Instant, Immediate, Real Time Retail Payment Systems (IIRT-RPS)

Instant, Immediate, Real Time Retail Payment Systems (IIRT-RPS)

 

There are Five different kinds of Payments

  • B2C Business to Consumer
  • C2B Consumer to Business
  • B2B Business to Business
  • Domestic P2P Peer to Peer
  • Cross Border P2P Peer to Peer

 

From Real-time payments are changing the reality of payments

IMPS

Existing Real Time Retail Payment Systems around the Globe

From THE U.S. PATH TO FASTER PAYMENTS FINAL REPORT PART ONE: THE FASTER PAYMENTS TASK FORCE APPROACH

IMPS2

Planned Real Tine Retail Payments Systems around the Globe

 

From Global Trends and Developments in Instant Payments

imps3

Current Payments Ecosystem

  • Faster Payments
  • ACH
  • Cards
  • Closed Loop
  • Distributed Ledger

 

From 2017 Advanced Payments Report

IMPS4

Evolving Landscape of Payment Systems

From 2017 Advanced Payments Report

imps5

 

New RTP Developments

 

From Federal Reserve Payment Trends Update

imps6

USA – The Clearing House RTP System

From Federal Reserve Payment Trends Update

imps7

USA – How Payment Platforms Compare?

  • Wires
  • Next Day ACH
  • NACHA Same Day ACH
  • EWS Zelle
  • TCH RTP
  • Mastercard Send

 

From Federal Reserve Payment Trends Update

imps8

Key Sources of Research:

 

 

Real-time payments are changing the reality of payments

Deloitte

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-real-time-payments.pdf

 

 

 

THE U.S. PATH TO FASTER PAYMENTS
FINAL REPORT PART ONE: THE FASTER PAYMENTS TASK FORCE APPROACH

Federal Reserve

2017

https://www.federalreserve.gov/newsevents/press/other/US-path-to-faster-payments-pt1-201701.pdf

 

 

Zelle

https://www.zellepay.com

 

 

 

Real-Time Payments for P2P
.
Eric Foust
Early Warning
Mike Wolf

2017

http://www.rtpsummit.com/wp-content/uploads/2017/10/12.10-Zelle-53-RTP-conference-deck-005.pdf

 

 

Banks Re-enter the P2P Payments Fray: With Mobile, Will this Time Be Different?

By Terri Bradford, Payments Research Specialist

Fed Reserve

https://www.kansascityfed.org/~/media/files/publicat/psr/briefings/psr-briefingjan2017.pdf

 

 

 

Faster Payments Finds Its Future

NACHA

2016

https://web.nacha.org/system/files/resource/2017-08/Faster-Payments-Tracker-December-2016.pdf

 

 

 

Faster payments: Building a business, not just an infrastructure

McKinsey

https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Faster%20payments%20Building%20a%20business%20not%20just%20an%20infrastructure/Faster%20payments.ashx

 

 

The Road to Faster Payments

As Real-Time Payments Rise, Payment Hubs See a Resurgence

The Clearing House

2017

https://www.theclearinghouse.org/research/banking-perspectives/2017/2017-q4-banking-perspectives/payment-hubs

 

 

 

Real-Time Payments and Settlement Comes to the United States

How U.S. Banks Can Realize the Full Opportunities of Immediate Payments for Their Customers

D+H

2016

https://www.pnc.com/content/dam/pnc-ideas/articles/D+H-US-Real-Time-Payments-and-Settlement-whitepaper-coauthored-PNC-TCH-15-April%202016.pdf

 

 

 

Real-Time, Cross-Border Payments Survey

2017

IPFA

http://ipf-a.org/wp-content/uploads/Real-time-Cross-Border-Payments-Final.pdf

 

 

 

Strategies for Improving the U.S. Payment System Federal Reserve Next Steps in the Payments Improvement Journey

Federal Reserve

2017

https://www.federalreserve.gov/newsevents/pressreleases/files/other20170906a1.pdf

 

 

 

Strategies for Improving the U.S. Payment System

Federal Reserve

2015

https://fedpaymentsimprovement.org/wp-content/uploads/strategies-improving-us-payment-system.pdf

 

 

 

Strategies for Improving the U.S. Payment System
Feb 2016 Progress Report

Fed Reserve

2016

https://www.w3.org/2016/02/usfed-criteria.pdf

 

 

Strategies for Improving the U.S. Payment System

Progress Report | January 2017

Federal Reserve

https://www.federalreserve.gov/newsevents/press/other/sips-progress-report-201701.pdf

 

 

 

Strategies for Improving the U.S. Payments System

Claudia Swendseid

2016

https://www.minneapolisfed.org/~/media/files/news_events/events/payments-swendseid.pdf?la=en

 

Strategies for Improving the U.S. Payment System

2015

http://aftweb.com/aws/AFT/asset_manager/get_file/110552

 

 

Making Payments Faster in the United States

Clearing House

2015

https://www.theclearinghouse.org/~/media/puertoricosamedayach2015/making%20payments%20faster%20in%20the%20us%20tim%20mills.pdf?la=en

 

 

 

The Clearing House RTP System “Back to The Future”: Emerging Payment Systems Legal and Regulatory Issues

2017

https://www.calbankers.com/sites/main/files/file-attachments/back_to_the_future_emerging_payment_systems_-_krebs.pdf

 

 

The Federal Reserve Faster Payments and Secure Payments Task Forces
2016 Smart Card Alliance Payments Summit

April 5, 2016

https://www.securetechalliance.org/secure/events/20160404/PACIFICA-7_TUE_445_AADLAND_Smart-Card-Alliance_Faster-and-Secure-Payments-Task-Forces_4-5-16.pdf

 

 

 

Understanding and Regulating Twenty-First Century Payment Systems: The Ripple Case Study

Marcel T. Rosner
Delaware Court of Chancery
Andrew Kang
University of Michigan Law School

2016

https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1239&context=mlr

 

 

 

