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Central banks and the BIS explore what a retail CBDC might look like
September 30, 2021--Seven central banks and the BIS take forward their work on retail central bank digital currencies and analyse policy options and practical implementation issues
New set of reports explores how CBDCs could best meet users' future needs through developing interoperable systems that support private innovation while preserving public trust.
Extensive cooperation and dialogue will be required to develop and run a CBDC, preserving the centrality of central bank money for future systems that anchor public trust and support public welfare
For central bank digital currencies (CBDC) to work effectively, public and private institutions need to cooperate to ensure integration with existing payments systems; to anticipate customers' future needs; and to support innovation while preserving public trust, privacy and stability in the broader financial system.
These are the main conclusions of a new set of reports issued by seven central banks and the Bank for International Settlements (BIS) that looked into users, needs, technological design options and financial stability implications of retail or "general purpose" CBDCs.
ETFGI reports record assets and net inflows of US$327 billion and US$109 billion respectively into ESG ETFs and ETPs listed globally at end of August 2021
September 28, 2021--September 28, 2021-- ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today that Environmental, Social, and Governance (ESG) ETFs and ETPs listed globally gathered net inflows of US$11.24 billion during August, bringing year-to-date net inflows to a record US$108.73 billion which is much higher than the US$41.47 billion gathered at this point last year and US$20.25 billion over the full year 2020 record net inflows US$88.45 billion.
Total assets invested in ESG ETFs and ETPs increased by 6.1% from US$308 billion at the end of June 2021 to US$327 billion and 69% YTD in 2021, according to ETFGI's August 2021 ETF and ETP ESG industry landscape insights report, an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Record assets of $327 billion invested in ETFs and ETPs listed globally at the end of August 2021.
Record YTD 2021 net inflows of $108.73 Bn beating the prior record of $41.47 Bn gathered in YTD 2020.
$108.73 Bn YTD net inflows are just $20.25 Bn over full year 2020 record net inflows $88.45 Bn.
$155.7 billion in net inflows gathered in the past 12 months.
Assets increased 69% YTD in 2021, going from US$193 billion at end of 2020, to US$327 trillion.
66th month of consecutive net inflows.
Equity ETFs and ETPs listed globally gathered a record $81.20 Bn in YTD net inflows 2021.
Monetary arithmetic and inflation risk
September 28, 2021--Between 2007 and 2020, the balance sheets of the European Central Bank, the Bank of Japan, and the Fed have all increased about sevenfold. But inflation stayed low throughout the 2010s. This was possible due to decreasing money velocity and the money multiplier. However, a continuation of asset purchasing programs by central banks involves the risk of higher inflation and fiscal dominance.
Fiscal and monetary policy responses to the 2007-2009 global financial crisis (GFC) and the 2020-2021 COVID-19 crisis led to rapid increases in public debt and central bank balance sheets in most advanced economies. However, inflation remained at record-low levels until early 2021. At first glance, this looks like an invalidation of the identities that describe the relationship between money supply and inflation. This entails the risk of over-optimism: downplaying inflation risks in economic policy debates could have negative macroeconomic consequences. In fact, the monetary arithmetic has not stopped working. Rather, changed parameters must be correctly understood, in particular in the context of increased engagement of central banks in public debt financing.
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IMF-Carbon Pricing: What Role for Border Carbon Adjustments?
September 27, 2021--Summary:
This Climate Note discusses the rationale, design, and impacts of border carbon adjustments (BCAs), charges on embodied carbon in imports potentially matched by rebates for embodied carbon in exports. Large disparities in carbon pricing between countries is raising concerns about competitiveness and emissions leakage, and BCAs are a potentially effective instrument for addressing such concerns. Design details are critical, however.
For example, limiting coverage of the BCA to energy-intensive, trade-exposed industries facilitates administration, and initially benchmarking BCAs on domestic emissions intensities would help ease the transition for emissions-intensive trading partners. It is also important to consider how to apply BCAs across countries with different approaches to emissions mitigation. BCAs are challenging because they pose legal risks and may be at odds with the differentiated responsibilities of developing countries. Furthermore, BCAs provide only modest incentives for other large emitting countries to scale carbon pricing-an international carbon price floor would be far more effective in this regard.
