Archive for February, 2018

The government of Canada seeking authority to remove legal tender status from old Canadian bank notes…

February 28, 2018

It is interesting how certain constitutions/rulebook restrict powers of the central government.

For instance in case of Canada, the Government does not have the authority to withdraw legal tender status of notes. Thus even some old notes issued since 1935 (when Bank of Canada started) which are barely in circulation remain legal tender. This is different from other countries where the Government can just withdraw legal tender of all possible banknotes.

Bank of Canada updates on this bit:

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Can Europe build a digital financial centre from scratch?

February 28, 2018

Interesting speech from Joachim Wuermeling of Bundesbank. It is nice when you read words like Continental Europe being used by central bankers.

He says post Brexit, things are difficult for both Europe and UK. London is poised to lose the several advantages it had pre-Brexit especially in the area of financial services where it was at numero uno position.

In this kind of a setting, can Europe build its own financial centre? History of financial centres suggests one can leapfrog over others:

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Listening to the buzz: social media sentiment and retail depositors’ trust

February 28, 2018

Interesting paper by Matteo Accornero and Mirko Moscatelli of Bank of Italy. They analyse the impact of Twitterati on bank deposits:  

We investigate the relationship between the rumours on Twitter regarding banks and deposits growth. The sentiment expressed in tweets is analysed and employed for the nowcasting of retail deposits. We show that a Twitter-based indicator of sentiment improves the predictions of a standard benchmark model of depositor discipline based on financial data. We further improve the power of the model introducing a Twitter-based indicator of perceived interconnection, that takes into account spillover effects across banks.

Need to figure the methodology of this research…

Why central banks must consider anonymity as a condition for their digital cash operations..

February 27, 2018

JP Koning has a post on the topic.

Central banks are pushing for digital cash as it limits the anonymity function which current physical cash enjoys. However, most people pay by cash largely as it keeps their identity anonymous from the state. Thus, for digicash to become popular, anonymity is important:

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Money and monetary stability in Europe, 1300-1914

February 27, 2018

K. Kıvanç Karaman, Sevket Pamuk and Seçil Yıldırım-Karaman write on the monetary stability  in Europe over 6 centuries since 1300:

 

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You can’t have Denmark without Danes: What it can and can’t teach us?

February 26, 2018

Superb piece by Megan McArdle of Bloomberg View.

She recently traveled to Denmark and tried figuring out what makes it such a livable country. Despite the country known for high social cohesion and surveys showing people return your wallet etc.  But what followed showed what Denmark actually stood for – total trust: (more…)

The collateral damage of PNB scam being felt on Gitanjali employees…

February 26, 2018

The bank may choose to give loans on little collateral but eventually someone has to pay the collateral. In this case, it is the employees of the Gitanjali group:

The Punjab National Bank – Nirav Modi scam has left thousands of employees of various companies owned by the billionaire diamond jeweller and Mehul Choksi stranded, unemployed and helpless. Workers who’ve dedicated over a decade of their lives to Modi and Choksi’s companies Gitanjali Gems and its various subsidiaries are now struggling to make ends meet, to pay their rent or to collect money for their loved one’s medical treatment.

Let’s listen in to the unheard voices of employees of the Gitanjali group in Mumbai who are living a nightmare in the wake of the PNB- Nirav Modi & Mehul Choksi fraud:

It is really sad to see a business which has been built by the Panapuri Jains on trust and community building, to be seen in this mess…

 

Bitcoin is more trustworthy than some academic critics

February 26, 2018

Prof Larry White takes on the academic critics on bitcoin:

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The rise of Palanpuri Jains who monopolise much of India’s diamond business…

February 26, 2018

As Nirav Modi Saga builds, it is interesting to get some business history lessons.

Nirav Modi belongs to a community of Palanpuri Jains who have monopolised the diamond trade in India. Palanpur is a small town to the north of Gujarat. Here is a superb video on Live History India portal documenting their rise.

This article notes how it is a tight knit community who apart from their diamonds also care a lot about food:

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RIP: Mr. A.V. Rajwade

February 26, 2018

Mr A.V Rajwade passed away during the weekend. He had this interesting background of starting work  at SBI and then become a consultant for financial market players on several issues like derivatives pricing, forex advice and so on. He wrote regularly on developments in financial markets and economics in the media. That he continued to write till very recently, when he was well in his 80s, shows the spirit of the person.