US Retail Payment Instruments and Systems

Structure, Transformation & Public Policy

NY Fed Reserve

2015

https://www.newyorkfed.org/medialibrary/media/banking/international/15-Retail-Payments-2015-Littman.pdf

 

 

 

Digital Payments Strategy for U.S. Retail Banks

Cognizant

2015

https://www.cognizant.com/whitepapers/Digital-Payments-Strategy-for-U.S.-Retail-Banks-codex1358.pdf

 

 

US Real Time Payments Technology Playbook

The Clearing House

2016

https://www.theclearinghouse.org/-/media/tch/pay%20co/rtp/tch%20rtp%20technology%20playbook%20111716%20v1.pdf?la=en

 

 

 

16 in 2016: Trailblazing trends in global payments

McKinsey

2016

https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/16%20in%202016%20Trailblazing%20trends%20in%20global%20payments/16%20in%202016%20Trailblazing%20trends%20in%20global%20payments_2015.ashx

 

 

 

Earthport

https://www.earthport.com/

 

 

 

Flavors of the Fast

A trip around the world in immediate payments

FIS

https://www.fisglobal.com/-/media/FISGlobal/Files/Report/Flavours_Of_Fast.pdf

 

 

 

Global Trends and Developments in Instant payments

Edger Dunn

14th February, 2017

http://edgardunn.com/wp-content/uploads/2017/02/MPE-Track-A-Afternoon-Session-Global-Trends-and-Developments-in-Instant-Payments-Ulf-Geismar-14-02-2017-VF-1.pdf

 

 

 

EXECUTIVE GUIDE TO IMMEDIATE/ REAL-TIME PAYMENTS

Accenture

https://www.aciworldwide.com/-/media/files/collateral/trends/executive-guide-to-immediate-payments-tl.pdf

 

 

 

INTERNATIONAL PAYMENTS IN A DIGITAL WORLD

Accenture

2017

https://www.accenture.com/t20171006T071036Z__w__/us-en/_acnmedia/PDF-62/Accenture-International-Payments-Digital-World.PDF

 

 

 

Ripple as an Innovative Solution to the Ways We Pay

RIPPLE

https://ripple.com/files/candian_comment_letter.pdf

 

 

 

Instant revolution of payments?

The quest for real-time payments

Deutsche Bank

2015

https://bravenewcoin.com/assets/Industry-Reports-2015/Deutsche-Bank-Research-Instant-revolution-of-payments-The-quest-for-real-time-payments.PDF

 

 

 

Retail payments and the real economy

ECB

Iftekhar Hasan, Tania De Renzis
and Heiko Schmiedel

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1572.pdf?0568b27871896eb01f54b0c4c40a8f63

 

 

 

NATIONAL RETAIL PAYMENT SYSTEMS TO SUPPORT FINANCIAL INCLUSION

AFI

2017

https://www.afi-global.org/sites/default/files/publications/2017-10/DFS_GN_29_stg4.pdf

 

 

 

Real-time payments for real-time banking
How banks can seize the full opportunities of immediate payments

Accenture

2015

https://www.accenture.com/t20151002T215256__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_22/Accenture-Banking-Realtime-Payments-Realtime-Bank.pdf

 

 

 

The New Payments Platform: Fast-Forward to the Future

Cognizant

https://www.cognizant.com/InsightsWhitepapers/the-new-payments-platform-fast-forward-to-the-future-codex1299.pdf

 

 

 

24/7 Domestic Real-time Payments

SWIFT

http://www.alfi.lu/sites/alfi.lu/files/files/16577_Expl1_SWIFT2020_2.pdf

 

 

Innovations in retail payments

Report of the Working Group on Innovations in Retail Payments

BIS

May 2012

https://www.bis.org/cpmi/publ/d102.pdf

 

 

Fast payments – Enhancing the speed and availability of retail payments

BIS

November 2016

 

https://www.bis.org/cpmi/publ/d154.pdf

 

Is a Global Real-Time Payment System Possible?

TCH

2015

https://www.theclearinghouse.org/research/2015/2015-q3-banking-perspectives/global-real-time-payments

Federal Reserve Payment Trends Update

2017

Federal Reserve Bank of Richmond

http://www.maafp.org/resources/Presentations/04192017%20Retail%20Payments.pdf

 

 

 

THE IMPORTANCE OF THE RETAIL PAYMENT SYSTEM

Hal S. Scott

Nomura Professor and Director, Program on International Financial Systems Harvard Law School

December 16, 2014

 

https://dash.harvard.edu/bitstream/handle/1/16883011/hal-scott—mastercard-retail-payment-systems.pdf?sequence=1

 

Mechanism Design for Near Real-Time Retail Payment and Settlement Systems

Zhiling GUO
Singapore Management University, ZHILINGGUO@smu.edu.sg

Robert John UFFMAN
Singapore Management University, rkau man@smu.edu.sg

Mei LIN
Singapore Management University, mlin@smu.edu.sg

Dan MA

2015

 

http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3494&context=sis_research

 

 

 

2017 Advanced Payments Report

Edgar Dunn & Company

2017

http://edgardunn.com/2017/06/2017-advanced-payments-report/

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Network Economics of Block Chain and Distributed Ledger Technology

Network Economics of Block Chain and Distributed Ledger Technology

 

Quadruple Accounting System

Morris Copeland, and Hyman Minsky emphasized quadruple entry accounting system envisioning interrelated interlocking balance sheets of economic agents.  Interlocking balance sheets create a network of economic agents.

I attach a slide from a presentation by Marc Lavoie given at Minsky Summer school in 2010 at the Levy Institute of Economics (Bard College).

 

Minsky

 

There are several FINTECH innovations which are bringing about dramatic changes in the financial services business.

  • Block Chain and Distributed Ledgers
  • Payment Banks
  • Retail P2P Payment services
  • Mobile Payments
  • Secured Wallets
  • Domestic Real Time Payments and Transfers
  • Cross Border Near Real time Money Transfers

 

Block Chain and Distributed Ledgers, in my opinion, are/can be implementation of quadruple accounting principles envisioned by Morris Copeland and Hyman Minsky.  Two economic agents engage in financial transactions which are recorded in distributed ledgers.

