Exchange Rates, De-dollarisation, Self-Fulfilling Crises: Philippe Bacchetta, University of Lausanne 

In this episode of Arth Niti, join Shekhar Tomar, Assistant Professor of Economics and Public Policy at ISB, as he engages in a thought-provoking conversation with Philippe Bacchetta, Swiss Finance Institute Professor of Macroeconomics at the University of Lausanne. Together, they explore the complexities of exchange rate systems and the nuances of international capital flows. The discussion then shifts to a critical analysis of the 'original sin' in emerging markets and its far-reaching consequences. Concluding the episode, they delve into the challenges and strategies surrounding De-dollarisation and the optimization of central bank reserves.
Introduction (00:00)
Understanding Exchange Rate Systems (01:56)
Why China has fixed exchange rate system? (05:03)
How academia and market participants differ in explaining ER fluctuations? (07:19)
International Capital Flows adjustments are slow (16:13)
Fama Puzzle (17:40)
Impact of delayed portfolio adjustments on economy (20:30)
Self-fulfilling Crises: how to prevent them? (29:06)
Original Sin: Issuance of dollar-denominated bonds by EM firms (35:20)
De-dollarisation and Optimal Central Bank Reserves (42:16)
#ISB #ArthNiti