2008
Source: http://www.opec.org/opec_web/static_files_project/media/downloads/publications/OS.pdf
Wednesday, March 28, 2012
OPEC - The Organization of the Petroleum Exporting Countries
General information
Organization of the Petroleum Exporting Countries
2010
Source: http://www.opec.org/opec_web/static_files_project/media/downloads/publications/GenInfo.pdf
Organization of the Petroleum Exporting Countries
2010
Source: http://www.opec.org/opec_web/static_files_project/media/downloads/publications/GenInfo.pdf
FED - A Note on Government Gold Policies
THIS NOTE IS A NON-TECHNICAL SUMMARY
OF
INTERNATIONAL FINANCE DISCUSSION PAPER NUMBER 582
WHICH FOLLOWS
A Note on Government Gold Policies*
by
Dale Henderson
Federal Reserve Board
and
Stephen Salant
University of Michigan
First Version: 4/22/97
Latest Revision: June 4, 1997
Source: http://www.federalreserve.gov/pubs/ifdp/1997/582/ifdp582.pdf
OF
INTERNATIONAL FINANCE DISCUSSION PAPER NUMBER 582
WHICH FOLLOWS
A Note on Government Gold Policies*
by
Dale Henderson
Federal Reserve Board
and
Stephen Salant
University of Michigan
First Version: 4/22/97
Latest Revision: June 4, 1997
Source: http://www.federalreserve.gov/pubs/ifdp/1997/582/ifdp582.pdf
Monday, March 26, 2012
BESSMA MOMANI - Gulf Cooperation Council Oil Exporters and the Future of the Dollar
"Since the mid-1970s, the value of the United States’ dollar has been upheld by a number of domestic and international factors. An often underestimated factor is that oil is sold and traded in US dollars. Arguably, having the dollar used as the ‘main invoice currency’ for oil makes the trade of this vital resource the new post-Bretton Woods’ Fort Knox guarantee of the dollar.1 The world’s continued confidence in dollar-denominated and US government debt is further supported by the use of petrodollars in oil trade and petrodollar recycling in the global financial system. It is argued that states have partial faith in the value of the dollar because the world’s lifeline of fuel and production is purchased and sold using petrodollars. After all, whether measured by value or volume, oil is the most traded good around the world..."
...
"Dollar-based invoicing of oil trade
The historic decision by the Organization of Petroleum Exporting Countries (OPEC) to invoice the trade of oil in dollars can be traced back to a set of bilateral deals between the United States and Saudi Arabia (the world’s largest oil exporter and producer). The first step towards this historic OPEC decision was taken in June 1974 with the establishment of the United States–Saudi Arabian Joint Commission on Economic Cooperation. Devised in part by US Secretary of State Henry Kissinger, the Joint Commission would facilitate annual meetings between Saudi Finance and US Treasury officials. This Joint Commission also included a special technical group that was staffed by American civil servants who helped US companies to increase their exports to Saudi Arabia. Financed by the Saudi government, the technical group’s objectives were to improve bilateral political and commercial relations, promote the export of US goods and services to Saudi Arabia and, most importantly, help recycle Saudi petrodollars
through the purchase of US goods..."
...
"In summary, OPEC, Saudi Arabia and the GCC no longer determine what currency to invoice their oil trade, because oil pricing is determined by oil markets.47 The latter are highly institutionalised capital markets that prefer to deal in US dollars. Similarly, oil producers would not be willing to incur currency risk to invoice oil trade in a currency not used in the oil markets.48 While the GCC may not be capable of undermining the dollar by changing the dollar-based invoicing of oil trade, this article examines two further possibilities: will the GCC uphold the dollar by continuing to recycle petrodollars in dollar investments, and will the GCC diversify its dollar reserve holdings?"
...
"Promoted by a young, entrepreneurial and Western-educated class of individuals, Gulf citizens are demanding that their governments invest more into their people.66 Moreover, Gulf citizens do not want a repetition of the 1970s when oil wealth was recycled into Western banks; this time, Gulf citizens are expecting their governments to invest in their future."
Source: http://relooney.fatcow.com/0_New_6432.pdf
...
