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Crypto exchange tokens have been at the center of some of the biggest disruptions in the crypto industry, including the collapse of FTX. My new…
Crypto exchange tokens have been at the center of some of the biggest disruptions in the crypto industry, including the collapse of FTX. My new…
Liked by Gong Cheng
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Peru is not only home to one of the most ancient civilizations but also to very modern financial innovation. With Alexandre Tombini, Előd Takáts…
Peru is not only home to one of the most ancient civilizations but also to very modern financial innovation. With Alexandre Tombini, Előd Takáts…
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Experience & Education
Publications
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On health and privacy: technology to combat the pandemic
BIS Bulletins
- Technology has been harnessed in the fight against the Covid-19 pandemic, eg to administer remote medical consultations, analyse aggregate movements and track paths of contact.
- Successful applications are predicated on broad public support. They must address concerns about data privacy, and the potential for misuse of data by governments and companies.
- Transparent public policies and clear governance frameworks can help to build trust. One possible approach is to differentiate data…- Technology has been harnessed in the fight against the Covid-19 pandemic, eg to administer remote medical consultations, analyse aggregate movements and track paths of contact.
- Successful applications are predicated on broad public support. They must address concerns about data privacy, and the potential for misuse of data by governments and companies.
- Transparent public policies and clear governance frameworks can help to build trust. One possible approach is to differentiate data use during a pandemic and in normal times.Other authorsSee publication -
Can Fintech Make the World More Inclusive?
Knowledge@Wharton
The potential gains for the start-ups driving fintech (financial technology) are obvious. But the possibilities for extending financial services to the underserved – or those without services at all – are already being realized. With proper oversight and regulation even more is possible, notes this opinion piece by Kalin Anev Janse, secretary general and a member of the management board of the European Stability Mechanism (ESM), the Eurozone’s lender of last resort, and Gong Cheng, senior…
The potential gains for the start-ups driving fintech (financial technology) are obvious. But the possibilities for extending financial services to the underserved – or those without services at all – are already being realized. With proper oversight and regulation even more is possible, notes this opinion piece by Kalin Anev Janse, secretary general and a member of the management board of the European Stability Mechanism (ESM), the Eurozone’s lender of last resort, and Gong Cheng, senior economist and policy strategist at the ESM. “It is thus essential for researchers and technical experts to shed light on the considerable social impact and promise fintech is offering and to find solutions to contain potential risks.”
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Official debt restructurings and development
World Development
Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper fills that gap. It provides a comprehensive description of the evolving characteristics of these operations and studies their impact on debtors. The progressive introduction of new terms of treatment gradually turned the Paris Club from an institution primarily concerned with…
Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper fills that gap. It provides a comprehensive description of the evolving characteristics of these operations and studies their impact on debtors. The progressive introduction of new terms of treatment gradually turned the Paris Club from an institution primarily concerned with preserving creditors’ claims into an instrument to foster development in the world’s poorer nations, among other objectives. Our study finds that more generous restructuring conditions involving nominal relief are associated with an acceleration of per capita GDP growth and with a reduction in poverty and inequality. We also find that countries receiving nominal relief tend to receive lower aid flows subsequently, the opposite being the case for countries receiving high reductions in the net present value of their obligations, but no nominal haircuts.
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IMF–RFA collaboration: motives, state of play, and way forward
ESM Discussion Paper Series 4 - A joint RFA staff paper
This joint staff paper sheds light on the existing cooperation between the IMF and RFAs and suggests further avenues to enhance their work together. It offers a collective RFA reply to the IMF’s recent policy paper on collaboration issues.
