Global ETF News Older than One Year
Financial system remains vulnerable to further liquidity strains, FSB warns
September 6, 2023--The progress report presents findings of work to assess and address "key amplifiers" of liquidity stress in non-bank financial intermediation (NBFI).
The report on the financial stability implications of NBFI leverage identifies pockets of high leverage in the NBFI sector and outlines the policy implications.
The March 2020 market turmoil and subsequent events, including the failure of Archegos and strains in commodities and bond markets, underscore the need to enhance the resilience of the NBFI sector.
The Financial Stability Board (FSB) published today its annual progress report to the G20 on enhancing the resilience of non-bank financial intermediation (NBFI).
The report presents findings of analytical work on vulnerabilities in particular entities and activities that may contribute to aggregate liquidity imbalances. It also describes policies being developed by the FSB and standard-setting bodies (SSBs) to reduce excessive and potentially destabilising spikes in liquidity demand, focusing on structural liquidity mismatch in open-ended funds and on margining practices.
Source: FSB (Financial Stability Board)
Does Monetary Policy Have Long-Run Effects?
September 5, 2023--Monetary policy is often regarded as having only temporary effects on the economy, moderating the expansions and contractions that make up the business cycle. However, it is possible for monetary policy to affect an economy's long-run trajectory.
Analyzing cross-country data for a set of large national economies since 1900 suggests that tight monetary policy can reduce potential output even after a decade. By contrast, loose monetary policy does not appear to raise long-run potential. Such effects may be important for assessing the preferred stance of monetary policy.
Monetary policy has traditionally been regarded as being "neutral" in the long run. This means that the path of an economy over time is determined by factors other than what the central bank does, including the availability of workers and capital and how productively they can be combined. Monetary policy has generally been viewed as having a moderating influence on cyclical economic fluctuations. Its long-run effects are believed to be limited to nominal variables, such as prices and nominal interest rates.
Source: frbsf.org (Federal Reserve Bank of San Francisco)
IMF Working Paper-Unconventional Fiscal Policy in Times of High Inflation
September 1, 2023--Summary:
The surge in energy prices in 2022 has been a defining factor behind the increase in euro area inflation. We assess the impact of "unconventional fiscal policy", defined as the set of fiscal measures, possibly expansionary, motivated by a desire to mute the effects of the increase in energy prices and to lower inflation.
Overall, we find that these unconventional measures reduced euro area inflation by 1 to 2 percentage points in 2022 and may avoid an undershoot later on.
When nonlinearities in the Phillips curve are taken into account, the net effect is to reduce inflation by about 0.5 percentage points in 2021-24, and keep it nearer to its target. About one-third to one-half of the reduction in 2022 reflects the direct effects of the measures on headline inflation, with much of the remainder reflecting the lower pass-through to core inflation. The fiscal measures were deficit-financed but had limited effects on raising inflation by stimulating demand and instead modestly helped to stabilize longer-term inflation expectations. Looking ahead, the prospective decline in inflation in the euro area is partly due to fortunate circumstances, with energy prices falling from their 2022 peaks and their pass-through effects fading, and with less economic overheating than in economies such as the United States. Implementing similar measures in the face of a more persistent increase in energy prices, or in a more overheated economy, would have caused a more persistent rise in core inflation.
Source: imf.org
Buzzy ETFs Are Closing By the Hundreds
August 30, 2023-Exchange-traded fund managers have rushed to cash in on all sorts of hot investing themes with new offerings. Many of those ideas are now falling flat with investors.
Global fund closures have climbed to 929 in 2023, rising at a record pace from 373 at the same point last year, according to the research firm ETFGI.
New listings still exceed closures but have slowed 27% to 1,622.
Source: wsj.com
Critical minerals demand has doubled in the past five years-here are some solutions to the supply crunch
August 30, 2023--Critical minerals like lithium, cobalt and nickel are vital building blocks for many green technologies.
More investment in critical minerals will boost the chance of meeting global climate targets, the International Energy Agency says.
A secure, abundant and affordable supply of critical minerals is needed to ensure the global energy transition, according to the World Economic Forum.
Investing in critical minerals will boost our chances of meeting global climate goals.
That's the view of the International Energy Agency (IEA), as it published its first report on the outlook for critical minerals, in which every scenario forecast a rapid increase in demand.
Critical minerals play vital roles in green technologies, for example in the construction of wind turbines, electric vehicles and solar panels. Demand for these technologies is rising around the world, with global battery demand one of the key factors in this growth.