"Dollar-based invoicing of oil trade
The historic decision by the Organization of Petroleum Exporting Countries (OPEC) to invoice the trade of oil in dollars can be traced back to a set of bilateral deals between the United States and Saudi Arabia (the world’s largest oil exporter and producer). The first step towards this historic OPEC decision was taken in June 1974 with the establishment of the United States–Saudi Arabian Joint Commission on Economic Cooperation. Devised in part by US Secretary of State Henry Kissinger, the Joint Commission would facilitate annual meetings between Saudi Finance and US Treasury officials. This Joint Commission also included a special technical group that was staffed by American civil servants who helped US companies to increase their exports to Saudi Arabia. Financed by the Saudi government, the technical group’s objectives were to improve bilateral political and commercial relations, promote the export of US goods and services to Saudi Arabia and, most importantly, help recycle Saudi petrodollars
through the purchase of US goods..."
...
"In summary, OPEC, Saudi Arabia and the GCC no longer determine what currency to invoice their oil trade, because oil pricing is determined by oil markets.47 The latter are highly institutionalised capital markets that prefer to deal in US dollars. Similarly, oil producers would not be willing to incur currency risk to invoice oil trade in a currency not used in the oil markets.48 While the GCC may not be capable of undermining the dollar by changing the dollar-based invoicing of oil trade, this article examines two further possibilities: will the GCC uphold the dollar by continuing to recycle petrodollars in dollar investments, and will the GCC diversify its dollar reserve holdings?"
...
"Promoted by a young, entrepreneurial and Western-educated class of individuals, Gulf citizens are demanding that their governments invest more into their people.66 Moreover, Gulf citizens do not want a repetition of the 1970s when oil wealth was recycled into Western banks; this time, Gulf citizens are expecting their governments to invest in their future."
Source: http://relooney.fatcow.com/0_New_6432.pdf
Thursday, March 22, 2012
Bellagio Group - WHY ECONOMISTS DISAGREE
WHY ECONOMISTS DISAGREE: FRITZ MACHLUP’S USE OF FRAMING AT THE BELLAGIO
GROUP CONFERENCES
Carol M. Connell, Associate Professor, Finance and Business Management
City University of New York – Brooklyn College
Abstract
"This paper offers new research into the influence of Fritz Machlup and the Bellagio Group on world monetary reform. Taking an historico-biographical approach, this paper draws on the archives and published works of Fritz Machlup, Robert Triffin and their contemporaries"
"...Machlup (1982) admits, “In the discussions of dollar shortage, payments balance, trade balance, exchange rates and so forth, the terms equilibrium and disequilibrium were being banded about as if these were simple household words. Most economists innocently believed that disequilibrium was ‘a bad thing’, and equilibrium ‘a good thing’; many thought that there could be ‘chronic’ disequilibrium; and virtually all were convinced that one could ‘see’ or ‘observe’ an equilibrium if one looked at some data” (p. 19). “By imputing a value judgment, a political philosophy or programme or a rejection of a programme or policy into the concept of equilibrium designed for economic analysis, the analyst commits the fallacy of implicit evaluation or disguised politics”..."
"...As international trade increased, the fixed, gold-dollar exchange rate system could not keep up with the demand to exchange dollars for gold. Under such a system, where the US was investing in Europe and paying for NATO protection, while encouraging Europe to buy from itself, the US would argue that payments deficits were unavoidable. And Europe would counter: Just how stable can an international system be if the world’s largest economy and source of the world’s reserve medium of exchange runs persistent balance of payments deficits? The US and Europe shared a common fear: Because central bankers could cash in dollars for gold at any time, one day the ratio of dollar liabilities to American-held gold might increase to a level that might cause a loss of foreign confidence in the dollar and a run on the US Treasury gold window. American and European policy makers shared a common history: the global recession turned depression had unleashed monetary chaos and devaluations, which unleashed beggar-thy-neighbor policies and economic nationalism, which produced dictatorships, which unleashed world war (Gavin, 2004, p. 14). In fact, the preceding period 1914 to 1946 had seen widespread use of exchange controls among countries..."
...
"Note that discussion of gold-based systems and centralized reserves was not part of the first conference (largely because of the absence of Europeans more closely associated with goldbased systems and centralized reserves)."
