PBOC governor: Shanghai needs regulation change to be global financial center

SHANGHAI, May 15 (Xinhua) -- Zhou Xiaochuan, governor of the People's Bank
of China (PBOC), Friday said China needs to modify market regulations to turn
Shanghai into a global financial center.

"(We) should make clear and improve from time to time our rules of the game when developing a
global financial center," Zhou told a financial forum in Shanghai.

He said the rules, including the legal system and those on accounting,
corporate governance and initial public offering, should be modified for global
acceptance.

China plans to make Shanghai a global financial center by 2020 that matches
the country's economic strength and the international status of its currency,
the State Council, or Cabinet, said on April 29.

To achieve the goal, the authorities should also improve infrastructure and
information environment and modify rules on tax, market access and talent
recruitment, Zhou said.

"The ratio could fall following government measures to boost domestic
demand, but it will continue to be high globally for a long period of time," he
said. "With the huge savings and the government encouragement for overseas
investment, we have all the conditions to speed up the development of various
investment funds."

He noted that the authorities will encourage the funds to take bigger risks
as they are more risk averse compared with their overseas counterparts.

Shanghai can draw experience from Hong Kong and work with the major
financial center in Asia to reach its target, Zhou told the second Lujiazui
Forum.

The official said Shanghai, like major brands in the country, needs to
stick to the principles of globalization in becoming a global financial center.

In 2006, China's voting power in the International Monetary Fund (IMF) was
raised to 3.66 percent from about two percent. The United States has 16.77
percent of the voting power, giving it the veto power.

"There should be more clear adjustment in the next round of cash injection
into the IMF before 2011," he said.

Many economists believed that China would be the first nation to recover
from the global downturn, allowing the fast growing economy to play bigger role
in the post-downturn world finance affairs.

Zhou said a bigger voice, however, comes with challenges. He said that
there is yet no consensus among experts and officials.

"But one thing, I believe, is clear," he said. "With the development of
China's economy and finance, we need an international financial center."

Wu Xiaoqiu, a professor of finance at the Renmin University of China, said
in late April that the global financial crisis brought to China more
opportunities than risks.

In the post-crisis period, Shanghai would join New York and London to be
the world's three major financial centers, Wu said.

Zhou said that to some experts, the international financial centers, like
New York and London, could be hard hit in the global financial crisis. But the
centers, he added, could be very helpful for economic growth, resources
optimization and financial innovation.

"So we should stick to the target," he said.

Special Report:
Expo 2010 Shanghai China

4th Conference of Islamic Banks and Financial Institutions kicks off in Damascus

DAMASCUS, June 1 (Xinhua) -- The 4th Conference of Islamic Banks and
Financial Institutions kicked off Monday in Syrian capital Damascus under the
theme "Islamic Banking Investment Opportunities and Competition Challenges."

The two-day conference is expected to address challenges facing the Islamic
financial industry in light of the recent global financial crisis which is
considered a good opportunity to give a push for the Islamic banking system.

The conference will also tackle the issues of liquidity management,
financing companies and individuals, solidarity, insurance, products standards,
regulations on e-banking operations, features of the Syrian Islamic banking
market, according to a statement published in the official website of Al Salam
for International Conferences and Exhibitions.

800 participants from 20 Arab and non-Arab countries, including presidents
of central, Islamic, investment and commercial banks along with businessmen and
investors, attend the conference.

Governor of the Central Bank of Syria Adeeb Miyalah said during the opening
session of the conference that efforts are on foot to establish a fair banking
system that is based on the Islamic Sharia.

Global financial crisis produces huge negative impacts on Nigeria's economy

Special Report:Global Financial Crisis

By Gladys Nyong, Li Huailin

LAOGS, March 5 (Xinhua) -- The global financial crisis is now anon-issue to the Central Bank of Nigeria governor Charles Chukwuma Soludo even he insisted that the impact of the looming crisis was very little to Nigeria's economy.

For him, the country's financial system had shock absorbers to cushion the external shocks.

The CBN governor prided the country's capital adequacy which is put at 22 percent against 10 percent capital adequacy ratio of foreign banks. As recession set in, presenting itself in low sales, business closures, foreign investment down turns, low stock prices in the nation's economy, he set in monetary policy that would allow more money to circulate and banks would access funds anytime they have the need.

Soludo had highlighted that other central banks had pumped in over 3.3 trillion U.S. dollars into various economies. The CBN governor had reduced liquidity ratio of banks from 40 percent in August 2008 to 30 percent.

This freed about 1.7 trillion naria (11.4 billion U.S. dollars)for banks' use in increasing their liquidity. Bank's aggregate capital base hit 9 trillion naira (30.4 billion dollars) toward the end of that year but that measure could not stop the deepening recession that had set in.

The fall in the price of crude oil which hovers above 30 dollars per barrel and above represent over 70 percent fall from its high peak price by July last year.

A review of the effects of the global financial crisis in various sectors will give a clearer picture of the challenges the country is facing.

