E58 - Central Banks and Their PoliciesReturn

The independence of central banks is a hot topic. In connection with the ongoing financial crisis, the media often come with concerns that central banks might be influenced by political elites. These considerations apply both to central banks of EU Member States and the European Central Bank. The aim of this paper is to prove or disprove the hypothesis of limited independence of the ECB. The main reason to focus primarily on the ECB is due to its leadership within the European System of Central Banks as well as due to the fact that any interference in its activities would affect mainly the functioning of the ESCB. The paper is divided into three parts. The first part deals with the theory of central banks' independence in general. The second part presents the issue of status and regulation of the ECB, and the last part applies the knowledge of the theory of independence of central banks to an evaluation of the independence of the ECB.

This paper focuses on the current issues of the new banking regulation and its expected impact on the banking sector in the Czech Republic. Its aim is to provide current information on the basic regulatory proposals issued under Basel III and their potential impact on the functioning of the banking sector in the CR and then on real economic development in the Czech Republic. The paper will analyze the basic characteristics of the banking sector in the CR and the current situation with regard to the stability of the European banking sector, which are relevant for setting regulatory measures. Finally, the paper will examine the potential effects of the essential elements of the new banking regulation on the functioning of the banking sector in the CR. More detailed research shows that the CR's banking sector is ready for adopting the new banking regulation and a fundamental change in its operation with significant impacts on the economy is not expected.

The purpose of this study is to answer the question 'Is Egypt ready to apply an IT regime?' The study presumed that a country is ready to apply an IT regime once the prerequisites for an IT regime are met. Comparing the current position of Egypt with some emerging market economies, the conclusions of the study are as follows: (i) the CBE is not factually independent. Although the CBE has been granted legal instrument independence, the existence of government representatives as voting members on the MPC and the coercion of the CBE to extend finance to the government are two elements sufficient to undermine the de facto independence of the CBE; (ii) inflation targets are expected to be missed under the possibility that the behavior of the CBE will be similar to the behavior of the majority of emerging market economies, i.e., adopting an IT regime whereas implicitly targeting FX rates; and (iii) the current level of knowledge about some central issues of designing an IT regime and the quality of the available data are not satisfactory to support the adoption of an IT regime. The study concludes that Egypt is still not ready to apply an IT regime.

The transformation of the world economy over the past two decades has been manifesting itself in various forms. On the one hand, there is an increasing interdependence of the world economy, which is a manifestation of the depth of the globalization process, mainly thanks to the expansion of information and communication technologies and the greater degree of the liberalization of the world economy. On the other hand, there is an increasing scale of contagion effects, where a crisis in one country or region is transmitted to the rest of the world quickly. The transformation of the world economy is also reflected in the growing influence of emerging economies both in terms of their global trade shares and their contributions to global economic growth. Despite a favorable growth dynamics over the past years, the current situation and the short-term outlook of the world economy are indeed gloomy. The multiple crises, which include oil, food and external imbalances, have led most of the advanced economies to converge to a recession. The current global slowdown is also accompanied by policy dilemmas as governments in the vast majority of countries have been scrambling to come up with the right economic incentive schemes to avert a protracted recession. Nonetheless, unlike previous crises, where countries used to choose policies unilaterally (including protectionist policies), now the world seems to favor coordination as opposed to protectionism, as the latter would mean the termination of the globalization process.