Real Talk!

Bank of Canada Governor, Mark Carney, at the Conférence de Montréal, indicated that the Bank of Canada has no plans to adjust its rates until at least June of next year, as it attempts to keep inflation below two per cent.

Carney spoke at the International Economic Forum of the Americas in Montreal, on June 11th, underscoring the conference theme: "Adapting to a New World Order”. He noted that globalized product, capital, and labour markets lie at the heart of the New World Order.

(did I just hear NEW WORLD ORDER?)

Carney outlined four key priorities that central banks, along with other public agencies, must promote in order to prepare the necessary market infrastructure and responsible policy that will sustain renewed globalization.

“First, transparency should be increased so that risk can be identified more effectively and priced more efficiently…”

“Second, core funding markets should be made more efficient and less susceptible to extreme price movements…”

“Third, macroprudential regulations must be enacted to help smooth the credit cycle. A prominent example could be a new bank capital regime…”

“Fourth, all countries must accept their responsibilities for promoting an open, flexible, and resilient international monetary system…”

Carney concluded his speech, “…with a few words on the impact of this rebalancing for Canada. It appears likely that the global economy is entering a period of lower potential growth. The substantial capital misallocation and financial excesses of the boom years will take years to work off.”

And, “With our domestic and international partners, the Bank is working actively to build more resilient markets and to create an open, global financial system. Success is not assured….”

HMMmmmmmm

So… who are these domestic and international partners?

The Business Credit Availability Program (BCAP) is a joint effort between Canadian financial institutions, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC).

Last month, The Business Development Bank of Canada announced a new private sector growth capital fund,that will provide financing to Canadian technology growth companies and fills a significant void in the Canadian market for growth capital.

The general partner of the fund is Tandem Expansion, co-founded by two of Canada's most experienced venture capital/private equity investors, Charles Sirois and Brent Belzberg. Mr. Sirois, who was recently appointed Chairman ofCIB C, founded Telesystem in 1984, which has since invested more than $1billion in venture opportunities of all stages through its various funds. Mr.Belzberg is the Founder and Senior Managing Partner of TorQuest, one of Canada's leading private equity firms with more than $700 million in private equity capital under management.

The BDC, will invest $75 million of funds that were provided by
the Government of Canada, allocated in the 2008 budget. There are also preliminary commitments from a number of institutional and private investors and the Tandem Expansion Fund is expecting a first close of $300 million this summer.

Meanwhile, Canadian Finance Minister Jim Flaherty held a press conference after the meeting in southern Italy of finance ministers from the G8 leading industrialized countries, today. Flaherty said that his European counterparts have agreed to carry out the stress tests, aimed at assessing the financial resilience of their banks. Stress tests, apparently, involve more than 150 regulatory officials poring over the books.

The benchmarks outlined in these stress tests:

The SCAP capital buffer for each [bank] is sized to achieve a Tier 1 risk-based ratio of at least 6% and a Tier 1 Common risk-based ratio of at least 4% at the end of 2010, under a more adverse macroeconomic scenario than is currently anticipated.

"There is an agreement that stress tests are important and they will be carried out," Flaherty said in the press conference. "There is some disagreement on the way that stress test results should be reported. But there is a commitment to do stress testing."

Does anyone else remember the January budget… errrr… I mean the “Action Plan” and the $200-billion “Extraordinary Financing Framework”? That would be the Bay Street bailout package that included $50-billion set aside to purchase mortgages from banks and lenders. It was a sort of amalgamation/combination of previous programs .

Budget measures also enhanced the powers of the Canadian Deposit Insurance Corp., allowing the CDIC to establish a “bridge bank” that would step in to maintain financial stability in the case of a possible bank failure.

On May 8th, Flaherty introduced us to the Canadian Secured Credit Facility (CSCF). “Our government has taken a broad and comprehensive approach to ensuring access to credit and financing through the Extraordinary Financing Framework announced in Canada's Economic Action Plan,” said Minister Flaherty. “The CSCF is a critical component of the Extraordinary Financing Framework, which identifies a key gap in the credit market and helps to address it.”

In his address at the Canada-UK Chamber of Commerce meeting of G20 partners,Flaherty discussed the current “synchronized global recession.” His speech mentioned … G20, G7, G8… The IMF, The World Bank, APEC… the Office of the Superintendent of Financial Institutions….

All of these groups, these teams… and what about “the Economic Advisory Council to the Minister of Finance” or the Organization for Economic Co-operation and Development (OECD)? Who are these people?
I need a program that names the players!

G5: consists of five of the world's leading industrialized countries: France, Germany, Japan, the United Kingdom, and the United States. Meetings include the 5 relevent finance ministers, central bank governors and finance ministry deputies and the Managing Director of the IMF. Their meetings were kept private until Sept. 1985. By 1989 the meetings were largely replaced by G7 meetings.

G7: includes France, Germany, Italy, Japan, United Kingdom, and United States meet several times a year and is not to be confused with the G8, which is the annual meeting of the heads of government of the aforementioned nations, plus Russia.

The G-7 Finance Ministers and Central Bank Governors endorsed the report in February 1999, including its recommendation to establish a Financial Stability Forum (FSF). The objectives of the FSF include improvements in the functioning of financial markets, and the reduction of systemic risk through enhanced information exchange and international cooperation among the authorities responsible for maintaining financial stability.

G10: France, Germany, Belgium, Italy, Japan, the Netherlands, Sweden, the United Kingdom, the United States and Canada, with Switzerland playing a minor role. It is a group of 10 countries that participate in the “General Arrangements to Borrow (GAB)” and the New Arrangements to Borrow (NAB).

