Archive for February 13th, 2019

How Estonia appoints its central bank Governor?

February 13, 2019

Central banks appoint their Governors and Deputy Governors in multiple ways. There is no one standard way.

Came across this Press release by Estonia Central Bank (called Eesti Pank) where secret ballot is used to select the Governor:


For many in Dakshina Kannada, Vijaya Bank is an emotion…

February 13, 2019

I blogged about how people in Dkashina Kannada region (Mangalore and included Udupi earlier) are really upset with Vijaya Bank’s merger (Dena bank too) with Bank of Baroda.

Here are two articles which continue to point to sorrows and protests amidst the local people over their bank’s merger and loss of identity:

These are sentiments which have built up over the years. The kind of fondness people have for “their banks” is best seen in Mangalore and Udupi regions.

Once there was an IDBI..

February 13, 2019

My new piece in Bloomberg Quint.

It documents the glorious days of IDBI where the financial institution was set up by RBI. It is one of those few entities which led to changes in RBI as an organisation. Now we know IDBI as a bank has been sold off to LIC and it could even lose its name  to becoming LIC Bank.

How India’s financial institutions and banks are exiting one after the other. But we have barely cared for documenting and preserving their history.. And soon we will be creating new institutions which will be just like the old ones under a new name.

It is not so much about history alone but also understanding the present and possibilities for future..

Women in Economics: Elinor Ostrom

February 13, 2019

Tylwer Cowen (Marginal Revolution Univ) discusses Elinor’s work as part of MRU’s series on Women in Economics.

Some governments attacking central bank liabilities and other assets: Case of Italy wanting central bank gold..

February 13, 2019

Firstly, Italy’s politicians have begin attacking the central bank for failing to clean banks in the country.

Further, an Italian newspaper has reported that government wants to sell part of country’s gold to cover its expenses. The gold is not just managed but owned by the central bank. This will obviously lead to all kinds of frictions. From the bullionstar blog by Ronan Manly:

Italy’s unpredictable political situation continues to throw up surprises with a controversial claim in national newspaper La Stampa this week that the country’s coalition government wants to sell part of Italy’s gold reserves to cover spending plans and to prevent the need to increase VAT in a forthcoming Italian budget.

While the claims by La Stampa are not really based on anything new, they still managed to cause an international media frenzy as they came a few days after Italy’s governing coalition launched verbal attacks on Italy’s central bankers and financial regulators.

Note that Italy claims to be the world’s third largest sovereign gold holder behind the US and Germany, with claimed monetary gold holdings of 2451.8 tonnes. Interestingly, unlike most countries where sovereign gold is owned by the State but managed by the country’s central bank, the Italian gold is officially owned by Italy’s central bank, Banca d’Italia (Bank of Italy), and not owned by the Italian State.

The Banca d’Italia furthermore claims that 1199.4 tonnes of the gold (or roughly half), is stored in the Bank’s gold vaults under it’s Palazzo Koch headquarters building in Rome, with most of the other half stored in the vaults of the Federal Reserve Bank of New York (FRBNY), and a small balance kept the Bank of England in London, and in an account of the Bank for International Settlements (BIS) in the vaults of the Swiss National Bank (SNB) in Berne, Switzerland. But without any documentary evidence or independent auditing or verification of any of its gold, especially the foreign held gold, these claims are impossible to verify.

Note also that the current Italian government is made up of a coalition of the right-wing League party (Lega), a party headed by Matteo Salvini, and the populist Five Star Movement (M5S), a party headed by Luigi Di Maio, but with the appointed Giuseppe Conte as prime minister (backed by Lega and M5S), and with Salvini and Di Maio as vice prime ministers.

Lots more in the piece on Italian politics and its economics…

It’s always a mistake to underestimate the strength of the European project..

February 13, 2019

Benoit  Coeuve, member of ECB in this interview on the European project:


Finland’s basic income experiment: self-perceived wellbeing improved but no effects on employment

February 13, 2019

Universal Basic Income is a much talked about idea these days.

Finland did an experimental study in 2017 to find the effect of basic income:

The basic income experiment was launched on 1 January 2017. During the experiment, a total of 2,000 unemployed persons between 25 and 58 years of age received a monthly payment of €560, unconditionally and without means testing. The experiment run for two years until 31.12.2018. 

The purpose of the basic income experiment was to find ways to reshape the social security system in response to changes in the labour market. The experiment also explored how to make the system more empowering and more effective in terms of providing incentives for work. Further objectives included the reduction of bureaucracy and the streamlining the complicated system for providing welfare benefits.

The preliminary results of the experiment have been released:

The effects of the basic income experiment on wellbeing was studied through a survey which was done by phone just before the experiment ended.

According to the survey, the recipients of a basic income perceived their wellbeing as being better than did the control group. 55% of the recipients of a basic income and 46% of the control group perceived their state of health as good or very good. 17% of the recipients of a basic income and 25% of the control group experienced quite a high degree or a very high degree of stress.

‘The recipients of a basic income had less stress symptoms as well as less difficulties to concentrate and less health problems than the control group. They were also more confident in their future and in their ability to influence societal issues’, says Minna Ylikännö, Lead Researcher at Kela.

The recipients of a basic income were also more confident in their possibilities of finding employment. In addition, they felt that there is less bureaucracy involved when claiming social security benefits and they were more often than the control group of the opinion that a basic income makes it easier to accept a job offer or set up a business.

‘The results of the register analysis and the survey are not contradictory. The basic income may have a positive effect on the wellbeing of the recipient even though it does not in the short term improve the person’s employment prospects’, says Ylikännö.

The response rate for the survey was 23% (31% for the recipients of a basic income and 20% for the control group).


The recipients of a basic income had on average 0.5 days more in employment than the control group. The average number of days in employment during the year was 49.64 days for the recipients of a basic income and 49.25 for the control group.

The proportion that had had earnings or income from self-employment was approximately one percentage point higher for the recipients of a basic income than for the control group (43.70% and 42.85%). Then again, the amount of earnings and income from self-employment was on average 21 euros lower for the recipients of a basic income than for the control group (€4,230 and €4,251).


Expect fair amount of discussion on this going forward…

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