Kopi Time podcast with Taimur Baig

Danny Quah. Li Ka Shing Professor in Economics and Dean at the Lee Kuan Yew School of Public Policy, National University of Singapore, joins Kopi Time. A scholar whose focus ranges from inequality to income mobility, international systems of trade and finance to world order among superpowers, Prof Quah underscores the importance of building greater resilience to pandemic, climate change, and technology waves. He also cares about social cohesion, without which even wealthy societies can stumble. Prof Quah combines the need for resilience and social cohesion in the metaphor of trampoline, a system that can take inevitable shocks and knocks but can bounce back readily.See omnystudio.com/listener for privacy information.

We welcome Martin Mühleisen, who until last year ran the International Monetary Fund’s Strategy, Policy, and Review Department. In a frank and wide ranging discussion, Martin assesses the global policy response to the pandemic, its seismic scale, impact, and potential costs. He considers our two generational challenges, inequality and climate change, and mulls over the political and macro cyclical dimensions of fighting these two trends. Martin is wary of multilateral over-reach, especially in the context of the IMF. He is also worried about likely sovereign debt restructurings ahead among some developing economies, and the issue of involving China, which has become a large creditor to these nations in recent years. Martin remains optimistic that the medium term outlook can benefit from more dispersion of technology, along with measures to assist the population through the disruptive aspects of technology and climate transition.See omnystudio.com/listener for privacy information.

Neeraj Seth, Managing Director and Head of Asian Fixed Income at BlackRock, joins to Kopi Time to talk about rates and credit outlook in the US, China, and rest of Asia. We begin with an overview of the current slowing-growth-firming-inflation dynamic, which Neeraj finds not alarming given the lingering strength in demand, and the supply side nature of production disruptions and inflation. He also thinks the US credit/rates space is likely to remain supported in 2022 even around a Fed taper window. We then move on to China; Neeraj details his views on credit market stress, rregulatory tightening, power shortage, supply side disruption, common prosperity, policy outlook, and the value in various fixed income assets. We also discuss the shock absorptive capacity of China’s financial sector. We then move on to the rest of the region, going over the markets of India, Indonesia, Singapore, South Korea, and Thailand. Neeraj’s wealth of experience in managing regional assets makes his views particularly worthwhile to listen. See omnystudio.com/listener for privacy information.

Dr. Ilan Goldfajn, former Governor of the Central Bank of Brazil (2016-19) and presently Chairman of the Board, Credit Suisse Brazil, joins Kopi Time to share his deep expertise on economic policy making and financial markets. We begin by talking about the policy space available in EM and DM to deal with the soaring cost of the pandemic. Ilan then shares his view on the social, political, and institutional dimensions of the cycle in Latin America. He proceeds to offer his views on the global inflation situation, and how temporary and permanent inflation outcomes can weigh on policy credibility, exchange rates, and markets. We discuss the US in depth, especially with regard to the merits and pitfalls of average inflation targeting and the limits of fiscal policy. Ilan will take over the IMF’s Western Hemisphere Department in January of 2022; it will be a fitting return to a place where he worked more than two decades ago.See omnystudio.com/listener for privacy information.

Paul Hiebert, head of Systemic Risk & Financial Institutions Division at European Central Bank, returns to Kopi Time to talk about ECB’s views on financial stability. We go over the pandemic’s impact on the financial system, interest rate sensitivity of various sectors, corporate solvency risks, and household balance sheets. We then move on to longer dated risks, of which climate change is the one that looms the largest. Paul shares with us the findings on measuring and modelling climate change impacts for the European Union, exposure mapping, data and methodological challenges, and the need to deal with greenwashing. From companies to global regulators, the intersection of climate change and financial stability has forced a steep learning curve; Paul underscores that much has been done, but a lot more remains to be accomplished. See omnystudio.com/listener for privacy information.

Dr. Ma Jun wears many hats. The former PBOC Chief Economist is now the President of Institute of Finance and Sustainability in Beijing, Chairman of China Green Finance Committee, Special Advisor to PBOC Governor, Co-Chair of G20 Sustainable Finance Working Group, and Co-Chair of Steering Committee of Green Investment Principles for the Belt & Road. He begins with a startling figure: by his estimates, China would need to invest resources amounting to 10% of GDP every year for the next four decades to achieve the 2060 net zero target. The green financing requirements, economic restructuring imperative, along with systems of emission trading, risk assessment, and governance standards needed would be profoundly transformative for the Chinese economy, and by extension, for the world. Jun highlights key initiatives in place, areas where China is working together with the US, Asian economies, as well as multilaterally, and expresses his optimism that tangible progress lies ahead. See omnystudio.com/listener for privacy information.

