Economic Surplus: Summer Holidays 4
Economic Surplus by The Marshall Society
“Nothing so weakens a government as inflation.” ― J.K. Galbraith
Welcome to the Economic Surplus, the newsletter brought to you by the Marshall Society! We are the University of Cambridge’s flagship economics society. Every week, we bring you our bespoke commentary on economic trends, updates on our exclusive members’ events as well as a summary of the headlines you can’t ignore! You’ve probably received this email because you were previously subscribed to the Marshall Society’s old email list, but if you have been forwarded this by a friend, feel free to subscribe here!
This week’s Marshall’s Thoughts are written by Matt Sterett.
Last week, we mentioned the hiccup in El Salvador’s adoption of bitcoin as a legally accepted medium of exchange. While that setback may be viewed by some as a sign of weakness for cryptocurrencies, others - including senior members of the global central banking community - view recent cryptocurrency developments as threats.
On Friday, at the Eurofi Financial Forum, Benoît Cœuré (of the BIS) gave a speech, remarking:
“…the time has passed for central banks to get going. We should roll up our sleeves and accelerate our work on the nitty-gritty of CBDC (central bank digital currency) design. CBDCs will take years to be rolled out, while stablecoins and cryptoassets are already here. This makes it even more urgent to start.“
Beyond the realm of central banks, Mr. Cœuré - a former member of the Executive Board of the European Central Bank - also questioned whether crypto assets would competitive or complementary to the existing commercial banking ecosystem.
In the days leading up to Cœuré’s speech, the Ukrainian parliament adopted a law that legalized and regulates cryptocurrency, and Panama announced a bill to regulate cryptoassets.
With regards to the timing of action, Benoît Cœuré did not mince his words:
“central banks have to act while the current system is still in place – and to act now.“
In Case You Missed It:
US government shutdown looms larger for investors | FT - The US debt ceiling law is back in focus. After a two year suspension, the law was reinstated on August 1st. In practice, this means that the US government will have to go into a partial shutdown unless a new debt service law and an associated “continuing resolution” for funding are passed. In the absence of a deal, Treasury Secretary Janet Yellen has estimated that the government will run out of cash in October.
UK economic recovery slows to a crawl as ‘pingdemic’ bites | FT - The UK economic recovery slowed in July, as the Delta variant, supply chain issues, and lower-than-expected consumer spending decreased output. July UK GDP rose 0.1% over the prior month, below both the 1% expansion in June and a 0.6% growth forecast from a poll of economists.
U.S. consumers’ inflation expectations highest in 8 years, NY Fed says | Reuters - U.S. consumers’ expectations for inflation over the next twelve months have risen to the highest levels since 2013.
That’s it from us for now!
The Marshall Society