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France: Selected Issues Paper
July 27, 2011--I. FRANCE’S POTENTIAL OUTPUT DURING THE CRISIS AND RECOVERY1
Using three distinct approaches—statistical filtering, production function, and multivariate
model—this note estimates potential output for France during 1980–2010 and discusses long-term growth prospects. The main findings include: (i) prior to the crisis, France’s potential output growth had already been on a declining trend, reflecting a slowing TFP
growth and falling average working hours per worker;
(ii) potential output losses due to the
financial crisis are estimated to be between 1 percent and 3 percent, somewhere between the losses of Germany and the U.S.; (iii) demographic factors would likely shave 0.2 percent
from potential growth over the next two decades; and (iv) boosting potential growth in the period ahead would require structural reforms to increase the participation rate, reduce
structural unemployment, raise working hours, encourage capital accumulation and utilization, as well as spur TFP.
A. Introduction
1. An important economic issue facing France today is the rate of its future potential output growth. Indeed, potential growth determines the extent to which a country can attain a higher living standard while providing social security and jobs for its citizens. Furthermore, given that potential output is an indicator of the level of economic activity consistent with price stability, an accurate measure of the corresponding output gap—the deviation of actual from potential output—provide a key barometer of an economy’s cyclical position.
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Russia to increase arms spending in 2011 by half
July 27, 2011--Russia will increase by half the amount it spends on modernising and re-arming its ailing military in 2011 compared to last year, Prime Minister Vladimir Putin told defense and finance officials on Tuesday.
About 750 billion rubles ($27.20 billion) will be spent this year on purchasing arms, defense-related research and development work, Putin said. "We have never allocated an amount like this in Russia for one year," he said on state TV.
Eurex expands commodity derivatives offering by introducing derivatives on two commodity ETPs
Listing on 29 July 2011
July 27, 2011--The international derivatives exchange Eurex today announced that from 29 July 2011 it will be offering futures and options on two commodity ETPs (exchange traded products) launched by ETF Securities: “Physical Gold” and “Crude Oil”.
The Physical Gold ETP is one of the world’s largest with assets under management of over 4 billion euros. The new derivatives complement the ETF derivatives segment of Eurex Exchange where 3 futures and 21 options on ETFs are currently tradable.
“The market for exchange-traded commodities (ETC) is growing continually, both in terms of the volume invested and the products available. In listing these derivatives, we are supporting the expansion of the ETC market in Europe by providing tailored hedging opportunities for investors and issuers,” said Eurex Executive Board member Peter Reitz.
Mark Weeks, Managing Director at ETF Securities, said: “The launch of Eurex’s options and futures on two of our flagship products marks a milestone in the evolution of the commodity ETP industry, which our chairman pioneered less than 10 years ago. Eurex’s products will complement our existing offering, allowing clients further opportunities to access the commodities markets. Client demand for such products has been significant so we expect Eurex to enjoy great success with these products.” A recent report by ETF Securities on commodity ETPs for Q2 showed global assets under management for commodity ETPs at over 170 billion British pound – an increase by 33 percent in the last 12 months alone. “We see the addition of options and futures on ETF Securities‘ products as a natural progression of this development and fully support their launch,” adds Mark Weeks.
The most important product features of the new contracts are that the futures and options have a contract size of 100 units and are tradable from 9 a.m. to 5.30 p.m. CET. They are traded in US dollars and delivery is planned in physical certificates. The options are European options with terms of up to 60 months. Eurex offers order book trading, whereas bilaterally agreed transactions can be cleared via the OTC Trade Entry facilities for each product.
MONETARY DEVELOPMENTS IN THE EURO AREA: JUNE 2011
July 27, 2011--The annual growth rate of the broad monetary aggregate M3 decreased to 2.1% in June 2011, from 2.5% in May 2011.1 The three-month average of the annual growth rates of M3 in the period from April 2011 to
June 2011 stood at 2.2%, unchanged from the previous period.
M3 components
Regarding the main components of M3, the annual growth rate of M1 stood at 1.2% in June 2011, unchanged from the previous month. The annual growth rate of short-term deposits other than overnight deposits (M2-M1) decreased to 3.7% in June, from 3.9% in the previous month. The annual growth rate of marketable instruments (M3-M2) decreased to 0.5% in June, from 2.9% in May. Among the deposits included in M3, the annual growth rate of deposits placed by households decreased to 2.1% in June, from 2.3% in the previous month, while the annual growth rate of deposits placed by non-financial corporations increased to 4.5% in June, from 3.7% in the previous month.
State Street rolls out London-listed ETFs
July 26, 2011--State Street Global Advisors (SSgA) has launched its first range of exchange traded funds for the London Stock Exchange to tap UK investor demand and expand its European presence in the fast-growing industry.
SSgA, the world's second-largest provider of ETFs after BlackRock Inc (BLK.N), has opened 11 of its SPDR-branded funds specialising in fixed income, global equities and emerging market equities to UK investors.
