Archive for July 9th, 2019

SEBI’s transfer of surplus to government raises more questions than answers

July 9, 2019

My new article in Moneycontrol.

I had pointed earlier that the SEBI is being asked by the government to transfer its surplus to latter.

Apparently, the Government has gone ahead with the proposal in the recent Budget. The article discusses this new proposal.

It has proposed an amendment in SEBI Act (1992) in the Finance Bill under which SEBI will now transfer 75% of its surplus to the Government. In a way this is not new, as SEC also transfers funds to the government.

Based on SEBI’s numbers, the transfer amount is too small and may not matter. But that is not the point. Ideally, government should have discussed this in the speech or bring to notice in some other way. It is buried in fineprint of Finance Bill which is again a case of using Money Bill for important policy changes.

The move opens up familiar questions which we ask when such actions are taken in case of central bank.

Much more in the piece.

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Global Dimensions of U.S. Monetary Policy

July 9, 2019

Maurice Obstfeld of Univ of California Berkeley in this research paper says there are 3 channels:

This paper is a partial exploration of mechanisms through which global factors influence the tradeoffs that U.S. monetary policy faces. It considers three main channels.

The first is the determination of domestic inflation in a context where international prices and global competition play a role, alongside domestic slack and inflation expectations.

The second channel is the determination of asset returns (including the natural real safe rate of interest, r*) and financial conditions, given integration with global financial markets.

The third channel, which is particular to the United States, is the potential spillback onto the U.S. economy from the disproportionate impact of U.S. monetary policy on the outside world.

In themselves, global factors need not undermine a central bank’s ability to control the price level over the long term — after all, it is the monopoly issuer of the numeraire in which domestic prices are measured. Over shorter horizons, however, global factors do change the tradeoff between price-level control and other goals such as low unemployment and financial stability, thereby affecting the policy cost of attaining a given price path.

 

Budget has lived its life, and deserves rebirth

July 9, 2019

Ashok Desai, former Chief Economic Advisor in this article says we need to revamp the budget and give it a new life.

It has stopped being a budget and more about just pleasing the Parliamentarians….

Dubai airports allow using Indian Rupee: History revisits itself..

July 9, 2019

It is interesting to get such stories:

The Indian Rupee will now be accepted for transaction at all airports in Dubai, according to a leading newspaper in the United Arab Emirates.

The acceptance of Indian currency is good news for tourists from that country as earlier they lost a sizeable amount due to exchange rates, sources said.

As per a report in the Gulf News, the Indian currency is now acceptable at all three terminals of Dubai International Airportand at Al Maktoum Airport. “Yes, we have started accepting the Indian rupee,” a Dubai duty free staff told the newspaper.

Nearly 90 million passengers passed through Dubai aiports last year, 12.2 million were Indians, the report quoted. Indian travellers had to earlier convert the rupee into Dollar, Dirham or Euro before they could shop at Dubai’s duty free shops.

The Indian rupee is the 16th currency to be accepted for transaction at Dubai Duty-Free since its opening in December 1983, said the report.

Obviously, it is fashionable to call any such thing as a first time. We forget that there is a long history of Indian Rupee being widely accepted in the region:

(more…)

20th anniversary of Euro: Twenty papers to better understand the single currency

July 9, 2019

Nauro Campos and Fabrizio Coricelli do us a huge favor by listing the 20 papers one should be reading to understand Euro.


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