Credit markets are often affected by market failures, which makes them prone to government interventions. While there are many ways in which governments can intervene in financial markets, a common method is through state-owned banks. These financial intermediaries allow governments to lend directly to households and firms and are commonly found across the world. Development … Read more

Having a financial account is essential for adults to save, borrow, make payments, and manage unexpected expenses. However, financial products come with risks, especially for those with limited financial knowledge or living in countries with poor consumer protection systems. Inexperienced account owners are vulnerable to fraud, over-indebtedness, and misunderstandings about account terms and fee structures. While increasing … Read more

The relationship between rising inflation and economic growth is a topic of ongoing debate in macroeconomics. According to the classical “neutrality of money” view, increases in inflation have little effect on real gross domestic product (GDP), as inflation increases both prices and wages similarly and merely alters the units of measurement. A related viewpoint is … Read more

West African Economic and Monetary Union (WAEMU) countries have seen increased financial account ownership since 2014, with mobile money accounts driving adoption and usage. On average, 41% of adults in the WAEMU have an account with a bank or similar institution or with a mobile money service. Senegal has the highest account ownership rate at … Read more

Sukuk are tradable securities. They are listed on major stock exchanges around the world and settle through the largest international securities clearing systems. They are, in other words, capital market instruments in the same way as stocks and bonds. Of course, they are structured to conform to specific Islamic principles. However, the fact that they … Read more

In October 2020, Shenzhen’s Luohu district announced the distribution of 10 million digital yuan—200 digital yuan (USD 30) to about 50,000 people. Lucky winners could spend their money at designated shops in Luohu between October 12 and 18, 2020. A similar announcement happened in Shenzhen, where registered citizens would receive their money on January 11, 2021, … Read more

In Part I of this post, we discussed “expiring” digital cash as a possible type of programmable money, which a central bank (in coordination with government) could issue and distribute to people during severe recessions or events like pandemics or calamities, when higher uncertainty makes people spend less. We argued that the instrument could be a most … Read more

The growth of passively managed and exchange-traded funds (ETFs) has been a notable recent development in fund management. The assets held by ETFs have increased even more rapidly than those of the industry, and now account for more than 20% of the NYSE market capitalization (and about a third of its traded volume).1 This has been especially the … Read more

Central bankers in emerging market and developing economies (EMDEs) have been seeking policy tools other than the traditional interest rate policy. The reason is that these economies are vulnerable to financial disruptions due to sharp reversals in capital inflows, known as sudden stops, where foreign investors suddenly withdraw their funds. Yet the use of so-called unconventional monetary … Read more

Green Financial Sector Interventions (GFSIs) are financial policies, regulations, and instruments that governments can use to direct private finance away from high-carbon investments and toward more climate-smart — or green — investment. This shift provides needed funding for climate action and protects financial institutions and systems against climate risk. GFSIs are part of a trend … Read more