Global ETF News Older than One Year
IMF Working Paper-Sovereign Debt
June 17, 2022--Summary:
This paper surveys the literature on sovereign debt from the perspective of understanding how sovereign debt differs from privately issue debt, and why sovereign debt is deemed safe in some countries but risky in others. The answers relate to the unique power of the sovereign.
One the one hand, a sovereign has the power to tax, making debt relatively safe; on the other, it also has control over its territory and most of its assets, making debt enforcement difficult.
The paper discusses debt contracts and the sovereign debt market, sovereign debt restructurings, and the empirical and theoretical literatures on the costs and causes of defaults. It describes the adverse impact of sovereign default risk on the issuing countries and what explains this impact. The survey concludes with a discussion of policy options to reduce sovereign risk, including fiscal frameworks that act as commitment devices, state-contingent debt, and independent and credible monetary policy.
Source: imf.org
How Crypto and CBDCs Can Use Less Energy Than Existing Payment Systems
June 16, 2022--Environmentally conscious design can make a major difference in the energy efficiency of digital currencies.
Most of the world's central banks have already agreed they should help fight climate change, a critical challenge that necessitates reductions in both energy consumption, which is our focus here, and the carbon emissions associated with the energy consumed.
To meet these aims, it's important to pay attention to the energy used by the payment systems that central banks regulate and oversee. Monetary authorities now have a unique opportunity to improve efficiency as the way people pay is undergoing rapid changes worldwide. Digital currencies, from crypto assets to central bank digital currencies, can play a role in the transformation that policymakers envision.
Source: imf.org
OECD G20 GDP growth continues to slow in the first quarter of 2022-First quarter of 2022, OECD
June 14. 2022--In the first quarter of 2022, gross domestic product (GDP) in the G20 area rose by 0.7% quarter-on-quarter according to provisional estimates, down from the 1.3% increase recorded in the fourth quarter of 2021.
The slowdown in the G20 area in Q1 2022 mainly reflects weaker performance in the United States,1 where GDP contracted by 0.4% quarter-on-quarter after rising by 1.7% in Q4 2021. This was mainly due to changes in net trade (exports minus imports) and decreases in inventory investment (destocking) and in government spending on COVID-19 assistance.
In Australia and Indonesia, growth slowed by more than 2 percentage points between Q4 2021 and Q1 2022. Growth slowed to a lesser extent in Canada, China, India, Italy, Korea, Turkey andthe United Kingdom in Q1 2022, while in France and Japan there were GDP contractions of 0.2% and 0.1% respectively.
Source: OECD
The Price of War OECD Economic Outlook, June 2022
June 10, 2022--The world is paying a heavy price for Russia's war in Ukraine. It is a humanitarian disaster, killing thousands and forcing millions from their homes. The war has also triggered a cost-of-living crisis, affecting people worldwide. When coupled with China's zero-COVID policy, the war has set the global economy on a course of slower growth and rising inflation-a situation not seen since the 1970s.
Rising inflation, largely driven by steep increases in the price of energy and food, is causing hardship for low-income people and raising serious food security risks in the world's poorest economies.
Here are the three key take-aways:
The war is slowing the recovery
Inflationary pressures have intensified
The cost of living crisis will cause hardship and risks famine
Source: OECD
ETFs play leading role as investment platforms slash costs
June 10, 2022--Online brokers and apps forecast to be primary source of demand, says PwC research
Exchange traded funds, centre stage in a price war that has sharply reduced the cost of investment vehicles, appear to be playing a leading role in another revolution that is slashing the cost of investing-the proliferation of low or no-fee online platforms and apps.
A recent survey by PwC of industry participants representing around 80 per cent of global ETF assets found that online platforms were now forecast to be the primary source of future ETF demand.
Source: ft.com
Global Wealth Hit Record High of $530 Trillion in 2021
June 9, 2022--Asian wealth is growing faster than in any other region
World's wealth set to keep rising despite economic headwinds
Global wealth rose 10.6% last year to reach a record high of $530 trillion in 2021 and is set to continue rising in all regions despite inflationary pressures and Russia's invasion of Ukraine.
Strong equity markets and a surge in demand for real assets such as property, wine and art drove the increase, according to a report by Boston Consulting Group. About $80 trillion of new wealth is likely to be created over the next five years.
Source: bloomberg.com
May Bond Bounce Sees Record ETF Flows
June 9, 2022--There were record inflows to fixed-income ETFs in May across a range of segments as economic fears spurred a broad bond rally.
Exchange-traded funds tracking government debt lured $18.7 billion with muni products adding $6.1 billion.
Almost $7.2 billion poured into ultra-short duration funds and short duration ETFs scooped up $9.4 billion. All were new monthly records.
Funds that buy bank loans were among the losers, seeing almost $1 billion exit in the first net outflow for the group since 2020.
Source: bloomberg.com
How Replacing Coal With Renewable Energy Could Pay For Itself
June 8, 2022--The world may gain an estimated $78 trillion over coming decades by making this energy transition.
International negotiators can't agree on how to phase out coal, in part because of opposition to carbon taxes, and now even countries that had been able to abandon the fuel are reversing that progress as the war in Ukraine raises energy prices.
The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but we show in new research that the economic benefits would far outweigh the costs.
We analyze this great carbon arbitrage, as we call it, in a recent working paper that calculates the cost of replacing coal with renewables, as well as the social benefits of this important transition.
Source: IMF.org
BIS-Blockchain scalability and the fragmentation of crypto
June 7, 2022--Key takeaways
Permissionless blockchains work by providing monetary incentives to decentralised validators. Yet the mechanism for maintaining these incentives necessarily entails congestion effects and high fees. These high fees encourage the use of alternative chains, leading to a fragmentation of the crypto landscape.
Newer blockchains have higher capacity, even if these come at the cost of greater centralisation and weaker security. Differences in the design also preclude blockchain interoperability.
Limited scalability and a lack of interoperability not only prevent network effects from taking root, but a system of parallel blockchains also adds to governance and safety risks.
view the BIS Bulletin No 56 Blockchain scalability and the fragmentation of crypto
Source: bis.org
IMF-Fintech Notes-Digital Currencies and Energy Consumption
June 7, 2022--Summary:
Whether in crypto assets or in CBDCs, design choices can make an important difference to the energy consumption of digital currencies. This paper establishes the main components and technological options that determine the energy profile of digital currencies. It draws on academic and industry estimates to compare digital currencies to each other and to existing payment systems and derives implications for the design of environmentally friendly CBDCs.
For distributed ledger technologies, the key factors affecting energy consumption are the ability to control participation and the consensus algorithm. While crypto assets like Bitcoin are wasteful in terms of resources, other designs could be more energy efficient than existing payment systems.
Source: IMF.org