Stock Market:

The Nigerian stock market had experienced boom in 2006 and 2007 with investors profiting from their investment in the market.

Bank shares and other penny stocks had gained value far above their initial offer price. Banks even sold initial public offers and offer for subscription of shares on credit to investors and recouping their debts on the monthly salaries of workers. But the global financial crisis saw shares tumbling down by over 50 percent loss.

Zenith banks' shares, for instance, that was 34 naira (0.23 dollar) by 2007, was now 15 (0.1 dollar) naira as on March 2. The recession has caused foreign investors to sell their shares and transfer the funds to resuscitate their own ailing economies. Share capitalization that over 10 trillion naira (67.1 billion dollars) is down to 5.323 trillion naira (35.7 billion dollars).

The CEO of financial Derivatives Bismark Rewane had predicted that Nigerian banks may be susceptible to the global financial crisis if oil prices continued to dwindle.

A business trader laments on how he invested about 5 million naira (33,550 dollars) in the stock market and the stock value have gone down to barely 250,000 naira (1,677 dollars).

Most investors have similar woes but some stock market experts think that now that share prices are low, this is the time to buy stocks when the market is bearish.

Investment and Employment:

Apart from foreign direct investment which has dwindled, local investment and production are suffering. In February, Paterson Zochonis and Unilever, major toiletries manufacturers of Joy toilet soap and close-up tooth paste, announced their intention to pack up business operations in Nigeria.

The company's staff strength is over 5,000. Dunlop Nigeria plc, Manufacturers of tyres also closed shop this year due to losses in billions of naira in operations.

Organizations are abundantly shedding staff, especially in the financial sector, to effectively utilize shareholders' funds.

On Feb. 26, Nigeria's minister of labor and productivity Adetokumbo Kayode said that about 40 million Nigerians, mostly between the age of 18 and 25, are jobless.

According to the minister, the World Bank presented the figure to the Nigerian federal government.

Project Financing

The federal government over the years spends two thirds of its revenue on recurrent expenditure (salaries of government officials and agencies). This leaves about a third to project development and infrastructure.

The government had bench marked the price of crude oil at a reference price of 65 dollars per barrel and had to review it to 45 dollars per barrel for 2009 fiscal year.

With the price of crude oil going down to about 35 dollars per barrel it leaves the government project financing at a limbo. The federal government has a deficit financing of 1.9 trillion naira (12.7 billion dollars) for 2009, built into its budget.

Former Minister for Finance Shamsudeen Usman said Nigeria needs between 40 billion and 60 billion dollars to fund major infrastructure.

It expects to get this through a 500 million dollar Sovereign Bond issue and Public Private Partnership (PPP) to develop major road infrastructure.

So it is very hard for the Nigerian government to spare funds for major infrastructural projects.

Review into investments by SOEs

BEIJING,May 7-- China¡¯s state-owned asset regulator will launch an investigation into investments made by centrally administered state-owned enterprises in the financial sector in a bid to help them avoid risks.

A total of 28 SOEs, including Air China, China Eastern Airlines and China COSCO Holdings Co, have invested in financial derivatives but most of them suffered losses.

The overriding concern of the SOEs, when they invest in financial derivatives, is to ensure they avoid risks and not to speculate, said Li Wei, vice director of the State-owned Asset Supervision and Administration Commission.

Air China lost 7.5 billion yuan (1.1 billion U.S. dollars) on fuel-hedging contracts by the end of last year, and China Eastern's wrong-way bets on hedging dragged its revenue down 6.4 billion yuan.

Li said SOEs which plan to invest in financial derivatives must meet four conditions - abiding by hedging rules, hiring financial institutions for consultation, controlling risks and getting the commission's approval.

"SOEs are short of financial talent to deal in such investments, which led to an underestimation of risks and violations, so the commission will issue suggestions after an investigation," Li said.

He also urged local state-asset regulators to investigate locally administered SOEs.

The SOEs have seen their first annual decline in net profit last year since 2002, diving more than 30 percent from a year ago to 665.29 billion yuan.

(Source: Shanghai Daily)

Britain urged to strengthen global financial ties

By Dongying Wang and Rob Welham

LONDON, May 9 (Xinhua) -- To keep its position as the world's leading financial center, Britain will have to better integrate the global financial services industry into its economy and develop a strategic partnership with other financial centers.

In a report to the government, top professionals in the financial field proposed a number of policies and initiatives, to keep Britain's financial services competitive over the coming 10 to 15 years.

The report warns Britain against resting on its laurels and advantages in the financial sector, which cannot guarantee its continued prestige as a world financial services leader.

The report entitled "UK international financial services ¨C the future" was published on Thursday by the Financial Services Global Competitiveness Group (FSGCG), co-chaired by Chancellor of the Exchequer, Alistair Darling, and former Citigroup chairman, Sir Winfried Bischoff.

