Multilateral Interchange Fees: Competition and regulation in light of recent legislative developments. ECRI Research Report No. 14, 31 January 2014

Two-sided payment card markets generate costs that have to be distributed among the participating actors. For this purpose, payment card networks set an interchange fee, which is the fee paid by the merchant’s bank to the cardholder’s bank per transaction. While in recent years many antitrust authorities all over the world - including the European Commission - have opened proceedings against card brands in order to verify whether agreements to collectively establish the level of interchange fees are anticompetitive, the Reserve Bank of Australia – as a regulator - has directly tried to address market failures by lowering the level of interchange fees and changing some network rules. The US has followed with new legislation on financial consumer protection, which also intervenes on interchange fees. This has opened a strong debate not only on legitimacy of interchange fees, but also on the appropriateness of different public tools to address such issues. Drawing from economic and legal theories and a comparative analysis of recent case law in the EU and other jurisdictions, this work investigates whether a regulation rather than a purely competition policy approach would be more appropriate in this field, considering in particular, at EU level, all of the competition and regulatory concerns that have arisen from the operation of SEPA with multilateral interchange fees. The paper concludes that a wider regulation approach could address some of the shortcomings of a purely antitrust approach, proving to be highly beneficial to the development of an efficient European single payments area.

The Penetration of Financial Instability in Agricultural Credit and Leveraging. Factor Markets Working Paper No. 2, September 2011

This paper describes the aggregate rural capital markets of the EU and the main differences between the markets of its member countries. The results of our study suggest that the agricultural credit markets are still quite segmented and the segments are country- rather than currency- or region specific. Financial instability in Europe is also penetrating the agricultural sector and the variation of interest rates for agricultural credit is increasing across countries. Perhaps the most dramatic signal of growing financial instability is that the financial leverage (gearing rate) of European farms rose in 2008 by almost 4 percentage points, from 14 to 18%. The 4 percentage-point annual rise was twice the 2 percentage-point rise observed during the economic recession in the late 1980s and early 1990s. The distribution of the financial leverage of agriculture across countries does not, however, reflect the distribution of country-specific risk premiums in the manner that they are observed in government bond yields. Therefore, in those countries that have the weakest financial situation in the public sector and in which the bond markets are encumbered with high country-specific risk premiums, the agricultural sector is not directly exposed to a very large risk of increasing interest rates, since it is not so highly leveraged. For example in Greek and Spanish agriculture, the financial leverage (gearing) rate is only 0.6% and 2.2% respectively, while the highest gearing rates are found elsewhere (in Denmark), reaching 50%.

Kazakhstan: the regional success story; Tajikistan: a trial period; Uzbekistan: the major source of instability in Central Asia? OSW Study 15/2004

Kazakhstan: Kazakhstan can boast economic development like no other country in Central Asia. In contrast to other countries of the region, which have rich natural resources, Kazakhstan has managed to use its economic potential in a way that yields concrete benefits now and, at the same time, creates prospects for further sustainable economic growth. Tajikistan: Tajikistan in its present state has been built on the civil war experiences and provisions of the peace accords signed in 1997. These have had a great impact on the present form of the state, its political scene and power mechanisms. President Emomali Rakhmonov is the central figure in the state. The political system, which he has cocreated, is based on - unique in this region - political pluralism (the existence of the Islamic party), decentralisation (far-going independence of the regions and relatively limited potential of the central structures) and compromise as the basic way of resolving conflicts. Such a system has so far guaranteed stabilisation and normalisation of the country. Uzbekistan: With its geographic location, potential, ambitions and political priorities, Uzbekistan could play a leading role in Central Asia. The international community has perceived the country as the pillar of stability in the region. This perception was further reinforced after 11th September 2001 and was certainly among the factors that inspired the United States to start closer political and military cooperation with Tashkent. The administration in Washington had expected that closer contacts might galvanise political, economic and social change in Uzbekistan, thus reinforcing positive trends in other countries of the region as well. But the relations between Washington and Tashkent are in crisis (which the United States will certainly try to overcome), and we have seen rapprochement between Uzbekistan and Russia and China.