SUERF - The European Money & Finance Forum

#SUERFpolicybrief “Leveraging BNPL Data in Consumer Banking" by Christine Laudenbach (Goethe University and SAFE), Elin Molin (Lund University), Kasper Roszbach (Norges Bank and University of Groningen) and Talina Sondershaus (Lund University) #BuyNowPayLater (BNPL) services are transforming consumer finance by offering lightly regulated short-term credit. This policy brief explores how BNPL data can be leveraged to improve #creditrisk assessments and enhance financial inclusion. Drawing on proprietary data from a Nordic bank, our research highlights how BNPL #lending and the associated repayment histories can increase loan approval probabilities, lower interest costs for low-risk consumers, and promote better borrowing behavior. The findings suggest that integrating BNPL data into mainstream credit evaluations could improve lending practices, particularly for underserved populations. This brief also provides policy recommendations that can contribute to BNPL remaining a beneficial financial tool while safeguarding consumers from potential risks. 📄https://lnkd.in/dmfgRFYq

#SUERFpolicybrief “Labour market transitions in a greener economy" by Emilia Soldani, Maxime Nguyen, Tomomi Tanaka, and ORSETTA CAUSA ( OECD) The transition to a greener #economy may create opportunities of #employment #growth in so so-called green jobs, which have higher incidence among high high-educated workers, and challenges for those in high high-polluting occupations, most common among individuals with lower lower-education or living in rural areas. Econometric analysis of the individual individual-level drivers of transitions from non-employment to employment in over 20 EU countries reveals that higher education, especially in scientific and technical subjects, increase the odds of getting a #greenjob both for unemployed workers as well as for younger individuals entering the #labourmarket. To promote transitions from joblessness to employment in green jobs, education and training policies are fundamental, along with active labour market policies, cash support to unemployed workers, and well well-designed collective bargaining institutional settings. Such transitions are instead hindered by excessively stringent regulations on employment protection, and business and labour market dynamism. 📄https://lnkd.in/dJQnsyyi

#SUERFpolicybrief “The impact of immigration shocks on the labour market in Poland" by Łukasz Postek and Małgorzata Walerych (Narodowy Bank Polski (NBP)) This policy brief analyses the impact of #immigration shocks on the #labourmarket in Poland – a country that experienced a significant inflow of immigrants (including refugees) after Russia invaded Ukraine in 2014 and 2022. Our results, based on structural #BVAR models, suggest that the impact of the 2022 refugee wave on the Polish economy differs from previous immigration inflows, primarily influencing aggregate demand and, to a lesser extent, boosting #labour supply. In recent years, immigration shocks have slightly reduced the #unemployment rate and, to a greater extent, lowered the annual growth rate of real wages. They also contributed to higher #growth in nominal #wages, particularly after 2022, when the inflow of non-working immigrants, which created significant consumption demand, was at its highest. 📄https://lnkd.in/dUF9FX6R

#SUERFpolicybrief “How are public development banks in Latin America and the Caribbean supporting the climate transition?" by Marchitto Barbara, Ricardo Santos, and Joana Conde (European Investment Bank (EIB)) #LatinAmerica and the Caribbean (LAC) countries are significantly exposed to #climaterisks and will require significant investments in adaptation and mitigation. #PublicDevelopmentBanks (PDBs) have a more prominent role in LAC than in other regions and will therefore play a key role in supporting both public and private #green #investments. The European Investment Bank (EIB) and the Association of Public Development Banks of Latin America and the Caribbean (ALIDE), assessed how public development banks are contributing to supporting the climate transition in Latin America and the Caribbean, what is holding them back from further scaling up green finance, and concrete policy recommendations. The analysis includes information from a survey on 28 PDBs from 15 LAC countries, representing close to 50% of total assets of PDBs in the region. The sample has a mixture of development banks at the national and regional levels. In this article, we share some key insights from the report. 📄https://lnkd.in/dhUvJD-q

#SUERFpolicybrief “Some Intergenerational Arithmetic to Control Public Debt in the EU" by Ward Romp (University of Amsterdam), Roel Beetsma (University of Amsterdam), Matthias Busse (IMF), and Martin Larch (European Fiscal Board, European Commission) Adverse #demographictrends are increasingly weighing on #publicfinances, and debt sustainability analysis (DSA) has become the instrument of choice across national governments and international organizations to assess their impact. Using the EU’s long-term projections, we quantify the orders of magnitude of additional economic growth needed to neutralise the effect of adverse demographic scenarios such as lower #fertility rates or lower immigration on the government #debt-to-GDP ratio. Our estimates underscore (i) the urgency to apply measures to raise #productivity #growth to alleviate sustainability risks and (ii) the need to build demographic projections on cautious assumptions. 📄https://lnkd.in/ddW6fewu

