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

Despite improvement over the last decade, financial inclusion in the Middle East and North Africa (MENA) region remains relatively low. According to the Global Findex, only 53% of adults in MENA have an account (including mobile money) as of 2021, up from 38% in 2011. By comparison, the same headline indicator for Sub-Saharan Africa in 2021 stood … Read more

Getting a bank loan for the first time enables an individual to enter a virtuous lending circle. This loan allows obtaining credit reports, which will be used by the bank and its competitors to analyze new credit requirements from then onward (figure 1). How do individuals get in this loop? Banks usually make their lending … Read more