Source: http://public.econ.duke.edu/uploads/assets/Workshop%20Papers/HOPE/CMConnellWhy%20Economists%20Disagree030511.pdf
GROUP CONFERENCES
Carol M. Connell, Associate Professor, Finance and Business Management
City University of New York – Brooklyn College
Abstract
"This paper offers new research into the influence of Fritz Machlup and the Bellagio Group on world monetary reform. Taking an historico-biographical approach, this paper draws on the archives and published works of Fritz Machlup, Robert Triffin and their contemporaries"
"...Machlup (1982) admits, “In the discussions of dollar shortage, payments balance, trade balance, exchange rates and so forth, the terms equilibrium and disequilibrium were being banded about as if these were simple household words. Most economists innocently believed that disequilibrium was ‘a bad thing’, and equilibrium ‘a good thing’; many thought that there could be ‘chronic’ disequilibrium; and virtually all were convinced that one could ‘see’ or ‘observe’ an equilibrium if one looked at some data” (p. 19). “By imputing a value judgment, a political philosophy or programme or a rejection of a programme or policy into the concept of equilibrium designed for economic analysis, the analyst commits the fallacy of implicit evaluation or disguised politics”..."
"...As international trade increased, the fixed, gold-dollar exchange rate system could not keep up with the demand to exchange dollars for gold. Under such a system, where the US was investing in Europe and paying for NATO protection, while encouraging Europe to buy from itself, the US would argue that payments deficits were unavoidable. And Europe would counter: Just how stable can an international system be if the world’s largest economy and source of the world’s reserve medium of exchange runs persistent balance of payments deficits? The US and Europe shared a common fear: Because central bankers could cash in dollars for gold at any time, one day the ratio of dollar liabilities to American-held gold might increase to a level that might cause a loss of foreign confidence in the dollar and a run on the US Treasury gold window. American and European policy makers shared a common history: the global recession turned depression had unleashed monetary chaos and devaluations, which unleashed beggar-thy-neighbor policies and economic nationalism, which produced dictatorships, which unleashed world war (Gavin, 2004, p. 14). In fact, the preceding period 1914 to 1946 had seen widespread use of exchange controls among countries..."
...
"Note that discussion of gold-based systems and centralized reserves was not part of the first conference (largely because of the absence of Europeans more closely associated with goldbased systems and centralized reserves)."
Source: http://public.econ.duke.edu/uploads/assets/Workshop%20Papers/HOPE/CMConnellWhy%20Economists%20Disagree030511.pdf
IEHC - Richard Roberts - ‘Sterling and the End of Bretton Woods’
‘Sterling and the End of Bretton Woods’
Richard Roberts, University of Sussex
"The final phase of the Bretton Woods international monetary system was marked by a series of crises from November 1967 to March 1973. The four principal episodes, out of at least a dozen such events, were:
• November 1967 – devaluation of sterling
• August 1971 – suspension of the convertibility of the dollar into gold
• June 1972 – floating of sterling
• February/March 1973 – second devaluation of the dollar and generalised floating
Thus sterling held centre stage twice, in November 1967 and June 1972. On both occasions, the sterling crisis was followed by bouts of instability in other major currencies and ultimately by the breakdown of the system: the Bretton Woods system in August 1971; and the modified Smithsonian Agreement parities, in February/March 1973.
There were two dimensions to these episodes: a political dimension and a market dimension. The involvement of senior politicians, sometimes in dramatic conflict with counterparts, and the attendant press attention, generated a public perception of a ‘crisis’ that was assigned to a particular country or currency. The market dimension was not so publicly visible and tensions in the foreign exchange markets are less straightforwardly attributable to a particular currency. The foreign exchange market is a zero-sum game: downward pressure on one currency means upward pressure on others, and vice-versa. In this sense, each of the international monetary crises was a crisis of the whole system, rather than a component currency.
Nevertheless, the term ‘sterling crisis’ was applied at the time to two of the key crises and the instability of sterling was plainly central to both episodes. Certainly policy-makers in the 1960s were convinced that the defence of sterling was essential for the stability of the dollar and hence the Bretton Woods system. ‘Whenever sterling might be devalued’, recalled Milton Gilbert of the Bank for International Settlements, ‘confidence in the dollar price of gold could be expected to evaporate and a large rise in the market for gold, as well as central bank conversions of dollars for gold, could be anticipated.’..."
"...As politicians and officials struggled to manage the increasingly unstable and dysfunctional international monetary system in the late 1960s and early 1970s, a countervailing development was taking place: moves towards the creation of a European monetary bloc and ultimately a European single currency. This endeavour was not successful, at least on the time-scale originally envisaged. Thus another question arises: Did sterling instability significantly impede the progress towards EEC monetary union?..."
...
