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In Part I of this post, we discussed “expiring” digital cash as a possible type of programmable money, which a central bank (in coordination with government) could issue and distribute to people during severe recessions or events like pandemics or calamities, when higher uncertainty makes people spend less. We argued that the instrument could be a most … Read more
The growth of passively managed and exchange-traded funds (ETFs) has been a notable recent development in fund management. The assets held by ETFs have increased even more rapidly than those of the industry, and now account for more than 20% of the NYSE market capitalization (and about a third of its traded volume).1 This has been especially the … Read more
Central bankers in emerging market and developing economies (EMDEs) have been seeking policy tools other than the traditional interest rate policy. The reason is that these economies are vulnerable to financial disruptions due to sharp reversals in capital inflows, known as sudden stops, where foreign investors suddenly withdraw their funds. Yet the use of so-called unconventional monetary … Read more
Green Financial Sector Interventions (GFSIs) are financial policies, regulations, and instruments that governments can use to direct private finance away from high-carbon investments and toward more climate-smart — or green — investment. This shift provides needed funding for climate action and protects financial institutions and systems against climate risk. GFSIs are part of a trend … Read more
Despite improvement over the last decade, financial inclusion in the Middle East and North Africa (MENA) region remains relatively low. According to the Global Findex, only 53% of adults in MENA have an account (including mobile money) as of 2021, up from 38% in 2011. By comparison, the same headline indicator for Sub-Saharan Africa in 2021 stood … Read more
Getting a bank loan for the first time enables an individual to enter a virtuous lending circle. This loan allows obtaining credit reports, which will be used by the bank and its competitors to analyze new credit requirements from then onward (figure 1). How do individuals get in this loop? Banks usually make their lending … Read more
Climate risks and climate policies are expected to have a major impact on the financial system. In recent years, financial authorities have required banks to embed climate risks into their risk management frameworks, including in their Internal Capital Adequacy Assessment Process, the so-called ICAAP. While some policy makers are exploring the explicit use of prudential … Read more
Although it is a factor in financial inclusion and development, the growth of mobile banking in Sub-Saharan Africa (SSA) has nonetheless gone hand in hand with a growing gender gap in financial inclusion. This unexpected consequence of financial digitalisation calls for a rethink of development policies. Chart 1. Bank coverage (adult population with an account, … Read more
The financial industry has undergone several changes in recent years: the emergence of new technologies, the entry of fintechs, and the transition from a physical branch- based business model to an increasing reliance on digital services. These trends can foster competition and the democratization of financial services. In our recent working paper, we investigate how the … Read more
What fresh apocalypse is this? In a world already acutely attuned to end-times, it’s increasingly hard to keep track of all the fictional dystopias that books and movies and TV shows seem so eager to throw at us like Mardi Gras beads. (You get a plague! You get a plague!) But Armageddon, of course, is … Read more