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Amol Agrawal

Amol Agrawal

I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

Articles by Amol Agrawal

Hong Kong as a risk management hub

1 day ago

Amidst all the developments in financial markets, the thing of international financial centres competing with each other remains on the sidelines but is an exciting area.
Mr Norman T L Chan of HKMA discusses how HK’s international financial centre is shaping as a risk management hub:

About 15 years ago, a senior banker suggested to me that, in order to further promote Hong Kong’s position as an international financial centre (IFC), we should turn Hong Kong into a “risk management hub” in Asia. However, he did not elaborate further at the time on exactly what he meant and how this could be achieved. To be honest, it was not clear to me then what this risk management hub idea was all about.
Now looking back, I realise that, even without us consciously pursuing the idea as a policy

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How advent of pension policy led to lower education in children: Case of Indonesia and Ghana

1 day ago

Prof Natalie Bau of UCLA in this voxeu piece point to really interesting findings from her new research.
She says that families funded children’s education so that latter could take care of former during old age. However, as pension policy was introduced, this old age care was not needed which led to decline in education!
In the paper, I examine whether the introduction of government pension plans changed cultural practices in Indonesia and Ghana. I study a set of cultural traditions that determine whether daughters (matrilocal), sons (patrilocal), or neither gender (neolocal) continue to live with parents after marriage and care for them in their old age. In matrilocal ethnic groups, daughters stay with parents, while in patrilocal ethnic groups, sons stay with them. Traditionally,

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Differences between Euro and Libra: Good way to think about digital money..

1 day ago

Just a few days back, ECB member Yves Mersch criticised Libra vehemently asking Europeans to reject the treacherous sirens of Facebook’s Libra currency.
After a few days,. another ECB member Benoît Cœuré in another speech is more hopeful of benefits of Libra.
Price stability remains, and will remain, a precondition for a currency to gain widespread use, whether digital or not. For this reason, central banks worldwide have adopted price stability as their primary mandate. And this is why unstable crypto-assets, such as bitcoin, whose price in fiat currencies is highly volatile, will never be able to serve as a reliable means of payment. “Stablecoins”, if they meet their promise of stability, are the natural next step in the evolution of digital assets.
This was already understood

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A brief (and fascinating) history of currency counterfeiting: Focusing on Australia and some other cases

2 days ago

Richard Finlay and Anny Francis of RBA in this research note give a fascinating account of currency counterfeiting. They focus on Australia but pull examples from other countries too. Perhaps one of the best things that have read in this year so far.
Counterfeiting has a rich and varied history going back to the very earliest forms of money. It has been pursued for personal gain – although at the significant risk of jail time, or, in the past, death – as well as for economic and political destabilisation by hostile countries. Both high- and low-value denominations are liable to be attacked. Currency issuers and counterfeiters are, and always have been, locked in a battle of innovation, with government authorities adapting and innovating in order to deter counterfeiting. Acceleration

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Sweden-based Indian couple, have named their daughter after Korean based Mutual Fund!

2 days ago

Talk about globalisation!
A Sweden-based Indian couple, have named their daughter after Mirae mutual fund. The couple was a regular investor in MF and were happy with the reurns:
A Sweden-based Indian couple, have named their daughter ‘Mirae’ drawing inspiration from Mirae Asset Mutual Fund, in a testament to the growing popularity of mutual funds in India. Mirae Asset Mutual Fund has been one of the top performers with two of its funds in particular, Mirae Asset Large Cap Fund and Mirae Asset Emerging Bluechip delivering strong performance relative to their category and benchmark over the past 5-7 years. The couple are resident Indians, currently in Sweden on a project for their employer.
Speaking on behalf of the family, Dr Rohan Chahande, 40, a Nagpur-based financial services

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Let hundred Dwijendra Tripathis (business historians) bloom

3 days ago

This post reviews the proceedings of ‘The International Conference on Indian Business and Economic History’ held at IIM Ahmedabad on 29-31 Aug 2019. The conference was held in the memory of Prof Dwijendra Tripathi, who taught business history in IIMA for four decades. Prof Tripathi passed away last year on Teacher’s day!
It was a tragedy that the course was not taught for next 25 years before Chinmay Tumbe started teaching it once again in IIMA. This conference was organised by a team led by Chinmay which wanted to take the legacy of Prof Dwijendra Tripathi forward. No words are enough for the team which put a stellar effort to make this event a reality.
Conference Proceedings:

