By Gita Bhatt The recent plunge in crypto assets has left investors numbed by losses and surely in doubt. But the future of money is undoubtedly digital. The question is, what will it look like? In our latest issue of Finance & Development, some of the world’s leading experts try to answer this complex and politically charged question. Of course, digital money has been developing for some time already. New technologies hope to democratize finance and broaden access to financial products and services. A main goal is to achieve much cheaper, instantaneous domestic and cross-border payments ..read more

By Jeff Kearns Amid war and inflation, debt and fragmentation, now may be a better time than ever to step back and consider the bigger and more enduring questions of lives and livelihoods. Authors from Cambridge economist Diane Coyle to Bank of Japan veteran Masaaki Shirakawa have provided more than enough reason to put down our phones and concentrate, as much as one can, on absorbing the larger lessons from leading thinkers. Below is a selection of volumes worth picking up, drawn from books recently reviewed in the IMF’s Finance & Development magazine.   A Brief History of Equality ..read more

By Charlotte Gardes-Landolfini and Fabio Natalucci High-quality, reliable, and comparable gauges are lacking. Here’s how to close the gap. Climate change is transforming the global investment landscape, creating new risks and opportunities. Physical risks, from rising sea levels to the lethal heat waves scorching Europe and elsewhere, affect asset values for everything from stocks to real estate and infrastructure. So-called transition risk—including government policies to reduce greenhouse gas emissions—lowers the value of fossil fuel companies. To evaluate these risks and support the transit ..read more

By Oya Celasun, Dora Iakova and Ian Parry With fossil fuels likely to remain expensive for some time, governments should let retail prices rise to promote energy conservation while protecting poorer households. Soaring energy prices have sharply increased living costs for Europeans. Since early last year, global oil prices doubled, coal prices nearly quadrupled and European natural gas prices increased almost seven-fold. With energy prices likely to remain above pre-crisis levels for some time, Europe must adapt to higher import bills for fossil fuels. Governments cannot prevent the loss in re ..read more

By Gustavo Adler, Ilan Goldfajn, and Anna Ivanova Español, Português The region continued its strong recovery in early 2022, but decelerating economic activity and persistent inflation will test its resilience. The economies of Latin America and the Caribbean have continued their strong post-pandemic rebound, but the winds are shifting as global financial conditions are tightening and commodity prices are reversing their upward trend, while inflationary pressures persist. The reopening of contact-intensive sectors, especially hospitality and travel, the unwinding of pandemic pent-up deman ..read more

By Simon Black, Ian Parry and Karlygash Zhunussova As the world gears up to avoid a climate catastrophe by limiting global warming to 1.5 to 2 degrees Celsius, more countries are putting carbon pricing at the center of their mitigation strategies. Yet designing ways to put a price on carbon can be complicated and countries face multiple choices. The Chart of the Week shows the expansion of carbon pricing schemes. So far, 46 countries are pricing emissions through carbon taxes or emissions trading schemes (ETS) and others are considering it. Globally, ETSs and carbon taxes cover 30 percent of e ..read more

By Mark Flanagan, Alfred Kammer, Andrea Pescatori and Martin Stuermer عربي, 日本語, Русский The partial shutoff of gas deliveries is already affecting European growth, and a full shutdown could be substantially more severe. Russia’s invasion of Ukraine has further darkened the global growth outlook, with the European economy facing a serious setback given trade, investment, and financial links with the warring countries. Now, Europe is enduring a partial cutoff of natural gas exports from Russia, its largest energy supplier. The prospect of an unprecedented total shutoff is fueling concern about ..read more

By Habtamu Fuje, Saad Quayyum and Franck Ouattara Several sub-Saharan African central banks are exploring or in the pilot phase of a digital currency, following Nigeria’s October introduction of e-Naira. Nigeria was the second country after the Bahamas to roll out a CBDC. CBDCs are digital versions of cash that are more secure and less volatile than crypto assets because they are issued and regulated by central banks. As the Chart of the Week shows, South Africa and Ghana are running pilots while other countries are in the research phase.The South African Reserve Bank is experimenting with a w ..read more

By Tobias Adrian, Patrick Bolton and Alissa M. Kleinnijenhuis The world may gain an estimated $78 trillion over coming decades by making this energy transition. International negotiators can’t agree on how to phase out coal, in part because of opposition to carbon taxes, and now even countries that had been able to abandon the fuel are reversing that progress as the war in Ukraine raises energy prices. The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but we show in new research that the economic benefits would far outweigh the cost ..read more

By David Amaglobeli, Emine Hanedar, Gee Hee Hong, and Céline Thévenot Countries should allow international prices to pass through to domestic prices while protecting households that are most in need. Governments confront difficult policy choices as they try to shield their people from record food prices and soaring energy costs driven higher by the war in Ukraine.   Countries introduced a variety of policy measures in response to this unprecedented surge in prices of the most crucial commodities. Our survey of these announced measures by member nations shows that many governments tried ..read more