The GAB enables the IMF to borrow specified amounts of currencies from (now) 11 industrial countries (or their central banks), under certain circumstances, at market-related rates of interest. The NAB is a set of credit arrangements between the IMF and 26 members and institutions.

G10 governors usually meet every second month at the Bank for International Settlements. (BIS) The Bank for International Settlements (BIS), European Commission, IMF, and OECD are international organizations that officially observe of the activities of the G-10.

The BIS is based in Switzerland, it was established by the Hague agreements of 1930. The main players were the Governor of the Bank of England and his German counterpart (who later became Adolf Hitler’s finance minister). The BIS was to make monetary policy more predictable and transparent among its 55 member central banks.

As a result of allegations that the BIS had helped the Germans loot assets from occupied countries during World War II, the United Nations Monetary and Financial Conference recommended the "liquidation of the Bank for International Settlements at the earliest possible moment”. In April of 1945 the British and Harry S. Truman stopped the dissolution of the BIS.

The BIS was originally owned by both the governments and private individuals, since the United States and France had decided to sell some of their shares to private investors. BIS shares traded on stock markets, which made the bank a unique organization: an international organization (in the technical sense of public international law), yet with private shareholders.

As of March 31, 2007, the BIS had estimated total assets of U.S. $409.15 billion (based on the dollar/SDR exchange rate at that time).That total included some 150 tons of fine gold.

The BIS provides the Basel Committee on Banking Supervision with its twelve-member secretariat. It is comprised of senior representatives of bank supervisory authorities and central banks from the G-10 countries. The BIS meets about four times a year. The purpose of the committee is to encourage convergence toward common approaches and standards.

The IMFC (International Monetary and Financial Committee) has the responsibility of advising, and reporting to, the Board of Governors on matters relating to the Board of Governors' functions in supervising the management and adaptation of the international monetary and financial system, reviewing developments in global liquidity and the transfer of resources to developing countries. There are 24 members who are governors of the Fund, ministers, or others of comparable rank.

There are representatives from Egypt, Algeria, Argentina, Belgium, Brazil, Canada, China, France, Gabon, Germany, India, Indonesia, Italy, Japan, Korea, Netherlands, Russia, Saudi Arabia, South Africa, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom and the United States.

The Joint Ministerial Committee of the Boards of Governors of the Bank and Fund on the Transfer of Real Resources to Developing Countries, better known as the Development Committee, was established in October 1974 to advise the Boards of Governors of the IMF and World Bank on critical development issues and on the financial resources required to promote economic development in developing countries.

It has 42 members, consisting of 26 senior representatives of national authorities responsible for financial stability in 11 significant international financial centers (in Australia, Canada, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Singapore, the United Kingdom, and the United States); six senior representatives of four international financial institutions (Bank for International Settlements, IMF, Organization for Economic Cooperation and Development, and the World Bank); seven senior representatives of three international regulatory and supervisory bodies (Basel Committee on Banking Supervision, International Organization of Securities Commissions, and International Association of Insurance Supervisors); a representative each of two committees of central bank experts (Committee on the Global Financial System and Committee on Payment and Settlement Systems); a representative of the European Central Bank and the Chairman.

The G15 was originally established in 1989, it is now 18 members. Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaice, Kenya, Malaysia, Mexico, Nigeria, Peru, Senegal, Sri Lanka, Venezuela, Zimbabwe and Iran.

The G-20 is made up of the finance ministers and central bank governors of 19 countries:Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States of America.

G-24, is a chapter of the G-77, was established in 1971 to coordinate the positions of developing countries on international monetary and development finance issues and to ensure that their interests were adequately represented in negotiations on international monetary matters. The group, which is officially called the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, is not an organ of the IMF, but the IMF provides secretariat services for the Group.

G77 was established on June 15, 1964, by the "Joint Declaration of the Seventy-Seven Countries" issued at the end of the first session of the United Nations Conference on Trade and Development (UNCTAD) in Geneva. It was formed to articulate and promote the collective economic interests of its members and to strengthen their joint negotiating capacity on all major international economic issues in the United Nations system. The membership of the G-77 has expanded to 130 member countries, but the original name has been retained because of its historical significance.

The Paris Club is an informal group of official creditors, industrial countries in most cases, that seeks solutions for debtor nations facing payment difficulties.

The London Club is an informal group of commercial banks that join together to negotiate their claims against a sovereign debtor
G-30 is a private, nonprofit, international body composed of senior persons from the private and public sectors, and academia. Its purpose is to deepen understanding of international economic and financial issues, to explore the international repercussions of policy decisions, and to examine policy options for key issues. Foundations, banks, corporations, central banks, and private individuals fund the G-30.

There used to be a Group of 33, too… it consisted of the finance ministers and central bank governors of Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Côte d'Ivoire, Egypt, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, Morocco, the Netherlands, Poland, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom, and the United States.

Confused?

I haven’t even started on the The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act (signed by Woodrow Wilson), it is a quasi-public and quasi-private (government entity with private components) banking system[1] that comprises (1) the presidentially appointed Board of Governors of the Federal Reserve System in Washington, D.C.; (2) the Federal Open Market Committee; (3) twelve regional Federal Reserve Banks located in major cities throughout the nation acting as fiscal agents for the U.S. Treasury, each with its own nine-member board of directors; (4) numerous other private U.S. member banks, which subscribe to required amounts of non-transferable stock in their regional Federal Reserve Banks; and (5) various advisory councils.

It would be so much easier, just to say "Uncle".