Its release comes against the backdrop of the most severe global financial crisis in generations, which began to take its toll last autumn.

The report calls on the government and industry to recognise that the country's status as an international financial center depends on the maintenance of an open economy and cooperation with other financial centers.

MEETING CHALLENGES

The financial services industry plays a vital role in Britain's economy, employing more than 1 million people with their economic value per head, more than double the national average.

The industry accounts for around 8 percent of the country's output, and contributes almost 14 percent of tax collected, helping to fund much-needed public services.

Proposals in the report aim to reform the industry and restore public trust by addressing the deficiencies revealed by the banking crisis, and to rebuild the reputation of banking.

"We must work together to learn the lessons, here and internationally, and reform regulations. But we need to distinguish between what has worked, and what needs to be strengthened and improved," Darling said.

The report said it is important "to acknowledge that the international financial services sector has been a major contributor to the wider UK economy, and we envisage this remaining the case in the future."

It said the sector is facing challenges, because major financial services firms are growing out of the emerging economies, small-scale innovative financial markets - such as carbon markets - will achieve critical mass, and the number of world class financial centers will rise.

Britain's financial services industry can continue to be a world leader only by working as a genuine partner of British businesses and emerging economies, while embracing the need for global regulatory reform, the report said.

Bischoff said that arguably the financial services sector is one of those industries, like media, pharmaceuticals and biotechnology, where Britain had a competitive advantage "but as events have shown, we cannot be complacent."

The report highlights immediate and necessary improvement in a number of areas, and the all-important aspect of government and industry co-operation on strategies and implementation.

LONG-TERM POLICY GUIDANCE

"The UK's long-term approach to international financial services needs to be sufficiently robust to withstand challenging and volatile conditions, such as those we face today," the report said.

It said the government and the industry should establish a clear direction for Britain's international financial services industry in partnership with the wider economy.

"There should be openness in sharing regulatory insights and regulatory exchanges with other countries and regions," the report said.

It also strongly urges Britain to take a leading role in the formulation and implementation of global and EU regulations.

Strong and purposeful engagement between the government and the industry is key to ensuring that Britain's tax system remains stable, sustainable and competitive in the long run, the report said.

It said flexible labour markets, enhanced skills, and training should be highly valued.

The report said the government should encourage overseas talents by ensuring that the immigration points system attracts people with financial services skills.

¡¡¡¡MAKE IT A SUCCESS

The success of the prescriptions in the report will be measured by the number of high value jobs in Britain, and by its contribution to the country's overall economic growth, the country's leading business organisation CBI (Confedration of British Industry), said.

"Britain's future competitiveness will depend on its ability to develop strengths in knowledge intensive, high value sectors," CBI director-general, and the report's author, Richard Lambert, said.

"As the (financial) sector consolidates in the face of financial pressures around the world, international firms appear to be choosing the UK as one of their preferred bases," Lambert said.

"There are obvious reasons for that choice," he said, citing the English language, the workings of the legal system, the geographic position between Britain and Asia, the clusters of first class support services, long-standing international networks and the very large number of active foreign firms in the country.

"All of these qualities, and more, add up to assets which are invaluable, and must be cherished," Lambert said.

"Without the right approach in areas like infrastructure investment, regulation and tax, they could drift away over time," he said.

Special Report: Global Financial Crisis

Banks' stress test does not erase all financial concerns

Special Report: Global Financial Crisis

by Yang Lei, Chen Gang

NEW YORK, May 7 (Xinhua) -- Some investors said the result of the U.S. government's stress tests on major financial institutions does not erase all concerns about the U.S. financial system.

"We still need to be worried about banks," Teddy Weisberg, a trader told Xinhua at the New York Stocks Exchange on Thursday.

"Clearly if we have learned anything well from the past 18 months, I think we learned that we need to be a little cautious and a little worried about a lot of things," he said.

U.S. regulators on Thursday unveiled the long-waited result of the stress tests and urged 10 of the nation's 19 largest banks to raise about 75 billion U.S. dollars in new capital to withstand future losses if the recession worsened.

Among the institutions needing more money, the Bank of America needs to raise 33.9 billion dollars in capital; Wells Forgo, 13.7 billion dollars; and the auto and mortgage lender, GMAC LLC, 11.5 billion dollars.

"We certainly saw with the release of first quarter earnings from the banks that, on the operating basis, clearly with the favorable yield curve, they had no problems making money," Weisberg said.

"But the issue continues to be the toxic waste, or the bad assets, on their books. I don't think the stress tests address these bad assets that continue to be on the books of banks," he said.

Weisberg said although the results of the tests showed the banks need additional money in the worst case scenario, "unfortunately, it is a scenario, and one of the problems with creating the scenario is that now we have this bogy that everybody is going to look at."

"If the economy does not get better or gets worse, a lot worse than we expect, then we have created a whole new set of problems," he said.

