Banco de Portugal

Isabel Schnabel: The state contingency of monetary policy transmission

Retrieved on: 
Thursday, April 25, 2024
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Key Points: 

Dominant currency pricing in international trade of services

Retrieved on: 
Thursday, April 25, 2024
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Abstract

Key Points: 
    • Abstract
      We analyze, for the first time, how firms choose the currency in which they price transactions
      in international trade of services and investigate, using direct evidence, whether the US dollar
      (USD) plays a dominant role in services trade.
    • JEL: F14, F31, F41
      Keywords: dominant currency paradigm, international trade, services.
    • Related research has
      shown that the US dollar (USD) exchange rate is a major source of swings in
      global trade in goods?a ?dominant currency pricing? (DCP) phenomenon?since
      most goods traded internationally are invoiced and sticky in USD.
    • Yet it is also key to look at dominant currency pricing in international trade
      in services for several reasons.
    • First, global trade in services is big?accounting for
      about a quarter of global gross trade flows and for around 40% in terms of valueadded trade.
    • Third, and relatedly, the
      future of globalisation might be in trade in intermediate services?as progress with
      digitech lowers technological barriers to such trade across borders.
    • But perhaps the main reason is that trade in services is conceptually different
      from trade in goods.
    • Our paper is the first, to our best knowledge, that analyzes how firms choose
      the currency in which they price transactions in international trade of services and
      that examines whether dominant currency pricing differs between trade in goods
      and services using direct evidence? hitherto unavailable?on patterns of currency
      choices in international transactions in services compared to goods.
    • Work on dominant currency pricing has
      almost exclusively focused on trade in goods.
    • One reason is that data on patterns
      in invoicing currency for trade in services are ?virtually nonexistent? (Adler et al.
    • Yet it is important to look at dominant currency pricing in international trade
      in services for several reasons.
    • Using the exporter?s (or producer) currency in exports is known in the literature as producer
      currency pricing (PCP), while using the importer?s currency is known as local currency pricing (LCP)
      and using a third currency is known as vehicle currency pricing (VCP).
    • Our paper is the first, to our best knowledge, that analyzes how firms choose the
      currency in which they price transactions in international trade of services and that
      examines whether dominant currency pricing differs between international trade in
      goods and services using direct evidence ? hitherto unavailable ? on patterns of
      currency choices in international transactions in services compared to goods.
    • First,
      we rule out compositional effects, that is that differences in the use of currencies
      reflect differences in trade partners in services vs. goods trade.
    • Both in extra-EU and intra-EU trade, the EUR is the
      most widely used currency, be it on the export or import side.
    • Based
      on the framework, we stress which factors should determine currency choices in
      international trade, and to what extent one should expect differences between
      services trade and goods trade.
    • Second, it can price in the importer?s currency
      (local currency pricing, LCP).4 Third, it can use a third currency, say currency
      v (vehicle currency pricing, VCP).
    • That is,
      the currency choice problem is equivalent to determining the currency in which the
      desired price is least volatile.
    • (2022)
      provide systematic empirical evidence ? firm size and exposure to foreign currencies
      in imported inputs ? should also shape currency choices in services trade.
    • Dominant currency pricing in USD ? services vs. goods trade
      Having established that currency choice in international trade of services is an
      active firm-level decision as well as the determinants of this decision, we now

      8.

    • Services and goods exports: prevalence of different pricing strategies (percent)
      Notes: The table shows the shares (in value terms) of different pricing strategies: producer currency
      pricing (PCP), local currency pricing (LCP) and vehicle currency pricing (VCP).
    • To make comparisons with goods trade, we rely on Eurostat?s
      macro data on international trade in goods by invoivcing currency.
    • If intra-EU trade is more important in services than
      in goods trade, this could hence be an explanation for the lower prevalence of the
      USD in services trade.
    • We showed
      that while the USD is also extensively used as a vehicle currency in services trade, its
      prevalence is systematically lower than in goods trade.
    • Hence for all travel services exports
      the invoicing currency is the EUR; for travel imports it is the currency of the
      destination of travel (i.e.
    • Also for these

      ECB Working Paper Series No 2932

      33

      services it seems plausible that trade does not take place vis-?-vis all counterparts
      in each currency.

    • Figure B.2: Share of international trade in services in global GDP broken down by type (%)
      Notes: Authors? calculations using World Bank and World Trade Organization data.
    • An earlier version of this paper circulated under the title ?Currency choices and the role of the
      U.S. dollar in international services trade?.

Philip R. Lane: Euro area international financial flows: analytical insights and measurement challenges

Retrieved on: 
Tuesday, February 13, 2024
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We document how gas price fluctuations have a heterogeneous pass-through to euro area prices depending on the underlying shock driving them.

Key Points: 
  • We document how gas price fluctuations have a heterogeneous pass-through to euro area prices depending on the underlying shock driving them.
  • Supply shocks, moreover, are found to pass through to all components of euro area inflation – producer prices, wages and core inflation, which has implications for monetary policy.

