The OMFIF Podcast

Avoiding a debt crisis

The Bank of England’s intervention in September to restart gilt purchases to support markets and pension funds troubled by rising rates and unfunded fiscal expansion is a warning that fiscal considerations are becoming a more potent force in monetary decisions. It could also be an early test case for other quantitative easing countries grappling with bloated central bank balance sheets, high debt and rising policy rates.

Neil Williams, chief economist and Taylor Pearce, economist at OMFIF, discuss what the forces driving government funding costs will be, whether there are other measures available and how they might suit the UK.

Global Public Pensions 2022, OMFIF’s survey of pension funds, is launching on Tuesday 6 December.

 

Countdown to COP27: More African countries implementing sustainability-focused policies

With only days to go until COP27 takes place in Sharm el-Sheikh, Egypt, there is hope that it will focus on priority issues for the African continent, including addressing Africa’s climate challenges and the deadlock on climate finance. The Absa Africa Financial Markets Index 2022, published by OMFIF, found that more African countries are implementing environmental, social and governance policies and offering sustainable financial products.

 

Ahead of this year’s climate conference, Katerina Atkins, programme coordinator of OMFIF’s Sustainable Policy Institute, speaks with Nikhil Sanghani, OMFIF’s managing director of research, about the findings of the report on the availability of sustainable products and ESG policy indicators across the African continent. They discuss which African countries are spearheading sustainable financial product offerings and why it is important for the continent to continue working on sustainability-focused policies.

Tammo Diemer on weak demand for Bunds, the repo market and EU joint debt

Burhan Khadbai, head of content at OMFIF’s Sovereign Debt Institute, sits down with Tammo Diemer, member of the management board at Deutsche Finanzagentur, to discuss the unprecedented volatility and challenges facing the German government bond market.

Diemer discusses the weak demand facing Bunds – including the recent seven-year auction and 30-year syndication – the Finanzagentur’s decision to tap bonds to use in the repo market, joint EU debt to fund the energy crisis, the performance of Germany’s green bonds and the outlook for 2023.

Can central banks normalise their balance sheets?

While announced as a temporary measure, the Bank of England’s purchases of long-dated gilts is another reminder of how central banks will struggle to reduce bloated balance sheets. Japan’s quantitative easing rumbles on, and the US and euro area are still at the nascent stage of addressing their central bank’s finances. QE globally has been no panacea, and the BoE has been quick to differentiate financial support from QE. Yet, by trying to suppress bond yields and signalling that money printing can be used to finance fiscal spending, it suggests fiscal considerations have in QE countries become a more potent force behind monetary decisions as rates rise. In the UK, ‘the kindness of strangers’ will increasingly hinge more on yield, currency and ratings considerations compared to Japan.

Is the UK a test case for others, what are the problems and where do we go from here? Neil Williams, chief economist, and Taylor Pearce, economist, OMFIF, discuss.

Combatting money laundering and payments risk in digital assets

Lewis McLellan, DMI editor, is joined by two representatives from Promontory, a digital asset advisory service within IBM consulting. Elizabeth Severinovskaya, senior principal at Promontory specialising in anti-money laundering, and Lorena Rosero, principal at Promontory focusing on information risk management and the mitigation of cyber risks, discuss the challenges of policing the increasingly popular digital asset ecosystem, laying out the key dangers posed by the new technology and some of the regulatory tools evolving to combat them.

What’s next for the Italian economy?

In this podcast, former Italian diplomat Antonio Armellini and Silvia Dall’Angelo, senior economist at Federated Hermes, speak with OMFIF Economist Taylor Pearce about the economic consequences of the 25 September general election in Italy. They explain the factors that led to the victory of far-right Prime Minister Giorgia Meloni and explore the outlook for Italy’s economic future under the leadership of the conservative coalition. They discuss Italy’s Recovery and Resilience Plan, fiscal framework and debt sustainability, and the country’s position in the euro area.

In conversation with De Nederlandsche Bank: Nature risk and the role of central banks

Biodiversity loss is increasingly on financial market agendas and De Nederlandsche Bank has been assessing nature-related risks financial institutions face. Saskia de Vries, Head of the International Financial Architecture department at the Financial Stability division of De Nederlandsche Bank, speaks with Emma McGarthy, head of OMFIF’s Sustainable Policy Institute, about the role of central banks in driving nature-related risk mitigation, accelerating nature-positive financial flows, and the Network for Greening the Financial Sector’s task force on biodiversity loss and nature-related risks.

Informing CBDC development with a qualitative look at consumer behaviour

Andrew Slack, strategic designer at SICPA, along with Erin Taylor, consultant, and Annette Broløs, associate consultant from Finthropology, join Lewis McLellan, Digital Monetary Institute editor, to discuss their fascinating new report on consumer behaviour in payments. They discuss the insights this research gives them into the priorities and concerns of citizens and how they can help shape digital currency policy and development. While the results gathered from this research are regionally specific and will vary between jurisdictions, some of the surprising conclusions it has thrown up shows the value of pursuing this type of research for other economies as well. 

To read SICPA’s short summary report Insights for CBDC Design, click here:  https://www.sicpa.com/insights/cbdc-fostering-financial-inclusion

Bank of England independence under Truss

A fundamentally weak pound is not the best platform on which to base uncertainty about the Bank of England’s future. But, barring the withdrawal of independence, there are – after 25 years of the Monetary Policy Committee – real opportunities to make new UK Prime Minister Liz Truss’ review constructive. It must be thorough, non-political and not drag on. Uncertainty in the meantime may put even greater pressure on the MPC to accelerate rate hikes and go harder on quantitative tightening. And, if that exacerbates stagflation, Truss may not get the full-blown recovery she needs before the next general election.

So, what are the issues, what are the most feasible options and where do we go from here? Neil Williams, chief economist, and Taylor Pearce, economist, OMFIF, discuss.

For more, see https://www.omfif.org/2022/09/options-for-truss-to-preserve-the-bank-of-englands-independence/

 

Japan’s approach to sustainable finance and regulatory practice

Japan is committed to achieving carbon neutrality by 2050 and reducing greenhouse gas emissions by 46% by 2030. To do so, the country has focused on developing transition finance, an approach designed to support polluting companies that are trying to reduce their carbon footprints. Satoshi Ikeda, chief sustainable finance officer at Japan’s Financial Services Agency, spoke with Katerina Atkins, programme coordinator of OMFIF’s Sustainable Policy Institute. They discussed Japan’s approach to sustainable finance and regulatory practice, guidelines for climate transition finance, transition bond issuance and preventing greenwashing.