The tests found that total credit losses for the 19 banks may reach 600 billion dollars in 2009 and 2010. If the economy performs as badly as the worst case scenario assumed in the tests, the losses of the banks could amount to 950 billion dollars from mid-2007 through 2010.

However, Nouriel Roubini, the NYU Stern School of Business professor, said the stress tests for the 9 major banks were not "stressful enough."

"Even with the recent economic news, the stress tests were not worst case scenarios. In fact, for some of the components, like unemployment, the reality is actually already worse than the more adverse scenario in the tests," Roubini, also known as "Dr Doom," told CNBC.

He said the unemployment rate in this year's fall may be already higher than the one assumed in the more adverse scenarios of the tests for 2010.

The International Monetary Fund (IMF) has doubled estimates of aggregate losses for loans and corresponding securities to 2.7 trillion dollars in its latest global financial review.

"These estimates put the financial system on the brink because the financial sector holds half of the losses. Since the 19 largest banks own the vast majority of assets, it therefore follows that they must also be holding the losses," Roubini said.

"Each bank clearly had the incentive to sugarcoat their expected losses to regulators. Nothing good could come from aggressively marking down their books. So while the losses are calibrated to be consistent across all 19 banks, the overall level of the losses will be downward biased.

"This explains why the stress tests don't completely jive with either the market estimates or the stock market drops," he said.

U.S. regulators gave the banks, found to be in need, to raise more capital and one month to come up with a plan. The banks will have until June 8 to develop a detailed capital plan, and until November 9 to implement it.

"The financial sector has been and will continue to be the most important part of the U.S. economy. It was certainly the area that had the most problems, which created most problems for the U.S. economy and the stock market," Weisberg said.

"So, far beyond the results of the stress tests, the financial sector, the big money banks in particular, will continue to be very much in focus for investors and traders for many, many months if not years to come," he said.

EU approves German recapitalization of Commerzbank

Special Report: Global Financial Crisis

BRUSSELS, May 7 (Xinhua) -- The European Commission said on Thursday it had approved a German plan to recapitalize the country's second-largest bank Commerzbank.

The commission, the European Union (EU)'s competition guardian, said it was satisfied that Commerzbank's long term viability has been demonstrated, and that the aid is kept to the minimum and will not lead to undue distortions of competition.

Commerzbank is the second largest private German bank. It ran into serious financial difficulties as a result of the global credit squeeze.

The German government injected eight billion euros (10.7 billion U.S. dollars) of state money into Commerzbank in December and plans to grant it a further ten billion euros (13.4 billion U.S. dollars) of capital.

The aid is granted to ensure financial stability under a German financial crisis scheme, approved by the commission in December.

Berlin has gone impatient with Brussels over the slow approval of the aid. The commission gave its green light only after presented a business plan setting out a number of measures aimed at keeping the aid to the minimum necessary.

In addition, to allay further concerns related to potential distortions of competition, Commerzbank will be subject to a general ban for three years on acquisitions of financial institutions or other businesses which potentially compete with it.

And the bank will not be allowed to do business under more favorable price conditions than its top three competitors in markets where it has a market share above five percent.

EU doubles fund for emergency lending to eastern members

Special Report: Global Financial Crisis

BRUSSELS, May 5 (Xinhua) -- European Union (EU) finance ministers agreed on Tuesday to double the fund for emergency lending to eastern European members to 50 billion euros (67 billion U.S. dollars).

Under the agreement, the ceiling of the EU's financial support facility will be raised from the current 25 billion euros (33.5 billion dollars) in the light of the economic and financial crisis.

"The increase is intended to cater for potential new demands from member states for medium-term support to their balances of payments," the finance ministers said in a statement on the sidelines of their monthly meeting in Brussels.

The ceiling of the facility, which was designed to help EU member states outside the euro zone stabilize their economies, were already doubled in December to the current amount.

But Hungary drew 6.5 billion euros (8.7 billion U.S. dollars) from the facility and Latvia used 3.1 billion euros (4.2 billion U.S. dollars) last year, while Romania is seeking 5 billion euros (6.7 billion U.S. dollars).

With more and more members in Central and Eastern Europe running into financial and economic trouble, there is a call for the EU to have more funds ready to provide emergency aid.

EU leaders agreed in principle at a summit in March to double the fund again.

Dutch banker: global financial crisis far from over

Special
Report: Global Financial Crisis

KUALA LUMPUR, May 6 (Xinhua) -- A top European
central banker on Wednesday cautioned against optimism that the global economy
will recover soon, saying the situation is far from true.

The market should not read too much into slight
improvements in some economic indicators when in fact there were still immense
challenges such as access to credit, Nout Wellink, president of the central bank
of the Netherlands, said in his keynote address at the Asia Regional Forum on
Policy and Regulation of Financial Inclusion.

"Challenges in this area (global financial system)
are just as relevant as they were last November, maybe they are even more
relevant nowadays," he said.

Although the crisis may have left the microfinancing
institutions relatively unaffected but they were also experiencing increased
pressure, he said.