Some of the key components of distributed ledger technology are:

  • Peer-To-Peer Networking
  • Cryptography
  • Distributed Data Storage

In contrast with centralized ledgers, distributed ledgers store data at each node in the P2P network.  So there is no need for an intermediating institution.  From a payment system perspective, each node in the P2P network can be thought of as a bank.   Each node will have its own ledger and balance sheet which will record assets and liabilities.

Ripple is a Cross Border money transfer solution which is based on block chain technology.

 

Recent rise of retail P2P payment services such as

  • Xoom
  • M-Paisa
  • PayTM

indicates a trend toward real time payments/money transfers domestic and international.  This trend also indicates decoupling of these services from traditional deposit/lending banks. XOOM is a service provided by PAYPAL for international Money Transfers.  Money transfers are within a few minutes.

In USA, there are new P2P services offered to facilitate faster near real time payments/money transfers through mobile and online interfaces.

  • Venmo (Paypal)
  • Zelle (clearXchange Network)
  • Square Cash
  • Braintree (Paypal)

There are also social media payments available now through which consumers can quickly send money using social media applications such as

  • Facebook (through Messanger app)
  • Snapcash (through SnapChat)
  • Apple PayCash (through imessages app)
  • TenCent via WeChat

 

Rise of payment banks such as PayTM is one such example.  Reserve Bank of India has granted PayTM a payment bank status.  But transfers are still between bank accounts of transacting consumers where deposits are kept. Payment Bank acts as a technology provider and acts as an intermediary.

As per the RBI guidelines, payments banks cannot lend they can only take deposits or accept payments.

There are four payment banks in India now.

  • PayTM Payment Bank
  • Airtel Payment Bank
  • India Post Payment Bank
  • FINO Payment Bank

 

Mobile payments using secured wallets is another such example.

  • Consumer to Business payments and transfers
  • Consumer to Consumer payments and transfers
  • Google Wallet
  • Apple Pay
  • Android Pay
  • Alipay

 

Cross Border Payment Solutions:

  • XOOM
  • Earthport
  • TransferWise
  • RIPPLE
  • Remitly
  • WorldRemit

 

 

Please see my other related posts:

Next Generation of B2C Retail Payment Systems

Cross Border/Offshore Payment and Settlement Systems

 

 

Key sources of Research:

 

Minsky and Godley and financial Keynesianism

Marc Lavoie
University of Ottawa

2010

http://www.levyinstitute.org/pubs/conf_june10/Lavoie.pdf

 

Block Chain:  A Primer

2016

https://mpra.ub.uni-muenchen.de/76562/1/MPRA_paper_76562.pdf

 

Distributed Ledger Technologies/Blockchain: Challenges, opportunities and the prospects for standards

Advait Deshpande, Katherine Stewart, Louise Lepetit, Salil Gunashekar

2017

www2.caict.ac.cn/zscp/qqzkgz/qqzkgz_zdzsq/201708/P020170818579005375876.pdf

 

Banking on Distributed Ledger Technology: Can It Help Banks Address Financial Inclusion?

By Jesse Leigh Maniff and W. Blake Marsh

2017

https://www.kansascityfed.org/~/media/files/publicat/econrev/econrevarchive/2017/3q17maniffmarsh.pdf

 

 

Distributed ledger technology in payments, clearing, and settlement

Mills, David, Kathy Wang, Brendan Malone, Anjana Ravi, Jeff Marquardt, Clinton
Chen, Anton Badev, Timothy Brezinski, Linda Fahy, Kimberley Liao, Vanessa Kargenian,
Max Ellithorpe, Wendy Ng, and Maria Baird (2016).

Finance and Economics Discussion
Series 2016-095. Washington: Board of Governors of the Federal Reserve System,

2016

https://www.federalreserve.gov/econresdata/feds/2016/files/2016095pap.pdf

 

 

Distributed Ledger Technology: beyond block chain

A report by the UK Government Chief Scientific Adviser

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/492972/gs-16-1-distributed-ledger-technology.pdf

 

Bitcoin, Blockchain & distributed ledgers: Caught between promise and reality

Deloitte

https://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-technology-bitcoin-blockchain-distributed-ledgers-180416.pdf

 

 

Distributed ledger technology in payment, clearing and settlement
An analytical framework

BIS

2017

https://www.bis.org/cpmi/publ/d157.pdf

 

 

The Truth About Blockchain

HBR
January–February 2017 Issue

 

https://hbr.org/2017/01/the-truth-about-blockchain

 

THE USE OF BLOCKCHAIN IN CLEARING AND SETTLEMENT

MARECHAL Baptiste

 

 

Peer-to-peer payments: Surveying a rapidly changing landscape

By Jennifer Windh

August 15, 2011

 

https://www.frbatlanta.org/-/media/documents/rprf/rprf_pubs/110815wp.pdf

Global Liquidity and Cross Border Capital Flows

Global Liquidity and Cross Border Capital Flows

 

Types of Cross Border Capital Flows

  • Intra Bank Flows (Intra Firm Transfers)
  • Inter Bank Flows (wholesale Money Markets)
  • International Shadow Banking
  • Euro Dollar Market
  • International Bond and Equity Portfolio Flows

Growth of Capital Flows and FX Reserves

From INTERNATIONAL MONETARY RELATIONS: TAKING FINANCE SERIOUSLY

Capitalflows

 

From INTERNATIONAL MONETARY RELATIONS: TAKING FINANCE SERIOUSLY

Capital Flows 2

From Stitching together the global financial safety net

Cap Flows 6

 

Decline in Global Trade and Cross Border Capital Flows since 2008

 

From Global Liquidity and Cross-Border Bank Flows

Cap Flows 7

 

US DOLLAR FLOWS – Inter regional Flows

  • Not all dollar flows are from USA.
  • Through Eurodollar Market, firms in many countries are engaged in US Dollar transactions.
  • US Dollar dominates cross border capital flows.

