Archive for April 5th, 2019

The application of behavioural insights to retail investor protection

April 5, 2019

Interesting report by IOSCO (HT: Regulation Asia)

Building on that important research, this report provides a literature review and reports on the results of a survey of IOSCO C8 jurisdictions focusing on how behavioural insights could be, and are being, used to respond to the following questions relevant to retail investor protection (the “Topic Areas”):

• Disclosure design: How can we apply behavioural insights to the presentation of disclosures to optimize retail investors’ absorption of essential information and resulting behaviour, and to what extent does the answer to this question vary for different segments of retail investors and different product types?
• Online interfaces: Many entities provide online interfaces primarily directed at attracting investments from retail investors. What design features, such as layout, reminders, and warnings, can online interfaces incorporate to help investors make informed investment decisions?
• Timeliness of information: When are retail investors most receptive to relevant disclosure or educational content (e.g., when the investor begins a new job or is about to make key decisions about retirement)?

This report acknowledges that, while behaviourally-informed measures in these areas have the potential to promote informed investor decision-making, their potential comes with limits. 

Disclosure and information, no matter how well-designed and no matter how well-timed their delivery, may not be sufficient on their own to achieve comprehensive retail investor protection. Standards of conduct imposed on the investment professionals on whom retail investors rely to recommend and manage their investments, as well as the regulation of investment products sold to retail investors, will continue to be part of the comprehensive set of measures employed by regulators to further retail investor protection.



The international role of the euro: down but not out

April 5, 2019

Claudio Borio of BIS in this speech:

Much has been said about the role of the euro in the international monetary and financial system and about the currency’s prospects. And much of it is not particularly encouraging.

Some of what has been said is about the future. Based on the lessons of history, there is a broad consensus on the financial and political preconditions for making that future a bright one.2 One can only conclude from those lessons that the distance to travel is, to put it mildly, considerable. I can hardly add
anything of value to that aspect of the debate.

Some of what has been said has been about the evolution to date. Take the IMF’s tally of the share of official foreign exchange reserves denominated in euros. This shows a sizeable diminution, from about 25% in 2012 to some 20% recently.3 Moreover, the ECB’s composite index of the euro’s international
role paints a similarly unflattering picture.4 One might conclude from all this that the euro has lost clout across the board.

Today, I would like briefly to question this verdict. My thesis is that the verdict is too categorical – a more nuanced assessment is in order.

I would like to argue that, in some significant but underappreciated respects, the euro’s heft has actually grown in recent years. I shall highlight three aspects: the euro’s influence on global bond markets; its influence on exchange rates globally; and its influence on the “effective pricing“ of commodities, regardless of the currency in which their prices are actually denominated.

Interesting sets of graphs in the speech..

Monitoring Digital Election Campaigns: Remembering Gordon Tullock

April 5, 2019

EPW edit points to the challenges of monitoring digital elections.

The campaigning for the upcoming Lok Sabha elections has been perhaps the most “digital” so far with parties across the spectrum now using, and often abusing, the digital tools available to them such as social media, mobile apps, online discussion forums, and mass messaging.

Last week, social media platforms came together with the Internet and Mobile Association of India to release a “Voluntary Code of Ethics” in consultation with the Election Commission of India (ECI). Through this, Facebook, Google, Twitter and others will monitor and take action against election-related paid advertisements that violate the ECI guidelines. This code claims to ensure that there is no misuse of the platforms that can “vitiate the free and fair character” of the electoral process.

Over the last decade, social media has developed from being a networking tool to becoming an important mode for citizen engagement that can empower, educate, and emancipate, changing the way in which democracies operate. However, as was evident from the Cambridge Analytica revelations, the personal data of millions of people was harvested using these very same tools for political gains. Closer home, along with threats of data harvesting, fake news is rampant and content websites are masquerading as “news outlets.” These instances reveal that while social media platforms can be empowering, they are still unequal forums with differential access determined by money and power.

This is not limited to India but is a huge issue worldwide.

It reminds me of this old post where I had pointed to a paper by prof Bruno Frey:


Ideas of Charan Singh (former Indian Prime Minister): the lone agrarian intellectual?

April 5, 2019

Prof Praveen Dhanda (Department of Political Science, Indraprastha College for Women, University of Delhi) in this EPW paper reflects on Charan Singh’s intellectual legacy:

Charan Singh’s intellectual practice has remained under-explored in the realm of the study of Indian intellectual traditions. At a time when development promises continue to elude agrarian and rural India, Singh’s ideas are worthy of serious attention because he presented a comprehensive critique of the development discourse in India from the perspective of agriculturists and the countryside. By noting why Singh’s written word should attract more attention, the paper goes on to mark the leitmotifs that may help one to navigate through Singh’s oeuvre. Further, it attempts to present an outline of three important developmental issues delved upon in Singh’s writings.

It is quite amazing to note how much Mr Charan Singh wrote and how his ideas differed from the mainstream…

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