The surprising recovery of currency usage

Currency usage began a long trend decline in the decades after World War II. This was expected to continue, and even accelerate, owing to payment technology innovations. Surprisingly, however, such usage as a percentage of GDP stopped falling and has increased quite sharply in recent years in most countries, with Sweden the major outlier. We examine to what extent this may have been due to increasing interest elasticity, nearing the zero lower bound, and also to rising tax evasion, as indirect taxes rise. We also show how currency holdings increased temporarily as the financial crisis struck in 2008

Historical reasons for the focus on broad monetary aggregates in post-World War II Britain and the ‘Seven Years War’ with the IMF

The British monetary authorities have traditionally focused on broader monetary aggregates than their counterparts elsewhere. The reasons include: the willingness of UK banks to allow customers to make payments by drawing on time deposits, the particularities of the UK approach to managing the national debt and the foreign exchange reserves, and the flow-of-funds system of national accounts developed after World War II. This article outlines these reasons, and explores the implications for the UK's often fractious relationship with the International Monetary Fund during the 1950s and 1960s. It explains why IMF conditionality on loans to the UK focused on broad aggregates

Systemic implications of the bail-in design

The 2007-2008 financial crisis forced governments to choose between the unattractive alternatives of either bailing out a systemically important bank (SIB) or allowing it to fail disruptively. Bail-in has been put forward as an alternative that potentially addresses the too-big-to-fail and contagion risk problems simultaneously. Though its efficacy has been demonstrated for smaller idiosyncratic SIB failures, its ability to maintain stability in cases of large SIB failures and system-wide crises remains untested. This paper’s novelty is to assess the financial-stability implications of bail-in design, explicitly accounting for the multilayered networked nature of the financial system. We present a model of the European financial system that captures all five of the prevailing contagion channels. We demonstrate that it is essential to understand the interaction of multiple contagion mechanisms and that financial institutions other than banks play an important role. Our results indicate that stability hinges on the bank-specific and structural bail-in design. On one hand, a welldesigned bail-in buttresses financial resilience, but on the other hand, an ill-designed bail-in tends to exacerbate financial distress, especially in system-wide crises and when there are large SIB failures. Our analysis suggests that the current bail-in design may be in the region of instability. While policy makers can fix this, the political economy incentives make this unlikely

The time-varying performance of UK analyst recommendation revisions : do market conditions matter?

This study examines the time-varying performance of investment strategies following analyst recommendation revisions in the UK stock market, with specific emphasis on the impact of changing market conditions. We find a negative relationship between the recommendation performance and market conditions as measured in terms of past market return and market volatility. In particular, the upgrade (downgrade) portfolio generates significantly positive (negative) net abnormal returns in bad market conditions (e.g., the dot-com bubble burst in 2000 and the credit crisis in 2007), but not in other periods of time. Moreover, our non-temporal threshold regression analysis shows that the reported negative relationship disappears when market conditions become better, i.e., when the past market return (market volatility) is higher (lower) than a certain level, indicating the importance of taking non-linearity into account in the long sample period as examined in this study. Our time-series bootstrap simulations further confirm that the superior recommendation performance in bad market conditions is not due to random chance; analysts have certain skills in making valuable up/downward revisions in bad markets

Consumer credit information systems: A critical review of the literature. Too little attention paid by lawyers?

This paper reviews the existing literature on consumer credit reporting, the most extensively used instrument to overcome information asymmetry and adverse selection problems in credit markets. Despite the copious literature in economics and some research in regulatory policy, the legal community has paid almost no attention to the legal framework of consumer credit information systems, especially within the context of the European Union. Studies on the topic, however, seem particularly relevant in view of the establishment of a single market for consumer credit. This article ultimately calls for further legal research to address consumer protection concerns and inform future legislation

Sand in the wheels, or oiling the wheels, of international finance? : New Labour's appeal to a 'new Bretton Woods'