 

From External dimension of monetary policy

Cap Flows 4

 

 

From Economic resilience: a financial perspective

 

Cap Flow 15

 

 

ALL CURRENCIES

From Breaking free of the triple coincidence in international finance

Cap Flows 10

 

Who is Involved in Cross Border Capital Flows

From The shifting drivers of global liquidity

Cap Flows 8

 

Recent Trends in Capital Flows

 

From The shifting drivers of global liquidity

Cap Flows 9

 

Problem of Boundaries

From Breaking the Triple Coincidence in International Finance

Capital Flows 3

Cross Border (International) Capital Flows (Networks) for

  • Intra Bank Flows
  • Inter-bank Lending
  • Debt and Securities Flows
  • International Shadow Banking

Capital Flows are not confined to National Boundaries.

Boundaries for

  • Monetary Policy
  • National Income Accounting
  • National Currencies

Types of Flows

From From Breaking the Triple Coincidence in International Finance

Cap Flows 11

 

A. Round tripping of Capital Flows

From Breaking the Triple Coincidence in International Finance

Cap Flows 12

B. International Debt Issuance by Non Financial Corporates in Emerging Markets

 

From From Breaking the Triple Coincidence in International Finance

Cap Flows 13

From Global dollar credit: links to US monetary policy and leverage

Cap flow 14

 

From  What does the new face of international financial intermediation mean for emerging market economies?

capflows 16

 

 

From Economic resilience: a financial perspective

 

Cap Flow 16

Please see my other related posts:

The Dollar Shortage, Again! in International Wholesale Money Markets

Currency Credit Networks of International Banks

Low Interest Rates and International Capital Flows

Low Interest Rates and International Investment Position of USA

Economics of Trade Finance

External Balance sheets of Nations

 

Key Sources of Research:

 

 

Breaking the Triple Coincidence in International Finance

Hyun Song Shin

Bank for International Settlements
Keynote speech at seventh conference of
Irving Fisher Committee on Central Bank Statistics

Basel, 5 September 2014

http://www.bis.org/ifc/publ/ifcb39_keynote-rh.pdf

 

 

Breaking free of the triple coincidence in international finance

Hyun Song Shin, BIS

Eighth IFC Conference on “Statistical implications of the new financial landscape”
Basel, 8–9 September 2016

http://www.bis.org/ifc/publ/ifcb43_zp_rh.pdf

 

 

 

Breaking free of the triple coincidence in international finance

by Stefan Avdjiev, Robert N McCauley and Hyun Song Shin

Monetary and Economic Department

BIS

October 2015

http://www.bis.org/publ/work524.pdf

 

 

 

Global Liquidity and Cross-Border Bank Flows

Eugenio Cerutti (International Monetary Fund)
Stijn Claessens (Federal Reserve Board)
Lev Ratnovski (International Monetary Fund)

Economic Policy
63rd Panel Meeting
Hosted by the De Nederlandsche Bank

Amsterdam, 22-23 April 2016

http://www.economic-policy.org/wp-content/uploads/2016/04/Global-liquidity-and-cross-border-bank-flows.pdf

 

 

 

Stitching together the global financial safety net

Edd Denbee, Carsten Jung and Francesco Paternò

Financial Stability Paper No. 36 – February 2016

BOE

http://www.reinventingbrettonwoods.org/sites/default/files/fs_paper36.pdf

 

 

 

Gross Capital Inflows to Banks, Corporates and Sovereigns

Stefan Advjiev

Bryan Hardy

Sebnem Kalemli-Ozcan

Luis Serven

January 2017

http://www.econweb.umd.edu/~kalemli/GrossFlows_jan17_final.pdf

 

 

External dimension of monetary policy

Hyun Song Shin

Remarks at the Board of Governors of the Federal Reserve System conference
“Monetary policy implementation and transmission in the post-crisis period”

Washington DC, Friday 13 November 2015

https://www.bis.org/speeches/sp151113.pdf

 

 

 

 

Financial deglobalisation in banking?

Robert N McCauley, Agustín S Bénétrix,
Patrick M McGuire and Goetz von Peter

TEP Working Paper No. 1717

July 2017

http://www.tcd.ie/Economics/TEP/2017/tep1717.pdf

 

 

Monetary policy spillovers and currency networks in cross-border bank lending

by Stefan Avdjiev and Előd Takáts
Monetary and Economic Department

March 2016

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2749311

 

 

 

Accounting for global liquidity: reloading the matrix

Hyun Song Shin
Economic Adviser and Head of Research

IMF-IBRN Joint Conference “Transmission of macroprudential and monetary policies across borders”

Washington DC, 19 April 2017

https://www.bis.org/speeches/sp170419.pdf

 

 

 

 

INTERNATIONAL MONETARY RELATIONS: TAKING FINANCE SERIOUSLY

Maurice Obstfeld
Alan M. Taylor
May 2017

http://econ.sciences-po.fr/sites/default/files/file/w23440.pdf

 

 

 

The Currency Dimension of the Bank Lending Channel in International Monetary Transmission

BIS Working Paper No. 600

Posted: 2 Jan 2017

Előd Takáts

Judit Temesvary

 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2891530

https://www.researchgate.net/profile/Elod_Takats/publication/311451202_The_Currency_Dimension_of_the_Bank_Lending_Channel_in_International_Monetary_Transmission/links/587dd04808ae9a860ff2723a/The-Currency-Dimension-of-the-Bank-Lending-Channel-in-International-Monetary-Transmission.pdf

 

 

 

The Second Phase of Global Liquidity and Its Impact on Emerging Economies

Hyun Song Shin
Princeton University

November 7, 2013

 

http://www.frbsf.org/economic-research/events/2013/november/asia-economic-policy-conference/program/files/The-Second-Phase-of-Global-Liquidity-and-Its-Impact-on-Emerging-Economies.pdf

 

 

 

 

BIS Quarterly Review

September 2017

International banking and financial market developments

 

http://www.bis.org/publ/qtrpdf/r_qt1709.pdf

 

 

 

 

The Three Phases of Global Liquidity

https://www.springer.com/cda/content/document/cda_downloaddocument/9789812872838-c2.pdf?SGWID=0-0-45-1490720-p177066168

 

 

 

 

The Shifting Drivers of Global Liquidity

Stefan Avdjiev
Leonardo Gambacorta
Linda S. Goldberg
Stefano Schiaffi

Staff Report No. 819
June 2017

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr819.pdf?la=en

 

 

 

How Do Global Liquidity Phases Manifest Themselves in Asia?