S Korean financial watchdog to speed up corporate overhaul

Special
Report: Global Financial Crisis

SEOUL, May 6 (Xinhua) -- South Korea's top financial regulator said
Wednesday that the nation's indebted conglomerates should step up restructuring
efforts and that the government will further push for the restructuring move.

"Highly leveraged conglomerates should increase efforts to overhaul their
businesses in order to win market confidence," Chin Dong-soo, chairman of the
Financial Services Commission (FSC), told reporters, adding that reluctant
companies will be punished.

Conglomerates with high debt amounts due to overexpansion should even
consider selling off affiliates to clean out their balance sheets, Chin said.

The remarks come amid a number of business groups turning to wait out the
economic downturn instead of making restructuring efforts, according to local
media.

Chin also said the government will support the restructuring move by
tapping money from a 40 trillion-won (31.32 billion-U.S. dollar) corporate
restructuring fund, which is aimed at purchasing bad debts from local financial
firms and buying ailing firms' assets.

Official: HK plays role as financial gateway to China

HONG KONG, May 6 (Xinhua) -- Hong Kong Secretary for
Financial Services and the Treasury KC Chan called on Belgian investors to take
advantage of the expanding renminbi business in Hong Kong, a government press
release said on Wednesday.

According to a press release from the Information
Services Department of Hong Kong Special Administrative Region (HKSAR)
government, when addressing a business luncheon in Brussels, Chan said the
Central Government has announced a pilot scheme for using renminbi for
cross-border trade settlements, strengthening Hong Kong's role as the financial
gateway to China.

"Both our financial industry and trade between the
two places will benefit immensely from this breakthrough," he said. "We will
announce the implementation details as soon as they are finalized, and we will
continue to work towards aligning our two financial systems to become a more
efficient and low-risk corridor for investment into and out of the Chinese
mainland."

Meanwhile, he said the HKSAR government is working
closely with other economies and the international financial community to
respond to the global financial crisis in a "co-ordinated and
mutually-reinforcing manner", with a view to reaching a consensus on a new
financial architecture to better suit the globalized world.

Asia makes breakthrough in regional financial cooperation

Special Report: Global Financial Crisis

By Zhou Erjie, Wang Jingzhong, Xu Lingui

BALI, Indonesia, May 4 (Xinhua) -- The global nature of the ongoing economic turmoil underlines the importance of cooperation between nations. Asian economies have, in this regard, taken a big step forward by finalizing a sizable regional reserve pool plan.

Finance ministers of the ten-member Association of Southeast Asian Nations, China, Japan and South Korea (ASEAN+3) reached an agreement "on all main components" of the so-called "Chiang Mai Initiative Multilateralization" (CMIM) Sunday and pledged to implement it by the end of this year.

In the 120-billion-U.S.-dollar pool many see as the quasi Asian monetary fund, China and Japan are the biggest contributors, each with a commitment of 38.4 billion U.S. dollars.

Sunday's agreement sends a strong message to the world that Asia is willing to act cooperatively and responsibly in the face of the daunting tasks ahead. It is also a showcase of determination and confidence.

The idea of the pool stemmed from the devastation Asian nations suffered from the 1997-98 financial crisis, where the region sank into a deep recession after currencies collapsed in Thailand, Indonesia and South Korea. The losses could have been greatly reduced had there been an anti-crisis emergency facility.

But turning the idea into a tangible mechanism -- and having all the details being agreed upon -- costs Asia almost a decade. State leaders and finance ministers engaged in several rounds of talks on various agenda from individual country's contribution, borrowing accessibility, to the surveillance and decision-making mechanism.

Now, the talk is over. All the major disputes have been settled, and obstacles cleared. Asia is given a big impetus towards getting equipped with the finance first-aid.

According to a statement the ASEAN+3 ministers issued Sunday, the reserve pool is set up on two objectives -- "to address short-term liquidity difficulties in the region and to supplement the existing international financial arrangements."

The first mission is clearly stately and right to-the-point. In times of the financial turmoil, the sizable reserve will greatly empower member nations' abilities to defend currencies and maintain financial stability.

The mechanism will be a boost to smaller Asian economies in particular, as the terms of the mechanism allow them to borrow larger amounts in proportion to their contributions than the more-developed economies.

Moreover, the CMIM is a foundation-laying step for more profound changes of Asia's financial cooperation and reform -- exemplified by a unified Asian currency, as some economists have suggested.

The scheme, however, is not without potential problems. Difficult situations could emerge concerning CMIM's second objective -- to supplement the existing international financial arrangements, as the pool's role overlaps with that of various bilateral currency swap deals and the International Monetary Fund.

More work needs to be done in clarifying terms of borrowing and coordinating conflict interests before the mechanism is fully implemented.

Global financial crisis hits Australian gov't revenue: treasurer

Special Report: Global Financial Crisis

CANBERRA, May 3 (Xinhua) -- Due to global financial crisis, projected Australian federal government revenue dropped by more than 100 billion Australian dollars (72 billion U.S. dollars) since the last budget, Treasurer Wayne Swan said on Sunday.

