Ousmene Mandeng conference images

Economics Commentary offers analyses and opinions on international monetary affairs and emerging markets capital markets developments. The content is primarily concerned with changes in the international monetary system and its impact on economic policies and international capital markets and draws extensively on participations in key international economic policy fora. Economics Commentary aims to support the public debate and markets' understanding of major international monetary and emerging capital markets developments.


Central banks and digital currencies

3 November 2017

Bitcoin closed at a record above US$7,000 on 2 November, up from US$702 12 months ago, serving as a stern reminder that digital currencies are on the rise. The advances of private cryptocurrencies have made central banks increasingly contemplate adopting official cryptocurrencies themselves in part also not to lose out against the digital currency rivals. While lately the Bundesbank argued that digital currencies are a long way off and the Bank of Estonia had to retreat from earlier hints it may support a digital currency, the Riksbank interim report on its e-krona project seems to conclude that adoption is possible in the near future and the People’s Bank of China announced that it completed key tests of its own digital currency. Yet, although the advantages of digital currencies in national transactions remain somewhat controversial hindering and possibly blocking prompt adoption, the benefits are clear in international payments. The adoption of any digital currency therefore will likely be driven in large part by perceived opportunities to make it big as a global digital currency on the nexus between technology and payments. [...]

IMF Annual Meetings——Exchange rates matter at last

17 October 2017

The IMF Annual Meetings on 14-15 October in Washington, D.C. offered plenty of optimism with the usual dose of caution. The world economy experiences the broadest upswing since the 2000s. Downside risks remain important including political risks, market frothiness, rising debt levels. Yet, one of the more intriguing aspects was the communiqué of the International Monetary and Financial Committee (IMFC), that was remarkable in its emphasis on exchange rates. Since 2000, the IMFC has only very rarely if ever mentioned exchange rates. This time, exchange rates and the international monetary system featured prominently. It is likely a sign that IMF member countries want a more assertive approach on international economic policy matters. [...]

ECB government financing and the IMF

1 October 2017

The Bundesbank on 25 September 2017 reiterated what many fear could lead to a sudden stop of the European Central Bank's (ECB) large scale asset purchases: "The problem of the public sector securities purchases is that the central banks have become the largest creditors of the [Euro Area] member countries. The boundary between monetary and fiscal policy increasingly blurs." The pending verdict by the German Federal Constitutional Court (GFCC) regarding the incompatibility of the asset purchases with German law has gotten new momentum with the referral for several questions, as announced on 15 August, to the European Court of Justice (ECJ) for a preliminary ruling. A verdict by the GFCC attesting the unconstitutionality of the PSPP is likely, the consequences of which would be severe but not only for the ECB. The Bundesbank has for years financed governments through the International Monetary Fund (IMF). The GFCC therefore risks upsetting the very foundations of the international financial architecture. [...]

New challenges for global economic integration

Conference——9th Annual Conference organised by the Central Reserve Bank of Peru and Reinventing Bretton Woods Committee, Cusco, 24-25 July

29 July 2017

The benefits of global economic integration are seen increasingly sceptically or so it appears. The conference with the participation of leading policy makers from Latin America and other countries, representatives from international organisations, academia and the private sector debated the future of globalisation. While there was recognition that globalisation may produce some adverse distributive outcomes, in Latin America support for openness seemed overwhelming. Herein is a summing-up of the discussions at the conference. [...]

Cryptocurrencies——Forward to the past

27 July 2017

Record valuations of Bitcoin suggest that cryptocurrencies are coming of age. The proliferation of cryptocurrencies or digital currencies seems to advertise a new era of money. In fact, their underlying ideas are rather old. Cryptocurrencies, herein referred to only as not having legal tender status, aim for a world—abstracting from their profound technological impact on recording, anonymising and administering monetary transactions—of rigid monetary rules and private monies and without central banks. There were many good reasons of why monetary systems moved forward. While this may not diminish the appeal of cryptocurrencies, to represent a monetary innovation they must look far beyond the traditional functions of money.[...]

Special Drawing Right (SDR)

Collection of comments on the SDR