GLOBAL FINANCIAL MARKETS INSTABILITY:WHAT TO EXPECT?
Dr. G. Ganchev,
Economics and International Relations Institute
Resume
The article focuses on the explanations of the global financial slump at the end of February 2007. The main interpretations of the observed decline are discussed. The author admits the correlations between the Bulgarian equity market and the global market trends. The author discusses also the empirical connection between the real effective exchange rate and the Bulgarian Stock Exchange indexes. The author forecasts higher volatility of the future capital inflows and outflows as well as an increase of the role of the global and local forex markets.
Key words: financial markets, exchange rates, volatility
JEL Classification number: F3
INTERNATIONAL EQUILY MARKETS DEVELOPMENT AND FORECAST:
2006 AND 2007
Angelina Doytchinova, Tatiana Gergova
Resume
The article is focused on the global financial market dynamics in 2006 and the beginning of 2007. Special attention is dedicated to the global financial market decline in February 2007. The performance of the markets in USA, Europe and Asia are discussed. The paper includes a forecast of the main international financial markets. The dynamics and perspectives of the Bulgarian equity market are also analyzed.
Key words: financial markets, capital flaws, financial indexes
JEL Classification number: F3
EUROPEAN INTEGRATION:
BALKAN ECONOMIC PROBLEMS
Dr. C. Nikolov,
South-West University, Blagoevgrad
Resume
The paper is dedicated to the economic problems of the EU enlargement. The author calculates that the enlargement of the EU worsens the average GDP per capita. Bulgaria becomes the poorest EU country. The new countries having talks with the EC for membership will worsen the situation. The biggest problem being Turkey not so much as a result of its poverty but because of its large population.
Key words: EU enlargement, GDP/GNP per capita, new members
JEL Classification number: F02
THE INTRODUCTION OF THE EURO IN BULGARIA:
REQUIREMENTS AND CONSEQUENCES
Bancho Banov
Resume
The article deals with the problems of euro zone integration of Bulgaria. The author shows that Bulgaria meets all the Maastricht criteria. The positive and negative aspects of the implementation of the collective EU currency are discussed. The author views the inflation and the tight fiscal and monetary policy as the main problems of Bulgarian monetary integration.
Key words: euro zone, Maastricht Criteria
JEL Classification number: F36
BANK’S CREDIT POLICY:
DESIGN AND DEVELOPMENT
Ass. Prof. Dancho Petrov,
Economic University, Varna
Resume
The article discusses the key conceptual parameters of the banks’ credit policy. The overview of the theoretical concepts and views about the development of the banking lending policy shows that it is an important element of the banks’ management. On the basis of the presented methodology and mechanisms of the credit policy the main formation challenges before the banking industry under the conditions of increasing competition are systematized. New approaches and solutions aiming at its methodological and practical improvement are presented.
Key words: bank credits, credit policy, credit standards, commercial banking
JEL Classification number: G21
MODERN CAPITAL APPRIZAL APPROACHES
Kalina Kavaldjieva
Resume
An object of the analysis are the alternative approaches to the appraisal of the enterprises which in the recent year are being widely applied in the evaluation of companies. That defines the methodological and practical interest to the said approaches. In the article it is attempted to show the in depth characteristics of the alternative approaches with their possibilities and priorities. An object of the analysis are the method of the extra profit, the method of the discounted future income, the method of the capitalization of the income, the method of the discounted net cash flow.
Key words: capital evaluation, alternative approaches, history
JEL Classification number: M20
FROM THE MAASTRICH TREATY
CHAPTER 2
MONETARY POLICY
ARTICLE 105
1. The primary objective of the ESCB shall be to maintain price stability. Without
prejudice to the objective of price stability, the ESCB shall support the general
economic policies in the Community with a view to contributing to the achievement of the objectives of the Community as laid down in Article 2. The ESCB shall act in accordance with the principle of an open market economy with free competition, favouring an efficient allocation of resources, and in compliance with the principles setout in Article 3a.
2. The basic tasks to be carried out through the ESCB shall be:
– to define and implement the monetary policy of the Community;
– to conduct foreign exchange operations consistent with the provisions of
Article 109;
– to hold and manage the official foreign reserves of the Member States;
– to promote the smooth operation of payment systems.
3. The third indent of paragraph 2 shall be without prejudice to the holding and
management by the governments of Member States of foreign exchange working
balances.
4. The ECB shall be consulted:
– on any proposed Community act in its fields of competence;
– by national authorities regarding any draft legislative provision in its fields
of competence, but within the limits and under the conditions set out by the
Council in accordance with the procedure laid down in Article 106(6).
The ECB may submit opinions to the appropriate Community institutions or bodies or to national authorities on matters in its fields of competence.
5. The ESCB shall contribute to the smooth conduct of policies pursued by the
competent authorities relating to the prudential supervision of credit institutions and the stability of the Financial system.
6. The Council may, acting unanimously on a proposal from the Commission and
after consulting the ECB and after receiving the assent of the European Parliament,
confer upon the ECB specific tasks concerning policies relating to the prudential
supervision of credit institutions and other financial institutions with the exception of insurance undertakings.
