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Analysis

OMFIF Reports

OMFIF publishes several reports a year, mainly of a bespoke nature, covering key themes in current economic and financial issues. 

If you are not a member of OMFIF and wish to receive a report, please send a request to editorial@omfif.org.

Latest reports

Green finance for Global Public Investors

Green finance for Global Public Investors

Green finance for Global Public Investors addresses the long-term impact of climate change on financial market stability, and the implications for public investors. It features the opinions of senior commentators from European governments, sovereign funds and development banks, including the European Investment Bank, African Development Bank and Caisse des Dépôts.

 

In his introduction to the report, Wolfgang Schäuble, German Finance Minister, writes:

 

'Many of the challenges we are facing in the 21st century cannot be met by nation states alone: they require a concerted effort by the international community acting together. One of the most pressing challenges is climate change, which is expected to have a profound effect on financial market stability.

 

'It is this recognition which led to the focus on green finance within the Finance Track of Germany’s G20 presidency this year, where discussions have centred on improving the relevance of environmental data for financial analysis and enhancing environmental risk assessment in financial decision-making.

 

'By doing so, policy-makers hope to help raise awareness in the financial sector of the long-term implications of climate change, improve decision-making, and – together – contribute to a successful transition towards a low-carbon economy.'

 

Click here to read the report.

Trump - The search for an improbable balance

Trump - The search for an improbable balance

Donald Trump takes over today at the helm of a healthy US economy, benefiting from 75 consecutive months of job gains, annualised GDP growth of 3.5% in the third quarter of 2016, low borrowing costs and bullish financial markets. Yet income inequality has increased, and growth is reliant on accommodative monetary policy and optimistic households ready to spend.

 

An OMFIF report published today – ​​Trump: Curse or Cure? – outlines the difficult search for a balanced economic policy that could mitigate the threat of additional Federal Reserve interest rate hikes derailing the recovery.

 

The 45th US president proposes to put ‘America First’ by introducing punitive import tariffs, reneging on international agreements, and threatening to brand major trade partners as currency manipulators. Domestically, Trump has pledged to lower both corporate and income taxes while increasing spending, especially on infrastructure, and deregulating financial services.

 

This report explores whether such initiatives will be a curse or cure for the US and world economy. While some commentators have described Trump’s policies as ‘the height of irresponsibility’, the strength of the American economy and Republican majority in Congress will give the new president significant flexibility.

 

Trump enters office with historically low approval ratings and a cabinet heavily criticised for its connection to the banking sector. Ultimately, the strength of global financial markets will be the barometer of Trump’s success – and whether his economic policy manages to achieve an improbable balance.

Candidate Clinton's chance - Policies for America's economic challenges

Candidate Clinton's chance

This report, the third in OMFIF’s series on the economics behind the US presidential election, examines Hillary Clinton’s policies in the run-up to the 8 November poll.

 

Entitled ‘Candidate Clinton’s chance’, the report assesses, among other issues, the immediate challenges Clinton would face on taking office; how global constraints would limit her available domestic policy options; and how Clinton’s policies differ widely from those of her rival for the presidency in terms of addressing economic inequality. It points out, too, how history indicates that Democratic presidents are more likely than Republicans to record relative economic success.

 

The report features contributions from respected commentators, including Otaviano Canuto of the World Bank, Jeffrey Frankel of Harvard University, and Desmond Lachman of the American Enterprise Institute. Lord (Meghnad) Desai, chairman of the OMFIF advisory board and emeritus professor at the London School of Economics and Political Science, provides a foreword.

Mastering flows, strengthening markets

Mastering flows, strengthening markets

Sovereign investment institutions are willing to help overcome constraints on global liquidity through increased securities lending and direct funding of less-liquid asset classes, according to a report by OMFIF and BNY Mellon.

 

‘Liquidity has been under strain for many reasons over the last eight years since the financial crisis,’ said David Marsh, managing director of OMFIF. ‘These reasons include regulation, economic developments and political and financial upsets which have conspired to slow down the flows of liquidity, which you can see reflected in the markets.’

