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by Araraukar » Fri Jan 11, 2019 11:55 am
Apologies for absences, non-COVID health issues leave me with very little energy at times.Giovenith wrote:And sorry hun, if you were looking for a forum site where nobody argued, you've come to wrong one.
by Wallenburg » Fri Jan 11, 2019 2:45 pm
Sierra Lyricalia wrote:Wallenburg wrote:I'm aware that this tackles things in a different manner than "Preventing Financial Crises", but are the two really simultaneously necessary? Seems like a whole lot of overkill.
OOC: IA can correct me if I'm misunderstanding these proposals, but here's my take in plain language:
To the extent that the WA has any business regulating international finance, the two proposals are regulating very different things. This one prevents and cures savings bank (i.e. "I have to go to the bank" banks) insolvency (which affects people's savings and wealth), while the other prevents and cures central or investment bank (i.e. banks that lend to your bank) insolvency, which is a proximate cause of savings bank insolvency. The problems and solutions faced by the different types of institutions are not identical, necessitating two different resolutions.
by Imperium Anglorum » Fri Jan 11, 2019 5:23 pm
Araraukar wrote:OOC: Araraukarian economy is basically almost completely digital, and the state controls all essential functions like banks. And yes I know it's a weird society, but it's a very large nation with lots of people (population is just over two billion, though they're trying to bring the number down humanely), and that helps to make it all work.
Wallenburg wrote:OOC: I ask because banks can operate many different kinds of banking operations simultaneously (for instance, Bank of America both runs individual credit, debit, and savings accounts and runs one of the largest investment banking operations in the world). Both this and "Preventing Financial Crises" serve a primary function of preserving liquidity among banks.
by Yohannes » Fri Jan 11, 2019 7:28 pm
Imperium Anglorum wrote:-
by Araraukar » Sat Jan 12, 2019 12:35 pm
Imperium Anglorum wrote:I've got two ideas
Apologies for absences, non-COVID health issues leave me with very little energy at times.Giovenith wrote:And sorry hun, if you were looking for a forum site where nobody argued, you've come to wrong one.
by Imperium Anglorum » Tue Apr 30, 2019 4:36 pm
by Imperium Anglorum » Wed Oct 30, 2019 7:47 pm
by Kelssek » Fri Nov 01, 2019 6:32 pm
All member nations are encouraged to establish a deposit insurance scheme that meets or exceeds the protective standards given by the Deposit Insurance Fund. But when a member nation lacks the institutional regulatory capacity to credibly insure deposits, they may not establish such a scheme. All depository institutions are encouraged to enrol, and all such institutions with demand accounts are required to enrol, in the Deposit Insurance Fund.
by Bananaistan » Sat Nov 02, 2019 12:59 am
Kelssek wrote:All member nations are encouraged to establish a deposit insurance scheme that meets or exceeds the protective standards given by the Deposit Insurance Fund. But when a member nation lacks the institutional regulatory capacity to credibly insure deposits, they may not establish such a scheme. All depository institutions are encouraged to enrol, and all such institutions with demand accounts are required to enrol, in the Deposit Insurance Fund.
On a policy note, this creates a free rider problem. Wouldn't there be an incentive for states to drop the entire burden of deposit insurance onto the World Assembly's scheme?
by The Macaronesia » Sat Nov 02, 2019 2:23 am
(iv) It may administer the IDI until such time that it is able to take other action, which includes any legal accounting operation in order to reduce IDI's liabilities over assets ratio.
6. In the case an IDI has been resolved, and if that IDI's managers have been found guilty of disloyal or fraudulent management, and if the judicial verdict considers the mismanagement is a cause or a contributing factor to the problems which leaded the resolution, the Fund is authorized to claim IDI's managers to totally or partially refund the costs the Fund had to face up to resolve the IDI.
by Imperium Anglorum » Sat Nov 02, 2019 1:48 pm
by Bananaistan » Sat Nov 02, 2019 2:21 pm
by Imperium Anglorum » Sat Nov 02, 2019 2:27 pm
Bananaistan wrote:"That's all very nice but is merely a distraction (or deliberate obfuscation) of the fact that this gives carte blanche to reckiless bankers to gamble the WA's money. The surest way to get bankers to make foolish and reckless decisions is to issue blanket guarantees such as the one presented here. That this guarantee is backed by the financial might of the WA is the cherry on top."
by Bananaistan » Sat Nov 02, 2019 2:29 pm
by Imperium Anglorum » Sat Nov 02, 2019 2:30 pm
Bananaistan wrote:"... the Fund ... may borrow from the World Assembly General Fund the necessary money to achieve its mandate." Moral hazard.
by The Macaronesia » Sat Nov 02, 2019 2:35 pm
by Bananaistan » Sat Nov 02, 2019 2:41 pm
by Imperium Anglorum » Sat Nov 02, 2019 2:45 pm
Bananaistan wrote:You propose to put the WA General Fund as the ultimate guarantor of every bank in every WA member state. What could possibly go wrong?