The move highlights SSgA's increasing efforts at growing its relatively small share of the European ETF marketplace and follows earlier rollouts in Frankfurt in May. Just $1.4 billion of the $263 billion in ETF assets SSgA manages currently comes from the continent.
London Stock Exchange welcomes SPDR® ETFs
July 26, 2011--The London Stock Exchange today welcomes SPDR ETFs as a new issuer of exchange traded funds (ETFs) on its Main Market. The company has issued 11 new products offering exposure to fixed income, global and emerging equity markets.
To mark the occasion, Scott Ebner, Global Head of ETF Product Development at State Street Global Advisers (SSgA), was joined by Gillian Walmsley, Head of ETFs at the London Stock Exchange, to open trading in London this morning.
Pietro Poletto, Global Head of ETFs at London Stock Exchange Group, said:
“As one of the largest providers of ETFs in the world, SPDR ETFs is a great addition to our range of issuers in London, and will offer investors simple, transparent access to an excellent selection of indices on a highly liquid platform.
“The launch of SPDR ETFs’ emerging markets products will further strengthen our position in the field; London Stock Exchange currently lists more emerging markets ETFs than any other exchange in the world.”
From today there are 493 ETFs from 16 issuers listed on the London Stock Exchange. In the first half of 2011 there were 369,600 ETF trades in London worth a combined £19 billion, a 40.3 per cent and 33.5 per cent increase respectively on the same period last year.
db X-trackers listet ETFs auf Schwellenländer-Indizes sowie US-Nebenwerte an der Deutschen Börse
July 26, 2011--db X-trackers, die Plattform der Deutschen Bank für Exchange Traded Funds (ETFs), hat heute an der Deutschen Börse sieben weitere ETFs auf MSCI-Schwellenländer-Indizes gelistet. Die neuen ETFs ermöglichen im Bereich Schwellenländer-Aktien gestreute Investments in die Regionen Afrika und Osteuropa.
Über einzelne Länder-Indizes werden die asiatischen Aktienmärkte in
China, Indien, Malaysia, Thailand sowie Chile auf dem südamerikanischen
Subkontinent abgebildet. Außerdem erweitert ein ETF auf US-Nebenwerte das
Angebot an ETFs, die verschiedene Segmente des US-Aktienmarktes abbilden.
„Mit den neuen Schwellenländer-ETFs vervollständigen wir unser Angebot. Nun können Investoren weltweit alle Anlageregionen im Bereich Schwellenländer mit db X-trackers ETFs abbilden, in den meisten Fällen auch mit ETFs auf Einzelländer“, sagt Thorsten Michalik, verantwortlich für db X-trackers. „Wir sind überzeugt, dass es aufgrund der hohen Wachstumsdynamik langfristig sinnvoll sein kann, diese Regionen in einem Depot differenziert abzubilden.“ db X-trackers bietet nun 50 Schwellenländer ETFs an und ist damit der größter Anbieter in Europa in diesem Segment.
ESMA tables tougher regulations for ETFs
July 25, 2011--Fund managers may be forced to offer greater transparency to investors on risks associated with investing in exchange traded funds in Europe under plans revealed by the European Securities and Markets Authority.
A consultation document released by the European Union financial regulatory body, known as ESMA, includes a raft of measures aimed at improving investor safety when dealing with ETFs.
At present ESMA claims that there is not sufficient regulation in place to fully explain the specific features and risks associated with both Ucits ETFs and structured Ucits. Greek Sovereign Debt Q&A (Update)
First, the official sector part: more aid money; expansion of EFSF. All we have so far is the Statement of Heads of State and some general news reports. On the basis of these, there does not appear to be anything relevant to CDS.
Eurozone Greece bailout: main points
GREEKS BEARING CUTS
NEW GREECE BAILOUT
July 25, 2011--The following are responses to the most frequently-asked questions that ISDA has received in connection with the application of credit derivatives to a potential restructuring or reprofiling of Greek sovereign debt. The following does not constitute legal advice, and is subject in all respects to any determination that the ISDA EMEA Credit Derivatives Determinations Committee may make in relation to CDS referencing the Hellenic Republic (Greece). ISDA makes no comment on the likelihood of the events described in this Q&A.
UPDATE JULY 25:
The determination of whether the Eurozone deal with regard to Greece is a credit event under CDS documentation will be made by ISDA’s EMEA Determinations Committee when the proposal is formally signed, and after a market participant requests a ruling from the DC. Based on what we know at this point, we can say the following. The package is in two parts:
July 22, 2011--Here are extracts of some of the main points in eurozone leaders' final statement at a summit that agreed a second emergency bailout for Greece to prevent a debt crisis engulfing the eurozone.
159 BILLION EUROS
IMF and European contributions total 109 billion euros, with private lenders providing a further 50 billion, equivalent to a total of $229 billion.
WHATEVER IT TAKES
"We reaffirm our commitment to the euro and to do whatever is needed to ensure the financial stability of the euro area as a whole and its member states."
"We welcome the measures undertaken by the Greek government to stabilise public finances and reform the economy... We are conscious of the efforts that the adjustment measures entail for the Greek citizens."
"We agree to support a new programme ... designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece."
