Global ETF News Older than One Year
Global Banks May Grow More Vulnerable to a Dollar Disruption
October 11, 2019--When a Mexican airline buys Brazilian airplanes, it's likely to finance the purchase with a US dollar loan obtained from a non-US bank. That's just one example of the dollar's outsize role in international financial transactions between non-US counterparts.
What happens if non-US banks suddenly find themselves short of dollars? That was the case during the global financial crisis of 2007-2008, when US financial firms were reluctant to lend dollars to their foreign counterparts. To prevent the collapse of the global financial system, the Federal Reserve provided more than $500 billion in emergency funds to overseas central banks, which could then on-lend the money to their dollar-starved home-country banks.
Source: IMF
IMF Working Paper-Macroeconomic Effects of Reforms on Three Diverse Oil Exporters: Russia, Saudi Arabia, and the UK
Summary:
We build and estimate open economy two-bloc DSGE models to study the transmission and impact of shocks in Russia, Saudi Arabia and the United Kingdom. After accounting for country-specific fiscal and monetary sectors, we estimate their key policy and structural parameters.
Our findings suggest that not only has output responded differently to shocks due to differing levels of diversification and structural and policy settings, but also the responses to fiscal consolidation differ: Russia would benefit from a smaller state foot-print, while in Saudi Arabia, unless this is accompanied by structural reforms that remove rigidities, output would fall. We also find that lower oil prices need not be bad news given more oil-intensive production structures. However, lower oil prices have hurt these oil producers as their public finances depend heavily on oil, among other factors. Productivity gains accompanied by ambitious structural reforms, along with fiscal and monetary reforms could support these economies to achieve better outcomes when oil prices fall, including via diversifying exports.
Source: IMF
Pension Policies Must Keep Up with Rapidly Aging Societies, says World Bank
October 10, 2019-New Publication Presents Evidence to Further Understanding of Pension Reform Options
A new publication on pension reform examines nonfinancial defined contribution (NDC) pension schemes as an approach to help policymakers meet the challenges brought on by rapidly aging populations and the changing nature of work, says the World Bank.
In a world in which working lives will be increasingly longer, and demands for social care services will expand, pension systems will need to be reformed to ensure workers are protected and do not fall into poverty in old age.
Titled "Progress and Challenges of Nonfinancial Defined Contribution Pension Schemes", this publication brings together evidence on NDCs pension schemes and reforms more broadly to bear on today's labor market. NDC is a type of public pension system in which workers pay contributions to finance the benefits of current retirees, similar to traditional public pension schemes. However, unlike the latter, the NDC approach factors in automatic adjustments based on demographic changes, a key advantage given the increased aging and decreased fertility in many societies today.
Source: World Bank
Report sets out governance of key OTC derivatives data elements
October 9, 2019--A new report identifies key criteria, functions and bodies for the governance arrangements for a set of critical data elements for over-the-counter (OTC) derivative transactions reported to trade repositories, excluding the Unique Transaction Identifier (UTI) and the Unique Product Identifier (UPI).
The report, Governance arrangements for critical OTC derivatives data elements (other than UTI and UPI), published by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO), is a further step towards fulfilling the Group of 20's commitment to report all OTC derivatives contracts to trade repositories.
Source: BIS
US-China trade war may cost US$700 billion by 2020 in synchronised global slowdown, new IMF chief says
October 8, 2019--Global growth rate this year is expected to slow to lowest rate in a decade, new IMF head Kristalina Georgieva says
Global corporate debt at risk of default in event of global downturn would be higher than during global financial crisis, the economist warns
The trade war between China and the United States could cost an increasingly fractured global economy about US$700 billion, or 0.8 per cent of gross domestic product, by 2020, Kristalina Georgieva said in her maiden speech as International Monetary Fund chief on Tuesday.
Source: scmp.com
Bassanese Bites: On the brink
October 8, 2019--Global Markets
Last week provided further tangible signs that the trade-induced slowdown in the global economy was finally filtering through to the United States, which seemingly should make US President Trump more prepared to strike a deal with China sometime soon.
Adding to the trade angst last week was the World Trade Organisation’s decision to let the US impose tariffs on EU aircraft imports-owing to the latter's unlawful Airbus subsidies.
In my view, if these festering trade tensions are not resolved soon, a global recession-and ugly bear market-awaits us by early 2020. The stakes are now that high. The world's 4th largest economy-Germany-is now in recession, with factory orders slumping further overnight.
Source: BetaShares
Global Value Chains Have Spurred Growth but Momentum Is Flagging
October 8, 2019--Report Shows Path for Developing Countries to Achieve Better Growth Outcomes
In an era of slowing trade and growth, developing countries can achieve better outcomes for their citizens through reforms that boost their participation in global value chains. These reforms can help them expand from commodity exports to basic manufacturing, while ensuring that economic benefits are shared more widely across society, a new World Bank Group report concludes
The World Development Report 2020: Trading for Development in the Age of Global Value Chains marks the World Bank Group's first trade'focused development report since the late 1980s. It finds that global value chains have powered an economic transformation ever since, allowing the poorest countries to quickly climb the development ladder. Such chains enable developing countries to specialize and grow wealthier without having to build whole industries from scratch.
Changing mining practices and greening value chains for a low carbon-world
October 7, 2019--Drivers of change-from the affordability of renewable energy to government policies to the world's commitment to reduce CO2 emissionshave created the perfect environment for the rise of low-carbon technology. Although it is not widely recognized, clean energy technologies such as wind, solar and batteries are actually more material intensive than current traditional fossil-fuel-based energy systems.
Meanwhile, demand for minerals and metals such as copper, lithium, cobalt, graphite and nickel-all of which are used in used in low-carbon technologies-will gather pace in the future and sustainable and reliable extraction and production will need to keep up. According to the World Bank's own analysis, global production of critical minerals used in low-carbon technologies is projected to rise by 965% for lithium, 585% for cobalt, 383% for graphite, 241% for indium, 173% for vanadium by 2050.
Source: World Bank
DTCC Pushes Back Blockchain Project to Avoid Brexit Complications
October 4, 2019--The Depository Trust & Clearing Corporation (DTCC) has pushed back the release of its blockchain-based post-trade system for derivatives by several months, in part because of complications created by Brexit.
The official line from the U.S. central securities depository (CSD) is that the delay, which has not been previously reported, is to allow for additional testing of the revamped trade information warehouse (TIW).
Source: coindesk.com
Debt Stocks of Developing Countries Rose to $7.8 Trillion in 2018: World Bank International Debt Statistics
October 2, 2019--Net Debt Flows Fell 28% to $529 Billion; Debt Burdens Rising
Total external debt of low- and middle-income countries climbed 5.3 percent to $7.8 trillion last year, while net debt flows (gross disbursements minus principal payments) from external creditors tumbled 28 percent to $529 billion, the World Bank's International Debt Statistics 2020 shows.
Although on average the external debt burden of low- and middle-income countries was moderate, several countries have been on a deteriorating debt trajectory since 2009, the report indicates. The share of low- and middle-income countries with debt-to-GNI ratios below 30 percent has shrunk to 25 percent, down from 42 percent ten years ago. Similarly, the share of countries with high debt-to-export ratios has climbed.
Source: World Bank