The Macaronesia wrote:(Image)Francisco Clavijo
Representative of the Republic of the Macaronesia at the World Assembly
Dear representative,
I want to thank you the time you are spending in taking into account our proposals, studying them and answering with such wide expositions.
On fraud, my proposal wanted to delimit precisely how the Fund could manage those situations. On one hand you have fraud or disloyal management as a chain of decissions which are taken to obtain an unfair enrichment at the expense of the Fund, the Nation, the business, its stakeholders, customers, providers or competence. On the other hand, a bankruptcy caused by a negligent management can be condemned, but not considered as fraud.
More concretely, the proposal does not give the Fund confiscation powers, but permits it to init a judicial cause based on a verdict which determines the bankruptcy could have been avoided by not permorming such fraudulental management. Also, the claim may not be for the whole resolution costs, but for a portion depending on the gravity of the fraud.
Not including this proposal makes the question remaining under the competence of every member Nation, which means countries that do not implement this provision would have to force their IDI's to support a higher cost, and would be a discrimination among fair managed IDI's and those which had been managed in a fraudulental manner, understanding fraud as I previously mentioned. This could be cumbersome for foreing banks operating in a higher-costs market.
So if a Nation has a wide historial of fraud management which increases insurance costs, fair managed IDI's shall support higher costs despite their had been respectful with business legislation.
I want to point that current draft seems enough good to us, but we would be more satisfied with more ambitious provisions on sharing responsibilities in case of fraud. Nevertheless, if our proposal is not incorporated we shall vote for the resolution, but my Nation shall go further in such questions and, if necessary, shall regulate bank sector to prevent disloyal competence in our territory.
Let me respectfully appreciate your efforts in this draft and thank you for the opportunity of having this fascinating debate.
by Bananaistan » Sat Nov 02, 2019 2:55 pm
The financial crisis of 2008 was, in part, due to unrealistic expectations of financial institutions. By accident or design - or a combination of the two - large institutions engaged in behavior where they assumed the outcome had no downside for them. By assuming the government would opt as a backstop, the banks actions were a good example of moral hazard and behavior of people and institutions who think they are given a free option.
by Imperium Anglorum » Sat Nov 02, 2019 3:00 pm
by Bananaistan » Sat Nov 02, 2019 3:10 pm
by Imperium Anglorum » Sat Nov 02, 2019 3:36 pm
Bananaistan wrote:OOC: Much RL evidence is that "firm managers" (is this some euphemism for bankers?) play hard and fast with other people's cash when they know the government will step in if everything goes tits up. I'm unaware of similar evidence that many businesses are going bankrupt merely because they have insurance for backpay.
by The Macaronesia » Sat Nov 02, 2019 3:40 pm
Imperium Anglorum wrote:The Macaronesia wrote:(Image)Francisco Clavijo
Representative of the Republic of the Macaronesia at the World Assembly
Dear representative,
I want to thank you the time you are spending in taking into account our proposals, studying them and answering with such wide expositions.
On fraud, my proposal wanted to delimit precisely how the Fund could manage those situations. On one hand you have fraud or disloyal management as a chain of decissions which are taken to obtain an unfair enrichment at the expense of the Fund, the Nation, the business, its stakeholders, customers, providers or competence. On the other hand, a bankruptcy caused by a negligent management can be condemned, but not considered as fraud.
More concretely, the proposal does not give the Fund confiscation powers, but permits it to init a judicial cause based on a verdict which determines the bankruptcy could have been avoided by not permorming such fraudulental management. Also, the claim may not be for the whole resolution costs, but for a portion depending on the gravity of the fraud.
Not including this proposal makes the question remaining under the competence of every member Nation, which means countries that do not implement this provision would have to force their IDI's to support a higher cost, and would be a discrimination among fair managed IDI's and those which had been managed in a fraudulental manner, understanding fraud as I previously mentioned. This could be cumbersome for foreing banks operating in a higher-costs market.
So if a Nation has a wide historial of fraud management which increases insurance costs, fair managed IDI's shall support higher costs despite their had been respectful with business legislation.
I want to point that current draft seems enough good to us, but we would be more satisfied with more ambitious provisions on sharing responsibilities in case of fraud. Nevertheless, if our proposal is not incorporated we shall vote for the resolution, but my Nation shall go further in such questions and, if necessary, shall regulate bank sector to prevent disloyal competence in our territory.
Let me respectfully appreciate your efforts in this draft and thank you for the opportunity of having this fascinating debate.
I don't know what provision you're talking about or what proposal we're talking about because these confiscation powers don't appear in the proposal, under such a term. If you mean to say that risk is being priced poorly, see section 2(a).
by Bananaistan » Sat Nov 02, 2019 3:51 pm
Imperium Anglorum wrote:Bananaistan wrote:OOC: Much RL evidence is that "firm managers" (is this some euphemism for bankers?) play hard and fast with other people's cash when they know the government will step in if everything goes tits up. I'm unaware of similar evidence that many businesses are going bankrupt merely because they have insurance for backpay.
To whom is the money given when the government bails out a firm?
by Imperium Anglorum » Sat Nov 02, 2019 3:53 pm
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