China’s central bank will find value in continuity 21 Feb 2013 PBOC governor Zhou Xiaochuan has presided over a decade of more-or-less stability. The cost has been financial repression and the build-up of sizeable risks. But the PBOC’s freedom is limited. If ideas and experience are what counts, Zhou remains the best person for the job.
BoE tempted by monetary radicalism 20 Feb 2013 One third of the UK central bank’s rate-setting committee wants to push monetary policy further. If the economy remains tepid and the next governor follows up on his dovish talk, the UK could test a no-holds-barred money-push. That would be exciting - but not in a good way.
Dirty money flight integral part of Putin’s Russia 20 Feb 2013 The head of the central bank says that the same “group of people” controlled half of the $50 billion of illegal money transferred out of Russia in 2012. The government can hardly feign surprise. Its claims notwithstanding, it is at the centre of the country’s web of corruption.
Hugo Dixon: The Bundesbank isn’t mad 18 Feb 2013 In a world where it is increasingly fashionable to call for central banks to print money, the German central bank is one of the last bastions of orthodoxy. Although its stance is extreme, it is a useful antidote to the theory that easy money is a cost-free cure to economic ills.
Central banks are globalisation’s new enemy 15 Feb 2013 Nearly every part of the economy is becoming more global. Trade is already so free that the proposed U.S.-EU Trade and Investment Partnership would produce only modest gains. So why are central banks stuck in a nationalist past? They’re in urgent need of globalised thinking.
King warns Carney that the UK is OK 13 Feb 2013 In presenting the latest inflation report, the outgoing governor of the Bank of England had two messages: be flexible on inflation and recovery is in sight. Markets only heard the first. But the economic comment is a warning to his successor Mark Carney not to overdo stimulus.
Fed’s extraordinary policy risks becoming ordinary 12 Feb 2013 Since World War Two, U.S. recessions have come on average every five years. That makes it likely that the United States will be stuck with ultra-low rates when the economy next turns down. This permanent monetary overdrive is bad for savers and the unbalanced global economy.
Interview questions for the new BOJ chief 12 Feb 2013 The Bank of Japan’s next governor will help decide the fate of Shinzo Abe’s anti-deflation campaign. Guts, diplomatic savvy and belief in the prime minister’s campaign will matter more than technical expertise. The following questions should help Abe choose the right person.
Money printing is actually a great idea 11 Feb 2013 Adair Turner, the UK FSA boss, broke a taboo by suggesting that governments should sometimes just print money to cover deficits. The regulator didn’t go far enough. Governments can create and destroy money at will. They shouldn’t be afraid to do so to melt away leverage.
ECB delivers long-overdue Irish relief 7 Feb 2013 The European Central Bank has given the nod to the restructuring of Ireland’s bank bailout, which will make the country’s debt more bearable. Euro zone leaders had resisted allowing their bailout fund to take on the burden. Luckily the ECB is stepping in when governments fail.
Carney still has to pass the really hard UK tests 7 Feb 2013 The incoming Bank of England governor charmed the scrutinising UK parliamentary committee. He dodged hard questions and backtracked on his one mildly radical policy suggestion. But he didn’t sound ready to deal with big fiscal deficits or the British fixation on house prices.
The answers to extract from Mark Carney 6 Feb 2013 The next Bank of England governor sits before UK lawmakers this week. Central bankers are masters of ambiguity. But Carney should be made to say how he would have managed Britain’s financial and economic crisis differently, and what he can realistically achieve from here.
Markets’ euro-jitters unjustified but helpful 5 Feb 2013 After a strong rally, a correction is almost inevitable, and potential bad news always lurks in Europe. But with the ECB calling the shots, political turbulence in Spain and Italy isn’t a big risk. Still, weak markets put welcome pressure on politicians to keep moving forward.
Hugo Dixon: Mario Draghi’s poisoned banking chalice 4 Feb 2013 The ECB is to gain huge power as the euro zone’s banking supervisor. But it will also be blamed when banks run into trouble. Draghi is already being criticised for failing to control Monte dei Paschi when he was at the Bank of Italy. The ECB faces even bigger reputational risks.
Rate cuts won’t revive India’s stalled growth 29 Jan 2013 The latest reduction in interest rates will be as futile as the previous one nine months ago. GDP growth will pick up when New Delhi curbs its own profligacy and improves the investment climate. The February budget may be the current government’s last chance to do both.
Carney should remember central banks’ limits 28 Jan 2013 Mark Carney, the incoming governor of the Bank of England, thinks the monetary authorities can do more to help the economy. His suggestion of targeting nominal GDP instead of inflation rates may be fashionable, but that policy is more likely to stoke inflation than growth.
Buoyant markets give ECB upper hand in Irish spat 28 Jan 2013 The European Central Bank has rejected a plan by Dublin to restructure its bank bailout. Any deal needs to balance the risks of derailing Ireland’s recovery against a breach of its own rules by the ECB. For now, low Irish bond yields give Frankfurt an advantage.
China FX swap may blur Bank of England mandate 28 Jan 2013 The central bank is under pressure to set up a swap facility with its Chinese counterpart. Doing so would boost renminbi trading in London. But the BoE’s main concern should be financial stability, not the City’s competitiveness. Confusing the two would be a mistake.
Colombia faces bigger threats than guerrillas 25 Jan 2013 FARC’s resumption of hostilities after a two-month ceasefire is disappointing. But peace talks continue. Colombia’s solid economic growth, though, is being infected by hot money from abroad distorting the currency and heading to the wrong sectors. That seems the greater worry.
ECB liquidity payback gamble was worth the risk 25 Jan 2013 EU banks have repaid over a quarter of the 489 bln euros of three-year central bank loans they took in 2011. The risk is weaker banks still hooked on cheap liquidity get stigmatised. But the stronger ones will benefit, and the euro zone has other options if the crisis reignites.