Global ETF News Older than One Year
Assessing Climate-Change Risk by Stress Testing for Financial Resilience
February 5, 2020--As society braces for the potential havoc a changing climate could induce, it's vital to gauge the range of shocks that the economy may soon endure. One way to quantify the effects of the potentially systemic shocks that could ripple through the financial system is to administer "stress tests"-a well-designed analytical process that has, for decades, been used by the IMF, World Bank and financial supervisors for detailed scenario planning to prevent future financial crises.
Measuring the Risks
Stress testing for financial resilience to climate risk stands out as an important new tool in a new IMF staff paper. Climate stress testing measures ways in which a climate crisis would affect the financial system, both globally and on a country-by-country level.
Source: IMF
Libra as a currency board: are the risks too great?
January 27, 2020--The Libra Association claims it will be analogous to a currency board regime, but they have overlooked the problems of monetary management that come with it
Facebook's Libra project to create a digital currency has had a difficult start, with criticism from authorities, and the departure of some founding members.
Libra's critics have mostly focused on risks associated with money laundering, financial stability and data privacy. But the project also raises questions about monetary management.
Libra's promotors present it as a payment system innovation. It is, however, also a new monetary system, because it implies the creation of a new currency-at least in the project's initial form-and because the Libra Association itself has characterised its approach as "similar to the way in which currency boards (eg of Hong Kong) have operated'.
Currency boards are a type of monetary system in which the issuer balances its liabilities with assets in the form of foreign currency.
Source: bruegel.org
Self-Service Blockchain Track and Trace Platform for Businesses Launched
January 23, 3030--Today, consumers are more concerned than ever about the social and environmental impacts of the products they purchase. Almost 90% would like big brands to help them be more environmentally friendly and ethical. Blockchain technology offers a way to showcase sustainability and environmentally friendly practices, but private blockchains do not address rising customer transparency demands.
Source: World Economic Forum (WEF)
Tentative Stabilization, Sluggish Recovery?
January 20, 2020--In the October World Economic Outlook, we described the global economy as in a synchronized slowdown, with escalating downside risks that could further derail growth. Since then, some risks have partially receded with the announcement of a US-China Phase I trade deal and lower likelihood of a no-deal Brexit.
Monetary policy has continued to support growth and buoyant financial conditions. With these developments, there are now tentative signs that global growth may be stabilizing, though at subdued levels.
In this update to the World Economic Outlook, we project global growth to increase modestly from 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent in 2021. The slight downward revision of 0.1 percent for 2019 and 2020, and 0.2 percent for 2021, is owed largely to downward revisions for India. The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels.
view the IMF World Economic Outlook, January 2020 Tentative Stabilization, Sluggish Recovery?
Source: IMF
2019 in Review: The Global Economy Explained in 5 Charts
January 18, 2019--Global growth this year recorded its weakest pace since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors.
Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already under way.
Further pressures came from country-specific weakness in large emerging market economies such as Brazil, India, Mexico, and Russia. Worsening macroeconomic stress related to tighter financial conditions (Argentina), geopolitical tensions (Iran), and social unrest (Venezuela, Libya, Yemen) rounded out the difficult picture.
Source: IMF
IMF Staff Discussion Note-Finance and Inequality
January 17, 2020--Summary:
The study examines empirical relationships between income inequality and three features of finance: depth (financial sector size relative to the economy), inclusion (access to and use of financial services by individuals and firms), and stability (absence of financial distress).
Using new data covering a wide range of countries, the analysis finds that the financial sector can play a role in reducing inequality, complementing redistributive fiscal policy. By expanding the provision of financial services to low-income households and small businesses, it can serve as a powerful lever in helping create a more inclusive society but-if not well managed-it can amplify inequalities.
view the IMF Staff Discussion Note-Finance and Inequality
Source: IMF
The Net-Zero Challenge: Fast-Forward to Decisive Climate Action
January 17, 2020--The Net-Zero Challenge report examines the current state of global climate action by companies and governments, providing a clear way forward.
Climate action is first and foremost an opportunity for countries and businesses to build a competitive advantage.
Source: World Economic Forum
State Street: custody battle
January 17, 2019--Custodian banks are being squeezed by the shift from active to low-cost passive funds.
Source: FT.com
IMF Working paper-Tech in Fin before FinTech: Blessing or Curse for Financial Stability?
January 17, 2020--Summary:
Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders' information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware used in US commercial bank branches after mapping them to their parent bank.
We find that higher intensity of IT-adoption led to significantly lower non-performing loans when the crisis hit: banks with a one standard deviation higher IT-adoption experienced 10% lower non-performing loans. High-IT-adoption banks were not less exposed to the crisis through their geographical footprint, business model, funding sources, or other observable characteristics. Loan-level analysis indicates that high-IT-adoption banks originated mortgages with better performance and did not offload low-quality loans. We apply a simple text-analysis algorithm to the biographies of top executives and find that banks led by more "tech-oriented" managers adopted IT more intensively and experienced lower non-performing loans during the crisis. Our results suggest that technology adoption in lending can enhance financial stability through the production of more resilient loans.
view the
Source: IMF
IMF Working Paper-Monetary Policy Is Not Always Systematic and Data-Driven: Evidence from the Yield Curve
While we find evidence of the primacy of the price stability objective in the inflation targeting countries, links to inflation and the output gap are generally weaker and less systematic in money-targeting and multiple-objective countries.
Source: IMF
January 17, 2020--Summary:
Does monetary policy react systematically to macroeconomic innovations? In a sample of 16 countries-operating under various monetary regimes-we find that monetary policy decisions, as expressed in yield curve movements, do react to macroeconomic innovations and these reactions reflect the monetary policy regime.
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