 

The findings, in ‘Mastering flows, strengthening markets: how sovereign institutions can enhance global liquidity’, are based on a survey conducted by OMFIF and BNY Mellon of over two dozen sovereign institutions. The findings indicate that a majority of sovereign investors expect liquidity conditions to tighten further in the next 12-24 months.

Rome Main Meeting September 2016 - Summary of discussions

Rome Main Meeting September 2016 - Summary of discussions

The euro area and the world economy

 

Overcoming challenges, spurring growth

 

22-23 September 2016 - Seventh Main Meeting in Europe

 

Summary of discussions and full meeting programme

 

The ever more urgent search for a better mix of European fiscal and monetary policies was a guiding theme at OMFIF’s 18th Main Meeting at the Banca d’Italia on 22-23 September in Rome, against a background of slowing growth, high debt and political fragmentation in many countries.

 

The overall mood was sombre, with a widespread perception that ‘political risk’ – from the US presidential election to an upsurge of anti-European political parties – had increased. One well-known political speaker said Europe’s leaders were unable to resolve their difficulties because the continent’s time-honoured recipe of dealing with crises through emergency action forged in the heat of upheaval was no longer working. ‘Unlike 2008-09, today’s risk is not financial but political contagion,’ one central banker said.

 

According to another top-line speaker, ‘Not even in the global financial crisis have the problems been more difficult… There has been an erosion of the mutual trust on which 2008 co-operation was based,’ he said, listing as the main European problems migration, Brexit, the rise of ‘nationalist and populist’ movements, financial and macroeconomic imbalances, and banking fragility.

At the edge of a shock - Japan's problematic monetary future

At the edge of a shock - Japan's problematic monetary future

Japan’s monetary and financial system is living on the edge of a shock with the potential to rock a global financial system still worryingly fragile in the aftermath of the global financial crisis, according to a new report by John Plender.

 

Almost four years after the launch of ‘Abenomics’ – Prime Minister Shinzo Abe’s three-pronged programme aimed at reviving Japan’s economy – Japan remains stuck in an atypical debt trap. The country’s aging demographic profile and history of excessive rates of corporate saving lie at the heart of an unsustainable build-up of debt that has necessitated increased public spending and caused the government to borrow as a substitute for tax receipts.

 

Abenomics has failed to reverse this reality radically. Expansionary monetary policy – its first ‘arrow’ – has been unable to break the economy out of deflation or substantially boost economic growth, while fiscal policy and structural reforms, the second and third arrows, have proved even less effective. Japan’s economic performance is expected to remain weak, posing challenges for debt sustainability.

 

Plender identifies three potential scenarios out of the debt trap, all of them problematic, and concludes that all encompass significant risks of financial stability that could spill over to the rest of the world. ‘The build-up of public debt and rising financial instability will ultimately lead to a crisis when confidence in the central bank’s ability to manage monetary conditions evaporates. These are the kind of circumstances in which a yen collapse could spark an inflationary surge. Linkages in today’s global markets make international repercussions inevitable.’

Lack of glory: Obama's mixed economic legacy

Lack of glory: Obama's mixed economic legacy

September 2016

 

This report, the second in OMFIF’s series on the economics behind the US presidential election, examines President Obama’s economic legacy. Author Darrell Delamaide takes a critical approach: GDP has grown only marginally during Obama’s tenure, and that is mostly thanks to the expansionary policies of the Federal Reserve.

 

Obama’s record appears even more disappointing when compared with the optimistic tone set back in 2009, when the Congressional Budget Office forecast GDP growth of 20% for the next decade (twice as fast as the 10% actually seen), a budget deficit of 1.2% of GDP by 2015 (less than half of the 2.5% recorded), and government debt of 48% (instead it stood at 74%).

 

All this will have important implications for the forthcoming US presidential election. Voters’ dissatisfaction with the economy, and particularly the dual nature of the recovery, has already proven problematic for Clinton, whose 16m votes in the primaries are well overshadowed by the 27m won by Trump and Bernie Sanders, Clinton’s opponent in the Democratic primaries, combined. While different in many ways, the two candidates swayed voters with a common message about inequality and lack of economic opportunity.

