Lucie Newcomb’s Post

The International Monetary Fund and The World Bank steering committee on Saturday emphasized the need for broader accountability as the institutions implemented reforms to help countries grapple with #climatechange and other shocks. Greater levels of collaboration were also strongly encouraged. #GlobalBusiness #MNC #Bank

PBOC Deputy Governor Lu Lei Attends G20 Finance Ministers and Central Bank Governors Meeting The first G20 Finance Ministers and Central Bank Governors Meeting under the Brazilian Presidency was held in São Paulo on February 28th and 29th, 2024. The meeting focused on issues including global economy, addressing inequality, improving financial system, and dealing with global sovereign debt pressures. Deputy Governor Lu Lei attended the meeting. The overall view of the meeting was that global economic recovery has proven more resilient than expected, but still faces multiple challenges. Therefore, enhanced international economic cooperation was required to promote growth together. The Ministers and Governors agreed to enhance the representation and voice of developing countries in global economic and financial institutions, advance the IMF quota reform, and address the debt vulnerabilities of low- and middle-income countries. Members committed to resist protectionism and encouraged concerted efforts to support an open and inclusive multilateral trading system. Members also agreed to maintain global financial stability together. #G20 #monetarypolicy #IMF #sovereigndebt

#SUERFpolicybrief “Financial Shock Transmission to Heterogeneous Firms: the Earnings-Based Borrowing Constraint Channel” by Livia Chitu (European Central Bank), Magdalena Grothe (ECB), Tatjana Schulze (International Monetary Fund) and Ine Van Robays (ECB) The US corporate sector has been recently faced with major simultaneous shocks: rapid monetary tightening and elevated global risk aversion after the pandemic outbreak and Russia’s invasion of Ukraine. In this policy brief, we first propose an integrated framework to identify monetary policy and global risk shocks jointly. We then tease out their transmission mechanisms to firms’ funding costs and default prospects through the lenses of the type of borrowing constraint that firms may face. Specifically, we contrast tighter funding conditions arising from traditional asset-based collateral constraints with the recently proposed earnings-based borrowing constraint hypothesis, differentiating firms across their leverage and earnings distributions, respectively. Our empirical evidence strongly supports the earnings-based borrowing constraint: global risk shocks have strong and heterogeneous effects on corporate funding costs which depend on firms' position within the earnings distribution. https://lnkd.in/dtWw5P86 #MonetaryPolicyShocks #GlobalRiskShocks #HeterogeneousFirms #CorporateSpreads #EarningsBasedBorrowingConstraint

In this week's edition of the #SSA roundup: This week we examined how SSA issuers plan to navigate post-election markets next week, as the #EU looks set to lead the way. https://lnkd.in/eHUwkBPq We also took a closer look at what the landslide victory for the Labour Party in the UK means for different corners of the capital markets https://lnkd.in/eHnZ5vPF Rentenbank took advantage of a relief rally after the first round of French elections to bring its first #euro benchmark of 2024. Leopold Olma talked us through the timing of the deal and how relative value helped the issuer secure an oversubscribed, high quality order book https://lnkd.in/evPHwBna KfW also made an appearance this week and made its blockchain-based bond debut. Tim Armbruster, Petra Wehlert and Tim Meirer sat down with us to go through the €100m syndicated deal, the pricing strategy – which entailed a clear ‘digital premium’ – as well as the agency’s plans to further advance its digital journey as it called for other market participants, including the buy-side and central banks, to join in https://lnkd.in/eb7wuYrc #capitalmarkets

#SUERFpolicynote “Is monetary policy dominated by fiscal policy?” by Isabel Schnabel, Member of the Executive Board of the European Central Bank The change in the interest rate environment and the high levels of public debt following the severe shocks that hit the euro area in recent years have given rise to the question whether monetary policy’s ability to act – and therefore its independence – is being constrained by fiscal policy. The determined monetary policy response and well-anchored inflation expectations demonstrate that the ECB has unwaveringly pursued its price stability objective, confirming monetary dominance. At the same time, the ECB managed to prevent fragmentation in the euro area, without undermining the disciplinary effect of financial markets. In future, it will mostly be up to fiscal policy to protect central bank independence by advancing fiscal consolidation in line with the new European fiscal rules while not neglecting investments urgently needed to meet future challenges. https://lnkd.in/dhREve7Q #MonetaryPolicy #FiscalPolicy #Inflation #InterestRates #ECB #FiscalDominance #EuroArea #SovereignDebt #PublicDebt #FinancialStability #EconomicGrowth #AssetPurchaseProgrammes #TPI #PEPP #QuantitativeEasing