How does one react meeting and hearing the four stalwarts of Indian business history- Tirthankar Roy, Medha

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If You Don’t Understand Banks, Don’t Write About Them

3 days ago

Frances Coppola in this piece reviews this book and laments how little scholars who work on banking know:

You’d think, after all the soul-searching in finance and economic circles over the last decade, that people writing about banks and money creation would, now, know how they work. After all, it is more than five years since the Bank of England produced its authoritative paper on money creation and Admati & Hellwig published their book on bank capital. But money creation myths still abound. Here’s one, in a recently published book by a high-profile British economic commentator:

Banks, on the other hand, can lend out money without first taking a deposit, because states give them the right to issue loans in the national currency, subject to certain rules. BigBank Inc could lend £90

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Opening the toolbox: how does the Reserve Bank of NZ analyse the world?

3 days ago

Team of RBNZ econs in this article:
This article describes how the Reserve Bank analyses international shocks and their implications for monetary policy. As a small open economy, New Zealand is particularly vulnerable to international shocks. The Bank has a long tradition of using a wide range of models to assess the impact of different types of international shocks and their spillovers to New Zealand through various channels. This modelling has explored the transmission of these shocks through trade, financial, and confidence or uncertainty linkages. As the international economy and financial markets continue to evolve, the Bank will continue to refine its modelling strategy to better understand how these shocks evolve and transmit through to the domestic economy.
Good way to review

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Will the digital money be like the one-sided coin? History of one-sided and two-sided coins..

3 days ago

Superb speech by Johannes Beermann of Bundesbank.
She says the advent of digital money is like a toss with the coin still hanging in the air. Which way it will land we have to see.
She starts with how football matches are started with the toss of a coin and why two sided coins matter:
Welcome to the Seehaus right at the heart of the English Garden.
This park is a true landmark of the city of Munich, with a design inspired by British landscape architecture.
It probably comes as no surprise that football – another at least originally English pastime – is popular around here as well.
Of course, “kicking a ball” with friends in a park such as the English Garden is a more informal affair than the matches you might see in the professional football leagues, where the stakes are arguably much

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Lesson from history of Rothschilds and US free banking

4 days ago

Lars Rhode, Governor of Denmark Central bank in this speech speaks on trust in financial services (what else to talk!).
My topic is trust and transparency in the financial system.
In recent years, the topic has surfaced again following a number of unfortunate issues that have accumulated since the financial crisis. For a long time we may have thought that this was primarily a problem that existed outside Denmark’s borders. But then cases emerged in Denmark too. There have been money laundering cases, there have been deliveries of very large banknotes to bureaux de change, and incorrect advice has been provided in connection with investment  products. The financial sector has been involved in transactions that have drained the government  coffers of many billions of kroner in dividend

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Agri finance: Another year, another panel. Will things change?

5 days ago

RBI released a report on Agricultural credit over the last weekend. I review the report in moneycontrol.

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This entry was posted on September 17, 2019 at 12:32 pm and is filed under Agriculture, Central Banks / Monetary Policy, Indian Economy/Financial Markets, reports. You can follow any responses to this entry through the RSS 2.0 feed.
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Liquidity and funding for banks under resolution

5 days ago

Should the central bank provide liquidity to banks under resolution? A bank needs both capital and liquidity to survive. A bank fails if it has either of the two.
Torbjørn Hægeland, Executive Director of Norges Bank Financial Stability, in this speech discusses the policy options:
resolved or not, a bank not only needs sufficient capital, but also needs sufficient liquidity. Payment intermediation is a vital core function of banks. Being a bank means participating in the settlement of payments, which means the bank must be liquid. How liquid is a bank that opens on a Monday morning after being resolved over the weekend? A newly resolved bank is not necessarily liquid for various reasons.
One reason is that prior to resolution, the bank will probably have depleted almost its entire

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MARTIN Has Its Place: A Macroeconometric Model of the Australian Economy

