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Reserve Currencies in an Evolving International Monetary System
November 17, 2020--Summary:
Despite major structural shifts in the international monetary system over the past six decades, the US dollar remains the dominant international reserve currency. Using a newly compiled database of individual economies' reserve holdings by currency, this departmental paper finds that financial links have been an increasingly important driver of reserve currency configurations since the global financial crisis, particularly for emerging market and developing economies.
The paper also finds a rise in inertial effects, implying that the US dollar dominance is likely to endure. But historical precedents of sudden changes suggest that new developments, such as the emergence of digital currencies and new payments ecosystems, could accelerate the transition to a new landscape of reserve currencies.
view the IMF paper-Reserve Currencies in an Evolving International Monetary System
What is Really New in Fintech
December 17, 2020--The financial industry is undergoing rapid technological change. Traditional banks face competition from online start-ups with no physical branches. Social media and other digital platforms are expanding into payments and credit. The increase in demand for digital services triggered by COVID-19 is turbo-charging this transformation.
The confluence we are witnessing is driving fintech innovation and raises important questions. What are the transformative aspects of recent financial innovation that can uproot finance as we know it? Which new policy challenges will the transformation of finance bring?
Recent IMF and ECB staff research distinguishes two areas of financial innovation. One is information: new tools to collect and analyse data on customers, for example for determining creditworthiness. Another is communication: new approaches to customer relationships and the distribution of financial products. We argue that each dimension contains some transformative components.
Bitcoin tops $20,000 milestone and continues to surge to record highs
December 16, 2020-Bitcoin has blown past the $20,000 mark and continues to hit record highs as investors flock to the cryptocurrency during the coronavirus pandemic.
After topping the symbolic benchmark Wednesday, bitcoin continued to surge late into the evening. It was last trading at roughly $21,851, according to data provider Refinitiv.
Bitcoin (XBT) has been on a tear this year, having tripled in value. It and other cryptocurrencies have been attractive to investors as the US dollar has weakened.
Nigeria: Exxon Mobil Says Will Lower Greenhouse Gas Emissions Intensity By 2025
December 15, 2020--Oil major Exxon Mobil Corp said on Monday it planned to reduce its greenhouse gas emissions over the next five years, an official said.
Pete Trelenberg, the ExxonMobil Director of Greenhouse Gas and Climate Change, said this during a news conference on Monday.
The company added that as investors and climate change campaigners ratchet up the pressure for action to limit global warming.
Glaciers of Global Finance: The Currency Composition of Central Banks' Reserve Holdings
December 15, 2020--The currencies that are being held by central banks as foreign exchange reserves have remained largely steady over decades. Changes in the composition of these holdings can, at best, be described as glacial in pace.
But geopolitical shifts and technological revolutions are reshaping the global economy and the international use of currencies. These forces, and the fallout from the COVID-19 pandemic, could further accelerate the transformations in the reserve holdings of central banks.
The status quo
There are currently around 180 national currencies, but only a few are widely used for international transactions, such as invoicing, paying for imports, and issuing debt or investing abroad. These currencies are the U.S. dollar, the euro, and, to a lesser extent, the Japanese yen, the British pound, and a few others. When crises hit, companies and investors usually seek safety in dollars.
G20 GDP Growth-Third quarter of 2020, OECD-G20 GDP showed a strong recovery in the third quarter of 2020, but remained below pre-pandemic high
December 14, 2020--Gross domestic product (GDP) in the G20 area rebounded by 8.1% in the third quarter of 2020 following the unprecedented falls in the first half of the year due to COVID-19 containment measures. However, GDP remained 2.4% below its pre-crisis high of the final quarter of 2019.
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Among the G20 economies, GDP in India rebounded strongest, by 21.9%, following a fall of 25.2% in the second quarter, the sharpest drop ever recorded.
GDP also rebounded with double-digit numbers in the third quarter, after double-digit falls in the second quarter, in France (by 18.7%, following a contraction of (minus) 13.8%), Italy (by 15.9%, after minus 13.0%), Turkey (by 15.6%, after minus 10.8%), United Kingdom (by 15.5%, after minus 19.8%), South Africa (by 13.5%, after minus 16.6%) and Mexico (by 12.1%, after minus 17.0%). GDP also grew in the other major economies: 8.9% in Canada; 8.5% in Germany; 7.7% in Brazil; 7.4% in the United States; 5.3% in Japan; 3.3% in Australia; 3.1% in Indonesia; 2.7% in China; 2.1% in Korea; and 1.2% in Saudi Arabia.