Iwan J. Azis
Asian Development Bank and Cornell University
Hyun Song Shin
Princeton University
August 2013

http://www.iwanazis.com/files/documents/Iwan-Azis-Paper-Shin-Global-Liquidity2013.pdf

 

 

 

 

GLOBAL LIQUIDITY—ISSUES FOR SURVEILLANCE

2014

IMF

http://www.imf.org/external/np/pp/eng/2014/031114.pdf

 

 

 

 

The shifting drivers of global liquidity

Stefan Avdjiev, Leonardo Gambacorta, Linda S. Goldberg and Stefano Schiaffi

May 2017

FED NY

 

https://www.chapman.edu/business/_files/faculty-research/2017-conference-presentations/linda-goldberg.pdf

 

 

 

CAPITAL FLOWS AND GLOBAL LIQUIDITY

IMF Note for G20 IFA WG
February 2016

 

http://g20chn.org/English/Documents/Current/201608/P020160811536051676178.pdf

 

 

 

 

Capital Flows, Cross-Border Banking and Global Liquidity∗

Valentina Bruno

Hyun Song Shin

March 15, 2012

http://www.igier.unibocconi.it/files/capital_flows_global_liquidity.pdf

 

 

Cross-Border Banking and Global Liquidity

Valentina Bruno

Hyun Song Shin

August 28, 2014

 

http://www.bis.org/publ/work458.pdf

 

 

The international monetary and financial system: a capital account historical perspective

by Claudio Borio, Harold James and Hyun Song Shin

2014

 

http://www.bis.org/publ/work457.pdf

 

 

Banks and Cross-Border Capital Flows: Policy Challenges and Regulatory Responses

 

https://www.tcd.ie/policy-institute/assets/pdf/CIEPR_banking_capital_flows_report_Sept12.pdf

 

 

 

Global dollar credit and carry trades: a firm-level analysis

Valentina Bruno

Hyun Song Shin

August 2015

 

http://www.bis.org/publ/work510.pdf

 

 

Global dollar credit: links to US monetary policy and leverage

by Robert N McCauley, Patrick McGuire and Vladyslav Sushko

2015

 

http://www.bis.org/publ/work483.pdf

 

 

 

Global liquidity and procyclicality

Hyun Song Shin

Bank for International Settlements

“The State of Economics, The State of the World” World Bank conference,

8 June 2016

 

http://pubdocs.worldbank.org/en/710301465395290548/Shin-Son-Shin-Presentation.pdf

 

 

 

 

Economic resilience: a financial perspective

Note submitted to the G20 on 7 November 2016

December 2016

 

http://www.g20.utoronto.ca/2017/2017-Germany-BIS-economic-resilience.pdf

 

 

Emerging Market Nonfinancial Corporate Debt: How Concerned Should We Be?,

Beltran, Daniel, Keshav Garud, and Aaron Rosenblum (2017).

IFDP Notes. Washington: Board of Governors of the Federal Reserve System, June 2017.

 

https://www.federalreserve.gov/econres/notes/ifdp-notes/emerging-market-nonfinancial-corporate-debt-how-concerned-should-we-be-20170601.pdf

 

 

 

 

International capital flows and financial vulnerabilities in emerging market economies: analysis and data gaps

By Nikola Tarashev, Stefan Avdjiev and Ben Cohen

Note submitted to the G20 International Financial Architecture Working Group

August 2016

 

https://www.bis.org/publ/othp25.pdf

 

 

 

Recent trends in EME government debt volume and composition

Corporate Debt in Emerging Economies: Threat to Financial Stability

Viral Acharya et al
2015

 

 

 

 

 Dollar credit to emerging market economies

Robert N McCauley Patrick McGuire Vladyslav Sushko

2015

 

https://www.bis.org/publ/qtrpdf/r_qt1512e.pdf

 

 

 

 

What does the new face of international financial intermediation mean
for emerging market economies?

Hyun song shin and PhiliP Turner, Bank for International Settlements

2015

 

https://publications.banque-france.fr/sites/default/files/medias/documents/financial-stability-review-19_2015-04.pdf

Cash and Investments: Corporate Savings Glut in USA

Cash and Investments: Corporate Savings Glut in USA

 

Profits/Retained Earnings of a firm can be used in number of ways:

  • Capital Investments
  • Debt Repayment
  • Dividends
  • Cash and Short Term Investments
  • Long Term Investments
  • Share Buybacks
  • M&A Investments

Please see three quarterly reports from FACTSET on trends in

  • Dividents
  • Buybacks
  • Cash and Investments

Share buybacks are very common for several years.

Please see my related posts

Why do Firms buyback their Shares? Causes and Consequences.

Low Interest Rates and Business Investments : Update August 2017

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Mergers and Acquisitions – Long Term Trends and Waves

Business Investments and Low Interest Rates

 

From The Corporate Saving Glut in the Aftermath of the Global Financial Crisis

cash

From Why Are Corporations Holding So Much Cash?

cash 2cash3

 

From FACTSET Cash and Investment Quarterly

cash4

Companies are holding on to the large sum of cash.  Rather than capital investments (CAPEX), cash is being used for share buybacks, dividend payouts, mergers and acquisitions, and cash investments (short and long term).

