Central Banks

Speedier FX markets offer muddier signals

17 September 2018

Electronic trading and automation has made the foreign exchanges even zippier, a BIS report says. That has both increased fragmentation in the $5-trillion-a-day currency market and given more clout to the biggest banks. Knowing who is doing what and why is even harder to discern.

Chancellor: The carry trade that followed Lehman

14 September 2018

The subprime crisis was born from yield-chasing in the Greenspan easy-money era. Even lower interest rates since the Lehman bust revived the global carry trade. Another maelstrom will be hard to avoid.

Chancellor: “Haves” enriched most from Lehman bust

13 September 2018

Ultralow interest rates after the crisis may have lifted many boats, but the yachts of the wealthiest have been buoyed above all. Wall Street and the CEO class particularly benefited. This has come at the expense of the less fortunate, who are making their displeasure known.

For Abe’s next trick, a diplomatic balancing act

10 September 2018

The veteran leader is on track to become Japan’s longest-serving prime minister. After almost six years of Abenomics, his signature policy is gaining traction. But with Tokyo caught in trade war crossfire, Shinzo Abe’s manoeuvring in Beijing and Washington will matter more.

Indonesia can best defend rupiah by staying calm

6 September 2018

An emerging markets rout has pushed the rupiah to its weakest since the 1998 Asian crisis. Policymakers, who have until now been laudably proactive, appear rattled. But threats against speculators are less helpful than higher interest rates and reforms that encourage investment.

Hadas: The paradox of risk-free finance

5 September 2018

A new study claims that national deposit insurance makes financial crises more likely. It may exaggerate, but guarantees are a sign of a basic problem in banking. The mix of public service and private risk is always potentially toxic. Separation would be hard but worthwhile.

Europe’s next bank cop faces fight on many fronts

3 September 2018

Daniele Nouy steps down as chair of the European Central Bank’s banking watchdog this year. Her successor will have to keep cleaning up bad debts and improving money-laundering controls. The bigger challenge, though, is addressing lenders’ chronic lack of profitability.

Britain is making a mess of replacing Mark Carney

3 September 2018

The Bank of England boss may extend his term for a second time, keeping him at the central bank beyond June 2019. That could offer comfort to investors worried about Brexit. But it would suggest the government is struggling to find a good successor. That’s a bad signal to send.

Nigerian problems cast doubt over MTN payout

30 August 2018

The country’s central bank says the mobile phone group’s local unit illegally paid $8.1 bln to its South African parent. Though MTN denies wrongdoing, its shares are down more than a fifth. Blocked payments from its most lucrative market would threaten MTN’s punchy dividend plan.

As Trump goes low, Fed goes high

24 August 2018

Jerome Powell sees little risk of economic overheating, indicating the Fed will raise rates again next month. The U.S. central bank chief’s first public comments since the U.S. president said he wasn’t thrilled with Powell’s policies suggest he’s largely impervious to Trump.

Fed vice chair deserves to be top global bank cop

23 August 2018

Allies of President Donald Trump have slammed the Financial Stability Board, but Randal Quarles is a strong supporter. Putting the U.S. central banker in charge of the body that oversees financial regulation when Mark Carney steps down would help maintain global rules.

Italy’s bond fix idea resembles covert bailout

21 August 2018

The economic spokesman of the ruling League Party says the euro will collapse unless the European Central Bank limits the gap between euro zone countries’ bond yields to 150 basis points. That bar is too low and would give big spenders free rein to dodge hard budget decisions.

Viewsroom: Turkey’s financial crisis may spread

16 August 2018

The feud between President Tayyip Erdogan and U.S. President Donald Trump over steel tariffs threatens to turn other emerging markets cold. Breakingviews columnists discuss the global impact of Turkey’s currency meltdown. Plus: A bad bank in China gets whacked by political risk.

Cox: When commemorating crises, think 20 not 10

15 August 2018

As the decennial anniversary of Lehman’s systemic collapse approaches, it’s worth recalling the one that preceded it. Russia’s 1998 default led to LTCM’s demise. Shockingly, that fiasco’s lessons went mostly unheeded until 2008. The key takeaway: there are always blind spots.

Sterling looks ripe for a short sharp bounce

9 August 2018

The pound is at its lowest in nearly a year against the dollar and the euro, and options prices show extreme pessimism about its outlook. Investors have grown too gloomy too soon about the risk of a messy Brexit. Even a glimmer of hope of a better outcome will spark a snapback.

Sterling’s Brexit jitters bigger than they look

7 August 2018

The pound’s gyrations in the coming year will be fairly restrained, options prices imply. But the currency is expected to be jumpier than a basket of major exchange rates, rather than less volatile as in pre-EU vote days. That gap is a sort of Brexit risk premium, and will grow.

Erdogan opens Turkish lira to new line of attack

6 August 2018

The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.

Mark Carney raises rates from position of weakness

2 August 2018

The Bank of England governor nudged up borrowing costs even though growth is tepid and will suffer if Brexit goes badly. The economy’s speed limit has declined since the financial crisis and EU talks will take time to pan out. He had little choice, but may have to reverse course.

India central bank doubles down on inflation fight

1 August 2018

The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.

Bank of Japan tries cheap way of imposing will

31 July 2018

Governor Haruhiko Kuroda has pledged to keep rates very low for an extended period to calm investors’ concern that monetary policy may become less loose. The no-cost tactic to keep bond yields in check is born of necessity given how many assets the central bank is already buying.