SF Fed Blog
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Helping Banks Brace for Hurricane Season
Hurricane season was especially busy in 2017 with six major storms on record. While we can’t predict the severity of this year’s storms, we are prepared to meet increased cash demand in recovery zones if necessary. Here’s how.
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Why Are Foreigners Holding More Onshore Chinese Securities?
Foreign holding of onshore Chinese securities is expanding rapidly from a small base. Over the past year, overseas investment in Chinese A-share stocks has gained momentum after the MSCI decided to add Chinese A-shares to the MSCI index family. This development will enhance the already growing interconnectedness between Chinese capital markets and the rest of the world.
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Asia’s Aging Workforce May Boost Its Markets
The demographics of aging have long been studied as a key driver of investment behavior in capital markets, as changes in life stage alter investor preferences. Asia is home to countries with a diverse range of demographic profiles, with several rapidly aging countries like Japan, Korea, and China, and younger populations in India and Indonesia. Building upon other research into the relationship between demographics and capital markets, this post considers how aging may impact the region.
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China Bond Market: Slower Growth but Better Product and Investor Mix
Domestic bond issuance in China declined in 2017. Growth in outstanding onshore bonds and trading volume also moderated. Notwithstanding the lackluster performance, the products offered by the Chinese bond market continued to grow in sophistication. The investor base has also become more diversified as overseas investors and non-bank domestic investors play a bigger role. These developments will likely contribute to the resilience of the bond market in the long run.
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New Data on Small Business Recovery after Natural Disasters
In 2017, natural disasters caused $306.2 billion of damage nationally. Yet little is known about the impacts of natural disasters on small businesses, which are a critical engine of the American economy and are responsible for creating two out of three new private-sector jobs. A new report fills this gap by examining data from the latest round of the Federal Reserve System’s Small Business Credit Survey and provides insight on the impact of natural disasters on small businesses and their related needs.
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India’s Digital Payments: Growing Consumer Trust, but Merchants Needed
More than a year after the shock of demonetization, Indian consumers continue to adopt digital payments as an alternative to cash. Though overall transaction volumes remain small relative to cash, the growth of mobile payment products indicates growing trust. Recent successes in promoting new products could also point the way to greater merchant adoption, providing insight for India and a number of other countries transitioning to new payment technologies.
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Asian Banks Search for Yield Overseas
Asian bank profitability has been squeezed in recent years, driven to some extent by intense competition among the large number of banks in the region. To boost profitability, banks from some developed Asian economies have expanded operations into Southeast Asia by setting up branches and investing in local institutions. What began as a search for yield is likely to persist because banks’ strategies to increase profits align with their governments’ initiatives in the region.
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Regulating Initial Coin Offerings and Cryptocurrency Exchanges across Asia
Asian regulators clarified their stances on initial coin offerings and cryptocurrency exchanges this past year as public interest in both has skyrocketed. Some of the same qualities that attract investors to cryptocurrencies make them susceptible to money laundering and fraud. Regulators have acted to protect investors and their financial systems in steps ranging from banning ICOs and cryptocurrency exchanges to implementing licensing requirements ensuring new currencies and products face the same scrutiny as existing ones.
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China’s Household Credit Boom
China’s rapid credit growth has generated increasing concern over the past several years. Recent regulatory action and debt restructurings have slowed the pace of corporate debt build-up, but new risks are emerging as Chinese households lever up. On the whole, continued increase in household credit is aligned with China’s efforts to rebalance its economy towards consumption, but the fast growth of the sector warrants close monitoring.
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Mapping Asia’s Biggest Overseas Investors
One of the striking trends in recent economic history is Asia’s growing importance in global investment flows. Over the past two decades, the region emerged as a large net creditor to the rest of the world. The net position, however, does not necessarily tell the entire story. A deeper examination of Asia’s overseas assets reveals the differences in how Asian economies invest abroad.