Post, October 22, 2015 By Ottmar Edenhofer, Jan Christoph Steckel, Michael Jakob
Novel ideas how to spend climate finance in a way that reduces emissions and at the same time promotes recipients’ immediate development objectives are required. In this short commentary, we propose to regard climate finance in the broader context of sustainable development.
Despite the magnitude of the Transpacific Partnership Agreement concluded by the United States, the EU should not heed calls to rush into concluding ongoing Transatlantic Trade and Investment Partnership talks under the Obama administration at any cost, and focus instead on negotiating a good agreement.
Most people hate finance, viewing it as the epitome of irresponsibility and greed. But, even after causing a once-in-a-century recession and unemployment for millions, finance looks indispensable for preventing an even worse catastrophe: climate change.
Post, October 8, 2015 By Christian De Perthuis, Pierre-André Jouvet
A mechanism of carbon “bonus-malus” is proposed, where the average emission rate of world countries serves as the anchor: above the threshold, countries should pay a malus, under this level, they would receive a bonus.
This paper seeks to bring a historical perspective to current global financial architecture issues on the speed and scale of climate finance needed to achieve a safer two degrees world. We look back in history to a similar episode for lessons: the financing and building of railroads in the 19th century.
The implementation of a multilateral mechanism for sovereign debt restructuring that the UN is calling for, is illusory. However, progress could be achieved in different ways: improving the contractual terms, introducing new clauses on automatic debt reprofiling and using the leverage of international funding.
Three factors hold back low-carbon investment in Europe: the risk/return profile of low-carbon investment projects, regulatory and behavioural features in the financial sector and a more global political economy context. These are key issues to create an investment climate for climate investment.
A new UN Climate agreement will probably be signed by the end of this year with some incremental progress but even inveterate optimists like myself don’t believe it will be capable of ‘bridging the gap’ between the maximum that 196 governments can agree upon by consensus...
Once again, the Federal Reserve has postponed the date of exit from the zero lower bound. We show that the pace of the tightening cycle matters more than the exact timing of the first interest rate hike for the macroeconomy.
We draw six political economy lessons from the actual dynamics of climate negotiations and their connection to the new macroeconomic normal emerging in the aftermath of the 2008 crisis. A specific proposal follows.
The Bangladesh central bank has a long tradition of favouring socially sustainable financing behavior. It was thus natural to extend its mission to the question of climate change mitigation and adaptation investments, both internally and externally in the global financial system.
Four guide-posts for efficient low-carbon finance are proposed: remove subsidies for high-carbon technologies, improve the cost-effectiveness of low-carbon subsidies, encourage private sector innovation, and maintain transparent public policy tools that support cost-benefit accounting.
Post, September 17, 2015 By Etienne Espagne, Baptiste Perrissin Fabert
The aim of this webpage, co-hosted by France Stratégie and CEPII, is to provide a medium for experts and non-experts to discuss the merits and the limits of the various proposals and initiatives in the field of international finance. It is intended to become a forum where the debate on the financial system’s contribution to the energy transition can flourish.
The decision to change the exchange rate regime of the renminbi taken by the Chinese authorities at the beginning of August might be less a response to the economic downturn than a further step, against all odds, in a bold but risky financial liberalization agenda.
From May 21 to May 23, the ECB organized its 2nd annual forum on Central banking. Mario Draghi's inaugural speech, as well as discussions on May 23rd, focused mainly on the need for structural reforms to strengthen growth in Europe.
Europe was disappointed in the GHG emissions reduction proposal by Japan in the context of the COP 21: -25.4% between 2005 and 2030. Japan could nonetheless help move forward the climate issue by its technologies and original experiences.
The rallying of major Western countries to the Asia Infrastructure Investment Bank provides yet another illustration of the relevance of the analogy between China's diplomacy and the game of Go aimed at placing pawns patiently to stifle one’s opponents and conquer territories.
Crude oil price volatility is often viewed as reflecting uncertainty not only related to the oil market, but also to the global macroeconomic environment. However, the question arises as to whether uncertainty is not likely to be at play without generating high volatility on the oil market.
Regulatory coherence is claimed to be the core of the potential economic stakes in the TTIP. As the 9th Round of Negotiations is being convened in New York City, time has come for discussions to take a more concrete form.
