15  Among many other changes, the Dodd-Frank Act allowed banks to pay interest on corporate deposits, and those depositors, because they deposit large amounts, are likely more interest-sensitive, than individual depositors. Furthermore, the wholesale money market is intensely competitive, and, as evidence that reserves are distributed across banks in a way that reflects competitive considerations, note that currently, reserves are held in disproportionately large amounts by Foreign Banking Organizations. The reason I think this happens is that those FBOs do not have to pay the FDIC assessment fee on their liabilities (as they hold no U.S. deposits). That suggests that all banks face competition in attracting liabilities to match their reserve holdings, and that the FBOs, because they face a lower cost in doing so, have managed to attract those deposits at a faster clip than domestic banks. This is the sort of competition that I expect to see that will result in the interest on reserves being passed through by banks to their customers and to the broader economy. BIS central bankers’ speeches  7  Moreover, even if we were to put any weight on this consideration, the incentives go the other way – our enlarged balance sheet creates an additional reason to tighten monetary policy in a timely way. If the Fed were to delay in raising short-term rates to protect its current earnings, inflation would rise and this would push long-term rates higher. This would just necessitate a bigger rise in short-term interest rates and a greater loss of earnings later.
Lim Hng Kiang: Increasing and broadening private sector participation in infrastructure development Opening remarks by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the World Bank-Singapore Infrastructure Finance Summit, Singapore, 29 May 2013. *  *  *  Ms Sri Mulyani Indrawati, Managing Director of the World Bank Group Mr Cesar Purisima, Secretary of Finance of the Philippines Mr Sergey Storchak, Deputy Finance Minister of Russia Mr Areepong Bhoocha-Oom, Permanent Secretary of the Ministry of Finance of Thailand Distinguished guests Ladies and gentlemen Introduction – infrastructure financing is crucial to maintain sustainable growth for countries A very good morning to all of you. It gives me great pleasure to join you at the opening of this year’s World Bank-Singapore Infrastructure Finance Summit. Let me extend a warm welcome to all our guests, and especially to our overseas guests. This is our fourth meeting, and we are meeting under more stabilised circumstances. Emerging market economies have experienced a strong rebound in capital inflows post global financial crisis. McKinsey estimates that some $ in foreign capital went to emerging markets in 2012. These flows are due in part to institutional investors’ hunt for yield in the shorter term, and in part also to the longer-term shift in liquidity from the advanced to the emerging world. The G30 Working Group on Long-term Finance has estimated that infrastructure spending must increase nearly 15% for countries to achieve even moderate levels of economic growth.