous apprendre relativement à la conduite des politiques budgétaires et monétaires pour des petites économies ouvertes comme celles du Québec et du Canada. Les déterminants des taux d'intérêt et leur interaction avec les politiques budgétaires et monétaires en économie ouverte sont étudiées et certains résultats empiriques importants sont présentés. This paper reviews the state of theoretical and empirical economic knowledge regarding interest rate differentials (and other deviations from international non arbitrage conditions). It emphasises in particular what can be learned from these differentials in relation to the conduct of fiscal and monetary policy in the context of small open economies such as Québec and Canada. The determination of interest rates and their interaction with fiscal and monetary policy are discussed and some important empirical results are surveyed.

Based on both single country models and panel data models uncovered interest rate parity is tested for ten European countries relative to Germany by regressing exchange rate changes on interest rate differentials. The period is from March 1979 to February 1996 at one month, three, six and twelve months maturity. Since exchange rate changes follow a non-normal distribution, the distribution of the test-statistic is bootstrapped from the sample. The bootstrapped confidence intervals are wider with larger upper limits than the confidence intervals based on the normal distribution. The regression coefficients, all estimated to be less than one, are considerably lower for long term maturities than for short term maturities, and lower for countries outside the ERM than for ERM countries. This is explained by differences in the variance of exchange rate changes and thereby by the risk premium between long and short term maturities and the risk premium between these two groups of countries.

Stylized empirical facts on the behaviour of exchange rates and interest rate differentials in target zone arrangements are at odds with the predictions of the simple (fully credible) target zone model. Incorporating time-varying devaluation risk in target zone models enriches the data-generating structures and provides an interesting interpretation of the variability - which standard target zone models leave unexplained. By using Bayesian time-varying parameter regression, the present paper shows that stochastic devaluation risk actually explains EMS data quite well. Three key findings should be stressed. First, estimates of expected devaluation rates have recently declined significantly, but devaluation risk has not yet been completely eliminated. Second, expected devaluation rates display `hysteresis'. This contaminates many of the relationships postulated by target zone models with noise, but adjusting for expected devaluation rates frequently reveals almost noise-free relationships, which strongly supports the predictions of the theory. Finally, the estimates of expected devaluation rates suggest that some of the early EMS realignments were largely anticipated by the market.