A forward-looking tracker of negotiated wages in the euro area

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Saturday, February 10, 2024
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Key Points: 

    ECB adjusts its capital key

    Retrieved on: 
    Wednesday, January 3, 2024
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    Communication shocks from the US spill over to risk in the euro area and vice versa, but traditional US shocks show no spillover effects to risk.

    Key Points: 
    • Communication shocks from the US spill over to risk in the euro area and vice versa, but traditional US shocks show no spillover effects to risk.
    • Both monetary policy and communication shocks spill over to stocks, with euro area information spillovers being particularly strong.

    The great retrenchment in euro area external financial flows in 2022 – insights from more granular balance of payments statistics

    Retrieved on: 
    Friday, June 30, 2023
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    Key Points: 

    Intangible assets of multinational enterprises in Ireland and their impact on euro area GDP

    Retrieved on: 
    Saturday, May 20, 2023
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    Key Points: 

    Bison Bank’s crypto subsidiary partners with Sygnum to enter crypto market

    Retrieved on: 
    Thursday, February 2, 2023
    Bitcoin, Ecosystem, Nationwide Asset Services, Risk, ETH, Partnership, Bison, 2020–21 Biathlon World Cup – Stage 7, VASP, Banco de Portugal, BTC, HNWI, Cryptocurrency, Ether

    Lisbon/Zurich: 17 January 2023 – Bison Digital Assets, Bison Bank’s crypto subsidiary licensed by Banco de Portugal, has partnered with Sygnum Bank to enter the global crypto market with regulated digital asset custody and trading services.

    Key Points: 
    • Lisbon/Zurich: 17 January 2023 – Bison Digital Assets, Bison Bank’s crypto subsidiary licensed by Banco de Portugal, has partnered with Sygnum Bank to enter the global crypto market with regulated digital asset custody and trading services.
    • This future-proofs Bison Digital Assets’ offering, enabling the capture of more Share-of-Wallet from existing customers along with additional market share via access to the global crypto market.
    • Bison Bank leverages Bison Digital Assets to securely hold customer digital assets and create a regulated bridge between the traditional and crypto finance worlds.
    • Sygnum’s operational efficiency, as well as its ability to hold client crypto assets off balance sheet, will help minimise risk.

    BHMI And Payshop Win “Editor’s Choice Award” at PayTech Awards 2022

    Retrieved on: 
    Wednesday, July 6, 2022
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    BHMI , a leading provider of enterprise software applications and creator of the Concourse Financial Software Suite , and Payshop , a subsidiary of Banco CTT and part of the CTT Group, received the Editors Choice Award at the recent PayTech Awards 2022 ceremony in London on July 1.

    Key Points: 
    • BHMI , a leading provider of enterprise software applications and creator of the Concourse Financial Software Suite , and Payshop , a subsidiary of Banco CTT and part of the CTT Group, received the Editors Choice Award at the recent PayTech Awards 2022 ceremony in London on July 1.
    • We are excited to be selected for this prestigious award, said Tiago Mota, CEO of Payshop.
    • Selecting BHMI and its Concourse platform and as our partner in this critical technology transformation journey has proven a tremendous value.
    • It is an honor to be chosen as this years Editors Choice Award winner alongside our partners at Payshop and I would like to thank the judges and Fintech Futures for their recognition, said Jack Baldwin, CEO of BHMI.

    BHMI And Payshop Named Leadership Award Finalists For The 2022 PayTech Awards

    Retrieved on: 
    Wednesday, May 18, 2022
    Professional Services, Technology, Finance, Software, Banking, Accounting, Concourse, Appetite, P2P, Program, AMA Foundation Leadership Award, Behavioural Insights Team, Friends, Collection, Banco de Portugal, CEO, Online shopping

    BHMI , a leading provider of enterprise software applications and creator of the Concourse Financial Software Suite, and Payshop , a subsidiary of Banco CTT and part of the CTT Group, announced the companies selection as finalists for the 2022 PayTech Awards, in the category for Leadership Awards PayTech Team of The Year.

    Key Points: 
    • BHMI , a leading provider of enterprise software applications and creator of the Concourse Financial Software Suite, and Payshop , a subsidiary of Banco CTT and part of the CTT Group, announced the companies selection as finalists for the 2022 PayTech Awards, in the category for Leadership Awards PayTech Team of The Year.
    • After selecting BHMIs Concourse Financial Software Suite , the two teams quickly got to work, resulting in an extremely successful project.
    • As a result, BHMI and Payshop were named to the shortlist in the category of PayTech Team of the Year, which lauds teams whose efforts have stood out for their exceptional teamwork and collaborative spirit in producing outstanding results.
    • The combined Payshop and BHMI team went above and beyond to ensure this project was a huge success, said Tiago Mota, CEO of Payshop.