"...US intervention in the foreign exchange market and participation in the inter-central bank swap network had ceased on 15 August 1971, with the suspension of dollar convertibility into gold, and had not been resumed with the 18 December 1971Smithsonian Agreement. ‘Benign neglect’ was a negotiating posture on the part of rumbustious Texan, John Connally, the US Treasury Secretary, to put pressure on the surplus countries ahead of the forthcoming negotiations on fundamental reform of the international monetary system. The US stance generated complaints from the IMF and other countries: the US embassy in Bonn reported that during the summit between Pompidou and Brandt on 3-4 July 1972 the French President had protested: ‘that the Europeans were now “defending the dollar” while the US sat by and did nothing.’ There were also critics at home, most outspokenly Arthur Burns, chairman of the Federal Reserve. And then on 16 May, 1972, out of the blue, Connally resigned..."
Source: http://www.helsinki.fi/iehc2006/papers1/Roberts.pdf
NOTE:
IEHC 2006XIV International Economic History Congress Helsinki, Finland, 21 to 25 August 2006
The International Economic History Association (IEHA) held its XIV International Economic History Congress in Helsinki, Finland, 21 to 25 August 2006. The local organising institutions were the Department of Social Science History and the Department of History at the University of Helsinki, in collaboration with the Finnish Economic History Association.
Almost 1400 participants from over 65 countries attended the congress. 123 sessions were held during the five day congress. The themes related to economic and social history such as: macroeconomic history, business history, labour history, monetary history, industrialization, trade and maritime history, demographic and family history, gender studies, urban history, and methodological issues. They covered periods from antiquity to the present day, and a variety of regions around the world.
Source: http://www.helsinki.fi/iehc2006/
Richard Roberts, University of Sussex
"The final phase of the Bretton Woods international monetary system was marked by a series of crises from November 1967 to March 1973. The four principal episodes, out of at least a dozen such events, were:
• November 1967 – devaluation of sterling
• August 1971 – suspension of the convertibility of the dollar into gold
• June 1972 – floating of sterling
• February/March 1973 – second devaluation of the dollar and generalised floating
Thus sterling held centre stage twice, in November 1967 and June 1972. On both occasions, the sterling crisis was followed by bouts of instability in other major currencies and ultimately by the breakdown of the system: the Bretton Woods system in August 1971; and the modified Smithsonian Agreement parities, in February/March 1973.
There were two dimensions to these episodes: a political dimension and a market dimension. The involvement of senior politicians, sometimes in dramatic conflict with counterparts, and the attendant press attention, generated a public perception of a ‘crisis’ that was assigned to a particular country or currency. The market dimension was not so publicly visible and tensions in the foreign exchange markets are less straightforwardly attributable to a particular currency. The foreign exchange market is a zero-sum game: downward pressure on one currency means upward pressure on others, and vice-versa. In this sense, each of the international monetary crises was a crisis of the whole system, rather than a component currency.
Nevertheless, the term ‘sterling crisis’ was applied at the time to two of the key crises and the instability of sterling was plainly central to both episodes. Certainly policy-makers in the 1960s were convinced that the defence of sterling was essential for the stability of the dollar and hence the Bretton Woods system. ‘Whenever sterling might be devalued’, recalled Milton Gilbert of the Bank for International Settlements, ‘confidence in the dollar price of gold could be expected to evaporate and a large rise in the market for gold, as well as central bank conversions of dollars for gold, could be anticipated.’..."
"...As politicians and officials struggled to manage the increasingly unstable and dysfunctional international monetary system in the late 1960s and early 1970s, a countervailing development was taking place: moves towards the creation of a European monetary bloc and ultimately a European single currency. This endeavour was not successful, at least on the time-scale originally envisaged. Thus another question arises: Did sterling instability significantly impede the progress towards EEC monetary union?..."
...
"...US intervention in the foreign exchange market and participation in the inter-central bank swap network had ceased on 15 August 1971, with the suspension of dollar convertibility into gold, and had not been resumed with the 18 December 1971Smithsonian Agreement. ‘Benign neglect’ was a negotiating posture on the part of rumbustious Texan, John Connally, the US Treasury Secretary, to put pressure on the surplus countries ahead of the forthcoming negotiations on fundamental reform of the international monetary system. The US stance generated complaints from the IMF and other countries: the US embassy in Bonn reported that during the summit between Pompidou and Brandt on 3-4 July 1972 the French President had protested: ‘that the Europeans were now “defending the dollar” while the US sat by and did nothing.’ There were also critics at home, most outspokenly Arthur Burns, chairman of the Federal Reserve. And then on 16 May, 1972, out of the blue, Connally resigned..."