"I think it (the shortfall) has got substantially worse," Smith told ABC TV.

A year ago, Swan said the International Monetary Fund (IMF) had been predicting world growth of four percent.

A week ago, it has downgraded its forecast to minus 1.3 percent.

"So, essentially, the whole world has turned upside down and, of course, that means global growth is contracting," Swan said.

When Swan has delivered Labor's first budget in 13 years in Maylast year, Treasury has been forecasting Australian federal government revenue of 319 billion Australian dollars (233 billion U.S. dollars) for the 2008/09 financial year.

But that was before the global financial crisis pushed Australia into recession.

Between the time of the last budget in May 2008 and February 2009, there has been a government revenue shortfall of 115 billion Australian dollars (84 billion U.S. dollars), Swan said.

Financial indicators mostly right in Tanzania

Special Report:Global Financial Crisis

By Yi Gaochao

DAR ES SALAAM, Feb. 10 (Xinhua) -- The important financial indicators for Tanzanian economy are mostly right despite the inroads of the global financial crisis, according to the chief of Tanzania's central bank.

According to figures released by the central banker to the country's lawmakers in Dodoma, Tanzania's political capital city, 31 of Tanzania's 34 commercial banks had a capital adequacy of 17 percent compared to the required 10 percent.

The banks' liquidity ratio averaged 42 percent, above the required level of 20 percent while deposits stood at 68 percent as against a required limit of 80 percent.

Most encouraging is Tanzania's foreign exchange reserves which by last week stood at 2.8 billion U.S. dollars which are hailed as strong enough to guarantee the country's financial stability and investors' confidence in the country.

Local banks combined to have another foreign exchange reserve of 600 million dollars, according to Bank of Tanzania Governor Benno Ndulu.

The bank governor has assured the general public that the country's financial sector therefore remains strong and safe despite the global economic downturn.

"The inter-bank settlement system continued to be trusted among the key stakeholders," said the central bank governor, "(The) inter-bank cash market is performing well."

He attributed the 15-percent depreciation of the Tanzanian shilling to the U.S. dollar so far to the ongoing economic crunch.

"This drop is not only of the Tanzanian shilling but has also affected currencies such as the Kenyan shilling which has dropped by up to 9.7 percent, Ugandan shilling (by) 20 percent while South African Rand dropped by 50 percent," he added.

Economists and analysts have warned that Tanzania's economic growth may well be affected by such adverse factors as inflation, current account deficit, low level of domestic revenue rather than reduced international aid inflow amid the ongoing financial crisis.

An International Monetary Fund report has earlier warned that lower growth would dampen government revenues in Tanzania, suggesting that the current path of spending would lead to widening fiscal deficits and a financing gap.

The IMF has identified that the real weaknesses of Tanzania's economy was its huge current account deficit which averages 13.3 percent of the country's annual gross domestic product over the 2005-2011 period.

Local economists have added low level of domestic revenue as another adverse factor to affect the country's growth. In the current fiscal year ending in June this year, domestic revenue is projected to account for 16 percent of the GDP. The ratio was 12.5 percent two years back.

Central banker Benno Ndulu has called for sound macro-economic management to mitigate effects of the global economic meltdown.

The governor has also called for financial discipline during the execution of the government budget plan so as to keep the country's financial sector on the right track.

Teaching kids to save money amid worsening financial situation

Special Report:Global Financial Crisis

BEIJING, Feb. 7 (Xinhua) -- Chinese parents have found it difficult but necessary to teach their children some financial lessons, starting tightening their purse strings amid the worsening financial situation.

Zeng Huaying, mother of a ninth grader in Xiamen, east Fujian Province, managed to persuade her 14-year-old son Tang Ling to pool all his red-packet money - traditionally given to children in red envelopes during Spring Festival to ward off evil spirits - into a finance management scheme.

Zeng, who works for an auto service company, was quoted by China Daily as saying that her year-end bonus had been halved because of the financial crisis, which partly prompted her to start expounding money management techniques.

Last month, she helped her son open his first bank account.

Tang said his classmates usually go crazy shopping with their red-packet money, splurging on things ranging from Haagen-Dazs ice cream to 1,000-yuan (about 146 U.S. dollars) Xbox game consoles.

But with the financial situation worsening, more parents have started tightening their purse strings.

A survey conducted by Jrj.com, a financial information website, and the Legal Evening News showed that 87 percent of respondents would like to start saving for their children's education.

Xia Xueluan, a sociologist at Peking University, was quoted by China Daily as saying that parents should help their children learn more about financial responsibility so they will be productive to society when they grow up.

Tang has deposited about 2,000 yuan of his red-packet money in his bank account and paid 1,000 yuan for health insurance policy.

His financial foresight does not stop there. "I'm going to save for college from now," he said.