Tony Blair’s political instinct typically is to associate himself only with the future. As such, his explicit appeal to ‘the past’ in his references to New Labour’s desire to establish a “new Bretton Woods” is sufficient in itself to arouse some degree of analytical curiosity (see Blair 1998a). The fact that this appeal was made specifically in relation to Bretton Woods is even more interesting. The resonant image of the international economic context established by the original Bretton Woods agreements invokes a style and content of policy-making which Tony Blair typically dismisses as neither economically nor politically consistent with his preferred vision of the future (see Blair 2000c, 2001b)

A new perspective on the ripple effect in the UK housing market: Comovement, cyclical subsamples and alternative indices

An alternative perspective is provided on the existence of a ripple effect in the UK housing market. In contrast to previous studies, the analysis involves consideration of information on the changes in house prices to which the hypothesis of house price diffusion posited by the ripple effect relates, rather than their levels. In an examination of changes in house prices in London relative to other regions of the UK, directional forecasting methods are employed to establish the extent of the relationship between geographical proximity and comovement across the three month window provided by quarterly data. Consequently, the analysis provides a direct examination of the ripple effect which refers to changes in prices rather than the convergence of levels which has become a feature of the empirical literature. The literature is extended further by both the application of dating techniques to perform the analysis across cycles and phases of cycles (recovery and recessionary periods) in the UK housing market, and the use of data from two alternative house price index providers. Striking results in support of the presence of a ripple effect are noted, particularly for the less commonly considered Halifax price index where the most significant results for comovement with London are exhibited by its contiguous regions. In addition, the cyclical subsamples considered indicate comovement to be greater during upturns, rather than downturns in the market. This is consistent with previous research showing London to correct – that is, exhibit differing behaviour to other regions – during downturns

Of Gold and Paper Money

We consider the role of money as a means of payment, store of value and medium of exchange. I outline a number of quantitative and qualitative experiences of monetary management. Successful regimes have sprung up in a variety of surprising places, and been sustained with state (centralised) interventions. Although the link between state and money, and its standard of identity and account may be clear, particularly in earlier stages of economic development, the extent to which the state is widely felt to hold responsibility for 'sound money' is less clear in modern democracies, where there are many other public responsibilities implying ongoing trade-offs

Antenatal couples' counselling in Uganda (ACCU): study protocol for a randomised controlled feasibility trial.

BACKGROUND: Common avoidable factors leading to maternal, perinatal and neonatal deaths include lack of birth planning (and delivery in an inappropriate place) and unmet need for contraception. Progress has been slow because routine antenatal care has focused only on women. Yet, in Uganda, many women first want the approval of their husbands. The World Health Organization recommends postpartum family planning (PPFP) as a critical component of health care. The aim of this trial is to test the feasibility of recruiting and retaining participants in a trial of a complex community-based intervention to provide counselling to antenatal couples in Uganda. METHODS: This is a two-group, non-blinded cluster-randomised controlled feasibility trial of a complex intervention. Primary health centres in Uganda will be randomised to receive the intervention or usual care provided by the Ministry of Health. The intervention consists of training village health teams to provide basic counselling to couples at home, encouraging men to accompany their wives to an antenatal clinic, and secondly of training health workers to provide information and counselling to couples at antenatal clinics, to facilitate shared decision-making on the most appropriate place of delivery, and postpartum contraception. We aim to recruit 2 health centres in each arm, each with 10 village health teams, each of whom will aim to recruit 35 pregnant women (a total of 700 women per arm). The village health teams will follow up and collect data on pregnant women in the community up to 12 months after delivery and will directly enter the data using the COSMOS software on a smartphone. DISCUSSION: This intervention addresses two key avoidable factors in maternal, perinatal and neonatal deaths (lack of family planning and inappropriate place of delivery). Determining the acceptability and feasibility of antenatal couples' counselling in this study will inform the design of a fully randomised controlled clinical trial. If this trial demonstrates the feasibility of recruitment and delivery, we will seek funding to conduct a fully powered trial of the complex intervention for improving uptake of birth planning and postpartum family planning in Uganda. TRIAL REGISTRATION: Pan African Clinical Trials Registry PACTR202102794681952 . Approved on 10 February 2021. ISRCTN Registry ISRCTN97229911. Registered on 23 September 2021