ARTICLE 105 a
1. The ECB shall have the exclusive right to authorize the issue of bank notes within the Community. The ECB and the national central banks may issue such notes. The bank notes issued by the ECB and the national central banks shall be the only such notes to have the status of legal tender within the Community.
2. Member States may issue coins subject to approval by the ECB of the volume of
the issue. The Council may, acting in accordance with the procedure referred to in
Article 189c and after consulting the ECB, adopt measures to harmonize the
denominations and technical specifications of all coins intended for circulation to the extent necessary to permit their smooth circulation within the Community.
ARTICLE 106
1. The ESCB shall be composed of the ECB and of the national central banks.
2. The ECB shall have legal personality.
3. The ESCB shall be governed by the decision-making bodies of the ECB which
shall be the Governing Council and the Executive Board.
4. The Statute of the ESCB is laid down in a Protocol annexed to this Treaty.
5. Articles 5.1, 5.2, 5.3, 17, 18, 19.1, 22, 23, 24, 26, 32.2, 32.3, 32.4, 32.6, 33.1(a)
and 36 of the Statute of the ESCB may be amended by the Council, acting either by a qualified majority on a recommendation from the ECB and after consulting the
Commission or unanimously on a proposal from the Commission and after consulting the ECB. In either case, the assent of the European Parliament shall be required.
6. The Council, acting by a qualified majority either on a proposal from the
Commission and after consulting the European Parliament and the ECB or on a
recommendation from the ECB and after consulting the European Parliament and the Commission, shall adopt the provisions referred to in Articles 4, 5.4, 19.2, 20, 28.1, 29.2, 30.4 and 34.3 of the Statute of the ESCB.
ARTICLE 107
When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body.
The Community institutions and bodies and the governments of the Member States
undertake to respect this principle and not to seek to influence the members of the
decision-making bodies of the ECB or of the national central banks in the performance of their tasks.
ARTICLE 108
Each Member State shall ensure, at the latest at the date of the establishment of the
ESCB, that its national legislation including the statutes of its national central bank is compatible with this Treaty and the Statute of the ESCB.
ARTICLE 108 a
1. In order to carry out the tasks entrusted to the ESCB, the ECB shall, in
accordance with the provisions of this Treaty and under the conditions laid down in the Statute of the ESCB:
– make regulations to the extent necessary to implement the tasks defined in Article
3.1, first indent, Articles 19.1, 22 and 25.2 of the Statute of the ESCB and in cases
which shall be laid down in the acts of the Council referred to in Article 106(6);
– take decisions necessary for carrying out the tasks entrusted to the ESCB under this Treaty and the Statute of the ESCB;
– make recommendations and deliver opinions.
2. A regulation shall have general application. It shall be binding in its entirety and
directly applicable in all Member States.
Recommendations and opinions shall have no binding force.
A decision shall be binding in its entirety upon those to whom it is addressed.
Articles 190 to 192 shall apply to regulations and decisions adopted by the ECB. The ECB may decide to publish its decisions, recommendations and opinions.
3. Within the limits and under the conditions adopted by the Council under the
procedure laid down in Article 106(6), the ECB shall be entitled to impose fines or
periodic penalty payments on undertakings for failure to comply with obligations under its regulations and decisions.
ARTICLE 109
1. By way of derogation from Article 228, the Council may, acting unanimously on a recommendation from the ECB or from the Commission, and after consulting the ECB in an endeavour to reach a consensus consistent with the objective of price stability, after consulting the European Parliament, in accordance with the procedure in paragraph 3 for determining the arrangements, conclude formal agreements on an exchange rate system for the ECU in relation to non-Community currencies. The Council may, acting by a qualified majority on a recommendation from the ECB or from the Commission, and after consulting the ECB in an endeavour to reach a consensus consistent with the objective of price stability, adopt, adjust or abandon the central rates of the ECU within the exchange rate system. The President of the Council shall inform the European Parliament of the adoption, adjustment or abandonment of the ECU central rates.
2. In the absence of an exchange rate system in relation to one or more non-
Community currencies as referred to in paragraph 1, the Council, acting by a qualified majority either on a recommendation from the Commission and after consulting the ECB or on a recommendation from the ECB, may formulate general orientations for exchange rate policy in relation to these currencies. These general orientations shall be without prejudice to the primary objective of the ESCB to maintain price stability.
3. By way of derogation from Article 228, where agreements concerning monetary
or foreign exchange regime matters need to be negotiated by the Community with one or more States or international organizations, the Council, acting by a qualified
majority on a recommendation from the Commission and after consulting the ECB,
shall decide the arrangements for the negotiation and for the conclusion of such
agreements. These arrangements shall ensure that the Community expresses a single position. The Commission shall be fully associated with the negotiations.
Agreements concluded in accordance with this paragraph shall be binding on the
institutions of the Community, on the ECB and on Member States.
4. Subject to paragraph 1, the Council shall, on a proposal from the Commission
and after consulting the ECB, acting by a qualified majority decide on the position of the Community at international level as regards issues of particular relevance to
economic and monetary union and, acting unanimously, decide its representation in
compliance with the allocation of powers laid down in Articles 103 and 105.
5. Without prejudice to Community competence and Community agreements as
regards economic and monetary Union, Member States may negotiate in international bodies and conclude international agreements.