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US Treasury to Appropriations: World Bank, IFC Accountability Must Be Strengthened

Last week, the US Treasury Department submitted a report to the appropriations committees of the House and Senate on strengthening the accountability mechanisms of the World Bank and International Finance Corporation, fulfilling a requirement included in the spending package signed into law earlier this year. The report acknowledges recent increases in caseloads and recommends that both the Inspection Panel and the IFC’s Compliance Advisor Ombudsman (CAO) be allocated larger budgets to carry out their responsibilities.

The Response to De-Risking: Progress Made, Some Challenges Remain

In November 2015, CGD published a report titled Unintended Consequences of Anti–Money Laundering Policies for Poor Countries. Today we release a follow-up to that report. Policy Responses to De-risking: Progress Report on the CGD Working Group’s 2015 Recommendations takes stock of accomplishments to date, notes where work remains, and recommends concrete actions for international institutions, governments, banks, and others to continue addressing de-risking.

A seamstress in Accra, Ghana. Photo by Jonathan Torgovnik/Getty Images/imagesofempowerment.com

Empowering Women, Changing Mindsets: A Conversation on Technology and Financial Training

Eight years and millions of mobile financial transactions later, we came together again at a private CGD roundtable in London to discuss the potential of mobile banking and savings for women’s economic empowerment. We were pleased to hear the richness of research evidence and interventions on women’s financial inclusion that have emerged over the past decade. What follows are some takeaways from our deliberations, informed by this research and practice.

Chart of the turnover of OTC interest rate derivatives

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 5: Effects on Capital Market Development and the Real Economy

While the immediate and direct effects of implementing Basel III regulatory reforms in emerging markets and development economies (EMDEs) are in these countries’ banking systems, there might also be effects beyond them on other segments of the financial system. In this blog post, I will focus on two specific areas of concern—risk management and capital market development, and spill-overs from banking structural reforms in advanced countries.

Construction workers laying a road

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 4: Challenges on Infrastructure and SME Lending

The adoption of Basel III by developing countries raises the question of what the impact of such regulatory reform will be on volume, cost, and composition of domestic credit in these economies and for the development of financial systems more generally. This is against the background of many emerging markets not yet having fully exploited the potential for financial development and inclusion in their economies.

Percentage of Foreign Bank Assets Among Total Bank Assets (Selected EMDEs)

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 3: An Unlevel Playing Field Between Domestic and Foreign Banks Might Increase Governments’ Funding Costs

Responding to the latest assessment of Mexico’s implementation of the Basel III recommendations, the Mexican authorities argued that regulations for countries hosting foreign banks’ subsidiaries and for the parent countries of the subsidiaries should be aligned “in order to prevent distortions due to the asymmetric treatment of similar risk exposures by home and host jurisdictions,” which could result in an unlevel playing field between foreign subsidiaries and domestic banks.

US Cross-Border Trade Finance to EMDEs by income categories (USD Billions)

Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 2: Effects on Trade Finance

Just as Basel III, among other factors, played a role in the decline in the volume of cross-border lending from advanced economies to EMDEs, it created incentives for a shift in the composition of these flows. Banks’ exposures to certain business lines have been affected, including those that are crucial for development like trade finance and infrastructure finance (the latter will be the subject of a future blog).

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