Posts Tagged ‘Financial System’

The Government Spain needed to allay the distrust of markets in the Spanish banking sector, has decided to increase to 8% core capital (equity plus reserves) to be kept on their balance sheet entities, compared to 6% today.The Government’s financial vice president, Elena Salgado, said yesterday afternoon the new measures. “This is to restore market confidence and eliminate any doubts about the solidity of our bank.”

One of the most controversial decisions of the announced is that the Bank Restructuring Fund (FROB) may enter the capital of those institutions that do not meet the new criteria established credit. The financial vice president made an estimate of capital needs that have domestic financial institutions to meet the new standards. He estimates that the sector will need more than 20,000 million to reach 8% of core capital ratio. In September 2010, the average core capital ratio was 8.5%.

The big banks play very well with the new criteria for creditworthiness. Santander and BBVA 8.5% 8.2%, respectively. People, after the merger with Crédit Mutual, slashing 9.4%. In contrast, medium banks have more difficulties. Sabadell is at 7.8%, while Bankinter only 6.5% (6.76% at end-2010).

Another of the peculiarities of the new regulation, to be adopted by royal decree during the month of February, is that it imposes additional capital requirements to those more traditional boxes. According to Economy Minister explained, those non-listed financial groups (banks and credit unions) have no significant private investor and who have a dependency on wholesale funding markets over 20%, must have a ratio fall of core capital to be “in any case” more than 8%. Although Salgado declined to detail how much it would raise the bar for these entities, some sources suggest it could reach 10%.

Read the rest of this entry »

If we hear the word savings and investment, these two words can create fear and frustration to most adults. Why? The list of reasons is broad. Have you ever said something like?

• “It takes more time and knowledge I have to know where to invest”

• “My paycheck barely covers my expenses, how I can think of to save?”

• “A budget is too restrictive.” “I earn more money in the future and then will invest.”

Whatever the excuse, the truth is that saving and investment are the two keys to your future financial security. Previously, people worked hard for over 40 years, saved a bit, and 65 years, quietly withdrew their savings, Social Security and perhaps a pension.

But that was in the past. Americans now live longer, need more money to wear the same style of life, and save less than any other industrialized country. Even worse, these days few people can count on fixed pensions. The reality is that you need to get more money than it cost so much effort saving, investing it wisely, and keeping in mind your financial goals in the short and long term.

Saving and investing at the same time protect you from unexpected problems. Help you if you ever have to face the economic and emotional divorce or an accident. You can also make the dreams of those who are accustomed to just talk, like a second honeymoon or another similar opportunity. In a word, save and invest gives you more options.

Before discussing the general characteristics of a proper financial system, first we must examine two areas in which the economy can be divided into two sides, namely the real and financial sides.

Real side of the economy makes it all something that has a physical presence, objective, correct and effective. Because it is distributed physical market goods.

Real economy is the foundation or support, financial economics or financial aspects of the economy. Among the latter including all commitments and agreements between various economic units to efficiently allocate resources.

Financial System is an institutional framework in which the perpetrators get funding gap remaining agents with surplus funds. The way in which funds are channeled to other agents about can be done either directly or through mediators financial system or through a process of financial intermediation.

Read the rest of this entry »

Apart from the urgent measures for job retention and protection of the unemployed that to date are pending parliamentary executive initiative, the Government still seems alien to the real problem that threatens, which is none other to overcome the lasting success guarantees a crisis are profoundly as we are living, in terms of unemployment and destruction of business network, we will still live over the coming half, if not years.

If we look at projects and bills which are currently being processed at the Congress of Deputies, we notice immediately how the legislative action is still far from the set of actions that can guide our country to overcome this crisis.

Suffice it to name it that are currently pending legislative initiatives: urgent action on telecommunications, the creation of the Civil Institute for Peace, measures to support businesses and the self, by the recovery of arrears, tax incentives savings in the economy, temporary suspension of the excise tax on certain means of transport, fiscal support to people with disabilities and older; tax incentives for the purchase of passenger cars and commercial vehicles, tax incentives and self-employed small and medium enterprises, measures to assist families to purchase a home.

Read the rest of this entry »