Always great to be back at the International Monetary Fund The World Bank Annual meetings. It is a unique opportunity to engage with international partners and discuss both short- and long-term priorities for the European economy. Resilience remains a key feature of the euro area outlook. As we look at the changes around the world, a credible budget framework is essential and we need to priotise projects that are crucial for enhancing our competitiveness in the years ahead. Looking forward to the next #Eurogroup meeting in just a few days where we will delve deeper into these important discussions. #IMFMeetings

🌎Yesterday, Brent Neiman, Assistant Secretary for International Finance at the US Treasury, delivered a thought-provoking critique ahead of the International Monetary Fund/The World Bank Annual Meetings. 📷He raised concerns over the IMF's approach to its surveillance responsibilities: “The Fund is also sometimes too polite in its surveillance responsibilities... For example, the #IMF does not publicly comment on the role of state-owned banks in managing #China’s exchange rate or on why changes in the PBOC’s balance sheet don’t line up with reserve transactions in China’s balance of payments data.” For a deeper dive into these critiques and the future of IMF governance, watch the full discussion on demand here: https://lnkd.in/ehzKEcph

The Governor of the National Bank of Moldova (NBM), Anca Dragu, along with a delegation from the NBM, participated in the Constituency meeting of the International Monetary Fund (IMF) and The World Bank (WB), representing the Republic of Moldova. Conversations at the meeting delved into main economic themes, such as fostering #economic #growth, mitigating #inflationary #risks, and discussing #monetary #policy initiatives undertaken by central #banks. There was also a focus on fortifying the governance of #financial institutions while acknowledging the ramifications of #geopolitical events like the conflicts in #Ukraine and #Israel on the financial sector.

Blomberg Reports: #Germany May Object If #ECB Moves to Lower French Bond Yields Finance minister (Christian Lindner)questions if action would break treaty rules Snap election called by #Macron has unsettled bond investors (my inclusion) By Kamil #Kowalcze 27. Juni 2024 https://lnkd.in/egnMzcXX --------- Perhaps Christian #Lindner does ask his staff at German Federal Ministry of Finance or just #ChatGPT 😁😉 - the Law IS so simple❗WHY he can't keep his mouth shut?! "Article 130 TFEU states: "In carrying out the tasks conferred on them by the Treaties and the Statute of the #ESCB, neither the European Central Bank, nor a national central bank, nor a member of their decision-making bodies shall seek or take instructions from #Union #institutions, bodies, offices or agencies, from governments of Member States or from any other body. The Union institutions, bodies, offices or agencies, and the governments of Member States undertake to respect this principle and not to impair the independence of the European Central Bank and of the national central banks." One must be cautious about the influence exerted by Mr Christian Lindner, the German Finance Minister. If a #Finance #Minister publicly expresses doubts about certain ECB actions or raises political concerns, this could be seen as an #attempt to influence the #ECB's #independence. Such statements could influence market sentiment and indirectly put pressure on the ECB. This would be problematic as it violates the basic #principles of #central #bank #independence laid down in the #EU #treaties.Mr Lindner's statement on whether or not the ECB should take action to lower #French #bond yields must be viewed as delicate in this context. Such statements can be seen as an attempt to influence ECB policy, potentially violating the treaty rules designed to protect the ECB's independence.Overall, the independence of the ECB must be strictly maintained and political interference avoided in order to ensure the credibility and effectiveness of monetary policy."

Sovereign debt markets in emerging market economies (EMEs) have grown bigger and deeper in the past two decades. How has this affected the liquidity of these markets and their ability to withstand shocks? In the latest BIS Quarterly Review, Bernardus Doornik, Jon Frost, Rafael Guerra, Christian Upper and Alexandre Tombini discuss the factors that help develop liquid and resilient markets - a key policy objective shared by governments and central banks. Here’s what they found: -The investor base and size of hedging markets affect the liquidity and resilience of government debt markets in EMEs. -Domestic banks seem to mitigate the impact of external shocks on market liquidity, particularly during bad times. - With a greater share of foreign investors, shocks may be amplified. Find out more at: https://lnkd.in/gBbcvmTN #BISQuarterly #EMEs #GovernmentBonds