Lithium, nickel, cobalt, manganese and graphite are crucial to battery performance, longevity and energy density, according to the IEA.view more
Source: weforum.org
ETFGI reports Crypto ETFs and ETPs listed globally gathered net inflows of US$356 million during July
August 29, 2023--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs ecosystem, reported today that Crypto ETFs and ETPs listed globally gathered net inflows of US$356 million during July. The US$356 Mn of net inflows gathered during July, brings year-to-date net inflows to $598 Mn, which is lower than $794 Mn in net inflows at this point last year.
Assets invested in Crypto ETFs and ETPs listed globally have increased 58.4% year-to-date in 2023 going from US$5.79 Bn at end of 2022 to $9.18 Bn at the end of July, according to ETFGI's July 2023 ETF and ETP Crypto industry landscape insights report, the monthly report which is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Net inflows of $356 Mn into Crypto ETFs and ETPs listed globally during July.
Year-to-date net inflows of $598 Mn are the third highest on record, after YTD net inflows of $4.05 Bn in 2021, followed by YTD net inflows of $794 Mn in 2022.
2nd month of consecutive net inflows.
Assets have increased 58.4% YTD in 2023 going from $5.79 Bn at end of 2022 to $9.18 Bn.
Assets of $9.18 Bn invested in Crypto ETFs and ETPs listed globally at the end of July.
Source: ETFGI
IMF Working Paper-Default Risk and Transition Dynamics with Carbon Shocks
August 25, 2023--Summary:
Climate mitigation policies are being introduced around the world to limit global warming, generating new risks to the economy. This paper develops a continuous time heterogeneous agents model to study the impact of carbon pricing policy shocks on corporate default risk and the consequent transition dynamics.
We derive a closed-form solution to corporate default probability based on firms' intertemporal optimization decisions and explicitly characterize the transition speed. This allows for studying policy implications in an analytically tractable way. The model is calibrated to different US corporate sectors to quantify the heterogeneous effects of carbon price shocks. While carbon-intensive sectors face increased default risks, there are notable asymmetric effects within sectors. Higher carbon prices increase default risk but also induce faster transition towards the new post-shock steady state with a highly non-linear impact. Our results suggest that once a range of possible price shocks are accounted for, the increase in the cost of capital/risk premiums might be sharply different across sectors.
Source: imf.org
Fossil Fuel Subsidies Surged to Record $7 Trillion
August 24, 2023--Scaling back subsidies would reduce air pollution, generate revenue, and make a major contribution to slowing climate change
Fossil-fuel subsidies surged to a record $7 trillion last year as governments supported consumers and businesses during the global spike in energy prices caused by Russia's invasion of Ukraine and the economic recovery from the pandemic.
As the world struggles to restrict global warming to 1.5 degrees Celsius and parts of Asia, Europe and the United States swelter in extreme heat, subsidies for oil, coal and natural gas are costing the equivalent of 7.1 percent of global gross domestic product. That's more than governments spend annually on education (4.3 percent of global income) and about two thirds of what they spend on healthcare (10.9 percent).
Our findings come as the World Meteorological Organization says July was the hottest month on record, underscoring the urgent need to curb human-induced climate change.
Source: imf.org
Emerging economies group BRICS invites 6 new members, including Saudi Arabia and Iran
August 24, 2023--Expansion of the bloc, which also invited Argentina, Egypt, Ethiopia and the United Arab Emirates, was a key agenda item at this week's summit in South Africa.
The BRICS economic coalition of emerging markets on Thursday extended membership invitations to six nations, South African President and current BRICS chair Cyril Ramaphosa said.
The BRICS alliance- which is composed of Brazil, Russia, India, China and South Africa- is set to invite Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join, Ramaphosa said in a speech published on the X social media platform, previously known as Twitter.
Source: nbcnews.com
BIS-Financial stability risks from cryptoassets in emerging market economies
August 22, 2023--In emerging market economies (EMEs), cryptoasset adoption has been on a steady rise. For some users, cryptoassets provide an alternative to limited investment and savings instruments. For others they offer a seemingly safe haven against volatile domestic currencies.
For EME financial authorities, there are serious concerns about their ability to monitor cryptoasset markets and to assess the financial stability risks from cryptoassets. This report studies how vulnerabilities in the nature, structure, composition and function of cryptoasset markets translate into financial stability risks in traditional financial markets. This includes market, liquidity, credit and operational risks, bank disintermediation and capital flow risks.
Source: BIS (Bank for International Settlements)
