Global ETF News Older than One Year
Greening (runnable) brown assets with a liquidity backstop
March 1, 2021--Summary
Focus
The momentum toward greening the economy brings with it a number of new transition risks, which, if not properly addressed, may threaten financial stability. In particular, the expectation that other investors may exclude high carbon corporate emitters from their portfolio creates a risk of runs on brown assets. Understanding and acknowledging this new source of financial instability is essential for government agencies in charge of preserving the soundness of financial systems.
Contribution
We analyse whether a market economy where polluting firms are subject to a run risk can sufficiently incentivise those firms to reduce their carbon emissions, and how the laissez faire allocation fares relative to one that could be provided by policymakers. We postulate that uncertainty on the level of carbon-emission intensity that will be tolerated by consumers, investors or regulators can result in runs on significant shares of financial assets. In this context, we propose a liquidity backstop facility that helps restore efficiency. We show how offering such a backstop, whose access fee is proportional to the carbon emission of corporates, can prevent such runs while greening output.
Source: BIS
Renewable energy: common myths debunked
March 1, 2021--Outdated misconceptions about the reliability and affordability of renewable energy must be challenged.
The transition to renewable energy is being driven by consumer demand and is happening faster than previously thought.
Grids of the future are already being built -buildings equipped with microgrids connected by software.
Critics of renewable energy often cite two reasons for why they think a transition from fossil fuels will take half a century.
Firstly, that sources of renewable energy are too intermittent to be reliable and secondly, that governments cannot bear the costs of switching entire economies to clean energy.
It’s about time these assumptions were challenged. These perceived obstacles for the mass adoption of clean, renewable energy technologies are quickly becoming outdated.
Myth: intermittency makes renewable energy unreliable
Conventional thinking has long held that renewable energy intermittency makes solar, wind and other green alternatives too unreliable. Thankfully, rapid technological innovation in recent years means this myth outdated.
It’s true that solar energy is only produced when the sun is shining on solar panels. Likewise, wind energy is dependent on the ebb and flow of air currents. But the sheer volume of renewable energy being deployed, the ability to store that energy for longer, and to match demand with supply using software, creates a balanced grid.
Source: World Economic Forum
The Haves and Have-nots Of the Digital Age
March 1, 2021--Accelerated by the pandemic,the digital future is coming at us faster than ever before,and maybe faster than we can imagine. In this issue of Finance & Development magazine, we explore the possible consequences-the good,the bad,and the gray.
For millions,technology has been a lifeline, changing the way we work, learn,shop, and entertain ourselves. In a year like no other, it has spurred game-changing digital shifts. Governments moved quickly,using mobile solutions to provide cash assistance; financial technology has helped the survival, and in some cases, growth of small-and medium-sized businesses; and the first national digital currency, in The Bahamas, provides a glimpse of the future of money.
Source: IMF
Tourism in a Post-Pandemic World
February 26, 2021--Tourism continues to be one of the sectors hit hardest by the COVID-19 pandemic, particularly for countries in the Asia-Pacific region and Western Hemisphere. Governments in these regions, and elsewhere, have taken measures to ease the economic shock to households and businesses, but longer-term the industry will need to adapt to a post-pandemic "new normal."
If you are hesitant to hop on a plane these days, you are not alone. According to the United Nations World Tourism Organization (UNWTO), tourist arrivals are estimated to have fallen 74 percent in 2020 compared to 2019.
Source: IMF
Groundbreaking Research Reveals the Financiers of the Coal Industry
February 25, 2021--US investors hold 58% of institutional investments in the coal industry
Commercial banks providing more money to the coal industry than in 2016
Japanese banks are top lenders, Chinese banks top underwriters
Today, Urgewald, Reclaim Finance, Rainforest Action Network, 350.org Japan and 25 further NGO partners published groundbreaking research on the financiers and investors behind the global coal industry.