🔊 Registration open: SUERF BAFFI Bocconi e-lecture "Artificial Intelligence in Economic and Financial Policy Making”. 📅 Tuesday, 22 April 2025 (online) 🕒 15:00-16:15 CET 📌 Webpage & Registration: https://lnkd.in/gvyhg8M7 ➡️ Key findings from the G7 Report on AI in Economic and Financial Policy Making: Prof. Anton Korinek (University of Virginia & Complexity Science Hub Vienna) ➡️ Discussion and Q&A: Iñaki Aldasoro (Bank for International Settlements – BIS), Risto Uuk (Future of Life Institute (FLI), moderated by Ernest Gnan (SUERF) #ArtificialIntelligence has emerged as a transformative technology across a spectrum of activities with potential to lead to significant changes in economic structure and financial systems. Being a general-purpose technology with a potential for rapid innovation across a broad array of economic processes, #AI calls for careful management and proactive policies. Governments have three roles to play in AI development: AI enablement (R&D, #education, infrastructure, and financing); the use of AI in government itself; and the enactment of laws and regulations for the private sector, ensuring that the use of AI technologies facilitates governments’ objectives of #economicgrowth, #stability, #equity, and well-being. The speed of innovation and adoption of AI, its subsequent impact on the #economy, #labormarkets, #finance, and sustainability is unknown, but could be rapid. Policymakers should remain vigilant to AI developments and be prepared to adapt policy flexibly. AI already poses several urgent questions for #policymakers. These include whether scaling laws will continue to hold and how that might impact concentration of market power; the trade-offs between proprietary and open-source systems; the availability of data for AI training; and the sustainability of AI business models due to the high associated capital and energy costs. Regulatory authorities should remain vigilant about market developments, as excessive concentration could reduce innovation and slow the spread of productivity gains. Opinions on the best approach to the technology diverge. G7 governments and central banks will likely prefer different approaches to AI, depending on culture, legal systems, national priorities, perception of risk and specific needs.

#SUERFpolicybrief “The Challenge of Asset Allocation with Illiquid Private Investments" by Daniel Dimitrov (De Nederlandsche Bank & University of Amsterdam) This policy brief examines the #AssetAllocation problem faced by long-term investors seeking exposure to illiquid #private #asset classes. In a recent working paper (Dimitrov 2025), I examine how the #iquidity uncertainty embedded in these assets complicates the asset allocation problem. In a quantitative dynamic asset allocation model I find that while adding private assets to the investment universe may offer benefits, ignoring #illiquidity in the portfolio construction process may also lead to substantial welfare losses. 📄https://lnkd.in/gGyqHYNP

#SUERFpolicybrief “Investing in Europe’s green future – Green investment needs and their financing" by Malin Andersson, Carolin Nerlich, and Petra Köhler-Ulbrich (European Central Bank) The #greentransition of the EU economy will require substantial investment, to reduce greenhouse gas emissions by 55% from 1990 levels by 2030 and reach net-zero emissions by 2050. Estimates of green investment needs vary and are surrounded by high uncertainty, but they all call for faster and more ambitious action. #Green #Investment will need to be financed primarily by the private sector, with support from the public sector. While #banks are expected to make a key contribution to funding the green transition, #capitalmarkets need to deepen further, especially to support green innovation financing. Public funds will be vital to complement and de-risk private green investment. #StructuralReforms should be tailored to encourage firms, households and investors to step up their green investment activities. #fiscalpolicy 📄https://lnkd.in/gGaMdN2M

#SUERFpolicybrief “Unwinding – Why and How" by Christian Pfister (Université d'Orléans, LEO) #Centralbanks have lengthened their balances sheets as a result of large scale #asset purchases. I first briefly describe how #monetarypolicy is implemented, then explain why keeping large central banks’ #balancesheets has not delivered the expected benefits that had been advocated. I finally outline an approach to restore lean central banks’ balance sheets without destabilising #financialmarkets. The balance sheets of most central have ballooned following their large scale #assetpurchases (LSAPs, also called “#QuantitativeEasing” – QE – in the media) in the wake of the #GreatFinancialCrisis (GFC) and of the pandemic crisis. However, reversing this sort of monetary policy easing, i.e. “unwinding”, was not prioritised when inflationary pressures resurfaced. Instead, central banks first raised #interestrates and kept large balance sheets, making this feature part of a “New Normal” (Pfister and Sahuc, 2020). Currently, central banks’ portfolios have dwindled from their peaks. However, no major central bank, and specifically neither the Federal Reserve (FED), nor the European Central Bank (ECB), has announced an objective to “unwind”.1 I first briefly remind some basics of monetary policy implementation, then explain the reasons for #unwinding and finally outline an approach to do it. #assetpurchases #financialstability 📄https://lnkd.in/g-bzkYcX