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Bassanese Bites: Beautiful Numbers
April 8, 2019--Week in Review
To paraphrase former PM Paul Keating, last week produced a fairly consistent set of "beautiful numbers" across the global economy. Key manufacturing indices in both the US and China were better than expected and suggest tentative signs of recovery due to easing trade tensions, the Fed's dovish tilt and renewed Chinese stimulus.
Service sector activity in both economies also remained at robust levels. And while US retail spending was softer than expected in February, this was more than offset by a solid upward revision to January's report.
Of course, the most beautiful set of numbers came in the US payrolls report, with better than expected employment growth and softer than feared wage growth.
IFC Report Estimates Investors Appetite for Impact Investing Could Be as High as $26 Trillion
April 8, 2019-Investors' appetite for impact investing-in which they seek to generate positive impact for society alongside strong financial returns-could be as much as $26 trillion, according to a new report issued by IFC, a member of the World Bank Group.
The report, Creating Impact: The Promise of Impact Investing, is the most comprehensive assessment so far of the potential global market for impact investing. As much as $268 trillion-the financial assets held by institutions and households across the world-is potentially available for investment. The report notes that if just 10 percent of this were channeled toward investments focused on improving social and environmental outcomes, it would go a long way toward providing the funding necessary to achieve the Sustainable Development Goals while also facilitating a shift to a low-carbon future.
view the IFC-Creating Impact-The Promise of Impact Investing report
This new form of currency could transform the way we see money
April 6, 2019--Central banks around the world are experimenting with so-called Central Bank Digital Currency (CBDC). But what is it and why does it matter?
CBDC is a digitized version of domestic currency where the central bank issues new money equivalent to-and redeemable for-its domestic currency, often removing the equivalent amount of currency from the money supply.
It could be issued using distributed ledger technology, where transactions would operate and settle on a peer-to-peer basis.
CBDC may be issued for general use ("retail" CBDC) for peer-to-peer payments and payments from consumers to merchants; or for use by commercial banks and clearing houses ("wholesale" CBDC) for more efficient interbank payments that occur outside traditional correspondent banking and other payment systems.
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Source: World Economic Forum
As Growth Slows in Europe and Central Asia, Financial Inclusion Can Play Key Role Addressing Long-Term Challenges
April 5, 2019--Economic growth in the Europe and Central Asia region slowed to 3.1% in 2018, and is projected to decline to 2.1% in 2019, amid slowing global growth and uncertain prospects, according to the World Bank's Economic Update for Europe and Central Asia, released today.
Growth in countries across the region varied. Upward revisions to GDP data for Russia, the largest economy in the region, contributed strongly to regional growth, alongside accelerating growth in Albania, Hungary, Poland, and Serbia. Meanwhile, Turkey experienced a severe slowdown, triggered by financial market and currency pressures-growth is forecast at 1.0% for 2019, a major decline from 7.4% in 2017.
view the World Bank Europe and Central Asia Economic Update, Spring 2019: Financial Inclusion
FSB publishes directory of crypto-assets regulators
April 5, 2019--The Financial Stability Board (FSB) published today a Crypto-assets regulators directory. The purpose of the directory is to provide information on the relevant regulators and other authorities in FSB jurisdictions and international bodies who are dealing with crypto-asset issues, and the aspects covered by them.
The directory will be delivered to the G20 Finance Ministers and Central Bank Governors meeting on 11-12 April 2019.
view the FSB Crypto-assets regulators directory
BlackRock analysis helps define climate-change risk
April 4, 2019--Study says investors fail to price in effect of extreme weather on portfolios
Investors underestimate the risks that extreme weather poses to their portfolios, according to landmark research by BlackRock that could drastically alter how the investment industry considers climate change in its risk management processes.
BlackRock's study looked at three US asset classes-municipal bonds, commercial real estate and US utility stocks-and said climate change was already having a tangible effect on securities. It warned that the trend would only accelerate.
IMF-Global Financial Stability Report-Chapter 2: Downside Risks to House Prices
April 4, 2019--Chapter 2 studies and quantifies house prices at risk, a measure of downside risks to future house price growth-using theory, insights from past analyses, and new statistical techniques applied to 32 advanced and emerging market economies and major cities. The chapter finds that lower house price momentum, overvaluation, excessive credit growth, and tighter financial conditions predict heightened downside risks to house prices up to three years ahead.
The measure of house prices at risk helps forecast downside risks to GDP growth and adds to early-warning models for financial crises. Policymakers can use estimates of house prices at risk to complement other surveillance indicators of housing market vulnerabilities and guide macroprudential policy actions aimed at building buffers and reducing vulnerabilities. Downside risks to house prices could also be relevant for monetary policymakers when forming their views on the downside risks to the economic and inflation outlook. Authorities considering measures to manage capital flows might also find such information useful when a surge in capital inflows increases downside risks to house prices and when other policy options are limited.
view the IMF-Global Financial Stability Report-Chapter 2: Downside Risks to House Prices
World Economic Forum-Why globalization needs an upgraded operating system
April 4, 2019--The G20 Leaders' Summit in London on April 2, 2009, is widely regarded as one of the best examples of global cooperation in a generation. Meeting as a group for only the second time, leaders of the world's top economies, accounting for some 85% of global GDP, agreed to provide $5 trillion in fiscal stimulus and $1 trillion in additional resources to the International Monetary Fund, and to implement a wide-ranging program of financial regulatory reform.
Coming on the heels of the 2008 financial crisis, the summit was instrumental in restoring confidence in capital markets and bringing the global economy out of its freefall.
The 2008 crisis showed that the international community had been far too complacent about adapting financial governance to the effects of new technologies and changing market and macroeconomic conditions. A decade later, we find ourselves in a similar situation.
