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As interest rate-growth differentials (r-g) turned negative in many countries, governments consider pursuing fiscal expansion and the potential risks involved. Using a large sample of advanced and emerging economies, our analysis suggests that high public debts can lead to adverse future r-g dynamics. Specifically, countries with higher initial public debt experience (i) a shorter duration of negative r-g episodes and a higher probability of reversal, (ii) higher average r-g, and (iii) a more right-skewed r-g distribution, that implies higher down-side risks. Furthermore, high-debt countries experience larger increases in interest rates in response to (iv) an unexpected decline in domestic output and (v) an increase of global volatility. Results are stronger when public debts are denominated in foreign currencies.

Japan --- Banks and Banking --- Exports and Imports --- Money and Monetary Policy --- Public Finance --- International Lending and Debt Problems --- Financial Crises --- Commodity Markets --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Debt --- Debt Management --- Sovereign Debt --- Interest Rates: Determination, Term Structure, and Effects --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Public finance & taxation --- International economics --- Finance --- Monetary economics --- Public debt --- Foreign currency debt --- Long term interest rates --- Currencies --- External debt --- Financial services --- Money --- Debts, Public --- Debts, External --- Interest rates

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Financial markets will play a catalytic role in financing the adaptation and mitigation to climate change. Catastrophe and green bonds in the private sector have become the most prominent innovations in the field of sustainable finance in the last fifteen years. Yet, the issuances at the sovereign level have been relatively recent and not well documented in the literature. This Note discusses the benefits of issuing these instruments as well as practical implementation challenges impairing the scaling-up of these markets. The issuance of these instruments could provide an additional source of stable financing with more favorable market access conditions, mitigate the stress of climate risks on public finances and facilitate the transition to greener low-carbon economies. Emerging market and developing economies stand to benefit the most from these financial innovations.

Bond market. --- Bonds --- Capital market --- Climate change --- Climate --- Climatic changes --- Currency crises --- Debt Management --- Debt --- Economic & financial crises & disasters --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Environment --- Environmental Economics --- Environmental economics --- Environmental Economics: General --- Finance --- Finance: General --- Financial crises --- Financial institutions --- Financial instruments --- Foreign Exchange --- General Financial Markets: General (includes Measurement and Data) --- Global Warming --- Informal Economy --- Informal sector --- Investment & securities --- Investments: Bonds --- Investments: General --- Macroeconomics --- Natural Disasters and Their Management --- Natural Disasters --- Natural disasters --- Sovereign Debt --- Underground Econom --- Germany

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E-money development has important yet theoretically ambiguous consequences for monetary policy transmission, because nonbank deposit-taking e-money issuers (EMIs) (e.g., mobile network operators) can either complement or substitute banks. Case studies of e-money regulations point to complementarity of EMIs with banks, implying that the development of e-money could deepen financial intermediation and strengthen monetary policy transmission. The issue is further explored with panel data, on both monthly (covering 21 countries) and annual (covering 47 countries) frequencies, over 2001 to 2019. We use a two-way fixed effect estimator to estimate the causal effects of e-money development on monetary policy transmission. We find that e-money development has accompanied stronger monetary policy transmission (measured by the responsiveness of interest rates to the policy rate), growth in bank deposits and credit, and efficiency gains in financial intermediation (measured by the lending-to-deposit rate spread). Evidence is more pronounced in countries where e-money development takes off in a context of limited financial inclusion. This paper highlights the potential benefits of e-money development in strengthening monetary policy transmission, especially in countries with limited financial inclusion.

Bank credit --- Banking --- Banks and Banking --- Banks --- Central bank policy rate --- Credit --- Currency crises --- Deposit rates --- Depository Institutions --- Economic & financial crises & disasters --- Economics of specific sectors --- Economics --- Economics: General --- Finance --- Finance: General --- Financial inclusion --- Financial Instruments --- Financial Markets and the Macroeconomy --- Financial markets --- Financial services industry --- Financial services --- Informal sector --- Institutional Investors --- Interest rates --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics --- Micro Finance Institutions --- Monetary economics --- Monetary Policy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Monetary Policy --- Money --- Mortgages --- Non-bank Financial Institutions --- Pension Funds