 

From FACTSET Cash and Investment Quarterly

cash5

Key Sources of Research:

 

The Corporate Saving Glut in the Aftermath of the Global Financial Crisis

Joseph W. Gruber
Steven B. Kamin

This Draft: June 2015

https://www.imf.org/external/np/seminars/eng/2015/secularstag/pdf/Gruber.pdf

 

The global corporate saving glut: Long-term evidence

Peter Chen, Loukas Karabarbounis, Brent Neiman

05 April 2017

http://voxeu.org/article/global-corporate-saving-glut

 

 

 

Declining Labor Shares and the Global Rise of Corporate Saving

Loukas Karabarbounis

Brent Neiman

October 2012

http://faculty.chicagobooth.edu/brent.neiman/research/labshare.pdf

 

The Global Rise of Corporate Saving

Peter Chen

Loukas Karabarbounis

Brent Neiman

March 2017

http://faculty.chicagobooth.edu/brent.neiman/research/CKN.pdf

http://www.nber.org/papers/w23133.pdf

 

FACTSET Dividend Quarterly

https://www.factset.com/websitefiles/PDFs/dividend

 

FACTSET Buyback Quarterly

https://www.factset.com/websitefiles/PDFs/buyback

FACTSET Cash and Investment Quarterly

https://www.factset.com/websitefiles/PDFs/cashinvestment

https://insight.factset.com/hubfs/Cash%20and%20Investment%20Quarterly/Cash%20and%20Investment%20Quarterly%20Q3%202016_12.21.16_v2.pdf

 

 

 

Why Are Corporations Holding So Much Cash?

By Juan M. Sanchez and Emircan Yurdagul

2013

 

https://www.stlouisfed.org/~/media/Files/PDFs/publications/pub_assets/pdf/re/2013/a/RE_Jan_2013.pdf

 

 

Why Do Companies Hold Cash?

Gianni La Cava and Callan Windsor

RDP 2016-03

 

https://www.rba.gov.au/publications/rdp/2016/pdf/rdp2016-03.pdf

 

 

MULTINATIONALS AND THE HIGH CASH HOLDINGS PUZZLE

Lee Pinkowitz

René M. Stulz Rohan Williamson

June 2012

 

http://www.nber.org/papers/w18120.pdf?new_window=1

 

 

 

The Determinants and Implications of Corporate Cash Holdings

Tim Opler, Lee Pinkowitz, Rene Stulz, Rohan Williamson

Issued in October 1997

http://www.nber.org/papers/w6234.pdf

 

 

WHY DO U.S. FIRMS HOLD SO MUCH MORE CASH THAN THEY USED TO?

Thomas W. Bates Kathleen M. Kahle Rene M. Stulz

September 2006

 

http://www.nber.org/papers/w12534.pdf

 

 

Why do firms hold so much cash? A tax-based explanation

C. Fritz Foley, Jay C. Hartzell, Sheridan Titman, and Garry Twite

October 2006

 

http://www.nber.org/papers/w12649.pdf

 

 

It’s Alive! Corporate Cash and Business Investment

Finn Poschmann

 

https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/e-brief_181.pdf

 

 

Dead money

There are good reasons for hoarding cash.

John Lorinc

 

http://www.canadianbusiness.com/economy/dead-money/

 

 

IS “DEAD” MONEY ALIVE? A FIRM-LEVEL ANALYSIS OF CANADIAN NON-FINANCIAL LISTED CORPORATIONS CASH HOLDING AND CAPITAL EXPENDITURE BEHAVIOR

2014

IMF

 

https://www.imf.org/external/pubs/ft/scr/2014/cr1428.pdf

Low Interest Rates and Business Investments : Update August 2017

Low Interest Rates and Business Investments : Update August 2017

 

From  Explaining Low Investment Spending

USINVEST

globalinvest

 

Please see my earlier posts.

Business Investments and Low Interest Rates

Mergers and Acquisitions – Long Term Trends and Waves

The Decline in Long Term Real Interest Rates

Short term Thinking in Investment Decisions of Businesses and Financial Markets

Low Interest Rates and Monetary Policy Effectiveness

Low Interest Rates and Banks’ Profitability : Update July 2017

Low Interest Rates and Banks Profitability: Update – December 2016

 

Since my earlier posts on this subject there has been several new studies published highlighting weakness in business investments as one of the cause of slower economic growth and lower interest rates.

Other significant factors impacting interest rates are demographic changes, and slower economic growth.

I argue that there is mutual (circular) causality in weak business investment, slower economic growth, and lower interest rates which reinforce each other.

 

Decreased competition, increased concentration, corporate savings glut, share buybacks, paying dividends are also identified as factors.

Number of public companies have decreased significantly in USA since 1996 due to M&A activity.   See the data below.

Increased Mergers/Acquisitions, Increased Concentration, Decreased Competition, Decreased Number of Public Companies, Share buybacks, and Dividend Payouts are multiple perspectives of same problem.

 

From The Incredible Shrinking Universe of Stocks

The Causes and Consequences of Fewer U.S. Equities

USNUMUSSTAT

 

Key sources of Research:

The Low Level of Global Real Interest Rates

Remarks by
Stanley Fischer
Vice Chairman
Board of Governors of the Federal Reserve System

at the
Conference to Celebrate Arminio Fraga’s 60 Years
Casa das Garcas, Rio de Janeiro, Brazil

July 31, 2017

The Low Level of Global Real Interest Rates

 

 

INVESTMENT-LESS GROWTH: AN EMPIRICAL INVESTIGATION

German Gutierrez Thomas Philippon

Working Paper 22897

NATIONAL BUREAU OF ECONOMIC RESEARCH

1050 Massachusetts Avenue
Cambridge, MA 02138

December 2016

 

INVESTMENT-LESS GROWTH: AN EMPIRICAL INVESTIGATION

 

 

Explaining Low Investment Spending

The NBER Digest
NATIONAL BUREAU OF ECONOMIC RESEARCH

February 2017

Explaining Low Investment Spending

 

 

The Secular Stagnation of Investment?

Callum Jones and Thomas Philippon

December 2016

 

The Secular Stagnation of Investment?

