Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: long-gone who wrote (19529)	9/22/1998 8:42:00 PM
From: lorne	Respond to of 116762

BOJ wakes up to world deflation problem,easy money policy. yomiuri.co.jp

To: long-gone who wrote (19529)	9/22/1998 8:46:00 PM
From: goldsnow	Respond to of 116762

IMF shows unease about market stability under EMU 11:50 a.m. Sep 22, 1998 Eastern FRANKFURT, Sept 22 (Reuters) - The International Monetary Fund warned that the early years of European Monetary Union could be marked by financial instability which authorities are ill-equiped to cope with. The IMF said in its Capital Markets Report released late Monday that systemic risks to the European financial system could increase temporarily after the launch of EMU, maybe forcing the European Central Bank to play a larger role in bank supervision than has previously been envisaged. ''Ensuring financial stability within EMU will be particularly challenging in the early years, when there might be several tendencies for systemic risks to increase temprarily,'' the report said. The IMF report, parts of which struck a chord with ECB President Wim Duisenberg, saw several reasons to expect increased financial market instability after the launch of the euro on January 1, 1999. The euro, the report said, could accelerate the restructuring of the European banking system in a period when it may be difficult to close banks or reduce costs. ''In such an environment, inefficient and unprofitable institutions may continue to operate, engaging in increasingly risky activities.'' Second, the IMF worried that new pan-European markets could emerge and that higher cross-border unsecured interbank lending could result with a ''higher risk of contagion.'' Finally, the report said that the EMU's cross-border gross settlement system, TARGET, may not help reduce systemic risk as some analysts hope. Maybe more worrying for the IMF was the apparent inability of European authorities to cope with a banking crisis. It said that many important decisons had not been made on how a bank liquidity crisis would be resolved. ''There does not seem to be a fully worked-out framework for crisis management in the EMU.'' According to the IMF, the Maastricht Treaty, the Statute of the ESCB (European System of Central Banks) and guidelines passed by the European Monetary Institute have left ''considerable uncertainty'' about how national central banks might provide emergency liquidity to troubled banks. And although the ECB is seen playing an important role in injecting such liquidity, the IMF said the institution lacks the supervisory tools to play a significant role in coping with a liquidity crisis. ''The current decentralized approach leaves neither national central banks nor national governments clearly responsible for supervision of pan-European banks or for ensuring EMU-wide financial market stability,'' the IMF said. ECB President Duisenberg appeared to agree with at least some of the IMF's report, telling the European Parliament on Tuesday that he wished the ECB had been given greater supervisory powers. ''I was involved in drawing up the Maastricht Treaty...If I had been alone, there would have been a much greater role for the ECB in bank supervision than there is now in the Treaty,'' he said. ((Scott Miller, Frankfurt Newsroom +49 69 756525, frankfurt.newsroom+reuters.com)) Copyright 1998 Reuters Limited

To: long-gone who wrote (19529)	9/22/1998 10:33:00 PM
From: goldsnow	Read Replies (3) \| Respond to of 116762

Yuan move stalks our exports By Michael Dwyer The Federal Government's key commodity forecaster has raised the spectre of a move by China to devalue its currency, with potentially disastrous effects for Australian exports. The dire warning from Australian Bureau of Agricultural and Resource Economics (ABARE) coincides with the release of new figures which show expenditure on mineral exploration is expected to drop sharply over the next six months. The figures from the Australian Bureau of Statistics show expenditure on mineral exploration is expected to plunge from $775 million in the first six months of 1998 to just $299 million in the second half of the year. But a far more significant problem for the Australian economy over the next few years, according to the ABARE report released yesterday, would be a decision by China to devalue the yuan. The ABARE report claims that the Chinese economy is already likely to slow significantly next year as it adjusts to major reforms of its State-owned enterprises and the banking sector. A move by China to devalue its currency - in response to weaker currencies among its Asian competitors - would make the situation significantly worse for Australia, according to ABARE. "If China were to devalue substantially, it could have significant adverse effects on economic activity on other parts of Asia as China's exports became more competitive internationally," said ABARE executive director, Dr Brian Fisher. He said Australian exports of wool, cotton and some minerals would be hit hard by a Chinese devaluation. The ABARE commodity report noted economic commentators have predicted a significant devaluation of the yuan in late 1998 or early 1999. China accounts for around 21 per cent of Australia's wool exports - around $800 million in 1997-98. It also accounts for 15 per cent of Australia's cotton exports - valued at $176 million last financial year. China is also a big market for Australian exports of iron ore and copper, taking around 23 per cent and 14 per cent of Australian shipments respectively in 1997-98. The report raises significant concerns about the impact on the global economy of the recent financial instability in Latin America and the economic downturn in Russia. It presents a far gloomier prognosis of the global economy than the views of the Federal Treasurer, Mr Peter Costello, who predicted last week that there would be a "turning" in Asia as early as next financial year. Economic forecasters have upgraded their forecast for the Australian economy for 1998 but cut Australia's growth forecast for 1999. The Consensus Economics survey of economists shows Australia's expected growth rate for 1998 has been increased by 0.5 percentage points to 3.7 per cent. This follows the unexpectedly strong growth in GDP in the June quarter. For 1999 Australia's forecast growth rate is now 2.5 per cent, down half a percentage point on the last survey. The ABARE report is based on the assumption that world economic growth will decline from 4.1 per cent in 1997 to 2.1 per cent in 1998. World growth is assumed to decline further to 1.8 per cent in 1999. "Apart from Japan, signs have emerged that growth in the United States may be easing, and there are now concerns that growth in domestic demand could moderate in western Europe," the report said. The ABARE report also forecast a fall in the value of Australian commodity exports of 0.8 per cent to $66.5 billion in 1998-99. Export earnings from farm commodities are forecast by ABARE to be $22 billion in 1998-99, a decline of 4 per cent from the previous year. afr.com.au