Peter Boone and Simon Johnson point out some potential limitations of the Canadian banking system in this post over at The Baseline Scenario.
This new CGFS study provides an interesting analysis of the difficulties in cross-border funding markets during the crisis, especially in relation to foreign-currency positions.
Here is the text issued by the EU leaders:
We reaffirm that all euro area members must conduct sound national policies in line with the agreed rules and should be aware of their shared responsibility for the economic and financial stability in the area.
We fully support the efforts of the Greek government and welcome the additional measures
announced on 3 March which are sufficient to safeguard the 2010 budgetary targets. We recognize that the Greek authorities have taken ambitious and decisive action which should allow Greece to regain the full confidence of the markets.The consolidation measures taken by Greece are an important contribution to enhancing fiscal
sustainability and market confidence. The Greek government has not requested any financial
support. Consequently, today no decision has been taken to activate the below mentioned
mechanism.In this context, Euro area member states reaffirm their willingness to take determined and
coordinated action, if needed, to safeguard financial stability in the euro area as a whole, as decided the 11th of February.As part of a package involving substantial International Monetary Fund financing and a majority of European financing, Euro area member states, are ready to contribute to coordinated bilateral loans.
This mechanism, complementing International Monetary Fund financing, has to be considered
ultima ratio, meaning in particular that market financing is insufficient. Any disbursement on the
bilateral loans would be decided by the euro area member states by unanimity subject to strong
conditionality and based on an assessment by the European Commission and the European Central Bank. We expect Euro-Member states to participate on the basis of their respective ECB capital key.The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possible by risk adequate pricing. Interest rates will be non-concessional, i.e. not contain any subsidy element. Decisions under this mechanism will be taken in full consistency with the Treaty framework and national laws.
More releases from the CSO:
The latest national accounts release shows the scale of the contraction in 2009, with national income falling far more than the decline in production (the foreign-owned firms doing better than domestic firms).
The BOP release shows that the current account deficit has narrowed to 2.8% of GDP.
The Fine Gael “New Politics” document includes a number of proposals to re-shape the fiscal process.
Some extracts:
In Government, Fine Gael will implement a Responsible Budgeting Initiative that will make the budgeting process much more transparent and give the Dáil a clear and meaningful role. In particular, it will allow both the Opposition and the wider public to examine in detail the key underlying financial assumptions on which Government is basing its actions before the budget is published.
and
Fine Gael will overhaul radically the entire budget process. We recognise that these new fiscal processes cannot by themselves buy international credibility or fiscal stability. However, we believe that a different budget process, such as we areproposing, might have limited the worst excesses of the last few years and will help avoid any recurrence.
• We will establish a Parliamentary Budget Office (PBO), supported by an Independent Advisory Council (IAC) to provide members generally, and the proposed Dáil Budget Committee in particular, with expert input and advice into:
o The underlying structural state of the public finances
o The desirable borrowing / savings target for Government in the Budget, taking into account the economic cycle and longer-term fiscal pressures;
o The long-term implications of specific spending and taxation policies, taking into account likely demographic and other social and economic changes;
o Opportunities for rationalisation and prioritisation of public spending; and
o Performance evaluation of spending programmes.
• We will overhaul the annual Government Budget Documentation to include:
o Presentation of high-level service delivery and outcome targets alongside proposed spending allocations for public services;
o Quantification of the cost of all major “tax expenditures” and “tax shelters”;
o Assessment of the Government’s financial and non-financial assets and its financial and contingent liabilities, including public sector pension liabilities, future liabilities under Public Private Partnerships and possible liabilities resulting from the National Asset Management Agency (NAMA).
• A new Parliamentary Budget Cycle will be established:
o September – Publication by the new Budget Office of its recommendation for the fiscal stance (borrowing target) in the Budgeto October – Government presentation to the Dáil of its Pre-Budget Outlook, including macro targets for spending, taxation and borrowing (saving) in the year ahead. The Government would have a “comply or explain” obligation with regard to the target set by the Budget Office.
o November – Government presentation to the Dáil of its draft Budget.
o March – Government presentation to the Dáil of a new Public Service Delivery Report, audited by the C&AG, showing compliance in the previous year with the levels of spending authorised by the Dáil, as well as a comparison of service delivery and outcome targets promised and actual
results achieved
o March – Oireachtas Estimate Approval, following consideration of the Public Service Delivery Report.
o April, July, September, December – Government presentation to the Dáil of Quarterly Exchequer Reports (an expanded Exchequer Return), which would require the Minister to report on deviations from strategy and on the need for correction, at Departmental and macro-level
• Government will develop a new Medium Term Expenditure Framework which will
include:
o Presentation of aggregate envelopes for expenditure and tax based on the appropriate fiscal stance, recognising the different constraints that should apply to:
Capital
Demand-led spending
Stable programme spending
o An explicit cabinet “rationalisation and prioritisation” mechanism to drive restructuring and to divide up the spending envelopes among broad departments and agencies. Cabinet would also retain a “strategic reserve” which could be applied to cross cutting activities and to Government prioritieso Within the broad allocations set by cabinet; units within Departments would be required to bid publicly for resources and offer a set of quantifiable service delivery and outcome commitments that they would deliver in return. New evaluation mechanisms within Departments would be established to judge whether commitments are being hit and to create an accountability framework.