Central Banks

RBI’s piggy bank can stand a New Delhi raid

20 November 2018

Under government pressure, India’s central bank will consider cuts to over $100 bln of reserves. Its capital cushion looks generous next to BRIC peers, but the country’s large budget deficit, its dependence on foreign capital and the danger of a bad precedent demand caution.

Hadas: Fear of fiscal deficits is overdone

14 November 2018

Mainstream economists agree that governments can safely spend more than they take in, but worry about big funding gaps. Some dissidents make a good case for going deeper in the red. They could be bolder. Most domestic borrowing can be replaced with straight money-printing.

Italian group bank rescue is self-preservation act

12 November 2018

A vehicle funded by the country’s lenders is spearheading a 400 mln euro rescue plan for ailing Carige. A private sector bailout avoids using taxpayers’ money and should not clash with EU state aid rules. It’s a sensible way to minimise the risk of banking contagion.

Governor’s exit would gut India’s central bank

12 November 2018

A power struggle with New Delhi could force out Urjit Patel. Losing two RBI chiefs in two years would ruin the credibility of India’s most respected financial institution. It also heralds more jostling elsewhere between populist governments and independent-minded central bankers.

U.S. stress tests risk falling on slippery slope

9 November 2018

Fed supervision chief Randal Quarles wants to tweak the annual exams. Some revisions are warranted, like giving banks test results before they decide how much capital to return to investors. But scrapping the watchdog’s ability to fail a firm gives Wall Street too much leeway.

Hadas: Central bankers stuck between two myths

8 November 2018

Monetary authorities dream of a neutral technocracy though their jobs are inherently political. Politicians from the U.S. to India fantasise about exerting more monetary control, but wild policies quickly turn toxic. The uncomfortable status quo may be the least bad arrangement.

South Korea can correct its economic missteps

6 November 2018

Business investment has tumbled and hiring weakened following a steep minimum wage hike and cap on working hours. Growth in the $1.5 trln export-dependent economy also is sputtering just as the U.S.-China trade war intensifies. Seoul would be wise to make some small adjustments.

Brazil’s Bolsonaro gives China electric shock

5 November 2018

Beijing-backed energy companies hope to invest tens of billions in Brazilian power, but the president-elect has warned of Chinese intentions. Firms like State Grid would bring needed money and expertise, but populist suspicion might overrule commercial logic.

India’s central bank spat has a global hue

1 November 2018

New Delhi has ratcheted up tensions with a mooted threat to invoke a never-used power to meddle with the RBI. With the rupee sinking, it’s a terrible time to undermine the bank's independence. Donald Trump’s readiness to fault the U.S. Fed has given others cover to be bolder.

Budget tests mettle of Malaysia’s mavericks

1 November 2018

Mahathir Mohamad's government is set to present the $300 bln economy's most significant blueprint in decades. It needs to burnish reform credentials and soothe rating agencies. Outlining a credible tax plan will be a start; a plan to reduce the state's role is the bigger prize.

U.S. regional banks finally feel watchdog warmth

31 October 2018

The Federal Reserve wants to modestly loosen liquidity rules for commercial banks like U.S. Bancorp and PNC. That will leave the United States’ biggest global lenders – the likes of JPMorgan and BofA – the only ones stuck with a largely undiluted post-crisis Dodd-Frank regime.

ANZ sets flat tone for contrite Aussie banks

31 October 2018

The $52 bln lender has reported a 5 pct drop in full-year earnings, hit by clean-up costs. Given regulatory heat, it could have been worse. Yet bank shares remain pricey. That suggests pain ahead as a boom, fed by a rosy economy, household debt and pricing power, winds down.

Struggling Filipino deals expose market flaws

29 October 2018

Local champion San Miguel was forced to shrink a stock sale while Melco met resistance to its casino takeover plan. Both episodes provide timely reminders about structural shortcomings for an exchange that trades less daily than smaller Vietnam. To grow will require some fixes.

The Exchange: Leta Hong Fincher

26 October 2018

China’s fledgling feminist movement has laid the foundations for a #MeToo moment. In the wake of the infamous one-child policy, author Hong Fincher has documented the development of women’s rights, and activism. She joins Katrina Hamlin to explain why their work worries Beijing.

Breakdown: Libor habit is hard and costly to kick

23 October 2018

Over $300 trillion of financial contracts are linked to discredited benchmark interest rates. Switching to new ones could disrupt economies as well as markets. It will take a lot of money, time, and willingness to reconcile conflicting interests to avoid bad withdrawal symptoms.

India Insight: Shadow banks look ugly in the light

22 October 2018

A golden run for the country’s non-bank lenders is over. Rising interest rates, shallow markets and the herd mentality of investors raise the possibility liquidity problems could unmask dodgy assets. If the last pillar of Indian credit growth crumbles, the economy could be next.

China needs shadow bankers to unclog growth

19 October 2018

The economy expanded only 6.5 pct last quarter, missing expectations. The campaign to quash financial risk is squeezing private companies, and exhorting banks to lend more won’t cut it over the long run. It’s time to let unconventional credit play a bigger role.

The sick man of Southeast Asia faces ill winds

18 October 2018

Thailand fared better than its neighbours in recent market ructions. Yet the ossified $460 bln economy is held back by an ageing population, poor education and high household debt. With an interest rate hike and a contentious poll ahead, there will be even fewer reasons to cheer.

China’s wink at punters hints at intervention

18 October 2018

Top officials are being trotted out to reassure investors after a near-25 pct stock slump this year. "Spring" is not far off, they say; a deleveraging campaign is already on hold. This is all in Beijing’s playbook: if markets keep falling, more active policy support comes next.

U.S. Treasury hasn’t yet been Trumped

17 October 2018

China again escaped being named a currency manipulator by the U.S. agency, despite pressure from the president. Although some trade-related penalties are already happening through other means, it’s a rational decision. Steady hands at Treasury and the Fed offer investors comfort.