Fiscal danger of interest on reserves overblown, The future of payments, and more
THE WEEKEND REVIEW – OMFIF
Latest opinion and analysis from OMFIF around the world
7-11 December 2020, Vol.11 Ed.48
Fiscal danger of interest on reserves overblown: The UK Treasury’s plans for continued higher spending in response to the Covid-19 crisis have sparked fears about debt sustainability. The OBR has remarked that greater UK debt levels make public finances more vulnerable to interest rate increases. A cause of larger interest rate sensitivity was the payment of interest on reserves kept at the BoE. Fears that this poses a threat to the UK’s fiscal position are overblown, write Danae Kyriakopoulou, Pierre Ortlieb and Chris Papadopoullos. Read more.
The future of payments: Payments are not just being disrupted, but utterly transformed by new technology. OMFIF surveyed central banks and regulators to examine how the future of payments will look. Their governance and involvement in hybrid systems will encompass not only a role as issuers, but also as standard-setters, write Bhavin Patel and Brandon Chye. Read more.
Euro area economic outlook: Vítor Constâncio, former vice-president of the European Central Bank, governor of Banco de Portugal and Portuguese finance minister, joins Christian Kopf, head of fixed income at Union Investment, and David Marsh, OMFIF chairman, to cover the state of the euro area economy, challenges of Covid-19 and more. Listen to the recording.
China’s economic outlook: Michael Pettis, professor of finance at Peking University’s Guanghua School of Management, joins Mark Sobel, US chairman of OMFIF, to discuss China’s macroeconomic outlook and the health of its financial system. They cover future US-China relations under President Joe Biden, the impact of Trump’s trade policies, and Chinese monetary and currency policy. Listen to the recording.
Crypto crawls from the crypt: Just when central bankers thought that their detailed plans for CBDC had consigned them to the fringes of the web, private cryptocurrencies are making a comeback. The distinction often fails to be made between true cryptos, private bank money and CBDC. Unless there is clear public education, central banks will struggle to introduce CBDC, writes Philip Middleton. Read more