St. Louis Main Meeting July 2016 - Summary of discussions

St. Louis Main Meeting July 2016

America and the World

 

Reflections on the US role in the global economy

 

14-15 July 2016 - Third Main Meeting in North America

 

Summary of discussions and full meeting programme

 

A bitter-sweet picture of the world economy, beset by low growth and polarised decision-making, was presented at the OMFIF Main Meeting in St. Louis on 14-15 July. Participants incorporated public and private sector delegates from around the world, including three US Federal Reserve Bank presidents.


On the one hand, continued unconventional monetary policies and ultra-low interest rates, including negative rates in Europe and Japan, were staving off the risk of recession. Inflation still posed no threat to recovery, and improved financial regulation and supervision had mitigated the danger of a financial crisis.


On the other hand, these unusually accommodative monetary policies, often undertaken because governmental policies, especially in the fiscal field, had been inadequate, themselves created risks for financial stability. By depressing banking profitability in key areas, many delegates took the view that they could constrain leeway for growth. 

The political economy of Donald Trump – July 2016

The political economy of Donald Trump

July 2016

 

Meghnad Desai, chairman of the OMFIF Advisory Board, explores the possible outcomes of Donald Trump’s unconventional economic thinking. In a major report – 'The political economy of Donald Trump' – on the Republican presidential candidate’s policies, Desai asks whether Trump could surprise observers making dire predictions about his potential move into the White House.

 

With fiscal policy paralysis in the G7 and G20 international forums, and with monetary policy reaching the limits of its stimulus power, a bold, unorthodox economic policy could remove obstacles to US growth, Desai argues. Capital spending on infrastructure on a par with that pursued by President Dwight D. Eisenhower in the 1950s could increase job opportunities precisely for those workers who need it.

 

However, much will depend on a compliant Congress. ‘If Trump wins in November, those who fear his actions should pray for four years of legislative gridlock.’

Global Public Investor 2016

Global Public Investor 2016

June 2016

 

For the third in its annual series, OMFIF has produced a comprehensive international publication − Global Public Investor 2016 − devoted to public sector asset ownership and management across a range of official institutions around the world.

 

GPI 2016 documents the further rise of the renminbi in a general move towards a multicurrency reserve system, as well as an ever-growing potential for co-investment and partnerships, including in low-carbon investments in the ‘real economy’. 

 

GPI 2016 covers the gamut of global official sector asset managers – a broad mix of investors of immense importance to the world economy. These organisations encompass many different types of institutions linked by their status as public sector-funded entities representing a core component of world capital markets and with total holdings estimated at $29tn.

 

Click here to buy GPI 2016

Foreign exchange reserves in a volatile world – June 2016

Foreign exchange reserves in a volatile world

June 2016

Global foreign exchange reserves have been under pressure over the last 18 months as falling oil and commodity prices, economic slowdown in China and Europe and extraordinary monetary policy responses have diminished current account surpluses and affected currency values, investment returns and capital flows. Despite the steep decline, the trend of foreign reserve accumulation over the preceding 15 years is unlikely to go into full reverse, according to the second OMFIF report on central bank reserve holdings by Gary Smith and John Nugée.

 

In recent years monetary authorities have earmarked ever-larger amounts of reserves for an ever-wider range of purposes, suggesting that central banks are unlikely to run down large portions of their reserves in pursuit of single policy objectives like maintaining a stable exchange rate. The recent experience of reserve shrinkage will instead raise the perception of what counts as adequate, both for those managing reserves and those commentating on their actions, leading to higher overall holdings in the future.

The future of the European Central Bank – September 2015

The future of the European Central Bank

September 2015

 

The financial and economic crisis has hit Europe particularly hard and demonstrated the fragility of the financial sector, fundamental market differences among euro members and the inability of a monetary union without a fiscal and political union to counter asymmetric shocks. Over the past five years, the European Central Bank has taken extensive measures to improve the workings of financial markets and create conditions for higher economic growth.

