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New life for an old framework: redesigning the European Union's expenditure and golden fiscal rules
October 14, 2020--This briefing paper focuses on two aspects of the EU fiscal framework: whether an expenditure rule would be more reliable than a structural budget balance rule and the possible benefits and drawbacks of introducing a golden rule to exclude certain types of investment from the operational fiscal rule.
In the context of the review of the EU economic governance framework, this study recommends a multi-year ahead expenditure rule anchored in an appropriate public debt target, augmented with an asymmetric golden rule that provides extra fiscal space only in times of a recession. An improved governance framework should strengthen national fiscal councils and include a European fiscal council, while financial sanctions should be replaced with instruments related to surveillance, positive incentives, market discipline and increased political cost of noncompliance.
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Source: bruegel.org
For the euro there is no shortcut to becoming a dominant currency
October 13, 2020--As an international currency, the euro has always been a distant second to the dollar. The idea of a greater international role for the euro has been floated, but without major institutional reform the euro will not challenge dollar hegemony.
When created two decades ago, the euro immediately became the world's second most important currency. But it has remained a distant second to the US dollar. Its internationalisation peaked in 2005 and went into reverse with the euro crisis, never fully recovering since. Although some predict the demise of the dollar, its global hegemony persists.
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Source: bruegel.org
UK active managers fail to prove their mettle in a bear market
October 12, 2020--Only half of stock pickers outperformed in 2020's volatile markets
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Source: FT.com
ECB-Euro area securities issues statistics: August 2020
October 12, 2020--The annual growth rate of the outstanding amount of debt securities issued by euro area residents increased from 7.3% in July 2020 to 7.7% in August.
For the outstanding amount of listed shares issued by euro area residents, the annual growth rate was 0.3% in August 2020, compared with 0.1% in July.
Debt securities
New issuance of debt securities by euro area residents totalled EUR 545.1 billion in August 2020. Redemptions amounted to EUR 443.7 billion and net issues to EUR 101.4 billion.
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Source: ECB
First Active ETF of Almalia on Xetra: Shariah-compliant companies worldwide
October 12, 2020--Since Monday, a Shariah-compliant, actively managed exchange traded fund issued by Almalia has been tradable on Xetra and Börse Frankfurt via the HANetf white label platform for the first time.
The Almalia Sanlam Active Shariah Global Equity UCITS ETF gives investors direct access to up to 30 companies worldwide that comply with the investment principles of the Shariah.
To be included in the index, companies must have a proven solid business model over the long term.
Companies that generate more than 5 per cent of their income from business activities such as alcohol, tobacco, pork products, conventional financial services, defence, gambling, music, hotels, cinema or adult entertainment are excluded.
Name: Almalia Sanlam Active Shariah Global Equity UCITS ETF
Asset class: Equity ETF
ISIN: IE00BMYMHS24
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Source: Deutsche Börse
Central banks and BIS publish first central bank digital currency (CBDC) report laying out key requirements
October 9, 2020--Seven central banks and the BIS release a report assessing the feasibility of publicly available CBDCs in helping central banks deliver their public policy objectives.
Report outlines foundational principles and core features of a CBDC, but does not give an opinion on whether to issue.
Central banks to continue investigating CBDC feasibility without committing to issuance.
A group of seven central banks together with the Bank for International Settlements (BIS) today published a report identifying the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives.
The report, Central bank digital currencies: foundational principles and core features, was compiled by the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, Sveriges Riksbank, the Swiss National Bank and the BIS, and highlights three key principles for a CBDC....
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Source: BIS
UK economy stumbles in August, setting back recovery from COVID-19 slump
October 9, 2020--Britain's economy struggled to grow in August, setting back its recovery from the coronavirus lockdown, and finance minister Rishi Sunak was due to announce more help to slow a rise in jobs losses as a second wave of COVID-19 infections hits.
Gross domestic product rose by 2.1% from July, official data showed, not even half the median forecast in a Reuters poll of economists and the slowest increase since the economy began to recover in May from a record slump.
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Source: reuters.com
London Stock Exchange to sell Milan arm to Euronext for 4.3bn Euros
October 9, 2020--Borsa Italiana deal clears way for LSE purchase of financial data provider Refinitiv
The London Stock Exchange Group has agreed to sell the Milan stock exchange to the rival group Euronext for €4.3bn (£s:3.9bn) in cash, clearing the way for the LSE's purchase of the financial data provider Refinitiv.
The LSE and Euronext, which owns several European stock exchanges including the Paris bourse, began exclusive talks over the Borsa Italiana deal in September.
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Source: theguardian.com
Meeting of 9-10 September 2020 Account of the monetary policy meeting of the Governing Council of the European Central Bank
October 8, 2020--Held in Frankfurt am Main on Wednesday and Thursday, 9-10 September 2020
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel reviewed the financial market developments since the Governing Council's previous monetary policy meeting on 15-16 July 2020.
The functioning of euro area financial markets had, by and large, been restored. Stress symptoms had largely dissipated and liquidity had returned to the market. The Composite Indicator of Systemic Stress (CISS) remained only marginally higher than before the coronavirus (COVID-19) period, with the difference primarily being driven by still elevated volatility, particularly in stock markets.
Financial conditions had also improved broadly in the euro area. The GDP-weighted government bond curve had shifted further down and had returned to its pre-crisis level. Large parts of the curve were again in negative territory and very close to the lowest level ever recorded. Government bond spreads too had reached, or were close to, their pre-crisis levels and investment-grade corporate bond spreads had fallen by nearly 20 basis points since the Governing Council's previous monetary policy meeting. High-yield bond spreads had even fallen by nearly 50 basis points.
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Source: ECB
Investing in People is Crucial to Economic Recovery in Central Asia
October 7, 2020---- Central Asian economies are on course to contract by 1.7 percent this year, a sharp reversal from the 4.9 percent growth in 2019, says the latest edition of the World Bank Economic Update for the Europe and Central Asia region released today.
The impact of the coronavirus (COVID-19) pandemic varies across Central Asia. Kazakhstan and the Kyrgyz Republic will see an economic contraction of 2.5 percent and 5.5 percent, respectively this year. Tajikistan and Uzbekistan, on the other hand, will avoid a recession but growth is likely to be tepid at 1.6 percent (from 7.5 percent in 2019) in Tajikistan and 0.6 percent (from 5.6 percent in 2019) in Uzbekistan.
World Bank Economic Update for the Europe and Central Asia
Source: World Bank