Passive investment blamed for inflating stock market bubble
September 27, 2021--Research suggests index funds have insulated US equities from threat of a sustained bear market.
The trillions of dollars that have flooded into passive funds in recent years have inflated valuations, radically reshaping the US stock market and insulating it from the threat of a sustained bear market, research has claimed.
How climate friendly is your capital?
September 24, 2021--To celebrate New York Climate Week, we measured the SDG impact of every US-domiciled fund.
Winter is coming, and soaring gas prices-455% in 12 months-are creating a headache for leaders trying to balance national needs and emissions targets. Good news for the UK: its first green gilt sale drew £10bn to help it meet both demands.
Mark Carney launched the Net Zero Financial Service Providers Alliance: the newest addition to the UN's Race to Zero campaign. Bringing together 17 high-profile inaugural members, the alliance aims to green global financial institutions.
Two little-noticed developments in Australia and the Netherlands underscore the fact that regulators worldwide are ramping up scrutiny of ESG claims, reports the FT. Meanwhile, the SEC is taking aim at traditional materiality tests and greenwashing.
Is the trillion-dollar 'win-win' fantasy of ESG distracting from a real economic reset? Finance can be a source of positive change, writes Kenneth Pucker, but only impact measurement can separate ESG-marketed funds from ESG-committed funds.
Climate change ETFs are undermining the war on global warming by routinely engaging in greenwashing, finds EDHEC.
The impact of COVID-19 on directions and structure of international trade
September 23, 2021--2020 marked some of the largest reductions in trade and output volumes since WWII. Focusing on the COVID-19 pandemic and using the latest monthly and quarterly data on international trade of selected countries and products, this paper documents key shifts in geographical direction and product composition of international trade in 2020.
Trade in services declined by more than twice as much as trade in goods and its recovery has also been slower. While the size of the drop in global trade relative to the drop in output in 2020 was smaller than during the Global Financial Crisis (GFC), this was not related to the overall size of the trade impacts in 2020, but rather reflects the significant heterogeneity of trade and production impacts across specific goods, services and trade partners from COVID-19. Trade in several types of goods plummeted, while that in others increased markedly. As a result, the variation in trade impacts across the different product categories in 2020 was not only larger than during the GFC, but also larger than in any other year during the past two decades. The product structure of countries’ goods trade also changed significantly in 2020, indicating large adjustments. While some international supply chains came under pressure in early months of the pandemic, the data also show that supply chains were instrumental in the resumption of economic activity.
When Do Investors Freak Out?: Machine Learning Predictions of Panic Selling
September 22, 2021-- Abstract
Despite standard investment advice to the contrary, individuals often engage in panic selling, liquidating significant portions of their risky assets in response to large losses.Using a novel dataset of 653,455 individual brokerage accounts belonging to 298,556 households, we document the frequency, timing, and duration of panic sales, which we define as a decline of 90% of a household account's equity assets over the course of one month, of which 50% or more is due to trades.
We find that a disproportionate numberof households make panic sales when there are sharp market downturns, a phenomenonwe call "freaking out".
IMF-Net Zero by 2050-The IEA outlines a path to decarbonize the energy sector in three decades
September 21, 2021--Following a raft of net zero target announcements in 2020 and 2021, scrutiny is mounting about the plans to get there. Some countries have detailed outlines of how they will reduce their emissions to net zero, but many still do not.
Thanks to countries with detailed plans we have an idea of the task at hand to decarbonize at the country level, but it is hard to imagine what it will take on a global basis. This is especially true given that the current global pledges won’t get us to net zero in time to limit the temperature rise to 1.5°C.
view the IEA Net Zero by 2050A Roadmap for the Global Energy Sector
Evergrande crisis entangles ETF investors as fallout spreads
September 21, 2021--Western investors are getting their fingers burnt after piling into exchange traded funds holding China Evergrande debt in an increasingly desperate hunt for yield.
The world's most indebted property developer is battling a serious liquidity ....