World Bank official warns on human crisis in Africa

Special Report:Global Financial Crisis

LAGOS, Feb. 2 (Xinhua) -- The World Bank's Chief Economist on Africa Shanta Devarajan has warned that the global financial crisis would pose a greater danger of human crisis for Africa.

Devarajan gave the warning on Sunday in a statement posted on the World Bank's website, saying that since Africa has already caught the flu of the global financial crisis, it will likely experience a deceleration.

"Africa was spared the first-round effects of banking failures, it is already facing the second-round impacts of declining capital flows, remittances, stagnating foreign aid, falling commodity prices and export revenues," he was quoted saying by the News Agency of Nigeria on Sunday.

He said his colleague at the World Bank, Justin Lin, had earlier warned against allowing the global financial crisis to become a human crisis.

"Child mortality, for instance, rises during decelerations, but hardly falls during acceleration and primary school completion rates are substantially lower in countries experiencing growth decelerations, as is life expectancy," he added.

Devarajan said the official development assistance either per capita or as a share of GDP is lower during decelerations, noting that it is pro-cyclical.

The Governor of the Central Bank of Nigeria, Chukwuma Soludo, admitted last week that Nigeria is vulnerable to the financial crisis.

Economic experts in the country have listed the meltdown in the capital market, gradual depletion of the foreign reserve and the falling crude oil prices as effects of the global financial crisis.

World leaders call for global cooperation to address financial crisis

Special Report:Global Financial Crisis

Backgrounder: World Economic
Forum

DAVOS, Switzerland, Jan. 30 (Xinhua) -- Global
cooperation, rather than a retreat from globalization, is the best approach for
solving the current financial crisis, world leaders said here Friday.

When attending the World Economic Forum annual
meeting in Davos, Switzerland, leaders from Britain, Mexico, South Korea and
South Africa agreed that global cooperation could set a pattern for dealing with
other international challenges, such as climate change, poverty and energy
security.

Founder and Executive Chairman of the
World Economic Forum (WEF) Klaus Schwab (2nd L) speaks at the session "Why
We Need a New System of Global Cooperation?" at the Annual Meeting 2009 of
the WEF in Davos, Switzerland, on Jan. 30, 2009.(Xinhua/World Economic
Forum Swiss-Image.ch)
Photo
Gallery

They called for coordinated actions on a number of
areas, including fiscal and monetary policy measures to stabilize the global
financial system and revive economic growth, reform and recapitalization of the
major multilateral lending institutions, and a resumption of stalled free trade
talks to combat a dangerous turn to protectionism.

Public and private sectors should work together to
solve global problems, the leaders said.

"We need to recognize that these problems were
created by humans and can be solved by humans," British Prime Minister Gordon
Brown said.

"Rather than losing faith and letting the
protectionists take over, or returning to a failed laissez-faire model that says
there is nothing we can do, we have to grapple with these problems and prove we
can come together and solve them," he added.

Brown called on governments to consider "radical
options" for dealing with the problem, such as risk-sharing schemes that would
insure banks and other investors against further losses on toxic assets, saying,
"We need international discussion on what is the best model."

British Prime Minister Gordon Brown (2nd
R) speaks at the session "Reviving Economic Growth" at the Annual Meeting
2009 of the World Economic Forum in Davos, Switzerland, on Jan. 30, 2009.
(Xinhua/World Economic Forum Swiss-Image.ch)
Photo Gallery

Mexican President Felipe Calderon said one key lesson
from the previous crisis in the 1930s was the urgency for working out a policy
response, recognizing that delay increases both the economic damage and the
ultimate cost to taxpayers.

South Korean Prime Minister Han Seung-soo cited his
country's experience during the 1997-1998 Asian financial crisis as an example
of how great the costs of a financial rescue can be.

He said South Korea spent the equivalent of 16
percent of its GDP shoring up the country's corporations and financial
institutions during the crisis.

South African President Kgalema Motlanthe said
developed countries should put their own governance in order if they want to be
offered a better seat at the international table.

South African President Kgalema
Motlanthe speaks at the session "Reviving Economic Growth" at the Annual
Meeting 2009 of the World Economic Forum in Davos, Switzerland, on Jan.
30, 2009.(Xinhua/World Economic Forum Swiss-Image.ch)
Photo Gallery

Motlanthe also called for a speedy conclusion to the
stalled Doha Round of multilateral trade talks.

Meanwhile, the leaders warned that the financial
crisis might be generating a protectionist backlash in some countries, arguing
that such measures would risk a repetition of the disastrous collapse in world
trade during the 1930s.

Minister: Tunisia's industry to suffer from global downturn in 2009

TUNIS, Jan. 23 (Xinhua) -- Tunisia's industry minister said on Friday the industrial sector, the most labor intensive one in the country, is expected to be hit by the world downturn in 2009, and called on local firms to reform structures and enhance productivity.