GDP in the G20 area as a whole remained significantly below the levels of the same quarter a year earlier (minus 2.0%), with only Turkey and China recording positive growth (of 5.4% and 4.9%, respectively), while the United Kingdom experienced the largest fall (minus 9.6%). A similar picture emerges when comparing economic activity in the third quarter with pre-pandemic levels, as approximated by the cumulative growth rate for the first three quarters of 2020.
The Behavior of Fixed-income Funds during COVID-19 Market Turmoil
December 14, 2020--Summary:
This note analyzes the stress experienced (and caused) by open-end mutual funds during the March COVID-19 stress episode, with a focus on global fixed-income funds. In light of increased valuation uncertainty, funds experienced a short period of intense withdrawals while the market liquidity of their holdings deteriorated substantially.
To cover redemptions, afflicted funds predominantly shed liquid assets first-for example, cash, cash equivalents, and US Treasury securities. But forced asset sales amplified price pressures in markets and contributed to liquidity falling across fixed-income markets. This drop in market liquidity, as well as the general stress in financial markets, may have led to fund investors becoming even more sensitive to challenging portfolio performance and encouraged further withdrawals. Only after central banks intervened, directly and indirectly supporting asset managers, did liquidity and redemption stress subside. Overall, the March episode validated the financial-stability concerns about liquidity vulnerabilities in the fund industry and calls for further action to address them.
2020 Year in Review: The impact of COVID-19 in 12 charts
December 14, 2020--This time last year, concepts such as "lockdowns","mask mandates" and "social distancing" were unknown to most of us. Today they are part of our everyday language as the COVID-19 pandemic continues to impact all aspects of our lives.
Through the following 12 charts and graphics, we try to quantify and provide an overview of our colleagues' research in the face of a truly unprecedented crisis.
The New Poor
Over the past 12 months, the pandemic has harmed the poor and vulnerable the most, and it is threatening to push millions more into poverty. This year, after decades of steady progress in reducing the number of people living on less than $1.90/day, COVID-19 will usher in the first reversal in the fight against extreme poverty in a generation.
ETFGI reports assets invested in ETFs and ETPs listed globally reached a new record of US$7.62 trillion at the end of November 2020
December 14, 2020--ETFGI, a leading independent research and consultancy firm covering trends in the global ETFs and ETPs ecosystem, reported today that assets invested in ETFs and ETPs listed globally reached new records of US$7.62 trillion and net inflows reached a new record of US$670.57 billion at the end of November.
ETFs and ETPs listed globally gathered record net inflows of US$131.99 billion during November, bringing year-to-date net inflows to a record US$670.57 billion which is higher than the US$475.53 billion gathered at this point last year, the full year 2019 NNA of US$571.15 billion as well as the prior full year record for net inflows of US$654 billion set at the end of 2017. Assets invested in the global ETFs/ETPs industry have increased by 11.4% from US$6.84 trillion at the end of October 2020, to US$7.62 trillion at the end of November, according to ETFGI's November 2020 Global ETFs and ETPs industry landscape insights report, the monthly report tht is part of an annual paid-for research subscription service. (All dollar values in USD unless otherwise noted.)
Highlights
Assets invested in ETFs and ETPs listed globally reach a new record high of $7.62 trillion at the end of November.
Net inflows reach an all time high of $670.57 Bn beating the prior record of record of $654 billion set at the end of 2017.
Cheap tracker funds trounce private equity
December 12, 2020--Low cost index monitoring funds beat the returns of personal fairness investments over the previous 20 years, in response to a survey of pension schemes.
The findings by CEM Benchmarking, a Toronto-based consultancy, elevate extra questions on claims of superior efficiency by personal fairness.
CEM examined the web returns (after charges) of 330 pension funds and different giant institutional buyers within the US, Canada and remainder of the world between 1996 and 2018.