 

Through the lens of six years of OMFIF articles and commentaries, this report evaluates the challenges and opportunities for the ECB in the next decade.

 

This OMFIF document was produced for the roundtable discussion ‘The future of the ECB’ in London, held on 29 September 2015.

Crossing the Collateral Rubicon – September 2015

Crossing the Collateral Rubicon

September 2015

 

Sovereign institutions or Global Public Investors (GPIs), including central banks, sovereign funds, public pension funds and multilateral development banks around the world, are supporting the development of the securities markets in the wake of new regulations surrounding the need for collateral. They are increasingly seen as large-scale suppliers of high-quality collateral to offset liquidity shortages in international capital markets and to shore up global growth.

 

This is the conclusion of a report by OMFIF in conjunction with BNY Mellon that explores how sovereign institutions have been adjusting after the 2008–09 financial crisis to new positions as pivotal participants in the world economy.

The Changing Role of Central Bank Foreign Exchange Reserves – September 2015

The changing role of central bank foreign exchange reserves

September 2015

 

Central banks around the world are expected to strengthen defences against monetary turbulence by seeking to resume growth of foreign exchange reserves after the present bout of reserve weakness, according to an OMFIF report by Gary Smith of Baring Asset Management and John Nugée, formerly of State Street Global Advisors and the Bank of England, now an OMFIF Director.

 

The report discusses the diverse motivations for the build-up and maintenance of foreign exchange reserves around the world over the past 15 years, from below $2tn in 2015 to $11.4tn today.

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

The Chinese Delegation at the 1944 Bretton Woods Conference – Reflections for 2015

The Chinese Delegation at the 1944 Bretton Woods Conference - Reflections for 2015

July 2015

 

A ground-breaking Chinese account of the 1944 Bretton Woods conference shows seven decades-old continuity over Beijing’s policies on the IMF. Official Chinese archives record strong parallels between war-time Nationalist government policies and those of the present Communist leadership.

 

Jin Zhongxia, former director general of the Research Institute of the People’s Bank of China (PBoC), now China’s executive director at the IMF in Washington, underlines how China’s actions in helping set up the IMF at the end of the second world war display broad similarities with policies today.

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

Global Public Investor 2015

Global Public Investor 2015

June 2015

 

The second annual Global Public Investor report advances the understanding of growing similarities among different categories of public entities owning assets equivalent to 40% of world output. It features in-depth global analysis and assessment of public sector investment and its impact on the world economy.

 

GPI 2015 goes into detail on key investment themes by providing data on global public investors’ asset allocation and performance, broken down by type and region, as well as the where they move their portfolio in the future.

 

The Top 500 Ranking Table, which encompasses a full range of GPIs across the globe, is based on the assets under management of central banks, sovereign wealth funds and pension funds.

 

GPI 2015 is supported by DZ BANK, Quantum Global and State Street Global Advisors.

 

Hardcopy (single user): £350 GBP 

 

Softcopy (corporate license): £500 GBP  

 

The hardcopy report can be purchased online here

 

The softcopy report can be purchased online here

 

The report can also be purchased from the OMFIF sales team on +44 (0) 207 965 4494. 

 

Global Public Investor 2014

Global Public Investor 2014

June 2014

 

The report, focusing on investments by 157 central banks, 156 public pension funds and 87 sovereign funds, underlines growing similarities among different categories of public entities owning assets equivalent to 40% of world output.


Hardcopy (single user): 100GBP (+ postage)

 

Softcopy (password protected): 250GBP 

 

The report can be purchased from the OMFIF sales team on +44 (0) 207 965 4494.

 

 

Capital account liberalisation in China: Guidelines from global experience – December 2013

Capital account liberalisation in China

December 2013

Written by Prof. Gabriel Stein, Chief Economic Adviser of OMFIF, Encik Marzunisham Omar, Bank Negara Malaysia, Hemraz Jankee, Member of OMFIF Advisory Board and former Chief Economist at the Central Bank of Mauritius and Dr. Monde Mnyande, formerly South African Reserve Bank.

