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Tag Archives: currency

How Does U.S. Monetary Policy Affect Emerging Market Economies?

Ozge Akinci and Albert Queralto The question of how U.S. monetary policy affects foreign economies has received renewed interest in recent years. The bulk of the empirical evidence points to sizable effects, especially on emerging market economies (EMEs). A key theme in the literature is that these spillovers operate largely through financial channels—that is, the effects of a U.S. policy tightening manifest themselves abroad via declines in international risky asset prices, tighter...

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How Does U.S. Monetary Policy Affect Emerging Market Economies?

Ozge Akinci and Albert Queralto The question of how U.S. monetary policy affects foreign economies has received renewed interest in recent years. The bulk of the empirical evidence points to sizable effects, especially on emerging market economies (EMEs). A key theme in the literature is that these spillovers operate largely through financial channels—that is, the effects of a U.S. policy tightening manifest themselves abroad via declines in international risky asset prices, tighter...

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Monetizing Privacy with Central Bank Digital Currencies

Rod Garratt and Michael Lee In prior research, we documented evidence suggesting that digital payment adoptions have accelerated as a result of the COVID-19 pandemic. While digitalization of payment activity improves data utilization by firms, it can also infringe upon consumers’ right to privacy. Drawing from a recent paper, this blog post explains how payment data acquired by firms impacts market structure and consumer welfare. Then, we discuss the implications of introducing a...

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COVID-19 and the Search for Digital Alternatives to Cash

Rod Garratt, Michael Lee, and Aaron Plesset Today, the majority of retail payments in the United States are digital. Practically all digital payments are tracked, collected, and aggregated by financial institutions, payment providers, and vendors. This trend has accelerated during the COVID-19 pandemic as payments that require physical contact, such as cash, have been discouraged. As cash gradually becomes obsolete, consumers are left with fewer alternatives for making private...

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Token- or Account-Based? A Digital Currency Can Be Both

Rod Garratt, Michael Lee, Brendan Malone, and Antoine Martin Digital currencies, including potential central bank digital currencies (CBDC), have generated a lot of interest over the past decade, since the emergence of Bitcoin. The interest has only grown in recent months because of a desire for contactless payment methods, stemming from the coronavirus pandemic. In this post, we discuss a common distinction made between “token-based” and “account-based” digital currencies. We...

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How Fed Swap Lines Supported the U.S. Corporate Credit Market amid COVID-19 Strains

Nicola Cetorelli, Linda S. Goldberg, and Fabiola Ravazzolo The onset of the COVID-19 shock in March 2020 brought large changes to the balance sheets of the U.S. branches of foreign banking organizations (FBOs). Most of these branches saw sizable usage of committed credit lines by U.S.-based clients, resulting in increased funding needs. In this post, we show that branches of FBOs from countries whose central banks used standing swap lines with the Federal Reserve (“standing swap central...

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Have the Fed Swap Lines Reduced Dollar Funding Strains during the COVID-19 Outbreak?

Nicola Cetorelli, Linda S. Goldberg, and Fabiola Ravazzolo In March 2020, the Federal Open Market Committee (FOMC) made changes to its swap line facilities with foreign central banks to enhance the provision of dollars to global funding markets. Because the dollar has important roles in international trade and financial markets, reducing these strains helps facilitate the supply of credit to households and businesses, both domestically and abroad. This post summarizes the...

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What happens when a 96 bitcoin ransom payment ends up on Bitfinex?

"Hello, to get your data back you have to pay for the decryption tool, the price is $1,200,000... You have to make the payment in Bitcoins."This is a snippet from a recent court case concerning ransomware that just crossed my desk. Companies that fall victim to ransom attacks fear the publicity it might attract, so the details of these attacks are usually swept under the table. But in this case, the ransom payer—a British insurer that traced the bitcoins to Bitfinex, a major bitcoin...

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Back to School Blogs

By IMFBlog Trade wars and inverted yield curves do not typically top the charts of your summer, beach-friendly reading list. But summer in the Northern Hemisphere has disappeared as quickly as your last strawberry daquiri, right along with your ability to remember your computer password.  Trade wars and inverted yield curves do not typically top the charts of your summer reading list. Need a hand shifting gears?  We have put together a primer of our recent blogs, each a quick read, on...

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Taming the Currency Hype

By Gustavo Adler, Luis Cubeddu, and Gita Gopinath Escalating trade tensions are taking a toll on the global economy and are partly responsible for the recent downward revisions to our growth forecasts for 2019-20. Facing sluggish growth and below-target inflation, many advanced and emerging market economies have appropriately eased monetary policy, yet this has prompted concerns over so-called beggar-thy-neighbor policies and fears of a currency war. In this blog post, we discuss the...

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