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State Street: custody battle
January 17, 2019--Custodian banks are being squeezed by the shift from active to low-cost passive funds.
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IMF Working paper-Tech in Fin before FinTech: Blessing or Curse for Financial Stability?
January 17, 2020--Summary:
Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders' information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware used in US commercial bank branches after mapping them to their parent bank.
We find that higher intensity of IT-adoption led to significantly lower non-performing loans when the crisis hit: banks with a one standard deviation higher IT-adoption experienced 10% lower non-performing loans. High-IT-adoption banks were not less exposed to the crisis through their geographical footprint, business model, funding sources, or other observable characteristics. Loan-level analysis indicates that high-IT-adoption banks originated mortgages with better performance and did not offload low-quality loans. We apply a simple text-analysis algorithm to the biographies of top executives and find that banks led by more "tech-oriented" managers adopted IT more intensively and experienced lower non-performing loans during the crisis. Our results suggest that technology adoption in lending can enhance financial stability through the production of more resilient loans.
view the IMF Working Paper-Monetary Policy Is Not Always Systematic and Data-Driven: Evidence from the Yield Curve IMF Working Paper-Predicting Downside Risks to House Prices and Macro-Financial Stability view the IMF Working Paper-Predicting Downside Risks to House Prices and Macro-Financial Stability IEA says oil stocks, non-OPEC output to buffer market from shocks
"Today's market, where non-OPEC production is rising strongly and OECD stocks are 9 million barrels above the five-year average, provides a solid base from which to react to any escalation in geopolitical tension," the IEA said. Climate change will reshape markets, McKinsey warns Climate risk and response: Physical hazards and socioeconomic impacts January 2020|Report Systematic funds suffer 'quant winter' BlackRock Responds to Demands for Stronger Climate Action with Bold New Commitments IMF-FinTech Note-Regulation of Crypto Assets
January 17, 2020--Summary:
Does monetary policy react systematically to macroeconomic innovations? In a sample of 16 countries-operating under various monetary regimes-we find that monetary policy decisions, as expressed in yield curve movements, do react to macroeconomic innovations and these reactions reflect the monetary policy regime.
While we find evidence of the primacy of the price stability objective in the inflation targeting countries, links to inflation and the output gap are generally weaker and less systematic in money-targeting and multiple-objective countries.
January 17, 2020--January 17, 2020--Summary:
This paper predicts downside risks to future real house price growth (house-prices-at-risk or HaR) in 32 advanced and emerging market economies. Through a macro-model and predictive quantile regressions, we show that current house price overvaluation, excessive credit growth, and tighter financial conditions jointly forecast higher house-prices-at-risk up to three years ahead.
House-prices-at-risk help predict future growth at-risk and financial crises. We also investigate and propose policy solutions for preventing the identified risks. We find that overall, a tightening of macroprudential policy is the most effective at curbing downside risks to house prices, whereas a loosening of conventional monetary policy reduces downside risks only in advanced economies and only in the short-term.
January 16, 2020--Surging oil production from non-OPEC countries led by the United States along with abundant global stocks will help the market weather political shocks such as the U.S.-Iran stand-off, the International Energy Agency (IEA) said on Thursday.
"For now the risk of a major threat to oil supplies appears to have receded," the Paris-based IEA said in a monthly report.
January 16, 2020-Financial markets could face upheaval if the risks of climate change are not taken more seriously, McKinsey warned in a report on Thursday.
Even climate-conscious investors, companies and regulators could be wrongfooted as slight increases in global temperatures threaten to create havoc, the consultancy said.
"Markets have been premised on the context of a relatively stable climate," said Jonathan Woetzel, one of the report's authors. "But there is an edge where risks can spike, which calls into question the capacity of the system."
January 16, 2020--After more than 10,000 years of relative stability-the full span of human civilization—the Earth’s climate is changing. As average temperatures rise, climate science finds that acute hazards such as heat waves and floods grow in frequency and severity, and chronic hazards, such as drought and rising sea levels, intensify.
In this report, we focus on understanding the nature and extent of physical risk from a changing climate over the next one to three decades, exploring physical risk as it is the basis of both transition and liability risks.
January 16, 2020--Automated investing is on the rise, but many funds are struggling to meet expectations.
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January 14, 2020--The company still remains the largest investor in coal, oil, gas, and the companies driving deforestation.
January 14, 2020--Today, after more than a year of increasing pressure from climate activists, investors, legislators, and thought leaders, BlackRock CEO Larry Fink, in his highly-anticipated annual letter, announced a sweeping new set of policies which aim to put climate change and sustainability at the center of BlackRock's business model. BlackRock is the world's largest asset manager with almost $7 trillion in assets under management.
In response to today's announcement Diana Best, Senior Strategist for the Sunrise Project which is a core partner of the BlackRock's Big Problem campaign, said: “BlackRock's new initiatives match the size of the crisis we're seeing in 2020 and are the direct result of an outpouring of pressure from the global climate movement.
January 10, 2020--Summary:
The rapid growth of crypto assets has raised questions about the appropriate regulatory perimeter and the ability of the existing regulatory architecture to adapt to changing conditions.
Effective regulation of financial services promotes long-term economic stability and minimizes the social costs and negative externalities from financial instability. The same underlying principles for regulation should apply to nascent products and services based on innovative technologies, notwithstanding design challenges.
