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Byline: Radi Khasawneh The London Metal Exchange (LME) has said it is considering a paper to poll clients on whether metals from Russia should continue to be allowed in its [...]

Byline: Ramla Soni Bond and repo trade body the International Capital Market Association (ICMA) has published a white paper on environmental, social and governance (ESG) practices in China, detailing ESG [...]

In September, IAASA published its most recent Observations paper, Observations on Selected Financial Reporting Issues--Years Ending On or After 31 December 2021. While directed primarily at the comparatively small number [...]

Byline: Radi Khasawneh The Bank for International Settlements (BIS) has warned regulators to be aware of the risks associated with financial firms' increasing reliance on a handful of large technology [...]

Changes at the core After years of relative stability, disciplines associated with Chartered Accountancy are about to undergo significant change, a key source of which will be legal and regulatory [...]

Byline: Thomas Helm The document airs some of the most important and controversial questions around efforts to incorporate ESG risks into the Basel III framework Market participants have welcomed the [...]

Byline: Radi Khasawneh The Bank for International Settlements (BIS) has warned regulators that clarity is needed on potential manipulation of cryptocurrency by the miners that update the ledgers. The note, [...]

Byline: Luke Jeffs Regulators and the industry at large should “consider further” the measures taken by clearing houses to avoid the spikes in margin calls during March 2020 as the [...]

Minister for Public Expenditure and Reform, Michael McGrath TD, recently launched Chartered Accountants Ireland's position paper on public sector accounting reforms. The paper outlines the benefits and implications of the [...]

The Institute has published its annual Next Financial Year position paper, with a focus on improving government policy for businesses on the island of Ireland without a need for additional [...]

Public debt in developing economies rose at a fast clip during 2020-2021, at least partly due to the onset of the global COVID-19 pandemic. Nobel laureate Paul Krugman opined in early 2021 that 'fighting covid is like fighting a war.' This paper empirically examines trends in debt and economic growth around the onset of three types of calamities, namely natural disasters, armed conflicts, and external debt distress in developing countries. The estimations provide quantitative estimates of differences in GDP growth and debt trends in economies suffering episodes of calamities relative to the trends observed in economies not experiencing calamities. The paper finds that debt and growth evolve quite differently depending on the type of calamity. With the empirical evidence in hand, the authors argue that debt-financed reconstruction efforts after natural disasters, and thus plausibly in the aftermath of the pandemic, can help accelerate growth after such disasters with lower debt burden than in the aftermath of episodes of armed conflict without necessarily incurring the economic costs associated with episodes of debt restructuring. However, the implied upward trajectory of the debt to GDP ratio in developing economies is not trivial, even after post-disaster growth upticks, which raises concerns about long-term debt sustainability after episodes of reconstruction after natural disasters. If so, the time for orderly preemptive debt restructuring might be approaching quickly since recoveries after debt defaults tend to be more costly. JEL Classification Q54 * E6 * H6, 1 Introduction 'Fighting Covid is like fighting a war.' Paul Krugman, New York Times, February 7, 2021. At the time of writing, the COVID-19 pandemic was still ravaging the world. [...]

Byline: Alfie Crooks HIG Capital, an alternative investment firm, has agreed to purchase a paper producing portfolio company of Lindsay Goldberg, including the outfit's 433MW portfolio of thermal plants spread [...]

Byline: Lisa Botter CEP Renewables, CS Energy and NJR Clean Energy Ventures (CEV) have converted a former contaminated brownfield into a 17MW solar project in Holland, New Jersey. The fixed-tilt [...]

Byline: Alix Publie Enel Chile has promoted Victor Tavera to CEO of the company's distribution and transmission subsidiaries. Tavera will replace Ramón Castañeda, effective May 16. Tavera joined the Enel [...]

