What share for gold? On the interaction of gold and foreign exchange reserve returns

11/26/2020 BIS International

Almost five decades after the collapse of the Bretton Woods system, gold continues to form an important share of global foreign exchange reserves. This may be because gold has traditionally offered reserve managers many benefits, such as the absence of default risk. This paper explores whether these large investment shares in gold are also justified from a risk-return standpoint, or whether any other explanations have to be brought to bear.

Stablecoins: risks, potential and regulation

11/24/2020 BIS International

The technologies underlying money and payment systems are evolving rapidly. Both the emergence of distributed ledger technology (DLT) and rapid advances in traditional centralised systems are moving the technological horizon of money and payments. These trends are embodied in private "stablecoins": cryptocurrencies with values tied to fiat currencies or other assets. Stablecoins - in particular potential "global stablecoins" such as Facebook's Libra proposal - pose a range of challenges from the standpoint of financial authorities around the world.

Housing booms, reallocation and productivity

11/23/2020 BIS International

I establish that US public firms holding real estate have persistently lower levels of productivity than non-holders. Rising real estate values relax collateral constraints for companies that own real estate and allow them to expand production. Consequently, an increase in house prices reallocates capital and labor towards inefficient firms, with negative consequences for aggregate industry productivity.

Monetary policy response in emerging market economies: why was it different this time?

11/12/2020 BIS International

During the Covid-19-induced financial stress in March 2020, central banks in emerging market economies (EMEs) departed from their monetary policy playbook by cutting rates even in the face of sharp currency depreciations and massive capital outflows. Two factors were at play. First, the cyclical position of EMEs gave more room for easing of monetary policy, while structural changes improved the anchoring of inflation expectations and kept a lid on exchange rate pass-through.

Fundamental but Forgotten - the Early Years Sector

11/12/2020 National Institute of Economic and Social Research UK

New guidance from Public Health England provides more evidence of the interconnected nature of health, care and education, and of the fundamental role early years practitioners play in supporting young children’s speech, language and communication development.  But with the early years sector struggling to survive in the wake of the pandemic, many children may miss out on this much needed support.  Where is the support for the early years sector?

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