While European external surpluses are accumulating and domestic demand is slacking, insisting on improving the Union’s external competitiveness, as some in the Commission are presently doing, is paradoxical. For Europe, the paramount risk is not losing its competitiveness. It is not recovering cohesion and growth.
Post, March 24, 2015 By Urszula Szczerbowicz, Natacha Valla
The ECB will purchase a monthly €60bn of private and public debt instruments between March 2015 and September 2016 – a total worth over €1 trillion. While the timing and size of purchases are known, there is more leeway than it seems in the way purchases are allocated to each category of assets.
The ECB has announced that it will launch in March its first round of quantitative easing. The announcement contains some good and bad surprises: the size of the ECB's plan is gigantic, while the Central Bank was unclear about the Greek issue. How was this announcement perceived by markets?
Post, January 9, 2015 By Urszula Szczerbowicz, Natacha Valla
Instead of buying sovereign debt, the ECB could broaden further its purchases to include equity of all sorts. Fuelling an equity bubble is no worse than fuelling a bond one. It can be mitigated by intervening secretly and including non listed securities. Inhibitions to take risk should be lifted.
The long awaited Juncker Plan for investment in Europe has arrived a few weeks ago. Beyond the creation of a Strategic Fund, the Plan as a whole has disappointed: not adamant enough to eliminate the deep obstacles to cross-border investment, and opaque in generating the “List” of projects to be financed. Yet, even imperfectly, Europe has now done its homework.
The recycling of current account and/or financial account surpluses through the accumulation of foreign exchange reserves by emerging countries after the 1999-2001 crisis, particularly by China, has been described as “smoking but not inhaling in international financial markets”.
The TTIP has become a full-blown political issue as the two largest economic entities in the world are negotiating a deep integration agreement, going beyond what has been done previously in any agreement except the EU’s Single Market.
The ECB has confirmed its determination to counter the risk of deflation in the eurozone by evoking the possibility of sovereign bond purchases, but is confronted once again with the heterogeneity of the area. The need for compromise could jeopardize the effectiveness of its action.
European policymakers are currently busy addressing two issues: moribund investment and banks on extended sick leave. Some observers might be tempted to segregate these issues. While investment would be in the remit of States, the financial health of our economies would be under the responsibility of the ECB alone.
Some five years after the severe recession of 2009, private sector investment in Europe is still dangerously sluggish. And public investment has been cut further, reinforcing a long term downward trend. At a mere 2% of GDP, it has halved over thirty years.
The decline in investment rates in the euro area following the global financial crisis has been sharp. And it looks as though it will not reverse significantly. Rebooting investment and channeling investable funds to the right places on the continent is therefore a major challenge for policy makers.
For a fact, measures of headline consumer price inflation have decelerated sharply over the recent past. At 0.8-1%; inflation hovers around levels that are clearly below the ECB’s flagship 2% medium-term objective.
Strikingly, the debate about the Feb 7 ruling of the German Constitutional Court against the ECB’s flagship OMT programme has gone almost unnoticed in France. This is wrong. The French should care about it.
For a long time considered as impossible to implement, the negative interest rates on deposits of commercial banks at the central bank is now often mentioned as an option for the European Central Bank (ECB).
The special and differential treatment granted to developing countries, a key principle in the multilateral trading system, now appears broken-down. Based on a speech given at the WTO Forum, this post reviews -with a focus on agriculture- why this is so and what could be done.
CEPII launches its first Policy Brief “Transatlantic Trade: Whither Partnership, Which Economic Consequences?” which examines the stakes and potential impacts of a Transatlantic Trade and Investment Partnership.
The current turmoil in emerging capital markets is the result of a classical reversal of market sentiment after an excess of optimism. There are good reasons for being cautiously optimistic but uncertainties remain.
In the United States, the regional Federal Reserve Banks (FRBs) are de facto subsidiaries of the central Federal Reserve Board. The claims and the debts between FRBs are settled through a transfer of assets which is actually a simple accounting arrangement.
Central banks in the Eurozone have accumulated claims and debts between themselves. These "Target 2 imbalances" substituted for the outstanding between private entities, in particular for the interbank loans and there is no mechanism to settle them. Should the Eurozone burst, they would become due.
Governments act as guarantors of last resort of the financial system, as evidenced during the crises of the past 6 years. It will remain true in the future, even if a better regulation and the bailing in financial institutions by their creditors allow to better circumventing the risks born by the taxpayers.