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The macroeconomic effects of official debt restructuring: evidence from the Paris Club
Oxford Economic Papers
We study 422 episodes of official sector debt restructuring and their macroeconomic effects, using a novel dataset of Paris Club treatments. We find that while official sector debt relief can significantly affect growth and external performance, the magnitude and direction of these effects critically depend
on the restructuring terms offered by official creditors. Growth is 5% higher five years after a restructuring when nominal debt relief is provided. Underlying this difference in…We study 422 episodes of official sector debt restructuring and their macroeconomic effects, using a novel dataset of Paris Club treatments. We find that while official sector debt relief can significantly affect growth and external performance, the magnitude and direction of these effects critically depend
on the restructuring terms offered by official creditors. Growth is 5% higher five years after a restructuring when nominal debt relief is provided. Underlying this difference in performance is an increase in investment following nominal debt relief but not Net Present Value relief, and a reduction on the fiscal deficit after Net Present Value debt relief not observed in the case of nominal debt relief. Our study also suggests that the official sector faces a trade-off between the objectives of stimulating growth and promoting external rebalancing when designing debt relief. Countries receiving Net Present
Value debt relief are likely to show a sustained improvement of their external balance, while those receiving nominal debt relief are not.Other authorsSee publication -
What happened to profitability? Shocks, challenges and perspectives for euro area banks
The European Journal of Finance
This paper analyses the evolution of bank profitability from 2005 to 2016, with a focus on the period covering both the global financial crisis and the euro area crisis. To accomplish this, we constructed a dataset that includes financial statement information from 310 euro area banks. Using a dual approach – a ‘bottom-up’ approach as applied by bank analysts and macroeconomists' ‘top-down’ approach, we find that the profitability of euro area banks was hit by two shocks of different nature…
This paper analyses the evolution of bank profitability from 2005 to 2016, with a focus on the period covering both the global financial crisis and the euro area crisis. To accomplish this, we constructed a dataset that includes financial statement information from 310 euro area banks. Using a dual approach – a ‘bottom-up’ approach as applied by bank analysts and macroeconomists' ‘top-down’ approach, we find that the profitability of euro area banks was hit by two shocks of different nature. The Lehman Brothers collapse affected mostly big banks with diversified portfolios via losses in their securities investment. The subsequent euro area debt crisis and economic recession hit more traditional banks specialising in retail lending activities, mainly through increasing impairment costs. If the first shock had a one-off impact on bank profitability, the second shock is far more long-lasting and is still depressing the profitability of banks in peripheral Europe.
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The Global Financial Safety Net through the Prism of G20 Summits
ESM Working Paper Series 13
Since the Global Financial Crisis, the Group of Twenty (G20) has not only become the premier forum for policy coordination among major economies but has also played an important role in promoting reforms to safeguard global financial stability. This paper focuses on the commitments the G20 has made to strengthen the Global Financial Safety Net since its first Leaders’ Summit in Washington, D.C. in 2008. This paper first compares reform proposals that the G20 achieved and those it did not during…
Since the Global Financial Crisis, the Group of Twenty (G20) has not only become the premier forum for policy coordination among major economies but has also played an important role in promoting reforms to safeguard global financial stability. This paper focuses on the commitments the G20 has made to strengthen the Global Financial Safety Net since its first Leaders’ Summit in Washington, D.C. in 2008. This paper first compares reform proposals that the G20 achieved and those it did not during the subsequent six years, or by the 2014 Summit in Australia. The paper finds that reforms aimed at enhancing financial resources and renewing instruments for emergency liquidity provision were substantially implemented. However, institutional reforms concerning the governing structure of International Financial Institutions were delayed. The paper then analyses, from a political economy perspective, why the G20 delivered on the first set of reforms, but not on the second. The urgency of responding to the crisis, the role of particular countries as well as institutional features of the G20 framework determine the political interests in this reform area.
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Balance sheet effects, foreign reserves and public policies
Journal of International Money and Finance
This paper shows that countries can use foreign reserves to enhance their domestic economies' resilience to potential risks from balance sheet effects. Based on a theoretical model, this paper demonstrates that the government can either deploy its foreign reserves to lend in foreign currency to the private sector or increase fiscal spending on domestic goods. Both these policy tools can remedy the bad equilibrium characterized by large-scale domestic currency depreciation and very low…
This paper shows that countries can use foreign reserves to enhance their domestic economies' resilience to potential risks from balance sheet effects. Based on a theoretical model, this paper demonstrates that the government can either deploy its foreign reserves to lend in foreign currency to the private sector or increase fiscal spending on domestic goods. Both these policy tools can remedy the bad equilibrium characterized by large-scale domestic currency depreciation and very low aggregate investment, but they diverge in how they stabilize the domestic economy and require different minimum amounts of foreign reserves. Targeted lending works by altering investors' expectations of the domestic exchange rate and of firms' net worth. As long as foreign reserves are sufficient to cover the private sector's external debt, this approach eliminates the bad equilibrium without an actual depletion of reserves. In contrast, fiscal spending increases the demand for domestic goods and affects the relative price, leading to domestic exchange rate appreciation that subsequently increases firms' net worth and facilitates investment.
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For a Few Dollars More: Reserves and Growth in Times of Crises
Journal of International Money and Finance
Based on a dataset of 112 emerging economies and developing countries, this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008–09 financial crisis. More specifically, the paper investigates the relation between international reserves and the existence of capital controls. We find that the level of reserves matters: countries with high reserves relative to short-term debt suffered less from the crisis, particularly…
Based on a dataset of 112 emerging economies and developing countries, this paper addresses the question whether the accumulation of international reserves has effectively protected countries during the 2008–09 financial crisis. More specifically, the paper investigates the relation between international reserves and the existence of capital controls. We find that the level of reserves matters: countries with high reserves relative to short-term debt suffered less from the crisis, particularly when associated with a less open capital account. This suggests some degree of complementarity between reserve accumulation and capital controls.
