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Investors pump record sums into leveraged ETFs
November 13, 2022--The bullish bets, equivalent to more than 5% of all ETF purchases, mean losses were magnified
Investors have poured record sums into high-risk leveraged funds this year in spite of the collapse in financial markets.
The funds, designed to magnify any market gains, also deepen any losses if asset prices fall, meaning many investors are likely to have been left badly out of pocket as stock markets have tumbled this year.
IMF Working Paper-U.S. and Euro Area Monetary and Fiscal Interactions During the Pandemic: A Structural Analysis
October 11, 2022--Summary:
This paper employs a two-country New Keynesian DSGE model to assess the macroeconomic impact of the changes in monetary policy frameworks and the fiscal support in the U.S. and euro area during the pandemic.
Moving from a previous target of "below, but close to 2 percent" to a formal symmetric inflation targeting regime in the euro area or from flexible to average inflation targeting in the U.S. is shown to boost output and inflation in both regions.
Meanwhile, the fiscal packages approved in the U.S. and the euro area, and a slower withdrawal of fiscal support in the euro area, have a similar impact on output and inflation as changing the monetary policy frameworks . Simultaneously implementing these policies is mutually reinforcing, but insufficient to fully explain the unexpected increase in core inflation during 2021.
IOSCO outlines regulatory priorities for sustainability disclosures, mitigating greenwashing and promoting integrity in carbon markets
November 9, 2022--The International Organization for Securities Commissions (IOSCO) today at COP 27 has outlined the actions it undertakes to protect investors by mitigating greenwashing in financial markets, to contribute to sustainability disclosure standards benefitting issuers and investors, and to promote well-functioning carbon markets.
Sustainability disclosures: timely disclosure and assurance standards
IOSCO has set out its expectations that both disclosures and assurance standards should be ready for use by corporates for their end-2024 accounts. Corporate disclosures underpin valuations in financial markets; sustainability disclosures will play the same role.
Here's how central bank digital currencies impact the global economy
November 9, 2022--Central banks are increasingly exploring the idea of having their own digital currencies.
There are 3 key arguments in favour of such a move, including the need to evolve monetary systems as transactions involving physical cash decline.
There are potential challenges and implications for monetary policy, but benefits could include improved privacy standards around payments.
Central banks around the world are exploring the case for central bank digital currency (CBDC) - essentially a digital version of cash (Nielpelt 2021). In a new paper (Ahnert et al. 2022a), we provide an overview of the economics of CBDC. First, we outline the economic forces that shape the rise of digital money and motivate the current debate. We then look at the implications for monetary policy and financial stability before discussing policy issues and challenges. Finally, we highlight several areas where our understanding of digital money could be improved by further research.
ETF investors turn bullish in October
October 7, 2022--Net inflows of $111.5bn were triple that of September and the highest since March
Exchange traded fund buyers turned bullish in October, suggesting some investors believed global equity and bond markets may be approaching their nadir after 12 months of painful losses.
Net inflows to ETFs surged to $111.5bn globally, according to data from BlackRock, triple that of September and the highest reading since March.
Trade must be a cornerstone of climate action, urges World Trade Report released at COP27
November 7, 2022--The 2022 edition of the WTO's World Trade Report presents new analysis and recommendations on how international trade and greater cooperation can amplify global efforts to address climate change and put the planet on a sustainable trajectory.
The WTO's flagship publication, released on 7 November at the 27th United Nations Climate Change Conference (COP27) in Sharm el-Sheikh, Egypt, also examines the consequences of climate change on trading patterns and future prosperity.
view the World Trade Report 2022 Climate change and international trade
Eight warmest years on record witness upsurge in climate change impacts
Eight warmest years on record witness upsurge in climate change impacts
November 6, 2022--Sea level rise accelerates, European glacier melt shatters records, extreme weather causes devastation
The past eight years are on track to be the eight warmest on record, fuelled by ever-rising greenhouse gas concentrations and accumulated heat.
Extreme heatwaves, drought and devastating flooding have affected millions and cost billions this year, according to the World Meteorological Organization's provisional State of the Global Climate in 2022 report.
The tell-tale signs and impacts of climate change are becoming more dramatic. The rate of sea level rise has doubled since 1993. It has risen by nearly 10 mm since January 2020 to a new record high this year. The past two and a half years alone account for 10 percent of the overall rise in sea level since satellite measurements started nearly 30 years ago
IMF Staff Climate Note-Getting on Track to Net Zero: Accelerating a Global Just Transition in This Decade
November 4, 2022--Summary:
To contain global warming to between 2°C and 1.5°C, global greenhouse gas emissions must be cut 25 to 50 percent below 2019 levels by 2030. Even if fully achieved, current country pledges would cut global emissions by just 11 percent. This Note presents illustrative options for closing this ambition gap equitably and discusses their economic impacts across countries.
Options exist to accelerate a global just transition in this decade, involving greater emission reductions by high-income countries and climate finance, but further delays in climate action would put 1.5°C beyond reach. Global abatement costs remain low under 2°C-consistent scenarios, with burdens rising with income levels. With efficient policies of carbon pricing with productive revenue use, welfare costs become negative when including domestic environmental co-benefits, before even counting climate benefits. GDP effects from global decarbonization remain uncertain, but modeling suggests they exceed abatement costs especially for carbon-ntensive and fossil-fuel-exporting countries. Ratcheting up climate finance can help make global decarbonization efforts more progressive.
Countries Could Cut Emissions by 70% by 2050 and Boost Resilience with Annual Investments of 1.4% of GDP
November 3, 2022--Low-and middle-income countries can transition to low-carbon, resilient growth pathways if key conditions are met with international support
Investing an average of 1.4% of GDP annually could reduce emissions in developing countries by as much as 70% by 2050 and boost resilience,according to a new report from the World Bank Group.
The analysis,Climate and Development: An Agenda for Action,compiles and harmonizes results from the Bank Group's Country Climate and Development Reports,covering over 20 countries that account for 34% of the world's greenhouse gas (GHG) emissions. It shows that investment needs are markedly higher in lower-income countries which are more vulnerable to climate risk,often exceeding 5% of GDP.
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Inflation's paradigm shift, explained
November 3, 2022--Optimists initially described the global inflationary surge as transitory-the reality of the situation is anything but.
Increasingly, experts suggest that higher prices may prove more intransigent and volatile than expected.
Efforts to rein in the price spike are further complicated since many inflationary factors transcend the mandate of any one monetary authority.
The global economy is under attack from an insidious force: inflation. How entrenched in the psyches of consumers, corporates and investors future inflation expectations become will foretell the durability of the foe, and its corrosive impact on the global economy, for (potentially) years to come.
Economic forecasts remain sanguine about the future level of inflation: testament to the confidence maintained in central bankers’ abilities to squash it. Yet convictions can shift rapidly, shredding widely held conventions.