RBI Governor Shaktikanta Das recently gave a speech at the Financial Express Modern BFSI Summit in Mumbai. Das discussed the ongoing technological disruptions in the financial sector, and how the disruptions are creating new opportunities for the financial sector. The opportunities have led to emergence of new banking models which are posing challenges for regulators.
In this moneycontrol articles, I discuss the emergence of the new banking models and challenges for RBI/regulators going ahead.
Interesting article by Marijn A. Bolhuis, Judd N. L. Cramer, Lawrence H. Summers, They estimate past US inflation using today’s methodology and realise that inflation trends today are quite similar to 1970s:
Implications:
Previous inflationary cycles look more volatile and responsive to Fed policy due to differences in how housing inflation was measured before and after 1983. We highlight three implications.
First, our observations indicate that the current inflation regime is considerably closer to that of the late 1970s than it appears if inflation rates are compared straightforwardly. Our corrected estimates suggest that core CPI inflation is now at levels experienced in 1979.
Second, we conclude that it is misplaced to glean the effects of monetary tightening from the published CPI disinflation Paul Volcker achieved in the early 1980s. Volcker’s rate of core CPI disinflation is significantly slower when measured using today’s methods. At the speed achieved in the 1980s, using this corrected estimate, it would take today’s headline CPI about three years to return to 2%.
Finally, many commenters have said that monetary policy works through housing – that was clearly the case in the past. Once rates stabilized shelter inflation plunged mechanically. Today, given the lag structure of shelter inflation discussed elsewhere (Bolhuis et al. 2022a), residential services are likely to be a significant hindrance to declines in headline and especially core inflation. This could be a headache for the Fed even after housing prices stop rising at double-digit rates.
Whether in crypto assets or in CBDCs, design choices can make an important difference to the energy consumption of digital currencies. This paper establishes the main components and technological options that determine the energy profile of digital currencies. It draws on academic and industry estimates to compare digital currencies to each other and to existing payment systems and derives implications for the design of environmentally friendly CBDCs. For distributed ledger technologies, the key factors affecting energy consumption are the ability to control participation and the consensus algorithm. While crypto assets like Bitcoin are wasteful in terms of resources, other designs could be more energy efficient than existing payment systems.
IMF’s Finance and Development Jun-2022 edition profiles Melissa Dell of Harvard University:
Scholars have long wondered why some places prosper, while others do not. How do societies climb the development ladder to greater prosperity? What is the secret sauce of economic success? Why is GDP per capita in South Korea so much higher today than it is in Cambodia, which had a similar standard of living in 1960?
Questions like that have inspired sweeping, almost epic books that span centuries and continents, like Guns, Germs, and Steel, by Jared Diamond, which looks at environmental factors, and Why Nations Fail, by Daron Acemoglu and James A. Robinson, which focuses on the role of institutions.
These questions fascinated Dell, but she wanted to follow a different path. She took a microscope to the subject, looking not at the diverging fortunes of continents and nations but of neighboring towns and villages.
“To be able to really delve into things, it helps to have that kind of local perspective,” Dell says in an interview with F&D. “By focusing on the micro level, you can get a lot more detail and granularity about what’s going on.”
One of Dell’s big contributions to the literature of development economics—and the advantage of her micro approach—has been to identify what she calls channels of persistence.
https://www.intelligenteconomist.com/economics-blogs/
Mostly Economics 