Although recent public opinion has focused on what went wrong with securitization, it is important to recognize the many benefits associated with sound securitization.
Global Financial Stability Report (GFSR), October 2009 - Chapter 2
Key points:
Sound securitization provides important benefits—to allocate credit more efficiently, transfer credit risk away from banking sector to more diversified investors, and more finely tailor risks and returns to potential end investors.
Due to the economic crisis, various sectors of the economy closed this March with lower sales than those in March 2008.
The data presented by the Superior Council of Private Enterprise (COSEP) reported a slowdown in sales during the first quarter when compared with the same period in 2008.
Elnuevodiario.com.ni website published: "[COSEP president José Adán Aguerri] said that up to and including March, the insurance sector decreased 4 percentage points in growth by registering a 9% increase, being that it was up 13% during the same period last year. He added that up to and including April, the hardware sector registered a deceleration of between 20 and 30% over the same period last year, while the decline was 8% for transport and 5% for telecommunications and consumer products."
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.
The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.
With the loan, the Central Bank will face "temporary liquidity contingencies” and give backing to public bank deposits in the domestic financial system.
The loan was granted by the Central American Bank for Economic Integration (BCIE) so that Nicaragua could face up to the consequences of the international financial crisis.
Elnuevodiario.com.ni reported that Antenor Rosales, president of the Central Bank of Nicaragua, said: "The interest rate at which the loan will be given is still under negotiation as is the commission for the disbursement." Normally this type of loan is granted at low interest rates and with ample grace periods.
Situation Report for March 2009 by the Executive Secretary of the Central American Monetary Council (SECMCA).
The Central American - Dominican Republic region could experience economic stagnation or a slight decline in 2009. According to what was published in the February report, econometric projections of regional economic growth already considered that the area of economic stagnation is at its bottom point.
With the creation of a Special Assistance Line (Lafex), the Central Bank could rescue domestic financial institutions that are having liquidity problems.
Antenor Rosales told Laprensa.com.ni: "It is one of the efforts of the Government, particularly the Nicaraguan Central Bank, to ensure all measures that guarantee a financial system that has solvency and liquidity.
The management of micro-financing in the context of the global financial and economic crisis implies challenges, but also opportunities.
With the title "The World Crisis and Micro-Finance," the Academy of Central America organized a discussion for legislative advisors and journalists, where a professor of Ohio State University, Claudio González Vega, analyzed the role of the micro-finance in the current situation.
It is necessary to prevent the governmental assistance to less solvent debtors from destroying the payment culture.
The micro-finance sector globally has a very low level of default, a product of a culture that is important to preserve by restructuring contracts in risk instead of granting direct financial assistance to debtors.
Lower demand and prices for the primary products of export have caused the country’s sales revenue to fall by 29%.
Ervin Sánchez writes in Elnuevodiario.com.ni: "Information supplied by the Center of Export Procedures is at the same time verifyed in an analysis carried out by the economist Adolfo Acevedo, who is an advisor of the Civil Coordinator. The real fall of exports, according to the analysis on the issue, which was done by Acevedo, began in November 2008, indicating that to September exports were growing strongly in comparison with the same month of 2007."
To address the economic crisis that affects the region, the World Bank will contribute $3 billion this year.
Diariolasamericas.com publishes in its website: "The Bank will contribute ´$3 billion for Central America´ as part of the contingency aid to address the effects of the crisis in these countries that are so dependent on trade with the United States,´ said Cox."
Regulation, surveillance, and supervision of the financial systems in Central America and the Dominican Republic.
International financial innovation has become one of the factors behind the current global financial crisis. According to estimates, almost 78% of global liquidity is concentrated in derivative instruments , which have come to represent at least 94% of the global GDP.
Global Economic Slump Challenges Policies. World growth is projected to fall to ½ percent in 2009, its lowest rate since World War II.
Despite wide-ranging policy actions, financial strains remain acute, pulling down the real economy. A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit markets are unclogged.