 

The report, 'Capital account liberalisation in China', is the fourth in OMFIF’s 2013 Year of Renminbi Focus. It warns that China needs to be prepared for the unexpected, since previous cases of exchange control liberalisation around the world have led to a great variety of outcomes, ranging from asset price bubbles to currency crises, depending on the authorities' skill in dealing with often unforeseen developments. 'Capital account liberalisation can lead to large inflows and outflows of capital. What matters is not the flows but how the authorities react to them,' the report says.

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

The new global frontier: Understanding China’s monetary policy – September 2013

Monetary policy in China

September 2013

 

Written by Advisory Board members John Plender and Gabriel Stein, this report examines the Chinese economy, its current period of transition, and the momentous challenge presented for monetary and financial policy. The move from a planned to a market economy in any country entails big risks, with a formidable – and by no means – exhaustive set of challenges for China’s policy-makers. The report highlights that the Chinese authorities are in many ways better equipped than other countries that tripped up on the road to a more market-oriented economy.

 

'This report is the most inspiring piece of work on China's monetary policy I have seen in a long time. I have already read it twice.'

-Panellist Kang Qu, Senior Research Analyst, Bank of China, London.

 

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

China's challenges in clearing and settlement: Helping the renminbi become a world currency – June 2013

China's challenges in clearing and settlement: Helping the renminbi become a world currency

June 2013

 

Written by Advisory Board member Peter Norman, this report is part of OMFIF’s ‘Renminbi Focus 2013’, an initiative designed to facilitate understanding of Chinese currency internationalisation. It concludes that China should seriously consider upgrading its infrastructure for clearing and settling trades in its financial markets, as part of efforts to modernise the Chinese economy and promote the internationalisation of the renminbi. Suggestions are made for possible improvements, with particular attention to China’s futures markets.

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

Gold, the renminbi and the multi-currency reserve system – January 2013

Gold, the renminbi and the multi-currency reserve system

January 2013

 

A report produced by OMFIF and commissioned by the World Gold Council, the gold industry’s market development body. It concludes that as the world heads towards a multi-currency reserve system, demand for gold is likely to rise. Driving this trend is uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds.

 

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

Challenges for central banks: wider powers, greater restraints – December 2012

Challenges for central banks: wider powers, greater restraints

December 2012

 

A joint report into world-wide central banking by OMFIF and Ernst & Young. The study emphasises the difficulties experienced by central bankers in the transition to an increasingly public role. It concludes that central banks in developed countries face a reduction in their independence from governments as a result of the increased responsibilities they are shouldering to resolve the long-running financial crisis. It reveals important differences between central banks in industrialised countries and emerging market economies.

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

Spanning the World of Money: How to succeed in international finance – September 2011

Spanning the World of Money: How to succeed in international finance

September 2011

 

This publication forms part of OMFIF’s framework for a global policy dialogue, in a bid to form a more cohesive and resilient world economy. OMFIF is pooling forces with Banque centrale du Luxembourg, the Government of the Grand Duchy of Luxembourg, Luxembourg for Finance and DZ BANK to explore the factors behind excellence in international finance centres (IFCs). We are placing special emphasis on Luxembourg as one of the pivotal centres for European finance.

 

The overall message that Luxembourg expounds is a universal one. The lessons exemplified by Luxembourg as a European hub, and the way that it has refined and expanded its services over the years, can be of demonstrable help for other centres, cities and countries as they seek to prosper in a changing and challenging economic environment.

 

 

To request a complimentary copy of this report email editorial@omfif.org stating your name, company, address, and if you would like a PDF or hardcopy.

Challenges for central banks: Wider powers, greater restraints

Challenges for central banks: Wider powers, greater restraints (1)

OMFIF and Ernst & Young collaborate on a report analysing the role of central banks in the financial crisis and its aftermath. Themes include the new centrality of central bankers, lessons from recent central  banking history, the new risk landscape, accountability and independence, macroprudential supervision and adaption to a new environment.

 

View report