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On Tuesday July 2, 2013 US central bank policy makers voted in favor of the US version of the global bank rules known as the Basel 3 accord. The cornerstone of the new rules is a requirement that banks maintain high quality capital, such as stock or retained earnings, equal to 7 percent of their loans and assets. The bigger banks may be required

Some commentators such as Mohamed El-Erian, the chief executive officer of Pacific Investment Management (PIMCO), are of the view that the Federal Reserve’s policy of massive asset purchases has added very little to economic growth. A study published by the Federal Reserve Bank of Kansas City explores various channels through which monetary

Most economists surveyed by Bloomberg News are now of the view that the Federal Reserve will begin tapering asset purchases in December. Contrary to expectations on the 18-19 of September, Federal Reserve policymakers have decided to continue with a very loose monetary stance and postpone the tapering of asset purchases. Most policymakers are of

According to the popular way of thinking, bubbles are an important cause of economic recessions. The main question posed by experts is how one knows when a bubble is forming. It is held that if the central bankers knew the answer to this question they might be able to prevent bubble formations and thus prevent recessions. On this, at the World

In countries such as Turkey and Argentina a tighter stance implemented by central banks has set in motion an economic bust. In Turkey the central bank has raised the one week repo rate to 10 percent from 4.5 percent while in Argentina the 3-month Treasury bill rate climbed to 25.89 percent from 16 percent in early January. In Argentina an increase

Some key US economic data shows visible weakening. The National Association of Home Builders/Wells Fargo sentiment index slumped to 46 in February from 56 in January. The New York Federal Reserve Bank’s Empire State general business conditions index fell to 4.48 in February from 12.51 the month before. Also, the yearly rate of growth of housing

After settling at 3.9 percent in July 2011 the yearly rate of growth of the consumer price index (CPI) fell to 1.6 percent by January this year. Also, the yearly rate of growth of the consumer price index less food and energy displays a visible downtrend falling from 2.3 percent in April 2012 to 1.6 percent in January. On account of a visible

According to commentators, sanctions imposed by the US and the European Union are pushing Russia toward a recession. However, we hold that some key Russian economic data have been displaying a weakening prior to the annexation of the Crimea to Russia. This raises the likelihood that sanctions might not be the key factor for an emerging recession.

Whenever the so-called economy shows signs of weakness most experts are of the view that what is required to prevent the economy sliding into recession is to boost the overall demand for goods and services. If the private sector fails to increase its demand then it is the role of the government to fill this void. Following the ideas of Keynes and

Conventional wisdom says that savings is the amount of money left after monetary income was used for consumer outlays, implying that saving is synonymous with money. Hence, for a given consumer outlays an increase in money income implies more saving and thus more funding for investment. This in turn sets the platform for higher economic growth.