Central Banks

New UK banknote just about passes Turing test

17 July 2019

With cash use shrinking and high denominations favoured by crooks, there are reasons to scrap big bills. But a revamp of the 50-pound note, picturing the mathematician, is intelligent enough. Unlike, say, 500 euros, it still fits a system shifting slowly to digital payments.

China’s awkward rate-setting status quo to persist

12 July 2019

The central bank may want to half-follow a U.S. rate cut expected later this month. Yet officials have been looking to scrap the benchmark rate that offers the most direct way to do so. With so much at stake, however, the current half-reformed setup could prove tough to shake.

New breed of central bankers is harder to read

11 July 2019

Jerome Powell at the Fed and Christine Lagarde, nominated to be the next ECB chief, are lawyers by training. Their thinking is more fluid than predecessors whose economic tenets informed a world view. That has benefits, but also means it’s harder to predict how they will react.

Hadas: Bond markets lost in inflation-growth gap

10 July 2019

Changing growth expectations explain most daily movements in bond prices, while falling inflation parallels the long-term trend of declining yields. Every so often, however, market gyrations reflect hopes that growth and inflation will reconnect. There’s little sign of that.

Deutsche creditors give ECB charity short shrift

9 July 2019

The banks regulator is aiding the German lender’s revamp by letting it run on a lower capital ratio. In response, Deutsche Bank’s hybrid bond yields spiked. A botched overhaul would be bad for creditors – and also the central bank’s credibility.

Global central bank assault claims Turkish victim

7 July 2019

Desperate to boost growth, President Tayyip Erdogan has fired the country’s central bank chief. He’s the latest casualty of a worldwide attack on independent monetary authorities. The blow to confidence makes any cut in the main rate, held at 24% since September, more damaging.

Review: The conundrum of no good jobs

5 July 2019

Low unemployment in the U.S. and UK hides a grimmer reality, economist David Blanchflower argues in his new book. Weak wage growth and widespread despair have prompted people to turn to populist leaders. He makes a compelling case for why policymakers can still rev up growth.

Bond markets keep raising bar for central bankers

4 July 2019

Global yields are falling with benchmark German ones at record lows. Investors expect more monetary policy easing on both sides of the Atlantic. That will come but the scale and speed of market moves mean rate-setters will have to work hard to meet ever-rising expectations.

Time to look beyond Europe for next IMF boss

3 July 2019

The international lender’s chief has always been European. Christine Lagarde’s exit will be a chance to drop the outdated convention. Any hope of salvaging the multilateral system means giving emerging and developing economies more clout. Competence matters more than nationality.

Viewsroom: What makes companies proud of Pride?

27 June 2019

Neither profit nor investor pressure explain U.S. firms lining up to mark 50 years of the LGBT-rights movement. They may simply be doing the right thing. But the nation still has a long way to go. Plus: how the UK prime minister race affects the Bank of England’s next boss.

New Zimbabwe dollar heading same way as old one

25 June 2019

Robert Mugabe’s successor has banned day-to-day use of foreign currency to promote a new local dollar. Crucially, there are no guarantees against the money-printing that killed its predecessor. Without adequate reserves, exports or popular support, the new unit is likely to fail.

Boris Johnson may spice up UK central bank race

24 June 2019

The frontrunner to succeed Prime Minister Theresa May tends to stray from the script. That increases the chances of an unconventional candidate replacing Mark Carney as the head of the Bank of England. If Johnson makes the pick, it could even be his most lasting legacy.

Big Tech warrants Bank of England’s open eyes

21 June 2019

The central bank may let technology firms deposit funds alongside regular lenders as Governor Mark Carney seeks to keep up with rapid shifts in finance. Lower costs and more competition are broadly positive. Large groups like Facebook, however, deserve a more cautious embrace.

Buybacks prolong Wall Street rally nobody loves

20 June 2019

U.S. stocks are near record highs – thanks in part to purchases by their issuers. Investors are pulling out of equities and fund managers report extreme bearishness amidst a weakening global economy. Hopes of Fed rate cuts are a fragile support when it’s the only game in town.

Fed gives data one more chance

19 June 2019

The U.S. central bank held rates steady, though no longer says it’s patient. Policy setters are up against weaker global growth, trade worries, more dovish signals from Europe and Japan, market hopes of rate cuts and Donald Trump’s brickbats. The tension may last only six weeks.

Mario Draghi will leave one big task undone

19 June 2019

The ECB’s annual Portugal shindig is this year as much a celebration of its outgoing boss as a deep dive into the euro’s first 20 years. The Italian bequeaths his as-yet-unnamed successor the unfinished job of boosting low inflation. That will be hard unless fiscal policy helps.

Central banks can only nudge towards greener world

18 June 2019

The Bank of France boss says climate change may end up being a stagflationary shock. That’s a good reason for rate-setters convening in Portugal to care about global warming. But meddling too much may imperil their independence. It’s up to governments to make a real difference.

Hurricane Trump may give Beijing some cover

14 June 2019

A torrent of rising U.S. tariffs threatens to wash out some of China’s growth. There’s far more behind the slowdown, but just as CEOs cite bad weather to obscure underlying issues, officials could use the trade war to release more stimulus or just blame Trump for missed targets.

Hadas: Fresh thinking can soften next downturn

12 June 2019

As the Federal Reserve and ECB get ready to loosen policy, their armouries look depleted. Modern monetary theory suggests the cost and quantity of money matter less than putting it in productive hands. How? With targeted financial regulation and fruitful government spending.

Irish central banker job glitch may be a blessing

11 June 2019

The government was thrilled to recruit a New Zealand Treasury official as its new governor. Now he faces an investigation about how he handled early accessing of budget information. If things go wrong, Ireland has a second chance to give Deputy Governor Sharon Donnery the job.