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Dominant currency pricing in international trade of services

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목요일, 4월 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?.

What does new micro price evidence tell us about inflation dynamics and monetary policy transmission?

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목요일, 4월 25, 2024

To understand inflation dynamics, it is necessary to analyse how often and by how much individual prices change.

Key Points:

To understand inflation dynamics, it is necessary to analyse how often and by how much individual prices change.
This article discusses what micro price data gathered by the European System of Central Banks’ Price-setting Microdata Analysis Network (PRISMA) tell us about the way firms set their prices.

Recent inflation developments and wage pressures in the euro area and the United States

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목요일, 4월 25, 2024

Core inflation remains elevated overall in both economic areas, due notably to high levels of services inflation.

Key Points:

Core inflation remains elevated overall in both economic areas, due notably to high levels of services inflation.
Labour costs started moderating earlier in the United States, with euro area wage growth peaking later and productivity growth being muted by cyclical and structural factors.

Economic Bulletin Issue 3, 2024

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목요일, 4월 25, 2024

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The European Banking Authority (EBA) today launched a public consultation on its draft Regulatory Technical Standards (RTS) on the method for identifying the main risk driver and determining whether a transaction represents a long or a short position. These RTS are part of the Phase 1 deliverables of the EBA roadmap on the implementation of the EU banking package in the area of market risk. The consultation runs until 24 July 2024.

Key Points:

The European Banking Authority (EBA) today launched a public consultation on its draft Regulatory Technical Standards (RTS) on the method for identifying the main risk driver and determining whether a transaction represents a long or a short position. These RTS are part of the Phase 1 deliverables of the EBA roadmap on the implementation of the EU banking package in the area of market risk. The consultation runs until 24 July 2024.

Nowcasting consumer price inflation using high-frequency scanner data: evidence from Germany

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화요일, 4월 23, 2024

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Key Points:

Christine Lagarde, Luis de Guindos: Monetary policy statement (with Q&A)

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목요일, 4월 18, 2024

Stock market development and familiarity (language and distance) are considered key determinants for home bias.

Key Points:

Stock market development and familiarity (language and distance) are considered key determinants for home bias.
The literature neglects however that investors often invest in foreign funds domiciled in financial centers.

Thailand’s Anti-Corruption Commission initiates an Anti-Corruption Education curriculum to educate Thai children and instill integrity value in society

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수요일, 4월 10, 2024

Corruption in Thai society during the past period has had enormous negative effects on the country and is a major obstacle to the country's development in all dimensions.

Key Points:

Corruption in Thai society during the past period has had enormous negative effects on the country and is a major obstacle to the country's development in all dimensions.
However, nowadays it has changed to become more complex which is involved with a conflict of interest and policy corruption.
"Children and youth are the future and hope of the country we can instill the idea that corruption is an unusual thing in society.
All of those are considered challenging goals of the NACC in driving the anti-corruption education curriculum toward future achievement.

EQS-News: CPI PROPERTY GROUP – Stefano Filippi Appointed Head of Corporate Finance

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수요일, 4월 10, 2024

Health, CPI, London Business School, Music, Head, Corporate finance, Senior advisor, Trustee, Life Foundation, Barclays

CPI PROPERTY GROUP (“CPIPG”) is pleased to announce the appointment of Stefano Filippi as Head of Corporate Finance.

Key Points:

CPI PROPERTY GROUP (“CPIPG”) is pleased to announce the appointment of Stefano Filippi as Head of Corporate Finance.
Stefano is a graduate of University Luigi Bocconi and conducted postgraduate studies at London Business School and King's College London – Dickson Poon School of Law.
“Attracting top talent typically leads to the best results, and we look forward to seeing Stefano in action.”’
In addition to his group corporate finance responsibilities, Stefano will also assume the role of country manager for Italy.
Giuseppe Colombo, who served in that role with distinction for nearly five years, will remain with CPIPG as Senior Advisor for Italy.

EQS-News: CPI PROPERTY GROUP publishes financial results for 2023

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수요일, 4월 10, 2024

WAULT, EUR, CPI, Growth, Capital expenditure, ICR, Environment, GSG, Hotel, Webcast, CEE, NAV, EPRA, Investment, LTV, FFO

CPI PROPERTY GROUP (hereinafter “CPIPG”, the “Company” or together with its subsidiaries the “Group”), a leading European landlord, hereby publishes audited financial results for the financial year ended 31 December 2023.