Source: http://www.helsinki.fi/iehc2006/papers1/Roberts.pdf
NOTE:
IEHC 2006XIV International Economic History Congress Helsinki, Finland, 21 to 25 August 2006
The International Economic History Association (IEHA) held its XIV International Economic History Congress in Helsinki, Finland, 21 to 25 August 2006. The local organising institutions were the Department of Social Science History and the Department of History at the University of Helsinki, in collaboration with the Finnish Economic History Association.
Almost 1400 participants from over 65 countries attended the congress. 123 sessions were held during the five day congress. The themes related to economic and social history such as: macroeconomic history, business history, labour history, monetary history, industrialization, trade and maritime history, demographic and family history, gender studies, urban history, and methodological issues. They covered periods from antiquity to the present day, and a variety of regions around the world.
Source: http://www.helsinki.fi/iehc2006/
FRBB - PANEL - MILTON GILBERT
"...a basic factor in the losses of gold reserves’ over the entire period has been the shortage of new gold available to the monetary system. In effect, the demand for gold by foreign monetary authorities in a surplus position was larger than could be supplied by new gold availabilities. The tendency was for the shortage to be made up by net purchases from the United States. It seems to be more correct in these circumstances to say that gold and the system were in fundamental disequilibrium, rather than that the dollar itself was in fundamental disequilibrium. In any case, the remedy available to the United States was to negotiate a change in the gold parity of the dollar with the IMF. This seems to me to be the adjustment process called for in the Bretton Woods system. But, for what I believe to be political considerations, the United States has not chosen this course..."
Source: http://www.bos.frb.org/economic/conf/conf2/conf2d.pdf
Wednesday, March 21, 2012
RBI - Gold Prices and Financial Stability in India
RBI WORKING PAPER SERIES - Gold Prices and Financial Stability in India
Rabi N. Mishra
and
G. Jagan Mohan
DEPARTMENT OF ECONOMIC AND POLICY RESEARCH
FEBRUARY 2012
"There has been an almost sustained rise in the international gold prices since 2002, with just one deep correction in 2008. As gold is an integral part of savings of a large number of investors, this has raised apprehensions whether any correction in gold prices will have destabilising implications on the financial markets. In this backdrop, the paper makes an attempt to analyse the implications of the correction in gold prices on financial stability in India.
The paper covers empirical analysis on the inter-linkages between domestic and international gold prices and then it examines the nature of changes in the factors affecting international gold prices during the last two decades. While validating empirically the existence of complete inter-linkages between domestic and international gold prices, the paper goes on to conclude that there has been a structural shift in the factors affecting international gold prices in 2003. Short-run volatility in international gold prices used to be traditional factors such as international commodity prices, US dollar exchange rate and equity prices. However, since 2003, the same is largely due to the volatility in the US dollar exchange rate and mildly due to volatility in equity prices.
In conclusion, the findings of the paper show that domestic and international gold prices are closely interlinked. Based on empirical evidences, the paper also concludes that implications of correction in gold prices on the Indian financial markets are likely to be muted..."
Source: http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/02WP28022012.pdf
Rabi N. Mishra
and
G. Jagan Mohan
DEPARTMENT OF ECONOMIC AND POLICY RESEARCH
FEBRUARY 2012
"There has been an almost sustained rise in the international gold prices since 2002, with just one deep correction in 2008. As gold is an integral part of savings of a large number of investors, this has raised apprehensions whether any correction in gold prices will have destabilising implications on the financial markets. In this backdrop, the paper makes an attempt to analyse the implications of the correction in gold prices on financial stability in India.
The paper covers empirical analysis on the inter-linkages between domestic and international gold prices and then it examines the nature of changes in the factors affecting international gold prices during the last two decades. While validating empirically the existence of complete inter-linkages between domestic and international gold prices, the paper goes on to conclude that there has been a structural shift in the factors affecting international gold prices in 2003. Short-run volatility in international gold prices used to be traditional factors such as international commodity prices, US dollar exchange rate and equity prices. However, since 2003, the same is largely due to the volatility in the US dollar exchange rate and mildly due to volatility in equity prices.
In conclusion, the findings of the paper show that domestic and international gold prices are closely interlinked. Based on empirical evidences, the paper also concludes that implications of correction in gold prices on the Indian financial markets are likely to be muted..."
Source: http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/02WP28022012.pdf
Subscribe to:
Posts (Atom)