The signalling channel of Central Bank interventions:modelling the Yen/US dollar exchange rate

This paper presents a theoretical framework analysing the signalling channel of exchange rate interventions as an informational trigger. We develop an implicit target zone framework with learning in order to model the signalling channel. The theoretical premise of the model is that interventions convey signals that communicate information about the exchange rate objectives of the central bank. The model is used to analyse the impact of Japanese FX interventions during the period 1999--2011 on the yen/US dollar dynamics

Large area inkjet printed metal halide perovskite LEDs enabled by gas flow assisted drying and crystallization

We demonstrate the upscaling of inkjet printed metal halide perovskite light emitting diodes. To achieve this, the drying process, critical for controlling the crystallization of the perovskite layer, was optimized with an airblade like slit nozzle in a gas flow assisted vacuum drying step. This yields large, continuous perovskite layers in light emitting diodes with an active area up to 1600 mm

Paths to a Reserve Currency: Internationalization of the Renminbi and Its Implications

In this paper we try to address the question of what could help make the renminbi a reserve currency. In recent years, the authorities in the People's Republic of China (PRC) have made efforts to internationalize its currency through a two-track strategy: promotion of the use of the renminbi in the settlement of cross-border trade and investment, and liberalization of the capital account. We find that if we use only the quantitative measures of the economy, the predicted share of the renminbi in global reserves could reach 12%. However, if institutional and market variables are included, the predicted share comes down to around 2%, which is a more realistic prediction. By reviewing experiences of other reserve currencies, we propose a three-factor approach for the PRC authorities to promote the international role of the renminbi: (i) increasing the opportunities of using renminbi in the international community, which requires relatively rapid growth of the PRC economy and continuous liberalization of trade and investment; (ii) improving the ease of using renminbi, which requires depth, sophistication, and liquidity of financial markets; and (iii) strengthening confidence of using renminbi, which requires more transparent monetary policy making, a more independent legal system, and some political reforms. In general, we believe that the renminbi's international role should increase in the coming years, but it will take a relatively long period before it plays the role of a global reserve currency

Exchange Rate Linkages between the ASEAN Currencies, the US Dollar and the Chinese RMB

This paper investigates whether the RMB is in the process of replacing the US dollar as the anchor currency in nine ASEAN countries, and also the linkages between the ASEAN currencies and a regional currency unit. A long-memory (fractional integration) model allowing for endogenously determined structural breaks is estimated for these purposes (Gil-Alana, 2008). The results suggest that the ASEAN currencies are much more interlinked than previously thought, whether or not breaks are taken into account, which provides support for a regional currency index as an anchor. Moreover, incorporating a break shows that the linkages between these currencies and the RMB and the US dollar respectively are equally important, and in fact in recent years the former have become stronger than the latter. Therefore including the RMB in the regional index should be considered

In-Sample and Out-of-Sample Prediction of Stock Market Bubbles: Cross-Sectional Evidence

We evaluate the informational content of ex post and ex ante predictors of periods of excess stock (market) valuation. For a cross section comprising 10 OECD economies and a time span of at most 40 years alternative binary chronologies of price bubble periods are determined. Using these chronologies as dependent processes and a set of macroeconomic and financial variables as explanatory variables, logit regressions are carried out. With model estimates at hand, both in-sample and out-of-sample forecasts are made. Overall, the degree of ex ante predictability is limited if an analyst targets the detection of particular turning points of market valuation. The set of 13 potential predictors is classified in measures of macroeconomic or monetary performance, stock market characteristics, and descriptors of capital valuation. The latter turn out to have strongest in-sample and out-of-sample explanatory content for the emergence of price bubbles. In particular, the price to book ratio is fruitful to improve the ex-ante signalling of stock price bubbles

Negative Interest Rate Policies: Sources and Implications

Against the background of continued growth disappointments, depressed inflation expectations, and declining real equilibrium interest rates, a number of central banks have implemented negative interest rate policies (NIRP) to provide additional monetary policy stimulus over the past few years. This paper studies the sources and implications of NIRP. We report four main results. First, monetary transmission channels under NIRP are conceptually analogous to those under conventional monetary policy but NIRP present complications that could limit policy effectiveness. Second, since the introduction of NIRP, many of the key financial variables have evolved broadly as implied by the standard transmission channels. Third, NIRP could pose risks to financial stability, particularly if policy rates are substantially below zero or if NIRP are employed for a protracted period of time. Potential adverse consequences include the erosion of profitability of banks and other financial intermediaries, and excessive risk taking. However, there has so far been no significant evidence that financial stability has been compromised because of NIRP. Fourth, spillover implications of NIRP for emerging market and developing economies are mostly similar to those of other unconventional monetary policy measures. In sum, NIRP have a place in a policy maker's toolkit but, given their domestic and global implications, these policies need to be handled with care to secure their benefits while mitigating risks