5 days ago

A team of economists at RBA in this paper explain their macro model MARTIN:
This paper introduces MARTIN – the Reserve Bank of Australia’s (RBA) current model of the Australian economy. MARTIN is an economy-wide model used to produce forecasts and conduct counterfactual scenario analysis. In contrast to other large-scale models used at the RBA – and at many other central banks – which adhere to a narrow theoretical view of how the economy operates, MARTIN is a macroeconometric model that consists of a system of reduced form equations built to strike a balance between theoretical rigour and empirical realism.
Most of the model’s equations align closely with the way RBA staff typically interpret the behaviour of individual economic variables. However, combining these individual

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History of GDP goes beyond the usual narrative

5 days ago

Jacob Assa in this paper says GDP is more of a political construct and symbol of power:

Histories of Gross Domestic Product (GDP) – both critical and favorable – have become somewhat of a cottage-industry since the global financial crisis of 2008. Following the Stiglitz Commission, numerous general-audience books have appeared, describing the rise of GDP, analyzing its limitations, and offering reforms or alternatives. These histories, however, suffer from three key problems. First, nearly all begin in the 1930s, following the Great Depression and the lead-up to World War II. Very little if anything is said of the 250 preceding years, a period implicitly thought of as a pre-history of GDP. Second, and as a result of this limited chronological lens, GDP is considered to be a

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Rothschild emerges from the shadows for the Centenary of the London Gold Fixing

5 days ago

Ronan Manly has a must read post in Bullionstar. 2019 marks the 100 years of fixing of world gold prices!:
This month in London marks the 100th anniversary of the first “London Gold Fixing”, the infamous daily meeting of a secretive cartel of bullion banks which has met since 1919 to set benchmark gold prices used throughout the international gold market, a meeting which continues to this day through its thinly disguised successor, the LBMA Gold Price auction.
London gold price benchmarks are critically important to the global gold market because they are used as a valuation source for everything from ISDA gold interest rate swap contracts to gold-backed Exchange Traded Funds (ETFs), and everything from OTC gold contracts to transaction reference prices used by physical bullion

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The net impact of RBI transfer on balance sheet is about Rs 89159 cr

8 days ago

The RBI gave record transfer of Rs 1.76 lakh crore to the government. The Rs 1.76 lakh crore in turn comprised Rs 1.23 lakh cr annual dividend and Rs 53,000 cr on account of excess transfers. See my article for more details.
RBI announced this transfer on 26 Aug 2019. RBI releases the weekly balance sheet which gives ideas on how the transfer actually took place. If we see the balance sheet changes from 23 Aug 2019 to 30 Aug 2019, we get some ideas.

In Rs crore

23-Aug-19
30-Aug-19
Change
Reasons
1 Notes Issued
2162511
2150393
-12118
Currency declines?
1.1 Notes in Circulation
2162500
2150382
-12118

1.2 Notes held in Banking Department
11
11
0

2 Deposits
729835
838249
108414

2.1 Central Government
101
101
0

2.2 Market Stabilisation Scheme

2.3 State Governments
42
42
0

2.4

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Central Bank of Philippines ranked the most trusted agency in Philippines for 25 times in 32 years of Survey!

9 days ago

Central bankers talk a lot about independence, trust and so on. They justify their independence based on the value they bring to the society. The proof pf pudding lies in eating and what matters most is how public perceives the central bank.
Apparently Central bank of Philippines is doing great in this aspect. Mr Benjamin E Diokno, Governor of Bangko Sentral ng Pilipinas (BSP, their central bank) in this speech says central banking goes beyond numbers:
This brings me to my next point-that strong institutions are critical in nation-building and this is true for a central bank.  So for us here in BSP, our ability to deal with the risks and challenges of the economy is largely dependent on how well-prepared and pro-active the central bank is.
We have our radars. We see the risks, the

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A saga ends in India’s cradle of banking: South Canara

