Topics at BOFIT 30th Anniversary Conference include central bank digital currencies and the impacts of sanctions on foreign trade

Last Tuesday (Nov. 9), the Bank of Finland Institute for Emerging Economies (BOFIT) held its 30th Anniversary Conference in Helsinki and virtually. BOFIT was created on September 1, 1991 to study economic developments in former Soviet countries, particularly the Baltics and Russia. The presentations at the conference are posted here. The entire conference can be viewed on the Bank of Finland YouTube channel.

The conference program consisted of three parts, each with its own theme. The panel discussion, which included Bank of Finland governor Olli Rehn, Central Bank of Russia governor Elvira Nabiullina, People’s Bank of China governor Yi Gang and European Central Bank executive board member Fabio Panetta, brought insights into central bank digital currency projects. Central banks have a variety of plans, but it was clear that the main function of digital cash will be as a substitute for physical cash as means of payment. It also was quite clear that China is well along in the trial phases for the digital renminbi.

The conference keynote speaker was Erik Berglöf, chief economist at the Asian Infrastructure Investment Bank. He spoke about trends in global value chains in emerging economies and the challenges of decarbonisation. He noted that there are still many untapped opportunities e.g. in improving transportation infrastructure.

The third session kicked off with a presentation by Gabriel Felbermayr of the Austrian Institute of Economic Research (WIFO) on his quantitative study of the impacts of sanctions on international trade. His findings showed that strong economic sanctions significantly depress international trade and that it takes a while after sanctions are lifted before trade returns to normal. Zuzana Fungáčová (BOFIT) shared her research on the impact of Russia’s presidential elections on bank lending behaviour and bank licence cancellation. Banks in Russia, including private banks, often increase their lending ahead of presidential elections. A similar phenomenon is seen in other countries, but is limited to state-owned banks seeking to influence election outcomes. In addition, the frequency of banking licence cancellations tends to drop around major elections in Russia.