 

 

Is there an investment gap in advanced economies? If so, why?

By Robin Dottling, German Gutierrez and Thomas Philippon

 

Is there an investment gap in advanced economies? If so, why?

 

 

The Disappointing Recovery of Output after 2009

JOHN G. FERNALD ROBERT E. HALL

JAMES H. STOCK MARK W. WATSON

May 2, 2017

The Disappointing Recovery of Output after 2009

 

 

Declining Competition and Investment in the U.S.

German Gutierrez and Thomas Philippon

NATIONAL BUREAU OF ECONOMIC RESEARCH

July 2017

 

Declining Competition and Investment in the U.S

 

 

Real Interest Rates Over the Long Run : Decline and convergence since the 1980s

Kei-Mu Yi   Jing Zhang

ECONOMIC POLICY PAPER 16-10 SEPTEMBER 2016

FEDERAL RESERVE BANK of MINNEAPOLIS

Real Interest Rates over the Long Run Decline and convergence since the 1980s, due significantly to factors causing lower investment demand

 

 

Understanding global trends in long-run real interest rates

Kei-Mu Yi and Jing Zhang

Economic Perspectives, Vol. 41, No. 2, 2017
Chicago Fed Reserve Bank

 

Understanding Global Trends in Long-run Real Interest Rates

 

 

Weakness in Investment Growth: Causes, Implications and Policy Responses

CAMA Working Paper 19/2017 March 2017

M. Ayhan Kose

Franziska Ohnsorge

Lei Sandy Ye

Ergys Islamaj

 

Weakness in Investment Growth: Causes, Implications and Policy Responses

 

 

Are US Industries Becoming More Concentrated?

Gustavo Grullon, Yelena Larkin and Roni Michaely

October 2016

 

Are US Industries Becoming More Concentrated?

 

 

Why Is Global Business Investment So Weak? Some Insights from Advanced Economies

 

Robert Fay, Justin-Damien Guénette, Martin Leduc and Louis Morel,

International Economic Analysis Department

Bank of Canada Review Spring 2017

 

Why Is Global Business Investment So Weak? Some Insights from Advanced Economies

 

 

What Is Behind the Weakness in Global Investment?

by Maxime Leboeuf and Bob Fay

2016

Bank of Canada

 

What Is Behind the Weakness in Global Investment?

 A Structural Interpretation of the Recent Weakness in Business Investment

by Russell Barnett and Rhys Mendes

 The Corporate Saving Glut in the Aftermath of the Global Financial Crisis

 

Gruber, Joseph W., and Steven B. Kamin

International Finance Discussion Papers
Board of Governors of the Federal Reserve System
Number 1150 October 2015

 

The Corporate Saving Glut in the Aftermath of the Global Financial Crisis

 

 

The Incredible Shrinking Universe of Stocks

The Causes and Consequences of Fewer U.S. Equities

March 22, 2017

GLOBAL FINANCIAL STRATEGIES

http://www.credit-suisse.com

 

The Incredible Shrinking Universe of Stocks The Causes and Consequences of Fewer U.S. Equities

 

 

They Just Get Bigger: How Corporate Mergers Strangle the Economy

Jordan Brennan

2017 February 19

They Just Get Bigger: How Corporate Mergers Strangle the Economy

 

 

Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap: American Prosperity in Historical Perspective

Jordan Brennan

March 2016

 

Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap: American Prosperity in Historical Perspective

 

 

The Oligarchy Economy: Concentrated Power, Income Inequality, and Slow Growth

Corporate concentration exacerbates income inequality

 

Jordan Brennan

March 2016

http://evonomics.com/the-oligarchy-economy/

Low Interest Rates and Monetary Policy Effectiveness

Low Interest Rates and Monetary Policy Effectiveness

 

World economy is stuck in low interest rates environment.   Euro area, japan have even negative interest rates.  US Fed Reserve since December 2016 has started raising interest rates.

Attempts by Central Banks have not been effective in increasing economic growth.  Many Economists now are presenting counter intuitive reasons for low growth.

 

Please see my earlier related posts.

Business Investments and Low Interest Rates

Mergers and Acquisitions – Long Term Trends and Waves

 

Since 2016, there are several new studies published exploring effectiveness of monetary policy in low interest rates environment.

 

Is monetary policy less effective when interest rates are persistently low?

by Claudio Borio and Boris Hofmann

April 2017

Is Monetary Policy Less Effective When Interest Rates are Persistently Low?

 

In March 2017, Brookings Institution published the following study by the economists of the US Federal Reserve.

Monetary policy in a low interest rate world

 

Fed Reserve of Chicago published speech given by Charles Evans in 2016.

Monetary Policy in a Lower Interest Rate Environment

 

Lecture by Vítor Constâncio, Vice-President of the ECB, Macroeconomics Symposium at Utrecht School of Economics, 15 June 2016

The challenge of low real interest rates for monetary policy

 

Journal of Policy Modeling published a paper by Ken Rogoff.  Paper was presented at American Economic Association, 2017.

Monetary policy in a low interest rate world

 

Eight BIS CCA Research Conference on “Low interest rates, monetary policy and international spillovers”, hosted by the Board of Governors of the Federal Reserve System, Washington DC, 25-26 May 2017

Low interest rates, monetary policy and international spillovers

 

Economist Magazine published an article on views of Bill Gross and others.

November 2015

Do ultra-low interest rates really damage growth?

 

Bloomberg Business Week published an article describing views of Charles Calomiris and others.

June 2017

Is the World Overdoing Low Interest Rates?

 

Claudio Borio and Boris Hofmann

The Paper was prepared for the Reserve Bank of Australia conference
“Monetary Policy and Financial Stability in a World of Low Interest Rates”,

16-17 March 2017, Sydney

Is monetary policy less effective when interest rates are persistently low?

 

Monetary policy and bank lending in a low interest rate environment: diminishing effectiveness?

Claudio Borio and Leonardo Gambacorta

February 2017

Monetary policy and bank lending in a low interest rate environment: diminishing effectiveness?