Key Points:

CPI PROPERTY GROUP (hereinafter “CPIPG”, the “Company” or together with its subsidiaries the “Group”), a leading European landlord, hereby publishes audited financial results for the financial year ended 31 December 2023.
“CPIPG’s results in 2023 demonstrate the resilient and high-yielding nature of real estate in the CEE region,” said David Greenbaum, CEO.
The Group raised over €2.5 billion of secured and unsecured external financing in 2023, including €1.2 billion of fresh cash.
CPIPG will host a webcast in relation to its financial results for 2023.

The National Anti-Corruption Commission Thailand joins forces with international agencies to focus on preventing and suppressing transnational corruption

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수요일, 4월 10, 2024

BANGKOK, THAILAND - Media OutReach Newswire - 25 March 2024 - As emerging with rapid digitalization that paves the way for transnational corruption, the National Anti-Corruption Commission (NACC), Thailand further tightened its collaboration with international organizations in tackling new tactics and complicated illicit activities in accordance with global standards. The NACC's Secretary-General, Mr. Niwatchai Kasemmongkol recently met with representatives of the Nordic Police Liaison Office, led by Mr. Carsten Andersen, Assistant Attache/Liaison Officer, Nordic Police Affairs Department at the Danish Embassy, Thailand and Ms. Jane Ohlsson, Assistant Ambassador/Coordinating Officer for Police Affairs in the Nordic Countries at the Swedish Embassy, Thailand, along with NACC's executives and representatives from the Bureau of International Corruption Affairs and Cases, and the Bureau of Investigation and Special Affairs to enhance cooperation between the NACC enforcement agencies in combating transnational corruption. "Current corruption problems are not limited to any one country. But it has developed into a transnational crime, which affects all countries around the world. Therefore, cooperation between each other in various forms, both bilateral and multilateral is considered an important mechanism for effectively preventing transnational corruption of all kinds," said the NACC secretary-general. He further elaborated that the NACC has collaboration with enforcement agencies from the Nordic countries in both bilateral and multilateral. It has a memorandum of understanding between each other to exchange legal information, coordinate cases, as well as academic cooperation in particular, the sharing of knowledge and anti-corruption practices which is beneficial to raising the level of the Corruption Perceptions Index (CPI) of Thailand. This tie collaboration will help promote the prevention and suppression of corruption in Thailand more effectively. Furthermore, under the cooperation, both sides discussed and exchanged information on international cooperation in criminal matters related to corruption cases between Thailand and the Nordic countries. Denmark has expressed great interest in the NACC's corruption prosecutions and is willing to cooperate in solving transnational corruption cases, while also exchanging information that is beneficial to the fight against corruption. Mr. Niwatchai concluded that the NACC has given great importance to strengthening and expanding the network of cooperation with law enforcement agencies of various countries to deal with transnational corruption continuously. Presently, the NACC, in Thailand has made memoranda of understanding with 25 law enforcement agencies and international organizations, including nine ASEAN countries, the Ministry of Supervision of China, the Independent Authority against Corruption of Mongolia, the Anti-Corruption Commission of Bhutan, the Independent Commission Against Corruption of Australia, the Oversight and Anti-Corruption Authority of Saudi Arabia, the Police Presidium of the Czech Republic, Federal Ministry of the Interior of Austria, Investigative Committee of the Russian Federation, International Department of the National Crime Agency of the United Kingdom, and Office of the Comptroller General of Brazil, as well as World Bank, United Nations Office on Drugs and Crime (UNODC), International Anti-Corruption Academy (IACA), Basel Institute on Governance, United Nations Development Programme (UNDP) and the UN International Organization for Migration (IOM). ----------------------------------------- *This exclusive interview translation is funded by the National Anti-Corruption Fund (NACF). Hashtag: #IntegrityWay #AntiCorruption #ZeroCorruption #NACC #NACF

Key Points:

Therefore, cooperation between each other in various forms, both bilateral and multilateral is considered an important mechanism for effectively preventing transnational corruption of all kinds," said the NACC secretary-general.
He further elaborated that the NACC has collaboration with enforcement agencies from the Nordic countries in both bilateral and multilateral.
Furthermore, under the cooperation, both sides discussed and exchanged information on international cooperation in criminal matters related to corruption cases between Thailand and the Nordic countries.
The National Anti-Corruption Commission (NACC) is a constitutional independent organization and supervised by nine commissioners selected from various professions.