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To: Abner Hosmer who wrote (7154)	2/2/1998 10:44:00 PM
From: Abner Hosmer	Read Replies (2) \| Respond to of 116762

Six of the foremost central bankers of Central and Eastern Europe discuss how the introduction of the Euro will affect their economies at the World Economic Forum's Salzburg Summit weforum.org >>Chairing the panel, Gerhard Randa, Chairman and Chief Executive Officer of Bank Austria, opened the discussion by suggesting a working scenario. Let us assume, he said, that monetary union will begin on 1 January 1999, that it will include 10 member countries and comprise some 300 million people and a GNP of 7000bn. Given that trade with the European Union already represents some 70% of your transactions, what effect, he asked the central bankers, will this new key currency have on your own economic and monetary policies? Gy”rgy Suranyi, President of the National Bank of Hungary, focused on the monetary aspects of joining the EU..."from our selfish point of view, the sooner the euro is adopted, the better. Any delay of the euro means a delay on enlargement of the EU. We have some doubts whether convergence criteria should be taken seriously as they are discretionary and arbitrary. The real issue is whether, once implemented, to what extent governments are willing to coordinate fiscal policy." ...Einars Repse, President of the Bank of Latvia, said that his country is anxious to know whether Monetary Union is primarily an economic project or a political affair...Repse urged EU members not to ease criteria...The euro is, in his view, essential for EU competitiveness but it must possess two qualifications: public trust and stability against other major currencies...As for the effects on Latvia, the euro's impact on its financial and banking system as well as the entire economy would be immediate. Trade with the EU already amounted to 50% of total turnover. Repse forecast that Latvia's share of foreign trade payments in US dollars - currently about 50% - will decrease.. ..The Chairman of Kazakstan's National Bank, Oraz Jandosov, described an increasingly optimistic economy for his country...He predicted a budget deficit of 3% for next year - meeting the Maastricht criteria...Goals for the 1998 include bringing inflation down to 10% and a GDP growth of 3-4%... ...Hanna Gronkiewicz-Waltz, President of the National Bank of Poland, said that EU integration has become for Poland an important element of its strategy for liberalizing the political and economic system...it is important not to fix a rigid exchange rate for the Zloty too early, at a time when the Poland is undergoing intensive structural adjustments...She noted that, in Poland, there is much higher consensus on joining NATO than on joining the EU - 90% compared to 75%.. ...Josef Tosovsky, Governor of the Czech National Bank, offered background on the Czech Republic's recent economic difficulties. Citing the excessive growth in wages and current account deficit imbalance, Tosovsky noted that the problems were not surprising given the massive inflows of foreign capital during the mid-90s. In one year, the Czech economy had had to absorb a flow of some $8bn -18% of its GDP..."On the one hand, we don't want to lose our monetary independence. On the other, we recognize the importance of a fixed exchange rate for our small economy.. The Ukraine is seeing a return of capital that fled during the transformation years, according to Victor Yushchenko, Chairman of the Central Bank. Confidence is returning as inflation comes down - the target for 1997 is 15-18% - and exports rise. "We do not have to print money to cover the budget deficit," he said, noting that the population are buying special government securities. However, an estimated $10bn in US currency is circulating in the country outside the banking system. Drawing that money back into the financial market is one of the most urgent challenges. Measures to build confidence include making the currency fully convertible and moving towards EU standards. "We expect 1997 to be a watershed year for the Ukrainian monetary system," he said.<<

To: Abner Hosmer who wrote (7154)	2/2/1998 11:31:00 PM
From: Abner Hosmer	Respond to of 116762

weforum.org >>Experts in the Islamic financing system argued for a growing role of Islamic banks in the highly competitive global market and said that Islamic funding could well be combined with non-Islamic funding.. ...The Islamic financial market is estimated to be around US$100 billion today and growing at an average of 15% per annum compared with a 7% to 8% growing rate for Arab Banking.. ...The principle of Islamic banking, which is based on the prohibition of interest, relies on several techniques: Murabaha, Musharaqa, Ijara and Mudaraba. According to Abdul Basit Shaeibi, Assistant General Manager of the Qatari Islamic Bank, the most common technique, Murabaha, is a contract between the bank and the client for the sale of goods with a profit margin agreed by both parties. More than 40% of the Islamic banking operations are based on Murabaha, he said. ...When first established, Islamic banks witnessed rapid growth but that did not last for a long period...ts development saw stagnancy in its second phase due to high competition and fighting. As the Islamic market enters its third stage, there are growing needs for efficiency that will lead to innovation to enhance techniques. ...President of the Russia-based Council for Trade and Economic Cooperation with Middle East and North African Countries (ACTEC) Vladimir Zair-Bek said Russia was taking part in the conference with the intention of achieving practical implementation to proposals and suggestions drawn by Islamic countries... ''The aim of our visit to Doha is to have a firsthand look at your experience in this regard and explore the possibilities of cooperation and their application in Russia in the future...'' ...In Russia, there are an estimated 11 million Muslims and 3000 Islamic organizations. In a quarter of a century, Muslims will form 30% of Moscow residents, he said. The difference between Islamic banks and traditional banks was debated with one participant insisting that while Muslims contend that the Islamic banking system does not take interest, it nevertheless takes from services it extends to people more than what interest makes. ''Better or worse (system) is a matter of personal choice,'' replied Bahar. ''The Islamic system is meant to meet the needs of the society's financing needs and should be in line with the Sharia (Islamic) law. And working within the context of Sharia necessitates this type of institution.''