 

Negative Interest Rate Policy (NIRP):
Implications for Monetary Transmission and Bank Profitability in the Euro Area

Prepared by Andreas (Andy) Jobst and Huidan Lin

IMF

August 2016

Negative Interest Rate Policy (NIRP): Implications for Monetary Transmission and Bank Profitability in the Euro Area

 

James Bullard, President and CEO of Federal Reserve Bank of St. Louis

March 24, 2009

The Henry Thornton Lecture, Cass Business School, London

Effective Monetary Policy in a Low Interest Rate Environment

 

Federal Reserve Bank of New York

Monetary Policy, Financial Conditions, and Financial Stability

Tobias Adrian
Nellie Liang

Monetary Policy, Financial Conditions, and Financial Stability

 

Monetary policy, the financial cycle and ultra-low interest rates

Mikael Juselius of Bank of Finland

DNB Workshop on “Estimating and Interpreting Financial Cycles”

Amsterdam, 2 September 2016

Monetary policy, the financial cycle and ultra-low interest rates

BIS Paper

Monetary policy, the financial cycle and ultra-low interest rates

 

The dynamics of real interest rates, monetary policy and its limits

Philippe d’Arvisenet

May 2016

The dynamics of real interest rates, monetary policy and its limits

 

Output Gaps and Monetary Policy at Low Interest Rates

By Roberto M. Billi

Output Gaps and Monetary Policy at Low Interest Rates

 

The insensitivity of investment to interest rates: Evidence from a survey of CFOs

Steve A. Sharpe and Gustavo A. Suarez

2014-02

The insensitivity of investment to interest rates: Evidence from a survey of CFOs

 

Does Prolonged Monetary Policy Easing Increase Financial Vulnerability?

Prepared by Stephen Cecchetti, Tommaso Mancini-Griffoli, and Machiko Narita

February 2017

Does Prolonged Monetary Policy Easing Increase Financial Vulnerability?

 

The Microeconomic Perils of Monetary Policy Experiments

Charles W. Calomiris

Cato Institute

The Microeconomic Perils of Monetary Policy Experiments

 

Why Have the Fed’s Policies Failed to Stimulate the Economy?

Mickey D. Levy

Cato Institute

Why Have the Fed’s Policies Failed to Stimulate the Economy?

Low Interest Rates and Banks’ Profitability : Update July 2017

Low Interest Rates and Banks’ Profitability : Update July 2017

 

Please see my previous posts.

Impact of Low Interest Rates on Bank’s Profitability

Low Interest Rates and Banks Profitability: Update – December 2016

 

Since December 2016, there are several new studies published which study low interest rates and Banks profitability.

 

 

Liberty State economics – a Blog of New York Federal Reserve has published a new column in June 2017.

Low Interest Rates and Bank Profits

 

 

Reduced Viability? Banks, Insurance Companies, and Low Interest Rates

CFA Institute

2016

CFA Institute Blog: Low Interest Rates and Banks

 

 

Changes in Profitability for Primary Dealers since the Financial Crisis

Benjamin Allen

Skidmore College

2017

Changes in Profitability for Primary Dealers since the Financial Crisis

 

 

Deloitte Consulting has published a new report in 2017 on Bank Models viability in environment of low interest rates.

Business model analysis European banking sector model in question

 

THE EFFECT OF NEGATIVE INTEREST RATES ON EUROPEAN BANKING
July 7, 2016
International banker

 

https://internationalbanker.com/banking/effect-negative-interest-rates-european-banking/

 

 

Low interest rates place a strain on the banks

bank of Finland

2016

https://www.bofbulletin.fi/en/2016/2/low-interest-rates-place-a-strain-on-the-banks/

 

 

The profitability of EU banks: Hard work or a lost cause?

KPMG

October 2016

 

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2016/10/the-profitability-of-eu-banks.pdf

 

 

The influence of monetary policy on bank profitability

Claudio Borio

2017

http://onlinelibrary.wiley.com/doi/10.1111/infi.12104/abstract

 

 

Can Low Interest Rates be Harmful: An Assessment of the Bank Risk-Taking Channel in Asia

2014

Asian Development Bank

 

https://www.adb.org/sites/default/files/publication/31204/reiwp-123-can-low-interest-rates-harmful.pdf

 

 

Determinants of bank’s interest margin in the aftermath of the crisis: the effect of interest rates and the yield curve slope

Paula Cruz-García, Juan Fernández de Guevara and Joaquín Maudos

 

http://www.uv.es/inteco/jornadas/jornadas13/Cruz-Garcia,%20Fernandez%20and%20Maudos_XIII%20Inteco%20Workshop.pdf

 

 

Dutch Central Bank has published a new study in November of 2016 on Banks’ Profitability and risk taking in a prolonged environment of Low Interest Rates.

Bank profitability and risk taking in a prolonged environment of low interest rates: a study of interest rate risk in the banking book of Dutch banks

 

 

Net interest margin in a low interest rate environment: Evidence for Slovenia

Net interest margin in a low interest rate environment: Evidence for Slovenia

 

Global Financial Stability Report, April 2017: Getting the Policy Mix Right

IMF

2017

IMF Global Financial Stability Report April 2017

 

 

Negative Interest Rates: Forecasting Banks’ Profitability in a New Environment

Stefan Kerbl, Michael Sigmund

Bank of Finland

Negative Interest Rates: Forecasting Banks’ Profitability in a New Environment

 

 

Low Interest Rates and the Financial System

Remarks by Jerome H. Powell
Member Board of Governors of the Federal Reserve System
at the 77th Annual Meeting of the American Finance Association
Chicago, Illinois
January 7, 2017

https://www.federalreserve.gov/newsevents/speech/powell20170107a.pdf

 

 

Bad zero: Financial Stability in a Low Interest Rate Environment

Elena Carletti  Giuseppe Ferrero

18 June 2017

https://www.dnb.nl/en/binaries/paper%20Carletti_Ferrero_18June2017_tcm47-360758.pdf