On a recent beautiful afternoon, in the island of Sentosa, Sopnendu Mohanty, Chief Fintech Officer, Monetary Authority of Singapore, joined Kopi Time to go over the nation’s burgeoning FinTech sector. He begins the conversation by noting that Singapore’s relatively small market size paved the way for numerous innovations in the area of business-to-business fintech: “Constraint brings new opportunity.” He then goes over Singapore’s journey of developing fin-tech relevant human capital, raising growth capital, fostering community capital, and entrenching trust capital over the past half-decade.  The journey has also entailed major regulatory developments, sand-box experiments, and collaboration with key multilateral official sector institutions as well as various private sector entities. Project Ubin-Partior, Proxtera for SMEs, and APIX are examples of the pragmatic and business-oriented developments nurtured by the regulators. Foundational public goods such as digital identity, trusted data exchange, interoperable payment systems, and consent architecture have been developed, paving the way for innovation in domestic and cross-border payments, fundamentally changing the cost, speed, and security of such transactions. Sopnendu talks about the application of CBDCs, and why such currencies have better use case for a developing country than a developed one. He then elaborates on the digital transformation challenges faced by SMEs, and how MAS is helping address them. On the issue of climate change, Sopnendu sees the Fintech space as a critical source of data and behavioural nudges that can move the needle, especially with respect to green solutions needed by companies and individuals. Singapore has lately become a vibrant space for green product-related research and development, as well as fund raising, something the authorities have encouraged actively. What about future technologies and solutions in the pipeline? What key developments await us? Sopnendu ends this riveting chat with his crystal ball. Watch/listen and find out!See omnystudio.com/listener for privacy information.

Anne Krueger, a veteran of international economics, Senior Research Professor at the School for Advanced International Studies, Johns Hopkins University, joins Kopi Time. She is candid in her criticism of the current US administration’s stance on trade with China, guarded about the usefulness of industrial policy, and against a substantial rise in federal minimum wage. With sharp reasoning, she breaks down the risks associated with inflation, stimulus measures, international support to deal with the pandemic, and central bank digital currencies. At 87, Dr Krueger remains as brilliant as ever; an inspiration to work productively long past what tradition dictates to be retirement age.See omnystudio.com/listener for privacy information.

"The risk is the Fed doesn’t overshoot 2% inflation by a small margin, but by a large amount.”"Low interest rate cannot help the poor who don’t own real and financial assets. They need wage increases."   Astute long-term market observer Komal Sri-Kumar (President of Sri-Kumar Global Strategies, Senior Fellow at the Milken Institute) returns to Kopi Time to share his concerns on economic overheating, inflation risks, Fed credibility, housing market, and rising inequality. Sri switched from being a long-term US fixed income bull to a bear earlier this year, expecting 2%+ 10-yr US bond yield by the end of the year. He is not only worried about the knock-on impact of prolonged monetary easing on inflation and financial stability in the US, but the likely destabilising global implications through the liquidity and exchange rate channels. He is short duration, neutral to bearish USD, long gold, and long commodities (food, energy, metals). He has no conviction on equities, especially given the high valuations and the risk of Fed misstep. See omnystudio.com/listener for privacy information.

Dr. Hyun Song Shin, Economic Adviser and Head of Research at the Bank for International Settlements, joins Kopi Time to discuss the latest in Central Bank Digital Currencies or CBDCs. We begin with the basics: is CBDC nothing more than a digital banknote? What kind of interest in CBDCs is there among the community of central banks? What kind of payments, settlement, or other financial/social problems at the domestic level can be solved by a CBDC? What about cross border payments? What are the ideal design features and potential points of friction? What about data privacy? Would private sector stable coins complicate matters? Hyun addresses all this with great detail and clarity, and ends by sharing with us his vision for CBDCs five years from now.See omnystudio.com/listener for privacy information.