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THE FORCE OF FINANCE: FROM GLOBAL TO REGIONAL AND LOCAL FINANCIAL FLOWS. Fikret ČAUŠEVIĆ The School of Economics and Business, University of Sarajevo The CBBiH – SEESOX, St Antony’s College High Level Workshop Sarajevo, 6 June 2014.

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The force of finance from global to regional and local financial flows

THE FORCE OF FINANCE: FROM GLOBAL TO REGIONAL AND LOCAL FINANCIAL FLOWS

Fikret ČAUŠEVIĆ

The School of Economics and Business,

University of Sarajevo

The CBBiH – SEESOX, St Antony’s College

High Level Workshop

Sarajevo, 6 June 2014


BEGINNINGS OF CREATING A LARGE GAP BETWEEN FINANCIAL AND REAL FLOWS:

THE CLINTON AND BUSH ADMINISTRATIONS

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CHANGE IN THE US NOMINAL GDP AND NASDAQ INDEX: REAL FLOWS:THE CLINTON ADMINISTRATION 1992-2000 (Base indices: 1992=100)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CHANGE IN THE US NOMINAL GDP AND NASDAQ INDEX: REAL FLOWS: THE BUSH ADMINISTRATION 2001-2008 (Base indices: 2001=100)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Change in the price of average home in the united states 2000 2008 base indices 2000 100
CHANGE IN THE PRICE OF AVERAGE HOME REAL FLOWS:IN THE UNITED STATES: 2000-2008 (Base indices; 2000=100)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


THE MINSKY CASE: FINANCIAL INSTABILITY HYPOTHESIS REAL FLOWS:

STABILIZING AN UNSTABLE ECONOMY

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Notional value of otc traded contracts in financial derivatives and world gdp in trillions of usd
NOTIONAL VALUE OF OTC TRADED CONTRACTS REAL FLOWS:IN FINANCIAL DERIVATIVES AND WORLD GDP (in trillions of USD)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Total claims of internationally active banks in trillions of usd
TOTAL CLAIMS OF REAL FLOWS:INTERNATIONALLY ACTIVE BANKSin trillions of USD

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


The new financial trilemma
THE “NEW” FINANCIAL TRILEMMA REAL FLOWS:

The financial trilemma arises from the impossibility of satisfying simultaneously the three following goals:

  • Financial stability

  • The development of international banking

  • National systems of supervision and oversight of banking operations.

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Very important issues for all of us
VERY IMPORTANT ISSUES REAL FLOWS:FOR ALL OF US

  • BASEL III IMPLEMENTATION

  • EU BANK RECOVERY AND RESOLUTION DIRECTIVE (BRRD)

  • FROM BAILING OUT TO BAILING IN

  • WHAT IS HQLA IN THE WORLD OF TODAYS INTERNATIONAL FINANCE?

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


The us public debt and gross domestic product in trillions of usd
THE US PUBLIC DEBT AND GROSS DOMESTIC PRODUCT REAL FLOWS:(in trillions of USD)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Change in public debt of euro zone countries 2006 2013 in of gdp
CHANGE IN PUBLIC DEBT OF EURO-ZONE COUNTRIES: REAL FLOWS:2006-2013(in % of GDP)

60 %

GDP

60 %

GDP

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop



MONEY – WHENCE IT CAME, REAL FLOWS:

WHERE IT WENT

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Change in assets of the federal reserve system 31 december 2007 100
CHANGE IN ASSETS OF REAL FLOWS:THE FEDERAL RESERVE SYSTEM 31 December 2007 = 100

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Portfolio and capital market theory and practice how to diversify portfolio s
PORTFOLIO AND CAPITAL MARKET: REAL FLOWS:THEORY AND PRACTICE – HOW TO DIVERSIFY PORTFOLIO(s)?

Rp = R* + [(Rm – R*) / Sm] x Sp

Ri = R* + [(Rm – R*) (RimSi/Sm)]

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CHANGE IN THE REAL FLOWS:DOW JONES INDUSTRIAL AVERAGE AND FINANCIAL TIMES STOCK EXCHANGE30 June 2008 – 31 March 2013

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CHANGE IN THE REAL FLOWS:DOW JONES INDUSTRIAL AVERAGE AND DEUTSCHE AKTIEN INDEX (DAX)30 June 2008 – 31 December 2013

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Change in the dow jones industrial average and dow nikkei 225 30 june 2008 31 december 2013
CHANGE IN THE REAL FLOWS:DOW JONES INDUSTRIAL AVERAGEAND DOW NIKKEI 225: 30 June 2008 – 31 December 2013

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CHANGE IN REAL FLOWS:THE DOW JONES INDUSTRIAL AVERAGE AND THE SHANGHAI SHENZEN CSI30 June 2008 – 31 December 2013

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Assets of the eurozone monetary financial institutions
ASSETS OF THE EUROZONE REAL FLOWS:MONETARY FINANCIAL INSTITUTIONS

http://www.ecb.europa.eu/press/pr/stats/md/html/index.en.html

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


CREDIT ACTIVITY OF THE BANKING SECTOR IN BOSNIA AND HERZEGOVINA

- milions of KM

Source: The Central Bank of Bosnia and Herzegovina

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


STRUCTURING AND RESTRUCTURING PORTFOLIOS OF THE REGIONS SMALL OPEN ECONOMIES’ FOREIGN EXCHANGE RESERVES HAS BECOME A RATHER DIFFICULT TASK

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


Eonia 2008 2012
EONIA: SMALL OPEN ECONOMIES’ FOREIGN EXCHANGE RESERVES HAS BECOME A RATHER DIFFICULT TASK2008-2012

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop

24


Yields on treasury bills and bonds of selected euro zone countries in percents
YIELDS ON TREASURY BILLS AND BONDS OF SELECTED SMALL OPEN ECONOMIES’ FOREIGN EXCHANGE RESERVES HAS BECOME A RATHER DIFFICULT TASKEURO-ZONE COUNTRIES (in percents)

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop

25


OUTSTANDING LOANS OF SELECTED COUNTRIES IN EURO-ZONE AND THE WESTERN BALKANS WITH THE IMF – December 2013

Source: The International Monetary Fund - http://www.imf.org/external/country/index.htm

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


EXTERNAL DEBT AND PUBLIC DEBT TO GDP RATIOS OF THE FORMER YUGOSLAV COUNTRIES AND ALBANIA – December 2013

Fikret Čaušević - The CBBiH-SEESOX St Antony's Workshop


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