"We expect that 2009 will be a difficult year for our companies as the country's industrial sector was under pressure of the global financial and economic crisis since November," Industry Minister Afif Chelbi was quoted by the official TAP news agency assaying.

"So it's important for our companies to improve their productivity, to list on Tunisia's bourse and restructure their financial structures in order to upgrade their competitiveness," Chelbi added.

The crisis, however, will create new chances for Tunisian firms to improve their positioning as a good destination for foreign cash as they offer qualified workforce with costs lower than those by eastern European countries after they joined the European Union(EU), according to the minister.

The country drew 352.3 million dinars (250.92 million U.S. dollars) over the first nine months this year, creating 10,149 jobs, according to government data.

The North African country eyes to double industrial exports, especially to the European bloc, its main trade partner, to 30 billion dinars by 2016.

Tunisia, whose industry accounts for 28 percent of the national wealth, launched an upgrading competitiveness program in 1996 to provide local firms with the needed financial and technical aid in order to improve productivity. (1 U.S. dollar = 1.404 dinar)

Nigerian president admits financial meltdown impact on economy

Special Report:Global Financial Crisis

By Qiu Jun

LAGOS, Jan. 15 (Xinhua) -- Nigerian President Umaru
Yar'Adua on Wednesday admitted that the impact of the global financial meltdown
had already been noticeable in Nigeria and directed ministers to deliver visible
measures to curb the damage in 2009.

The president stated this in Abuja while addressing
the ministers at the first Federal Executive Council meeting in 2009.

Declining national revenue, sharp fall in the value
of shares, and the continuing crash of the naira against foreign currencies,
according to the president, are some of the major indicators that the global
crisis is already affecting Nigeria.

The president said it was time to rise up to the
global challenge and to deliver on his administration's promises, particularly
as 2009 marked the mid-point in the life of his administration.

According to him, the government needed to double its
efforts in the face of the global financial meltdown, noting that no time could
be more challenging for the government than now.

"We can feel the impact from falling oil prices, the
declining exchange rate of the naira and the cascading prices of shares at the
capital market," he was quoted as saying by the Punch newspaper on Thursday.

"We are thus starting the year amidst persistent push
and pull of both local and global realities," he added.

Yar'Adua's statement actually set a basic tune for
Nigerian economy, flagging off emergence alarm over the African most populated
country's growth in 2009.

It is also a reverse of his central bank governor's
optimistic view on global financial crisis for the country.

The Governor of the Central Bank of Nigeria (CBN),
Chukwuma Soludo had in late 2008 said that Nigeria was insulated from the global
financial meltdown, arguing that enough idle capital, satisfying economic growth
rate and growing agriculture could considerable cushion impacts on Nigerian
economy.

Nigeria is one of Africa's biggest oil producers. Oil
money takes critical part in its national economy.

According to local media reports, more than 95
percent of the country's export value comes from crude export, while more than
80 percent of federal government's revenue is from oil sector.

IMF says financial losses may swell to $4 trln

Special Report:Global Financial Crisis

WASHINGTON, April 21 (Xinhua) -- The International Monetary Fund (IMF) said Tuesday that losses stemming from the U.S. mortgage crisis may approach 4 trillion dollars, saying the global financial system "remains under severe stress."

The IMF said in January that it expected the deterioration in U.S.-originated assets to reach 2.2 trillion dollars by the end of next year.

But the Washington-based lender said in a semi-annual report, the Global Financial Stability Report (GFSR), that its best estimate of write-down on U.S.-originated assets to be suffered by all holders will be 2.7 trillion dollars, "largely as a result of the worsening base-case scenario for economic growth."

"In this GFSR, estimates for write-downs have been extended to include other mature market-originated assets and, while the information underpinning these scenarios is more uncertain, such estimates suggest write-downs could reach a total of around 4 trillion dollars, about two-thirds of which would be incurred by banks," said the IMF.

The IMF report followed a global plunge in stocks Monday, when U.S. stocks slid more than 3 percent after a six-week winning streak, which was the longest for the SP 500 since 2007 and led to the biggest gain over the period for the Dow Jones since 1938.

The report warned the global financial system remains under severe stress as the crisis broadens to include households, corporations, and the banking sectors in both advanced and emerging market countries.

"Shrinking economic activity has put further pressure on banks' balance sheets as asset values continue to degrade, threatening their capital adequacy and further discouraging fresh lending," said the report.

"Thus, credit growth is slowing, and even turning negative, adding even more downward pressure on economic activity," it said." Substantial private sector adjustment and public support packages are already being implemented and are contributing to some early signs of stabilization."

The report called for decisive actions to restore confidence in the global financial system.

"Further decisive and effective policy actions and international coordination are needed to sustain this improvement, to restore public confidence in financial institutions, and to normalize conditions in markets," said the report.

The key challenge is to break the downward spiral between the financial system and the global economy, said the IMF, noting that promising efforts are already under way for the redesign of the global financial system "that should provide a more stable and resilient platform for sustained economic growth."