Bank of International Settlements. Today, the Bank of International Settlements released a paper on virtual banking providing insights on the use of information capital as a substitute for tangible capital. The paper argues that information capital, comprised of an enterprise’s or individual’s digital data footprint, can be used as collateral for obtaining credit, thus increasing access to credit by small and medium businesses and low income individuals.
While the paper uses the Hong Kong market as a case study, I believe that if US-based banks and fintechs embarked on the same initiative, the following legal issues may arise. Can information capital be used as collateral when borrowing for the purpose of purchasing foreign currencies? Does the use of information capital raise discrimination issues where biases are embeded in the artificial intelligence programming? Are existing laws sufficient for protecting enterprise or individual data privacy where such data is encompassed in information capital used as collateral?
The link to the BIS paper can be found here.
Federal Reserve Bank of New York. Yesterday after the Board of Governors of the Federal Reserve announced that it would hold its interbank rate for overnight lending between 0 and .25%, the Federal Reserve Bank of New York announced that the reserve bank’s Open Market Trading Desk would increase its System Open Market Account holding of Treasury securities by at least $20 billion per month and its agency mortgage-backed securities by at least $10 billion per month. This reduced level of purchasing (down from a combined high of $120 billion per month at the beginning of the pandemic) will commence on 14 February 2022.
The link to the New York Fed’s announcement can be found here.
Interbank Market, Pakistan. The rupee held steady against the dollar at Rs176.98 but has been depreciating in value since 1 July 2021. See link to article here.
Foreign exchange rates as of 10:00 am EDT
Source: U.S. Department of the Treasury
Washington – The findings from the annual survey of U.S. portfolio holdings of foreign securities at year-end 2019 were released today and posted on the Treasury web site at https://www.treasury.gov/resource-center/data-chart-center/tic/Pages/shcreports.aspx
The survey was undertaken jointly by the U.S. Department of the Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System.
A complementary survey measuring foreign holdings of U.S. securities is also conducted annually. Data from the most recent such survey, which reports on securities held at end-June 2020, are currently being processed. Preliminary results are expected to be reported on February 26, 2021.
This survey measured the value of U.S. portfolio holdings of foreign securities at year-end 2019 as approximately $13.1 trillion, with $9.5 trillion held in foreign equity, $3.1 trillion held in foreign long-term debt securities (original term-to-maturity in excess of one year), and $0.5 trillion held in foreign short-term debt securities. The previous such survey, conducted as of year-end 2018, measured U.S. holdings of approximately $11.3 trillion, with $7.9 trillion held in foreign equity, $2.9 trillion held in foreign long-term debt securities, and $0.5 trillion held in foreign short-term debt securities. The increase in 2019 was mainly in equity (see Table 1).
U.S. portfolio holdings of foreign securities by country at the end of 2019 were the largest for the Cayman Islands ($2.00 trillion), followed by the United Kingdom ($1.52 trillion), Japan ($1.15 trillion), and Canada ($1.10 trillion) (see Table 2). These four countries attracted 44 percent of total U.S. portfolio investment, versus 45 percent the previous year.
The surveys are part of an internationally coordinated effort under the auspices of the International Monetary Fund (IMF) to improve the measurement of portfolio asset holdings.
TABLE 1. U.S. HOLDINGS OF FOREIGN SECURITIES, BY TYPE OF SECURITY, AS OF SURVEY DATES 
(Billions of dollars)
|Type of Security||December 31, 2018||December 31, 2019|
|Short-term debt securities||502||470|
U.S. PORTFOLIO INVESTMENT BY COUNTRY
Table 2. Market value of U.S. portfolio holdings of foreign securities, by country and type of security, for countries attracting the most U.S. investment, as of December 31, 2019 
(Billions of dollars)
|Country or category||Total||Equity||Debt|
|China, mainland (1)||222,282||204,252||18,030||15,197||2,833|
|Rest of world||2,015,293||1,208,546||806,748||740,466||66,282|
* Greater than zero but less than $500 million.
Items may not sum to totals due to rounding.
 The stock of foreign securities for December 31, 2019, reported in this survey may not, for a number of reasons, correspond to the stock of foreign securities on December 31, 2018, plus cumulative flows reported in Treasury’s transactions reporting system. An analysis of the relationship between the stock and flow data is available in Exhibit 4 and the associated text of “U.S. Portfolio Holdings of Foreign Securities as of End-December 2019.”
 China, Hong Kong, and Macau are all reported separately.
WASHINGTON – On October 28, 2020, U.S. Treasury Secretary Steven T. Mnuchin participated in a conference call with the Finance Ministers of Australia, Canada and the United Kingdom to discuss policies to support business and employment in response to the COVID-19 pandemic. The call, hosted by Chancellor Rishi Sunak, is the latest in a series of regular calls among the Finance Ministers of the “Five Eyes” nations. The Ministers discussed various policy responses to support workers and businesses and collaborative efforts to promote a strong and sustained economic recovery.
Source: U.S. Department of Treasury