This paper presents a highly granular database of nearly 500 capital flow management measures (CFMs) that cover 14 instruments and 49 countries at monthly frequency between 2008 and 2021. It sheds light on the incidence of CFMs along previously unexplored dimensions such as the nature of instruments used, and the asset class and direction of capital flows to which they were targeted. The paper also presents new indices of capital account policies to characterize the usage, stance and intensity of CFM policies. In comparison with existing indices of capital controls, we find that our data reveal significant intra-year changes in CFMs even when other indices exhibit stability over long periods. We find that a 'stock-taking' version of our data generates similar assessments about episodic versus long-standing controls as some other indices, suggesting that existing indices may be capturing low-frequency characteristics of capital account policies. Mahir Binici is a senior economist in the European Department of the IMF. Previously, he worked in the Strategy, Policy, and Review Department, where he focused on external policy issues, including those related to India. Prior to joining the IMF, he held positions as an economist at the Central Bank of Turkey and the European Central Bank. Mitali Das is an Advisor in the Fiscal Affairs Department of the IMF. Previously, she was Co-Chair of the IMF flagship publication, External Sector Report, led the analytical work on unemployment dynamics and labor shares for the World Economic Outlook, served on the IMF missions to China, Japan, and Nauru, and in the Office of the Chief Economist. Prior to the IMF, Ms. Das held academic appointments at Columbia University, Harvard University, Dartmouth College, and the University of California Davis. Evgenia Pugacheva is a research officer in the Research Department of the IMF, where she works on the World Economic Outlook report. Her research focuses on the macroeconomic implications of climate change, international trade, and the COVID-19 pandemic. Prior to joining the IMF, she worked at the World Bank on the World Development Report. JEL Classification F3 * F33 * F36, 1 Introduction Capital flow management measures (CFMs)--such as approval requirements, taxes on the acquisition of property, and outright prohibitions on cross-border transactions of financial assets--have been resurgent as crisis-management and [...]

Byline: Elliot Hayes wpd has reached financial close on its 188MW Karhunnevankangas (Karhu) onshore wind project in the north of Ostrobothnia, Finland. The €220 million ($268.4 million) financing provided by [...]

I study the social efficiency and aggregate effects of equity home bias using a general equilibrium model with nominal rigidities and a fixed exchange rate. I find that the source of home bias is key for analyzing the wedge between equilibrium and socially optimal levels of home bias. Surprisingly, when home bias is due to labor income hedging effects, stock positions tend to be approximately efficient despite the aggregate demand externalities induced by the rigidities. On the other hand, home stock positions are excessive when home bias is due to financial frictions or biased expectations. The key theoretical results hold numerically well in a more general quantitative model., 1 Introduction Should a currency union promote the holdings of foreign equity? This paper argues that the answer depends crucially on the cause of home bias. Home bias and the [...]

Byline: Angus Leslie Melville Norske Skog has entered into debt facility agreements valued at €265 million to finance its €350 million investment in recycled containerboard conversion projects. The finance package [...]

Byline: IJGlobal RWE Supply & Trading has signed an agreement to supply green power to Koehler Paper on a long-term basis from 2023. The green power certificates come from the [...]

Our paper analyzes the role of public employment agencies in job matching, in particular the effects of the restructuring of the Federal Employment Agency in Germany (Hartz III labor market reform) for aggregate matching and unemployment. Based on two microeconomic datasets, we show that the market share of the Federal Employment Agency as job intermediary declined after the Hartz reforms. We propose a macroeconomic model of the labor market with a private and a public search channel and fit the model to various dimensions of the data. We show that direct intermediation activities of the Federal Employment Agency did not contribute to the decline in unemployment in Germany. By contrast, improved activation of unemployed workers reduced unemployed by 0.8 percentage points. Through the lens of an aggregate matching function, more activation is associated with a larger matching efficiency. JEL Classification E24 * E00 * E60, 1 Introduction Labor market reforms are a standard recommendation of international organizations to bring down unemployment (e.g., Cacciatore et al. 2016; Cacciatore and Fiori 2016; Duval and Furceri 2018; IMF [...]

We examine the link between sovereign defaults and credit risk by distinguishing between commercial and official debt and by taking into account the extent of the final restructuring events, which take place at the end of a default spell. We use a local projection-based approach, combined with propensity score weighting (Jorda and Taylor 2016), to estimate the average treatment effect of the final restructuring on our outcome variables of agency ratings and bond yield spreads. Our results show that the average treatment effect on ratings is negative (and positive for bond spreads) up to seven years following the final restructuring with private creditors, while the opposite holds for official creditors. Furthermore, our results are robust to using a panel analysis, which allows us to investigate the importance of the final haircut size. Specifically, we find that the rating (spread) variation (increase) is larger for cases with deeper haircuts. Therefore, we find evidence that official and private defaults have different costs and then may induce selective defaults. Keywords Sovereign defaults * Haircut * Credit rating agencies * Bond yield spreads * Local projection JEL Classification F34 * G15 * G24 * H63, 1 Introduction In the wake of adverse global shocks such as the Covid-19 pandemic or recent geopolitical crises, a prolonged economic slowdown looms (particularly for developing countries) and hence a [...]

