Deposit insurance pricing: the hidden burden of premium rate volatility
Article Abstract:
Most banks have not had to pay deposit insurance premiums in 1995 and 1996, and this is seen as a positive development. This view ignores the problem of premium rate volatility for US banks. The Bank Insurance Fund was recapitalized rapidly because premium rates were excessive, and they were too high because of an overreaction to losses in the past. Regulation of banks can impose high costs. Our aim should be to foster a competitive, sound and safe banking industry, and one way to achieve this is to address the problem of premium rate volatility.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1997
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Reforming deposit insurance and the regulatory system: the failure of the middle way
Article Abstract:
The use of deposit insurance as an attempt by politicians to control financial markets is evidence of the failure bound to occur when such second-best approaches are used. Second-best, because the market itself cannot be suitably analysed by policy makers. The market should be the first source of regulation, which suggests no political regulation, or very little, is needed. By relying on necessarily incomplete information, regulators will be constantly adapting policy after the fact, never able to truly control the market, only to respond to it.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1995
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The role of forecasting in meeting inflation targets: the case of New Zealand
Article Abstract:
Price-level stability was set out as the only macroeconomic aim of New Zealand's central bank in the 1989 Reserve Bank of New Zealand Act. Economic forecasts became important after this act since there is a delay before monetary policy affects inflation levels. The bank's forecasting record has been promising, and underlying inflation dropped to under 2% in 1997. The inflation target was widened after the 1996 elections, and there are debates as to whether such a strong emphasis should be placed on price-level stability.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1997
User Contributions:
Comment about this article or add new information about this topic:
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