March 2022

Post n°264

European Union debt, a new benchmark asset?

Published on 03/28/2022

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By Léa Le Quéau, Agathe Madeline and Paul Sabalot

The European Union is going to issue close to EUR 800 billion of debt to finance the NextGenerationEU recovery plan, making it one of the largest public debt issuers in the euro area. European debt has some key advantages that would make it ideal as a benchmark asset. However, it still needs to reach the critical mass required to ensure a sufficiently liquid secondary market.

Chart 1: NGEU debt yields are comparable to those of the highest rated euro area issuers Source: Authors’ calculations using Bloomberg data and median of Moody’s, S&P and Fitch ratings (data as at 18/03/2022).
Updated on 03/29/2022 10:38
Post n°263

Sanctions against Russia: the role of SWIFT

Published on 03/22/2022

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By Mathieu Gex, Marie-Aline Vives

In response to Russia’s military invasion of Ukraine, the Council of the European Union has adopted a series of restrictive economic and financial measures, including the exclusion of seven Russian and three Belarusian banks from the SWIFT global financial messaging system. This blog post explains the key role SWIFT plays in the international financial ecosystem.

Chart 1. Increase in daily SWIFT traffic over the last three years (in millions of messages)
Chart 1. Increase in daily SWIFT traffic over the last three years (in millions of messages) Source: SWIFT.
Updated on 03/22/2022 13:17
Post n°262

Climate data: time to act!

Published on 03/18/2022

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By Léa Grisey

Financial stakeholders report numerous data gaps that hinder their consideration of climate-related risks. While the lack of reliable, comparable, granular and forward-looking data is a challenge, some temporary solutions may help overcome it. Furthermore, recent efforts should allow to gradually bridge those persistent gaps.

Chart 1: Data gaps across three main dimensions
Chart 1: Data gaps across three main dimensions Source: Network for Greening the Financial System (NGFS), Progress report on bridging data gaps (2021).
Updated on 03/18/2022 18:09
Post n°261

Advantages of point targets and drawbacks of target ranges

Published on 03/15/2022

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By Christoph Grosse Steffen and Magali Marx

A central bank’s inflation objective can be formulated using a point target, a target range or a combination of the two. In this blog, we show the disadvantages of a target range for anchoring inflation expectations and for macroeconomic stabilisation. The analysis thereby underpins the ECB’s adoption of a clear and symmetric 2% inflation point target.

Chart 1: Inflation objectives, Q2 2020
Chart 1: Inflation objectives, Q2 2020 Source: Central bank websites, authors’ illustration.
Updated on 03/15/2022 17:33
Post n°260

Exchange rate flexibility and resilience to external shocks in Sub-Saharan Africa

Published on 03/11/2022

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By Bruno Cabrillac and Vincent Fleuriet

The Covid-19 crisis, combining supply and demand shocks with associated inflationary pressures, provides an opportunity to reassess the advantages of fixed exchange rate regimes over flexible or intermediate exchange rate regimes, in particular in Sub-Saharan Africa (SSA). Indeed, in this context, the anchoring of the currency via the fixed exchange rate gives more monetary policy space…

Inflation in Sub-Saharan Africa
Inflation in Sub-Saharan Africa Source: IMF (World Economic Outlook, Oct. 2021, dotted line = forecast) and Banque de France calculations.
Updated on 03/11/2022 18:35
Post n°259

Implicit discrimination against women.... economists

Published on 03/08/2022

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Par Cecilia García-Peñalosa et Soledad Zignago

In several sectors, including academic economics, considerable efforts have been made over at least the past two decades to combat gender discrimination. One of the most frequently debated policies over recent years has been positive discrimination. Hiring or promoting an equally qualified woman over a man is argued to have a positive impact on all individuals in the profession as it will reduce prejudice and provide role models for younger women. Despite these efforts, women still appear to be vastly underrepresented amongst researchers in economic and earn far less credit than men for their academic work.

Figure 1: Proportion of female economists according to RePEc
Chart 1: Proportion of female economists according to RePEc Source: RePEc, Female representation in Economics and academic Rankings by country and for the world, as of February 2022.
Updated on 03/08/2022 14:52
Post n°258

The recent rise in the employment rate is a French particularity

Published on 03/03/2022

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By Cristina Jude, Antoine Lalliard and Pierre Sicsic.

The employment rate in France has exceeded the level reached at end-2019. This is a French particularity. It nevertheless remains low compared to other countries, in particular for young workers and men over 60. Its growth over the past twenty years had been slower than in the other major countries until recently.

Chart 1: Employment rate deviations from Q4 2019
Chart 1: Employment rate deviations from Q4 2019 Source: Eurostat & BLS
Updated on 03/03/2022 17:07