We provide a systematic empirical analysis of short-term covered interest parity (CIP) deviations for a large set of emerging market (EM) currencies. EM CIP deviations tend to be wider and more volatile compared to most G10 currencies, and may move in an opposite direction compared to G10 currencies during global risk-off episodes. Motivated by theories of financial determinants of exchange rate, we show that while offshore EM CIP deviations are sensitive to changes in FX dealers' risk-bearing capacities and global risk aversion, onshore CIP deviations are largely unresponsive in segmented FX markets. Meanwhile, the sensitivity of offshore CIP deviations to global factors for currencies with segmented FX markets is stronger compared to their counterparts with integrated FX markets. After accounting for global factors, we find weak evidence of country default risk and FX intervention affecting EM CIP deviations. JEL Classification G15 * F31, 1 Introduction More than three decades ago, Krugman and Obstfeld's (1988) bestselling international economics textbook introduced Covered Interest Parity (CIP) as the 'Basic Equilibrium Condition' to understand foreign exchange (FX) [...]

Rare disaster models assume that growth is afflicted by a negative-mean and left-skewed component, which, if eliminated, could produce first-order welfare gains, unlike other models of business cycle costs. This paper introduces a new test to show that many if not most business cycles are asymmetric in this way, and resemble 'mini-disasters' in addition to the widely studied rare disaster events with which we are familiar, typically wars. Using long-run historical data, we show empirically that this holds for advanced economies since 1870 in peacetime. We develop a tractable local projection framework to estimate consumption processes in normal and financial crisis recessions. Introducing random coefficient local projections, we get an easy and transparent mapping from estimates to a calibrated simulation model of disasters with variable severity. Our simulations show that substantial welfare costs arise from the smaller but more frequent mini-disasters. On average, even with low risk aversion, households would be willing to pay between 5 and 12% of deterministic consumption to avoid these events based on their average historical frequency and severity. JEL Classification El3 * E21 * E22 * E32, 1 Introduction A great deal of research in macroeconomics is aimed at understanding the business cycle and thinking about policy responses to dampen cyclical fluctuations. In standard models, agents are [...]

In his papers during the lead up to the birth of the European Monetary Union, Obstfeld considered whether the countries forming the EMU were sufficiently similar to survive a single monetary policy--and more importantly, whether they had the capacity to adjust to asymmetric shocks given a single monetary and exchange rate policy. The convention at the time was to take the United States as the baseline for a smoothly functioning currency union. We expand on stylized facts in the literature to illustrate how stratification in local labor market outcomes appears far more persistent in later years than 3 decades ago in the context of what (Obstfeld and Peri in Econ Policy 13(26):205-259, 1998) call non-adjustment in unemployment rates. We then extend the currency union literature by adding an additional consideration: differences in regional cyclical sensitivity. Using measures of cyclicality and Obstfeld-Peri-type non-adjustment, we explore the characteristics of places that can get left behind when local labor markets respond differently to national shocks and discuss implications for policy. JEL Classification F15 * F16 * F45 * F66, 1 Introduction Maury Obstfeld's work includes substantial theoretical and conceptual advances in international macroeconomics and finance, but he has also been intensely practical in analyzing real-world problems in real-time. A [...]

AICPA & CIMA released today their Re-defining finance for a sustainable world white paper, the latest iteration of their Future of Finance research programme. Originally launched in 2019 with the [...]

Brfd Heffernan provides an update one year after the Monitoring Group issued its proposed reforms^o international standard-setting boards. In July 2020, the Monitoring Group issued its muchanticipated paper outlining reforms [...]

Byline: Angus Leslie Melville Banking software specialist Conpend has today published a whitepaper – Trade finance document checking and data management: the case for automation – that identifies automation is [...]