"Our new research, however, analyzes financial flows to all 934 companies on the Global Coal Exit List (GCEL)1," says Katrin Ganswindt, head of financial research at Urgewald.Top Institutional Investors in the Coal Industry. In January 2021, 4,488 institutional investorsheld investments totaling US$ 1.03 trillion in companies operating along the thermal coal value chain. Among the investors covered by the NGOs' research are pension funds, mutual funds, asset managers, insurance companies, hedge funds, commercial banks, sovereign wealth funds and other types of institutional investors. The world's largest institutional investor in the coal industry is the US mutual fund company Vanguard with holdings of almost US$ 86 billion. It is closely followed by BlackRock, which holds investments of over US$ 84 billion in the coal industry.Together, these two investment giants account for 17% of institutional investmentsin the global coal industry.
Source: reclaimfinance.org
Structural Factors and Central Bank Credibility Limit Inflation Risks
February 19, 2021--After ending last year with unexpectedly strong vaccine success and hope that the pandemic and economic distress it caused would recede, we woke up to the reality of new virus variants and the unpredictable, winding road that it can lead the world down.
Something similar has happened with the discourse on inflation. At the end of last year, after a historic collapse of the global economy estimated at -3.5 percent, inflation was below target in 84 percent of countries. This was expected to allow for continued low interest rates and government spending to support growth, especially in advanced economies. The U.S. plan for an additional $1.9 trillion of fiscal spending has challenged this view, with even traditionally dovish economists raising concerns about an overheated economy that could push inflation well above the comfort zone of central bankers.
Source: IMF
Bitcoin Hits $1 Trillion Value as Crypto Jump Tops Other Assets
February 19, 2021--Price of largest digital token surges to as much as $55,736.29
Rally has stoked a more than 100% jump in crypto index in 2021
Bitcoin's market value reached $1 trillion for the first time, a surge that's helping cryptocurrency returns far outstrip the performance of more traditional assets like stocks and gold.
The largest digital-asset has added more than $450 billion of value in 2021 to more than $1 trillion, data compiled by Bloomberg show. The Bloomberg Galaxy Crypto Index, which includes Bitcoin and four other coins, has more than doubled.
Source: bloomberg.com
More than 10% of ETFs have changed their index, data show
February 18, 2021--Investors should read communications and check their holdings regularly, industry figures suggest.
Exchange traded funds climbed to prominence on their promise of a low-fee, broad-based approach with a relatively safe path for investors who followed a long-term, buy-and-hold regimen.
However, data from TrackInsight suggest that advice might need updating. The findings show that 11 per cent of ETFs have changed the index they are benchmarked against in some way, and that on average those that did so made the change 5.6 years after they launched.
Source: FT.com
These are the countries where cryptocurrency use is most common
February 18, 2021--Cryptocurrency use is on the rise, with 33% of Nigerians either using or owning cryptocurrency, according to a recent survey.
Cryptocurrency has become popular as a cheaper solution to sending money across borders.
According to bitcoin.com, the Philippines' Central Bank has approved several crypto exchanges to operate as "remittance and transfer companies" in the country.
Reliance on remittances and the prevalence of peer-to-peer phone payments have led to a steep rise of cryptocurrency use in Africa's largest economy. Out of 74 countries in the Statista Global Consumer Survey, Nigerians were the most likely to say they used or owned cryptocurrency.
Source: World Economic Forum
Public and Private Money Can Coexist in the Digital Age
February 18, 2021-We value innovation and diversity-including in money. In the same day, we might pay by swiping a card, waving a phone, or clicking a mouse. Or we might hand over notes and coins, though in many countries increasingly less often.
Today's world is characterized by a dual monetary system, involving privately-issued money-by banks of all types, telecom companies, or specialized payment providers-built upon a foundation of publicly-issued money-by central banks. While not perfect, this system offers significant advantages, including: innovation and product diversity, mostly provided by the private sector, and stability and efficiency, ensured by the public sector.
Source: IMF
