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IOSCO revises its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets to ensure market integrity
January 31, 2123--The Board of the International Organization of Securities Commissions today has published a revised version of its 2011 Principles for the Regulation and Supervision of Commodity Derivatives Markets. The aim of the revision is to ensure that these Principles continue to provide a resilient framework for the regulation and oversight of the commodity derivatives markets.
While the Principles reflected the characteristics of commodity derivatives markets in 2011, these markets have continued to evolve over the past decade, spurred by various market developments and international events in the form of external disruptions, such as the COVID-19 pandemic and the Russia-Ukraine conflict.
Countries Should Act Now to Limit Rising Risks From Corporate Distress
January 31, 2023--Sharp rises in global interest rates could spark corporate distress and pose wider problems for many economies
Corporate debt rose by more than $12 trillion in advanced and emerging economies during the pandemic as companies borrowed to strengthen their balance sheets and survive the economic shock.
But steep rises in interest rates and more expensive debt service are stretching firms' finances, even as global debt declines as a share of gross domestic product.
This build-up of risk in the corporate sector and a doubling of funding costs for even the safest issuers could pose serious problems for many economies and their financial systems. A new machine-learning model developed by IMF staff predicts the probability of corporate distress spilling over into systemic economic risk, based on lessons from previous crises in 55 advanced and emerging economies since 1995. We identify around 50 indicators-from firms' debt ratios to credit expansion and overvalued assets-that might have power to predict future crises and then train the model.
Global Economy to Slow Further Amid Signs of Resilience and China Re-opening
January 30, 2023--The fight against inflation is starting to pay off, but central banks must continue their efforts
The global economy is poised to slow this year, before rebounding next year. Growth will remain weak by historical standards, as the fight against inflation and Russia's war in Ukraine weigh on activity.
Despite these headwinds, the outlook is less gloomy than in our October forecast, and could represent a turning point, with growth bottoming out and inflation declining.
Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe. Inflation, too, showed improvement, with overall measures now decreasing in most countries-even if core inflation, which excludes more volatile energy and food prices, has yet to peak in many countries.
How Innovation is Revolutionizing Global Trade
January 30, 2023--Global trade, in many ways, makes the world go round. Think of any electronic good, clothing item, or perhaps a chocolate bar; all everyday items which are in consumers hands and homes because of global trade, providing countless jobs.
Mona Haddad, the Global Director for Trade, Investment and Competitiveness at the World Bank Group, explains: "Trade is an engine of growth that creates better jobs reduces poverty and increases economic opportunity."
Mona adds that trade liberalization increases GDP, and that it has, "lifted more than one billion out of poverty since 1990."
Crypto ETFs roar into life with eye-popping 2023 returns
January 30, 2023--Rebound has extended to tech funds such as ARKK, which has risen 25% this year
A swarm of cryptocurrency-focused equity exchange traded funds have enjoyed astonishing starts to 2023, chalking up sharp gains rarely seen by diversified stock funds.
The $3.9mn Valkyrie Bitcoin Miners ETF (WGMI) has led the way with a 101 per cent return since the turn of the year, but a flock of rival funds have also chalked up gains of between 40 and 80 per cent.
IOSCO report provides new insights into global investment funds industry
January 27, 2023--The Board of the International Organization of Securities Commissions (IOSCO) today published the second edition of the Investment Funds Statistics Report (IFSR), which provides new insights into the global investment funds industry.
The report is based on a comprehensive collection of IOSCO members' supervisory data as of end-02021.
The IFSR is an annual exercise that aims to facilitate the regular collection and analysis of investment fund data, enabling regulators and stakeholders to share information and observe trends in the global investment funds sector. It builds on the foundations of IOSCO's previous biennial Hedge Funds Survey.
IMF Working Paper-Gold as International Reserves: A Barbarous Relic No More?
January 27, 2023--Summary:
After moving slowly downward for the better part of four decades, central bank gold holdings have risen since the Global Financial Crisis. We identify 14 "active diversifiers," defined as countries that purchased gold and raised its share in total reserves by at least 5 percentage points over the last two decades.
In contrast to the diversification of foreign currency reserves, which has been undertaken by advanced and developing country central banks alike, active diversifiers into gold are exclusively emerging markets.
We document two sets of factors contributing to this trend. First, gold appeals to central bank reserve managers as a safe haven in periods of economic, financial and geopolitical volatility, when the return on alternative financial assets is low. Second, the imposition of financial sanctions by the United States, United Kingdom, European Union and Japan, the main reserve-issuing economies, is associated with an increase in the share of central bank reserves held in the form of gold. There is some evidence that multilateral sanctions imposed by these, and other countries have a larger impact than unilateral sanctions on the share of reserves held in gold, since the latter leave scope for shifting reserves into the currencies of other non-sanctioning countries.
ETFGI reports assets invested in the global ETFs industry extended lead over hedge fund industry to US$4.57 trillion at the end of Q3 2022
January 27, 2023-- ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today that assets invested in the global ETFs industry extended its lead over the global hedge fund industry by US$4.57 trillion at the end of Q3 2022, based on data from ETFGI and HFR.
Highlights
Assets invested in global ETFs industry extended lead over assets in global hedge fund industry to $4.57 trillion at the end of Q3 2022.
The global hedge fund industry suffered net outflows of $26 billion during Q3 2022 while global ETFs industry gathered net inflows of $129.9 billion.
Assets invested in the global ETFs industry first surpassed those invested in the global hedge fund industry at the end of Q2 2015, as ETFGI had forecasted. Growth in assets in the ETFs industry has outpaced growth in the hedge fund industry since the financial crisis in 2008.
Infrastructure, a sector ripe for government efficiencies
January 27, 2023--STORY HIGHLIGHTS
The relative strength or weakness of the governance environment can determine how developed a country's infrastructure is.
Infrastructure is an area where the government of the future can potentially demonstrate its efficacy, in terms of the ideal role of government, how it should deliver, and gain citizen's trust simultaneously.
To make progress governments need to understand the governance constraints to infrastructure management and delivery they face.
Different levels of infrastructure in countries can be explained by unique pre-conditions that every country faces, including geographic traits and financial resources. As the figures below illustrates, huge infrastructure quality and spending gaps remain between countries. Crucially, pre-conditions also include different politicians' and constituencies' perceptions of the ideal policy combination on the one hand, and the right incentives for infrastructure development on the other. In other words, the relative strength or weakness of the governance environment can determine how developed a country's infrastructure is. These governance differences across countries are especially visible in regulated industries where services are essential and the risk of market failure is high, such as in water and electricity utilities, ports, toll roads, and airports.
Global Economic Uncertainty Remains Elevated, Weighing on Growth
January 26, 2023--January 26, 2023--From Brexit and US-China trade tensions to the pandemic and war, successive shocks have combined to keep uncertainty elevated
The shocks that have shaken the global economy in recent years have introduced a new normal for turbulence, driven in some cases by political fragmentation between countries. These episodes have also lifted uncertainty to exceptionally high levels, which in turn hurts economic growth as our research shows.
To better track the evolution of these conditions, we updated our World Uncertainty Index to show more frequent readings that are monthly, instead of quarterly, and incorporate data for 71 economies dating back to 2008.
As the Chart of the Week shows, the index fell in December, the most recent reading, but has continued to hit elevated levels in recent times on the back of successive shocks, including most recently Russia's invasion of Ukraine and the associated cost-of-living crisis.