Weak Position Limits Cannot Tackle Speculation in Commodities

By Kavaljit Singh | Commentary | October 19, 2011

After months of delay, the US commodity regulator – Commodity Futures Trading Commission (CFTC) – finally approved new rules to limit traders’ positions on 28 physical commodity futures (and swaps) contracts.  On 18 October 2011, the CFTC’s decision was arrived through a 3-2 vote along party lines, with the commission’s three Democrats forming the majority against the two Republicans. The new restrictions (called position limits) on the number of contracts traders can hold are an important component of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) to regulate commodities trading. But their detailed workout plan and actual implementation by CFTC got delayed…

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G20 Defers Decision on FTT Despite Global Support

By Kavaljit Singh | Commentary | October 17, 2011

The G20 finance ministers and central bankers have put off an immediate decision to weigh up a global financial transaction tax (FTT) proposal at the forthcoming G20 Summit (Cannes, 3-4 November 2011).

The two-day Ministerial Meeting in Paris took place against the backdrop of huge protests in US and Europe, galvanized by the Occupy Wall Street movement. At the Paris meeting, G20 finance ministers discussed myriad policy and implementation issues concerning world economy and financial markets. As anticipated, eurozone sovereign debt crisis dominated the discussions and the communiqué pressed Europe to act decisively on resolving the crisis at the forthcoming EU summit next week. The Paris meeting was…

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India-EU FTA: Grave Implications of Unrestrained Investments

By Kavaljit Singh | Commentary | September 20, 2011

Under the proposed India-EU free trade agreement, the European Commission (EC) has sought an expansive mandate to negotiate on investment issues on the behalf of the European Union. On January 20, 2011, the EC officially made recommendations to the European Council seeking modifications in the negotiating directives for the trade agreement with India. If these recommendations are accepted, the EC would pursue comprehensive cross-border investment liberalization and protection provisions under the proposed free trade agreement with India. The EC document calls for the “progressive abolition of restrictions on investment, with the aim to ensure the highest level of market access.” Since 2007, India and EU…

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Taming the “Wild West” of Microfinance

By Kavaljit Singh | Commentary | December 24, 2012

The recent suicides by over 60 poor borrowers in the Indian state of Andhra Pradesh have brought the operations of microfinance institutions (MFIs) under public scrutiny. It is well documented by both print and electronic media that these debt-driven suicides were due to coercive methods of loan recovery used by commercial MFIs. The commercial MFIs operate as profit-making non-banking financial corporations (NBFCs) in India.

The majority of suicides took place in Warangal district of Andhra Pradesh and as many as 17 borrowers of SKS Microfinance were among those who reportedly committed suicide. For the past few months, the SKS Microfinance (the largest commercial MFI in India) has been in the news. In August 2010,…

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Will G20 Take Collective Stand on Capital Controls?

By Kavaljit Singh | Op-Ed, The Korea Times | November 10, 2010

Leaders of the G20 will meet in Seoul on Nov. 11 and 12 to discuss a myriad of issues concerning global financial stability and economic recovery. In many ways, the G20 Seoul Summit is significant because for the first time it is hosted by a non-G8 nation and one in Asia too. The two-day Seoul summit covers an expansive agenda, ranging from global safety nets to new rules on bank capital and liquidity requirements to reforming the International Monetary Fund (IMF).

It remains to be seen how much of this agenda could be accomplished given the sharp differences among G20 member countries on key issues. The summit is likely to be overshadowed by the…

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