Monetary Law Blog

German Court Upholds Greek Bailout

While upholding the aid to Greece and a euro rescue package, the German Constitutional Court has concluded that for future financial guarantees the Federal Government should obtain prior approval from the German Parliament.

On September 7, the Court rejected three constitutional complaints directed against German and European legal instruments and other measures in connection with the aid to Greece and with a euro rescue package.

The Court decided that by adopting these Acts, the German Parliament did not impair in a constitutionally impermissible manner its right to adopt the budget and control its implementation by the Government or the budget autonomy of future Parliaments.

However, the Court also noted that § 1.4 of the German Euro Stabilization Mechanism Act merely obliges the Federal Government to strive to reach an agreement with the Parliament’s Budget Committee before giving guarantees. This is not sufficient, so the Court concluded; instead, guaranteeing parliamentary budget autonomy requires an interpretation to the effect that the Federal Government is in principle obliged to always obtain prior approval by the Budget Committee before giving guarantees.

 

Legal Vacancy in IMF

The IMF Legal Department is seeking a Senior Counsel to join the fiscal law team of its Financial and Fiscal Law Unit in Washington DC. Interested applicants should visit www.imf.org/jobs for the full vacancy information and apply to job #1100368 by June 20, 2011.

Econstories.tv: a fun way of teaching economics

Econstories.tv is a place to learn about the economic way of thinking through the eyes of creative director John Papola and creative economist Russ Roberts.

Watch for example the music videos Fear the Boom and Bust or Fight of the Century where John Maynard Keynes and F. A. Hayek rap about their economic theories.

Legal Vacancy in ECB

The European Central Bank is looking for a Counsel in its Legal Advice Division in Frankfurt am Main.

Follow this link for more info.

Legal Vacancy in EBRD

The European Bank for Reconstruction and Development is looking for a Counsel in its Finanical Law Unit in London.

Follow this link for more info.

Spanish Town 'Reintroduces' Peseta

A small town in northern Spain has decided to reintroduce the old Spanish currency - the peseta - alongside the euro to give the local economy a lift. Shopkeepers in Mugardos want anyone with forgotten pesetas to come and spend it.

The BBC reports that people are travelling to Mugardos just to spend the old currency they never got round to converting. When the euro banknotes and coins were introduced in January 2002, Spaniards had three months to exchange their pesetas for euros at any bank.

The Bank of Spain estimates that pesetas worth 1.7bn euros ($2.4bn) are still unaccounted for. That cash can still be converted today, but only at the Bank of Spain itself. So the Bank may expect some business from shopkeepers from Mugardos.

 

Happy New Year ...welcoming Estonia to the euro area

All the best to all of you. In particular our friends in Estonia who joined the euro area on January 1, 2011.

Netherlands Plans to Make Call for Bank Run a Criminal Offense

The Dutch government intends to make calls for bank runs a criminal offense. At the start of 2011 the Dutch Ministry of Justice plans to send a draft bill amending the Dutch Criminal Code, it said in a statement today. Under the draft legislation, inciting customers to withdraw their money from a bank may lead to a maximum punishment of a 19,000-euro (approx. $24,881) fine or a four- year prison term.

 

Basel III: A global regulatory framework for more resilient banks and banking systems

Full text of "Basel III: A global regulatory framework for more resilient banks and banking systems", December 2010

From BIS.org ...

The Basel Committee has issued the Basel III rules text, which presents the details of global regulatory standards on bank capital adequacy and liquidity agreed by the Governors and Heads of Supervision, and endorsed by the G20 Leaders at their November Seoul summit. The Committee also published the results of its comprehensive quantitative impact study (QIS).

Mr Nout Wellink, Chairman of the Basel Committee on Banking Supervision and President of the Netherlands Bank, described the Basel III Framework as "a landmark achievement that will help protect financial stability and promote sustainable economic growth. The higher levels of capital, combined with a global liquidity framework, will significantly reduce the probability and severity of banking crises in the future." He added that "with these reforms, the Basel Committee has delivered on the banking reform agenda for internationally active banks set out by the G20 Leaders at their Pittsburgh summit in September 2009".

The rules text presents the details of the Basel III Framework, which covers both microprudential and macroprudential elements. The Framework sets out higher and better-quality capital, better risk coverage, the introduction of a leverage ratio as a backstop to the risk-based requirement, measures to promote the build up of capital that can be drawn down in periods of stress, and the introduction of two global liquidity standards. 

The Committee also issued today Guidance for national authorities operating the countercyclical capital buffer as a supplement to the requirements set out in the Basel III rules text. The primary aim of the countercyclical capital buffer regime is to achieve the broader macroprudential goal of protecting the banking sector from periods of excess aggregate credit growth that have often been associated with the build-up of system-wide risk. In addition to providing guidance for national authorities, this document should help banks understand and anticipate the buffer decisions in the jurisdictions to which they have credit exposures.

 

Irish Central Bank Governor: “total loan losses about 55 per cent of this year’s GDP”

“I’m not sure that it is widely recognized just how big the actual and prospective loan-losses taken account of in the recapitalization of retail banks in Ireland has been.  … the total loan losses come to no less than €85 billion, or about 55 per cent of this year’s GDP.”

This is a quote from the address by Mr Patrick Honohan, Governor of the Central Bank of Ireland, at the International Financial Services Summit 2010, Dublin, 10 November 2010.