Category Archives: Macroeconomics and Monetary Policy

Central Bank Digital Currencies and Financial Inclusion

Despite the fact that central bank digital currencies (CBDCs) are frequently called ‘a solution in search of a problem’, some 86 per cent of central banks worldwide are actively researching the potential for a CBDC. Their design, implementation and adoption will be strongly influenced by country specific objectives and there is no ‘one-size-fits-all’ solution. One prominent objective for a CBDC is financial inclusion, i.e., facilitating access to financial services for the world’s 1.7 billion under- or unbanked. The implicit assumption is that a CBDC and its associated technology provides better access to financial services than current systems. But this is putting the CBDC cart before the horse: a CBDC can at best be part of the solution, but it is unlikely to be the only solution. For a CBDC to increase financial inclusion, it must address the causes of exclusion, and any CBDC initiative would need to be embedded in a much wider set of reforms undertaken by the government in co-operation with the private sector. A CBDC will enhance inclusion only if this dimension features prominently in its design from the outset. There are more straightforward and targeted ways to support access to financial services than to launch a CBDC.

Reality Bites: Bitcoin’s Recent Successes and Setbacks

The month of June 2021 was an extremely eventful month for the cryptocurrency universe, with one positive development (from the standpoint of the industry) helping to offset two negative interventions from authorities, one in May and one in June.[1]  The positive development took place on 9 June, when the legislature of El Salvador, at the […]

Bitcoin Accepted Here – Should Other Emerging and Developing Countries Follow El Salvador and Make Bitcoin Legal Tender?

Central banks are increasingly taking actions that may cause harm to the economic stability of El Salvador.  In order to mitigate the negative impact from central banks, it becomes necessary to authorise the circulation of a digital currency with the supply that cannot be controlled by any central bank. El Salvador President Nayib Bukele On […]

Towards a Better Evaluation of Our Training Courses

One of the main activities of The SEACEN Centre is capacity building, so understanding the effectiveness of our training courses is of vital importance. We want to know what works and what does not and how we can improve our training material and teaching modalities to best serve the needs of our member central banks. […]

What about “Terms and Conditions”? Going Back to the Code of Hammurabi

What matters is not so much the money supply or the T-bill interest rate, but the availability of credit, and the terms at which credit is made available…. An increase in credit availability may not lead to more spending on produced goods, but increased prices for land or other fixed assets; it can go to […]

Four Praises and a Funeral: In Defence of Short Selling

Everyone loves a good underdog story in which an unlikely hero takes on a mighty foe in the face of overwhelming odds. The recent US stock market uprising involving the mobilisation of retail investors to collectively drive up the share price of GameStop, a video-game retailer best known for its bricks and mortar stores, can […]

Programmable Money and CBDC

In 2020, one of the interesting topics being discussed in parallel to central bank digital currency (CBDC) is programmable money (PM). Like CBDC, programmable money does not appear to have a clear definition. In this post we will discuss our understanding of programmable money, its potential usefulness and possible obstacles to future use. What is […]

The Rise in Interest in CBDC

The following is the first in a series of blog posts on central bank digital currencies (CBDCs). The purpose of this post is a discussion of the sudden surge of interest in CBDCs. Motivations for CBDCs With the evolution of technology, digital payments have been on the rise. As technology has increasingly been leveraged to […]

Dynamics of Output Growth During Pandemics: Evidence from Two Centuries of Data

In this Suara SEACEN article, we show that global output growth slows down during pandemics, and global growth in the post-pandemic period is slightly lower than the pre-pandemic period. This article argues that public health must remain the top priority; and fiscal stimulus that will cushion the severe impacts of the pandemic must play dominant […]

FDI and Capital Flows: New Perspectives from New Data

Capital flows and their volatility present challenges for economic policy makers.  They can exacerbate economic cycles.  Their outflows can lead to costly “sudden stops”.  One particular form of capital flows, namely foreign direct investment (FDI) has been regarded differently compared to other forms of capital flows like debt and portfolio flows.  First, unlike foreign portfolio […]