- Andrew Sheng: Small is beautiful
- E.F. Schumacher’s ‘Small is Beautiful’:
- "One of the most fateful errors of our age is the belief that the problem of production has been solved. The illusion…is mainly due to our inability to recognize that the modern industrial system, with all its intellectual sophistication, consumes the very basis on which it has been erected. To use the language of the economist, it lives on irreplaceable capital which it cheerfully treats as income."
- The importance of smallness in large organization - as organizations become larger and larger, they become more impersonal.
- Inherent contradictions within large organizations that have alternating phases of centralizing and decentralizing.
- Five principles:
- Subsidiarity –the upper authority should delegate to the lower level powers where it is obvious that the lower levels can function more efficiently than the central authority.
- Vindication – governance by exception. The centre delegates and only intervenes under exceptional circumstances which are clearly defined.
- Identification – the subsidiary must have clear accounting in the form of balance sheets and profit and loss account.
- Motivation –motivation at the lower levels of large organization has little motivation if everything is directed from the top.
- The Principle of the Middle Axiom. He notes that "the centre can easily look after order; it is not so easy to look after freedom and creativity". In practical terms, you set out an objective, but do not detail and direct how that objective is to be achieved, giving some degree of innovation and freedom for the subsidiary levels of the organization to achieve the objectives.
- ESMA: Draft Technical Standards for the Regulation on OTC Derivatives, CCPs and Trade Repositories – Discussion paper
- Asks for input on a wide range of issues, such as when ESMA should consider a derivatives contract to have a direct effect within the EU, what sort of information should be collected through CCPs, and how to ensure consistency of data storage in TRs.
- IMF: From Stress to CoStress: Stress Testing Interconnected Banking Systems
- An integrated framework for assessing systemic risk - models banks’ capital asset ratios as a function of future losses and credit growth using a generalized method of moments to calibrate shocks to credit quality and credit growth.
- Analysis is complemented by a simple measure of systemic risk, which captures tail risk comovement among banks in the system.
- Based on CreditRisk+, which uses
analytical techniques—similar to those applied in the insurance industry - to
estimate banks’ credit portfolio loss distributions, making no assumptions
about the cause of default.
- PBOC lowering the reserve requirement by 50 bps from 24th Feb.
- Cut will bring the ratio down to 20.5 per cent for the largest banks, and is expected to free up about Rmb400bn ($64bn) for new lending.
- New renminbi-denominated lending dropped Rmb288.2bn to Rmb738.1bn in January from a year earlier.
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