9 days ago

Superb piece by M. Raghuram in Mint:
In the new wave of bank mergers announced by finance minister Nirmala Sitharaman on 30 August, Syndicate Bank will now be merged with the anchor Canara Bank. In short, Syndicate Bank will cease to exist.
The Udupi-born Corporation Bank will also lose its name. Founded by Khan Bahadur Haji Abdullah Haji Kasim Saheb Bahadur in 1906, it will be merged with Union Bank of India and Andhra Bank. Last year, another local bank, Vijaya Bank, which was started by the Bunt (landowners) leader A.B. Shetty, was merged with Bank of Baroda.
So, Canara Bank is now the lone public sector bank standing in the region that has been dubbed the “cradle of banking”. Before they were bifurcated in 1997, the Udupi and Dakshina Kannada districts had birthed five banks. Four

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50 years of remarkable relationship between the Federal Reserve Bank of Minneapolis and the University of Minnesota..

9 days ago

In end-August 2019, Minneapolis Fed and Univ of Minnesota hosted a conference celebrating their 50 years of association.
Sound economic research is the bedrock of solid economic policy. That research is often inspired by confronting key policy issues in an independent environment.
The proof will be on display August 21-23 when some of the world’s leading economic thinkers gather for an academic conference—“Research and Policy: A Golden Minnesota Partnership”—and for a historic public event, a conversation with “The Four Horsemen of the Economic Revolution.”

t’s all to celebrate a half-century of a unique partnership between the Minneapolis Fed and the University of Minnesota, a collaboration that has fueled pioneering research and driven significant impact on monetary and public

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How Do Private Digital Currencies Affect Government Policy?

9 days ago

Max Raskin, Fahad Saleh, and David Yermack in this paper show support for digital currencies:
This paper provides a systematic evaluation of the different types of digital currencies. We express skepticism regarding centralized digital currencies and therefore focus our economic analysis on private digital currencies. Specifically, we highlight the potential for private digital currencies to improve welfare within an emerging market with a selfish government. In that setting, we demonstrate that a private digital currency not only improves citizen welfare but also encourages local investment and enhances government welfare.

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This entry was posted on September 12, 2019

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250 years of history of covered bonds

9 days ago

On 29 Aug 1769, Frederick II led discussions on the introduction of a new financial instrument, which was later sealed by a cabinet order signed in Wrocław (Breslau) which in in Poland today. The year 2019 marks 250 years of covered bonds.
EBRD reviews this fascinating history of covered bonds:
Financial innovation is as old as the financial sector itself. But sometimes we can move forward by dusting off instruments that have been in our tool box for a long time, adapting them to modern usage and applying them, in order to address contemporary challenges. Such is the case with covered bonds.
First introduced by Frederick II of Prussia exactly 250 years ago, covered bonds have now become a major building block in efforts to build safe and efficient capital markets in many central and

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The Well-meaning Economist: Choosing an appropriate “mean” matters..

9 days ago

Adam Gorajek of RBA in this paper writes why choosing “mean” matters:
Economists usually inform policymakers with conclusions that come from studying the conditional expectation, i.e. arithmetic mean, of some potential outcome. But there are other means to study, from the same ‘quasilinear’ family. And they can support very different conclusions. In trade research, for instance, studying other means can transform the perceived roles of colonial history, geography, and trade wars. In wages research, studying other means can reverse perceived earnings differentials between groups. Similar scenarios will be common in other tasks of policy evaluation and forecasting. To choose means well I propose selection criteria, which also consider options that are outside of the quasilinear family,

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Switching costs in the Finnish retail deposit market

10 days ago

Tuomas Takalo of Bank of Finland in this paper:
I calibrate switching cost for the Finnish retail deposit market by using the approach developed by Oz Shy (2002). It turns out that switching costs faced by deposit customers of the main banks are high, ranging from 200 euros to nearly 1,400 euros. Over the past 20 years, switching costs have increased by roughly 50% in real terms, but in relation to average account balance, switching costs have not essentially changed. I conjecture that differences in the switching costs among the Finnish banks might be explained by differences in their loyalty programs.
Switching costs look really high for Indian depositors too and need to be worked out…

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Jihadi attacks, media, and local anti-Muslim hate crime

10 days ago

Ria Ivandic, Tom Kirchmaier and Stephen Machin in this piece reflect on the role of media in hate crime:
The attacks on mosques in Oslo and Christchurch have again called attention to the rise in anti-Muslim sentiment that is increasingly becoming normalised in media and on social platforms. This column studies the role the media plays in local increases in Islamophobic hate crime following jihadi terror attacks. Data from Greater Manchester Police reveal a spike in Islamophobic hate crime and incidents following ten international jihadi attacks. Other jihadi attacks that were much less prominent in the UK media, but no less lethal, did not generate the same spikes, suggesting that anti-Muslim hate crime is magnified by media coverage. 

