Ricardo Reis's picture
Affiliation: 
London School of Economics
Credentials: 
AW Phillips Professor of Economics

Voting history

Bitcoin and the City

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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:
Disagree
Confidence level:
Confident
Comment:
Bitcoin is inadequate as a currency. As an asset that provides some small benefits to its users---chiefly anonymity and irreversibility of transactions---and that has a fairly limited and steady supply though, it is quite similar to gold. Even the arguments of some of its fans are eerily familiar to those that one has heard for decades about gold. Like gold, it fluctuates wildly in value and it is subject to fads and manias. As long as regulators treat it as a highly speculative investment, like so many other investments out there, then it should pose as much risk to the financial system as so many of these do.

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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Answer:
Agree
Confidence level:
Not confident
Comment:
The negative impact on the construction sector, which is quite leveraged and already in bad shape according to stock market valuations, and the reduction in consumption would likely lead to a slowdown in GDP growth in the short run.

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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:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
Predicting house prices (or any other asset price) is close to being a fool's errand. Moreover, the UK's economic prospects have so much uncertainty around them as a result of Brexit, that it is very hard to make any forecasts for the state of the economy or the housing market in particular. Finally, the budget for next year can have a significant impact on house prices depending on what the promised reforms of the UK housing market turn out to be. Given all of these, I find it hard to make a prediction with any certainty on what will happen to house prices.

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:
Neither agree nor disagree
Confidence level:
Confident
Comment:
There has been some great research on this topic in the last few years, and there are still many studies underway. My reading of it is that it that it is too early to tell. But I hope that in 2-3 years, I could give a confident answer to this question.

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Question 1: Does the world economy face heightened risks arising from an excess of public and private debt and/or inflated asset prices?

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Answer:
Agree
Confidence level:
Not confident
Comment:
Increases in credit seem to be predictive of financial crises, and likewise for the level of public debt and sovereign debt crises. But the associations are weak, not very stable, unclear if causal, and there are lots of false positives. As for asset prices, "inflated asset prices" is too vague, as there is some "inflated" asset price" in some market almost every day. But, if some negative shock hits the world economy, having higher debt in many cases heightens its negative impact, although stating it this way is not that useful. So, I slightly agree, but with little confidence.

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