Viral Load Monetization // Russia Remains Among the Beneficiaries of the Covid Financial Crisis

Financial crises always lead to both capital outflow and “flight to quality” of investors, as well as to a weakening of asset values ​​and changes in cross-rates of currencies – however, the overall result of what is happening, the conditional “total profit and loss account” delay. According to the calculations of researchers from the IMF and the University of California, the United States and Russia, along with the United Kingdom, Brazil, a number of developing countries at the end of 2020 can be considered conditionally gains in the total increase in the value of foreign assets and liabilities in the crisis caused by COVID-19.

Calculations summarizing the indicators of foreign balances for individual economies are very difficult to do even with the current level of development of statistics, as Galina Hale from the University of California at Santa Cruz and Luciana Juvenal from the International Monetary Fund (IMF ) – article published in the NBER series. In terms of foreign assets and liabilities of a particular country, any global crisis is a collection of very different and often contradictory movements in value. “External” assets are denominated in different currencies, in the modern world often in national ones. Even reserve currencies, not to mention the quite popular “safe currencies” (for example, the Swiss franc), are unstable in crises in relation to the actual reserve world “five” (dollar, euro, pound, yen, yuan) – as well as in relation to each friend. Changes in the value of currencies change the “price” of external debt, and often in favor of the borrower, but the value of assets in foreign markets may or may fall. Finally, the crisis is a time not only for devaluations, but also for active physical “flight to quality” of investors. The result for one class of assets (for external liabilities) is the opposite of that for another class (for example, for investments abroad).

Finally, not all country statistics are comparable, and some information is not officially published by countries – one of the results of Hale and Juvenal’s work is the collection of a panel of correct data. Who won and who lost in the end? Who has more money as a result? Although the answer to such a question is rather arbitrary, and the use of the answer for “patriotic” purposes is meaningless, the authors give these estimates – and they are not intuitive. According to the results of the “covid” crisis, the most winners are (apart from the US) Russia, Brazil and Great Britain, according to some parameters – Argentina and Hong Kong. Turkey and Ireland, to a lesser extent the Netherlands and Sweden can be referred to among the “losers” at the end of 2020. In relation to country GDP, the effects are small (up to 0.7% of GDP).

Hale and Juvenal were primarily interested in the differences between the “acute” phase of the crisis (the first quarter of 2020) and its conditional “weakening” (at the end of the year): the results of different countries for different asset classes as a result of the flight to the dollar and collapses of national currencies in most countries at the beginning and end of 2020 were different, and the very nature of the post-crisis recovery was different from the “standard” crises of 1998 and 2008. At the first stage of the crisis, the United States, as a standard, acted as a “world insurer”, having lost about $ 200 billion in the total balance of external liabilities and the value of assets, by the end of the year – won about $ 600 billion. »About $ 40 billion. The authors draw attention to the fact that in 2020 the losses of emerging markets from fluctuations in exchange rates are significantly less than in previous crises – this is more likely due to the development of financial markets. However, Hale and Juvenal make a reservation that it is not yet possible to take into account part of the losses in the balance sheet, as the situation develops, they will be found on bank balances and in operations to “rescue” banks and financial systems – this may take years, which will reveal the true winners from COVID …

Dmitry Butrin

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