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Ruchir Agarwal, Ina Ganguli, Patrick Gaulé, and Geoff Smith
This paper studies the impact of U.S. immigration barriers on global knowledge production. We present four key findings. First, among Nobel Prize winners and Fields Medalists, migrants to the U.S. play a central role in the global knowledge network—representing 20-33% of the frontier knowledge producers. Second, using novel survey data and hand-curated life-histories of International Math Olympiad (IMO) medalists, we show that migrants to the U.S. are up to six times more productive than migrants to other countries—even after accounting for talent during one’s teenage years. Third, financing costs are a key factor preventing foreign talent from migrating abroad to pursue their dream careers, particularly for talent from developing countries. Fourth, certain ‘push’ incentives that reduce immigration barriers—by addressing financing constraints for top foreign talent—could increase the global scientific output of future cohorts by 42 percent. We concludeby discussing policy options for the U.S. and the global scientific community.
Mr. Tanai Khiaonarong and David Humphrey
The level and trend in cash use in a country will influence the demand for central bank digital currency (CBDC). While access to digital currency will be more convenient than traveling to an ATM, it only makes CBDC like a bank debit card—not better. Demand for digital currency will thus be weak in countries where cash use is already very low, due to a preference for cash substitutes (cards, electronic money, mobile phone payments). Where cash use is very high, demand should be stronger, due to a lack of cash substitutes. As the demand for CBDC is tied to the current level of cash use, we estimate the level and trend in cash use for 11 countries using four different measures. A tentative forecast of cash use is also made. After showing that declining cash use is largely associated with demographic change, we tie the level of cash use to the likely demand for CBDC in different countries. In this process, we suggest that one measure of cash use is more useful than the others. If cash is important for monetary policy, payment instrument competition, or as an alternative payment instrument in the event of operational problems with privately supplied payment methods, the introduction of CBDC may best be introduced before cash substitutes become so ubiquitous that the viability of CBDC could be in doubt.
Dirk Jan Grolleman and David Jutrsa
The withdrawal of correspondent banking relationships (CBRs) remains a concern for the international community because, in affected jurisdictions, the decline could have potential adverse consequences on international trade, growth, financial inclusion, and the stability and integrity of the financial system. Building on existing initiatives and IMF technical assistance, this paper discusses a framework that can be readily used by central banks and supervisory authorities to effectively monitor the developments of CBRs in their jurisdiction. The working paper explains the monitoring framework and includes the necessary reporting templates and an analytical tool for the collection of data and analysis of CBRs.
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses key findings of the Detailed Assessment of Observance of the Committee on Payment and Settlement Systems–International Organization of Securities Commissions Principles for Financial Market Infrastructures(FMIs) in Singapore. Singapore has a well-developed payment, clearing, and settlement infrastructure, which includes two central counterparties for financial products. The infrastructure includes a large value payment system operated by the central bank and securities and derivatives clearing and settlement systems operated by the Singapore Exchange Limited. The FMIs in Singapore are subject to effective regulation, supervision, and oversight of the Monetary Authority Singapore (MAS). The legal framework provides the MAS with sufficient powers to obtain timely information and induce change.
Mr. Morris Goldstein, Mr. Donald J Mathieson, Mr. Tamim Bayoumi, Mr. Michael Mussa, and Mr. Peter B. Clark


This study addresses major policy issues associated with the future of the international monetary system. It focuses on whether there is a need for fundamental reform of this system, defined as systematic and sustained effort on the part of the three major industrial countries (United States, Japan, and Germany) to maintain their exchange rates within agreed ranges. It then discusses less rar-reaching reforms that could strengthen and improve the system.

International Monetary Fund. Research Dept.
The purpose of this paper is to outline a theoretical framework that can serve as a starting point for analyzing interest rate behavior in those developing countries that are in the process of removing controls on the financial sector and restrictions on capital flows. The approach suggested here combines elements of models developed for both closed and open economies; thus, it is able to incorporate the influences on domestic interest rates of foreign interest rates, expected changes in exchange rates, and domestic monetary developments. An interesting feature of the model presented is that the approximate degree of financial openness, defined as the extent to which domestic interest rates are linked to foreign interest rates, can be determined from the data of the country analyzed. The estimates indicate that in Colombia both foreign and domestic factors are important, whereas domestic interest rates in Singapore are fully determined by foreign interest rates and by variations in the exchange rate. These results are precisely those expected, given the characteristics of the respective financial systems in the two countries.
International Monetary Fund. Research Dept.
This paper reports the unfinished business of the 1974 Report to the Board of Governors on Reform of the International Monetary System on the question of the Special Drawing Right (SDR) as a basket of currencies. The SDR basket was revised after an initial period of four years and is subject to further revision at intervals of five years on the basis of an announced formula. Although the standard basket SDR has the properties that permit it to become a market asset, this is not the case for an SDR valued on the basis of any of the alternative methods considered in the C-20. The basic reason is that these other SDRs are not combinations of existing currencies but assets that have no counterpart in the market. In the adjustable basket, the divergence between currencies in the basket and currencies in the market occurs not only at the lower end of the range but at the upper end as well.
International Monetary Fund. Research Dept.
This paper outlines the Asian currency market provides an intermediation function between several Asian countries and the Eurocurrency market. However, soon after its creation in 1968, the Asian market went beyond this function and has now developed a substantial regional network of financial transactions. The Asian currency market was developed when the economy of Singapore was going through an important period of transition that was caused by the independence of the island in the mid-1960s and by a rapid phasing out of large British military installations. In addition to an important effort of economic development at home, this period of transition has involved expanding financial and trade relations to countries other than the British Commonwealth and the immediate neighbors. Several factors contributed to the establishment of the Asian currency market in Singapore. In the 1960s, the rapid economic growth of a number of Asian countries, an increased flow of direct investment, and a greater participation of multinational corporations in the economy of Asia generated a growing pool of foreign currencies in the hands of the private sector.
International Monetary Fund. External Relations Dept.
This paper reviews the procurement process under World Bank projects. The paper highlights that the World Bank’s interest in procurement under its loans stems directly from the “project” requirement of its Articles, which stipulates that it should lend for specific projects, except in special circumstances, and that it should ensure that the proceeds of the loan are used only for its specified purpose, with due attention to economy and efficiency. In 1951, the World Bank began introducing international competitive bidding as the normal procedure for procurement of the goods and works needed for its projects.