In recent years, most low-income countries (LICs) have been remarkably successful in reducing inflation to single-digit levels, and many LICS are engaged in reforms to make their monetary policy frameworks more systematic, transparent, and forward-looking, often with technical support from the International Monetary Fund (IMF). To inform those initiatives, our paper provides new empirical evidence about how the characteristics of the monetary policy framework affects the propagation of shocks in LICS. First, we analyze a cross-country panel dataset of 79 LICs over the period 1990 to 2015 to assess the impact of external shocks on real GDP growth, and we find highly significant differences between LICs where the central bank targets monetary aggregates or inflation compared to LICs that use the nominal exchange rates as the main nominal anchor. Second, we use difference-in-difference methods to assess the evolution of economic growth in sub-Saharan Africa (SSA) over the period from 1986 to 1994, and we find highly significant differences between 9 countries in the Central African Franc (CFA) zone compared to a control group of 12 other SSA countries. Our findings show that central banks in LICs can face policy tradeoffs similar to those which have been highlighted for more advanced economies, and our analysis underscores the key role of the monetary policy framework in fostering price stability and sustained economic growth in LICs. Keywords Central banks * LICs * Monetary policy frameworks JEL Classification E02 * E52 * E58 * 023, 1 introduction In recent years, numerous low-income countries (LICs) have engaged in reforms to make their monetary policy frameworks more systematic, transparent, and forwardlooking, often with technical support from the [...]

In May, the Treasury published a (https://www.gov.uk/government/publications/potential-reforms-to-uks-capital-allowance-regime-inviting-views/potential-reforms-to-uks-capital-allowance-regime-inviting-views) policy paper setting out potential reforms to the UK's capital allowances regime. The paper is surprisingly short compared to most consultations, with the [...]

Byline: Luke Jeffs The main British investment trade body has welcomed a plan by the Financial Conduct Authority to review the oversight of UK asset managers, adding that any new [...]

The macroeconomic effects of the COVID-19 pandemic were most severe for emerging market economies, representing the middle of the world income distribution. This paper provides a quantitative economic theory for why emerging markets fared worse, on average, relative to advanced economies and low-income countries. To do so we adapt a workhorse incomplete-markets macro model to include epidemiological dynamics alongside key economic and demographic characteristics that distinguish countries of different income levels. We focus in particular on differences in lockdown stringency, public insurance programs, age distributions, healthcare capacity, and the sectoral composition of employment. The calibrated model correctly predicts the larger output losses and greater fatalities in emerging market economies, matching the data. Quantitatively, emerging markets fared especially poorly due to their high employment share in occupations requiring social interactions and their low level of pubic transfers, which leads economically vulnerable households to continue working in the market rather than sheltering at home. Low-income countries fared relatively better due mainly to their younger populations, whom are less susceptible to disease, and larger agricultural sectors, which require fewer social interactions., 1 Introduction While every country has been adversely affected by the coronavirus pandemic, the damage it has wrought varied widely around the world. In this paper, we investigate how and [...]

Byline: Radi Khasawneh The Derivatives Service Beureau (DSB) has published its latest consultation paper, setting out updates to technical standards covering the generation and infrastructure for trade reporting codes. The [...]

As the world is recovering from the economic and social disruptions caused by the COVID-19 pandemic, new shocks such as the war in Ukraine and the rapid global rise in [...]

Byline: Radi Khasawneh Euronext has expressed fresh concerns over the inclusion of pre-trade data in updated discussion papers issued by the EU presidency ahead of a meeting last week. The [...]

Byline: Ramla Soni Over 70% of central banks have begun exploring the possibility of introducing central bank digital currencies (CBDCs), according to a new paper from the Global Financial Markets [...]

In this paper, we assess the merits of financial condition indices (FCIs) constructed using equal weights averaging versus alternatives that use data reduction techniques, like principal components, or that allow for time-varying parameters. Our analysis is based on data for 18 advanced and emerging economies at the monthly frequency covering about 70% of the world's GDP. We study the performance of these indicators based on their ability to capture tail risk for economic activity and to predict banking and currency crises. We find that averaging with equal weights produces FCIs that are not inferior to, and often perform better than, those constructed with more sophisticated statistical methods. For the USA and for the euro area, based on the same evaluation criteria, they also work better than two popular alternatives that receive wide attention in policy discussions, namely the Chicago Fed National Financial Conditions Index and the Composite Index of Systemic Stress. JEL Classification E32 * E44 * Cl1 * C55, 1 Introduction The concept of financial conditions, a summary measure of how easily firms, households, and governments finance themselves, has received wide attention following the 2008-2009 Global Financial Crisis. Financial [...]