Archive for August 16th, 2018

Using CPI vs RPI: Politics over using measures of inflation in UK…

August 16, 2018

Nice piece on the issue. Despite being deeply flawed, UK still uses Retail Price Index as a measure of inflation.

RPI overstates inflation and thus is disliked:

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200 Swiss Franc new banknote: No personalities

August 16, 2018

The design of some of these European banknotes is just so fascinating.

Here is the new design of CHF 200 banknote. It is equivalent to nearly 15,000 Rs which tells you how Swiss are not as worried about high denomination notes as other countries are.

 

Inequality is highest in the Middle East..

August 16, 2018

Facundo Alvaredo, Lydia Assouad and Thomas Piketty relook at the inequality in Middle East using different sets of data. They say the region has highest inequality amidst the other regions in the world:

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How forex market operations of the RBI alter domestic liquidity conditions: A Primer

August 16, 2018

A team of RBI researchers (Janak Raj, Sitikantha Pattanaik, Indranil Bhattacharya and Abhilasha) have this nice short note in recent RBI Bulletin.

This article explains how forex market operations of the Reserve Bank of India alter domestic liquidity conditions, which are then modulated consistent with the stance of monetary policy. The Reserve Bank’s intervention in the forex market is aimed at containing volatility. The
attendant impact on liquidity conditions may necessitate durable liquidity absorption/injection operations by the Reserve Bank depending on the state of durable liquidity requirements of a growing economy at any point in time. The effectiveness of sterilised interventions, however, may occasionally become an issue for the independent conduct of monetary policy.

It is a good primer to figure the several interlinkages in RBI’s policies.

So, when capital flows are excessive, RBI sterlises the flows by doing open market purchases. This purchases in turn lead to higher interest rates leading to more capital flows. So we have both sterlisation (first round) and offset sterlisation (in the second round). The primes also estimates coefficients of both the sterilisations:

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The difficulty of being a monetary/banking policymaker in Europe: Balancing European and nationalistic interests

August 16, 2018

Ms Sabine Lautenschläger of ECB in this interview speaks about the state of banking developments and regulation in Euroarea. The interview talks about other things such as lack of women representation in central banking, stronger state of US banks and so on.

But what was most interesting is the way she balances her answers. The interviewer asks her a country specific question but she just replies for the Euroarea as a whole:

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