…..
That anti-Muslim hate crime is magnified by

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RBI Committee on the Development of Housing Finance Securitisation Market: Review

10 days ago

RBI released a new report on Development of Housing Finance Securitisation Market.
I review the findings of the report in my new article in Moneycontrol.

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This entry was posted on September 11, 2019 at 4:06 pm and is filed under Indian Economy/Financial Markets. You can follow any responses to this entry through the RSS 2.0 feed.
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When people worried over surveillance powers of e-money way back in 1975..

12 days ago

Came across this interesting publication : Computers and People written way back in 1975 (HT: JP Koning blog).  In the publication, several people have written on computers and applications in 1975.
Paul Armer, Center for Advanced Study in the Behavioral Sciences at Stanford Univ writes on Computer Technology and Surveillance.
His take on Electronic Fund transfer (ETFs) is quite interesting and should be read by one and all. ETFs were just beginning to take shape back then.
Let me now turn to a new topic. Several times I have” referred to situations where the technology under discussion was developed for reasons otherthan surveillance, but it happens that it is useful for surveillance purposes. As a prime example of this I want to talk about electronic funds transfersystems. I can’t

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British stock markets from 1829-1929

12 days ago

Interesting piece by Gareth Campbell, Richard Grossman and John Turner:
Although long-run stock market data are an important indicator, obtaining them is challenging. This column constructs new long-run broad-based indices of equities traded on British securities markets for the period 1829-1929 and combines them with a more recent index to examine the timing of British business cycles and compare returns on home and foreign UK investment. One finding is that the capital gains index of blue-chip companies appears to be a good bellwether of macroeconomic behaviour.
Can we use these stock market indices to understand British macroeconomic fluctuations over the long run? We use Chadha et al.’s (2000) catalogue of business cycle peaks and troughs from 1857 to 1954, and the OECD indicators

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From pecan pralines to ‘dots’ as currency: how the prison economy works

12 days ago

Superb piece by Richard Davies (HT: JP Koning blog).
Davies tracks the economies and currency markets in prisons in Louisiana (also called as Angola):
In many ways, a prison’s official economy is like that of a regular town. In Angola there is a world of work, with jobs and pay, promotions and demotions. And there is a world of shopping, with consumer goods and stores. But prisons are economic systems in which the cost of goods bears no relation to wages or the buying power of the workforce. The most important connections of a market economy – the prices that link work and pay, demand and supply – have been severed, intentionally, by the authorities. The official prison economy exists, but it may as well not, leaving the prisoners to build their own underground markets.
In the

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Former Central Bank of Ukraine Governor struck by a car: accident or threat?

12 days ago

Central Bank of Ukraine (called National Bank) and its officials have been under pressure both from government and private sector. The central bank forced nationalisation of PrivatBank, a private bank owned by an oligarch. The oligarch threatened the nationalisation in court which went in his favour. The Governor who forced nationalisation was Valeria Gontareva and she was given death threats etc back then as well.
However, it seems problems continue.
The former Governor is currently a Prof at LSE was recently struck by a car in London. Her friends smell something fishy about it:
Valeria Gontareva, the former head of the National Bank of Ukraine (NBU), says she has been hospitalized in London since Monday, Aug. 26 after she was struck by a car in the city center of the U.K. capital.

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RBI’s report on developing secondary market for loans

12 days ago

RBI recently released a report on the need to develop a secondary market for corporate loans.
In this moneycontrol article, I review the main findings of the report.

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This entry was posted on September 9, 2019 at 4:03 pm and is filed under Indian Economy/Financial Markets, Policy, reports. You can follow any responses to this entry through the RSS 2.0 feed.
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