Ethan Ilzetzki's picture
Affiliation: 
London School of Economics

Voting history

Bitcoin and the City

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Question 2: Do you agree that the regulatory oversight of cryptocurrencies needs to be increased?

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Answer:
Disagree
Confidence level:
Confident
Comment:
It is hard to envision these currencies becoming true alternatives to government-based fiat currencies in the forseeable future, so they will likely continue to be toys for a limitted number of collectors. In terms of financial stability, a more likely threat is web-based financial institutions (internet banks) playing a larger and larger role, augmenting or disrupting the existing financial system. This seems inevitable to me and may change the regulartory requirements dramatically. (And internet banks will largely borrow and lend in government based currencies, not in Bitcoin, ect.)

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Question 1: Do you agree that cryptocurrencies are currently a threat to the stability of the financial system, or can be expected to become a threat in the next couple of years?

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Answer:
Strongly disagree
Confidence level:
Confident
Comment:
At this point, Bitcoin and other cryptocurrencies remain a toy for a very narrow segment of investors and is detached from the financial system and the real economy.

House Prices and the UK economy

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Question 2: Do you agree that a more widespread weakening of the UK housing market will slow UK GDP growth significantly?

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Make sure to save each question separately

Answer:
Agree
Confidence level:
Very confident
Comment:
My own research and related research in the US indicates that housing price declines have impacts for the economy as a whole. In research we have conducted on the UK housing market (Cloyne, Huber, Ilzetzki, and Kleven, 2017), we find that a £1 decline in housing prices leads to a 20p decline in borrowing. From US-based research (e.g. Mian and Sufi) it appears that consumption declines follow the decline in borrowing.

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Question 1: Do you agree that the phenomenon of declining house prices will ripple out from the London property market leading more UK regions to experience falling prices?

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Answer:
Agree
Confidence level:
Confident
Comment:
London is the central hub of the UK economy and a slowdown in London is likely to spill over to other parts of the country. In research we have conducted on the UK housing market (Cloyne, Huber, Ilzetzki, and Kleven, 2017), we find that a £1 decline in housing prices leads to a 20p decline in borrowing. From US-based research (e.g. Mian and Sufi) it appears that consumption declines follow the decline in borrowing. With weakening London consumption, house prices in the rest of the country are bound to suffer as well.

Global risks from rising debt and asset prices

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Question 2: Is the loose monetary policy of major central banks responsible for the recent increase in global leverage or asset values?

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Answer:
Disagree
Confidence level:
Not confident
Comment:
Low central bank rates are a consequence--not a cause--of global low real (risk-free) interest rates. The global recovey is still sluggish and central banks could and should address macroprudential risk with macroprudential policy, not interest rate policy.

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