Other authorsSee publication -
Growth and Reserves: Impact in Crisis Times
Vox EU
The financial crisis that swept the global economy at the end of 2008 provides a natural experiment to test the proposition that international reserves are useful during crises. This column presents cross-country evidence based on a panel of 112 emerging and developing countries. Countries with more reserves relative to short-term debt fared better.
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A Growth Perspective on Foreign Reserve Accumulation
Macroeconomic Dynamics
Based on a dynamic open-economy macroeconomic model, this paper analyzes the motive for foreign reserve accumulation in fast-growing emerging economies. The demand for foreign reserves stems from the interaction between productivity growth and underdevelopment of the domestic financial market. As domestic firms are credit-constrained, domestic saving instruments are necessary to increase their retained earnings in order to invest in capital. The central bank plays the role of a financial…
Based on a dynamic open-economy macroeconomic model, this paper analyzes the motive for foreign reserve accumulation in fast-growing emerging economies. The demand for foreign reserves stems from the interaction between productivity growth and underdevelopment of the domestic financial market. As domestic firms are credit-constrained, domestic saving instruments are necessary to increase their retained earnings in order to invest in capital. The central bank plays the role of a financial intermediary and provides liquid public bonds while investing the bond proceeds abroad in the form of foreign reserves. Foreign reserve accumulation is thus part of a catching-up strategy in an economy facing financial frictions. During economic transition, foreign reserve accumulation is proved to be welfare-improving as long as private capital flows are controlled. This joint strategy enables the central bank to channel sufficient external funding to the domestic economy while keeping domestic interest rates under control to cope with positive productivity shocks.
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What is the Gold Standard?
Focus - Banque de France
Recurrently, and especially during periods of monetary stress, economic debate revisits the reintroduction of the gold standard. In this Focus, we first present the definition, the history and the mechanism of the gold standard and then discuss the advantages and disadvantages of a return to this monetary regime.
Other authorsSee publication
Languages
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French
Native or bilingual proficiency
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Chinese
Native or bilingual proficiency
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English
Full professional proficiency
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Spanish
Professional working proficiency
More activity by Gong
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Moody's Corporation has joined the fixed income workstream of the Monetary Authority of Singapore (MAS) Project Guardian, a collaborative initiative…
Moody's Corporation has joined the fixed income workstream of the Monetary Authority of Singapore (MAS) Project Guardian, a collaborative initiative…
Liked by Gong Cheng
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It is of the utmost importance keeping climate change at the top of the policy agenda. At the ESM - European Stability Mechanism, we will continue…
It is of the utmost importance keeping climate change at the top of the policy agenda. At the ESM - European Stability Mechanism, we will continue…
Liked by Gong Cheng
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In my ongoing quest to boost my intelligence - artificial or otherwise, I'm not fussy - I was lucky enough to talk to John M. about where the…
In my ongoing quest to boost my intelligence - artificial or otherwise, I'm not fussy - I was lucky enough to talk to John M. about where the…
Liked by Gong Cheng
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As we enter a new era of innovation, we're proud to join the Monetary Authority of Singapore (MAS)'s Project Guardian—a collaborative initiative…
As we enter a new era of innovation, we're proud to join the Monetary Authority of Singapore (MAS)'s Project Guardian—a collaborative initiative…
Liked by Gong Cheng
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𝗕𝗮𝗰𝗸 𝘁𝗼 𝘀𝗰𝗵𝗼𝗼𝗹: Grateful to #FSSummerAcademy24 for a jam-packed week on #SustainableFinance, and to Asian Development Bank (ADB) for…
𝗕𝗮𝗰𝗸 𝘁𝗼 𝘀𝗰𝗵𝗼𝗼𝗹: Grateful to #FSSummerAcademy24 for a jam-packed week on #SustainableFinance, and to Asian Development Bank (ADB) for…
Liked by Gong Cheng
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https://lnkd.in/drkAqn_Y Congrats for the BSC initiative, Kennedy School! Important efforts to support public sector capacity in policy making to…
https://lnkd.in/drkAqn_Y Congrats for the BSC initiative, Kennedy School! Important efforts to support public sector capacity in policy making to…
Liked by Gong Cheng
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I'm glad to share the (long awaited) publication of our work developing an analytical framework for evaluating the economic impact of climate change…
I'm glad to share the (long awaited) publication of our work developing an analytical framework for evaluating the economic impact of climate change…
Liked by Gong Cheng
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We’re excited to have clinched two awards at this year’s The Asset Triple A Sustainable Infrastructure Awards. Our awards for Rating Agency of the…
We’re excited to have clinched two awards at this year’s The Asset Triple A Sustainable Infrastructure Awards. Our awards for Rating Agency of the…
Liked by Gong Cheng
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