I had brief interactions with Mr Rajwade which were not very pleasant. But nonetheless that is past now and his energies even then were quite something.

Dr. Ajit Ranade writes a nice obituary…

 

Banking crises and frauds: An Indian history..

February 26, 2018

My new piece in Mint.

I take a deep dive into Indian banking history of around 200 years and show that frauds and scams have been a fairly integral part of Indian financial history. Most banking euphoria whether in terms of opening new banks or giving loans is eventually met with some fraud or failure. Most bank crises are nothing but accounting adventures and misrepresentations.

I want to add how banking is not just an Indian problem but of most countries today. Post 2007, the malaise started with French bank BNP Paribas and then quickly the base shifted to US banks. Then it quickly spread to most western European countries. It has been more than  ten years since but no signs of abetting.We see continued signs of distress in banking system across countries: US, UK, Italy, Ireland, Greece, Spain, Russia, Australia, South Africa, Latvia and many more (still counting). There have been all kinds of problems starting from how LIBOR was rigged by players.

How greed and lack of ethics has got deeply entrenched in banking makes us go back to Amartya Sen’s words as mentioned in the article.

 

Politics of inflation measurement in UK: Why RPI is preferred over CPI?

February 22, 2018

Mark Carney in a recent speech asked for cautionary withdrawal of Retail Price Index as a measure of inflation in UK.

Prof. Robert O’Neill of  University of Huddersfield in this piece tells us why:

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Asian political economy: China beats India to slice of Dhaka Stock Exchange

February 22, 2018

Didn’t know this was happening. Apparently Dhaka Stock Exchange is modernising and demutualising. It had set aside 25% ownership for a foreign player and both India and China were vying for the pie.

Finally, Chinese authorities managed their hands over it:

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Will Pakistan excel in the digital and AI revolution? Answer lies in English skills…

February 21, 2018

Waqar Younas (not the former fast bowler who anyways spelled his name as Younis) has a piece in Dawn. He works in tech sector.

He says for Pakistan to play its part in digital world, English skills are crucial:

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How churches are improving wi-fi access in rural England?

February 21, 2018

Interesting piece:

The initiative stems from an agreement between the Church of England and the UK government, and comes more than two years after former prime minister David Cameron promised to bring fast broadband to all UK homes and businesses by 2020. Many small communities in the UK do not have access to speedy internet, and the new arrangement is expected to improve Wi-Fi connections in up to a million properties.

“Churches are central features and valued assets for local communities up and down the country,” secretary of state Matt Hancock says in a statement. “This agreement with the Church of England will mean that even a 15th century building can help make Britain fit for the future, improving people’s lives by boosting connectivity in some of our hardest-to-reach areas.”

….

Using one’s smart phone during church services is, presumably, still discouraged.

🙂

Learning about Korean coin history via Korean pop music…

February 21, 2018

Nice post by Emily Pearce Seigerman, a museum specialist with the National Numismatic Collection.

She says best way to remember history of coinage in Korea is by linking it with their pop music:

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The new supplier of Danish Banknotes has been chosen…

February 21, 2018

I had blogged earlier how Denmark is outsourcing both printing of banknotes and minting of coins. Minting was awarded to Mint of Finland.

Now the central bank has announced that printing is being outsourced to a French firm- Oberthur Fiduciaire SAS:

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Demand for cat meat in Chennai and it being a repugnant good…

February 21, 2018

As I was reading this piece on rising demand  for cat meat in Chennai, I was feeling my stomach churn. As Al Roth asked why certain meats like chicken, fish are acceptable and others like horse, cat etc are repugnant?

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Chit funds to be called as Fraternity funds..

February 20, 2018

The Cabinet recently approved a new bill to ban Unregulated Deposit Schemes and amend Chit Funds Act 1982. The Chit Funds Act is here.

So what does the amendment propose?

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Where and why Central Banks choose to keep their gold reserves? Sweden edition..

February 20, 2018

Came across this press release from Riksbank (Sweden’s central bank).

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