ECB

German weakness gives ECB carte blanche to be bold

14 August 2019

Europe’s biggest economy shrank in the second quarter as global trade tensions hurt export-orientated manufacturers. The problems will filter through to other sectors. That will lessen any Teutonic resistance to European Central Bank boss Mario Draghi’s planned monetary easing.

Greece’s new PM needs to avoid banking own goal

1 August 2019

The fund that oversees state shareholdings in the country’s four big banks has been a force for better governance. Even so, recently elected Prime Minister Kyriakos Mitsotakis may decide to overhaul its leadership. A changing of the guard now would send the wrong message.

Markets want to see colour of Mario Draghi’s money

25 July 2019

The European Central Bank chief opened the door to even looser monetary policy. The dearth of decisions or details meant the euro reversed initial losses while bond and stock prices gave up brief gains. He will have to deliver on his big promises before investors give him credit.

Italy’s banks find novel fix for EU bail-in rules

23 July 2019

The country’s lenders are collectively rescuing wobbly peer Carige after buyers walked away. It’s an imperfect solution, but lighter on taxpayers than a bailout, and avoids a risky liquidation. It also shows how European rules designed to let banks fail are ineffective.

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.

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.

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.

Lagarde lends ECB continuity more than credibility

2 July 2019

International Monetary Fund boss Christine Lagarde is set to replace Mario Draghi as head of the European Central Bank. The Frenchwoman will stick to the policy path he has charted and is a consensus builder. But she lacks central bank experience and will have to win her spurs.

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.

Mario Draghi puts easing back in play on way out

6 June 2019

The ECB boss is set to end his eight-year term without once raising interest rates. Some colleagues have even floated the possibility of further cuts or more asset buying. His successor will have to figure out how to boost inflation and growth without banks scaling back lending.

ECB sop to banks will only help at the margin

10 April 2019

President Mario Draghi is considering ways to ease the pain that negative policy rates inflict on banks, such as tiered deposits in Japan and Sweden. Savings-rich German lenders would benefit most. But any earnings boost would be modest and does nothing to remedy high costs.

Twitchy sterling sends traders running for cover

3 April 2019

Speculative bets on the pound are at their lowest level since 2012. Little wonder given that Britain could crash out of the EU, postpone its departure, or cancel Brexit in the next few weeks. The first signs of clearer direction will trigger a huge move on the foreign exchanges.

French banks’ pain may worsen

8 March 2019

The Bank of France may raise capital buffers to dampen loan expansion. That is justified given credit is growing much faster than the economy is expanding. But combined with pitiful lending margins, the move would add to the profitability problem which is plaguing Gallic banks.

With friends like Draghi, banks don’t need enemies

7 March 2019

European Central Bank President Mario Draghi is going to offer lenders new long-term loans. But his plan to keep policy rates at record lows for longer makes their lives harder. And if growth turns out to be as weak as the ECB now expects, more of the loans they make may go bad.

ECB stimulus flows show why Draghi works so hard

6 March 2019

President Mario Draghi bought 2 trln euros of government bonds to boost the economy. But some proceeds were used to buy debt issued by non-euro zone companies, or left in bank deposits, the BIS says, diluting the impact. Though mainstream, money-printing remains an imprecise tool.

Central banks’ gold fever is anything but reckless

5 February 2019

Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.

Italian banks have a 38 bln euro problem

15 January 2019

The European Central Bank has told euro zone lenders to deal with dud loans by a set date. For state-owned Monte dei Paschi, the deadline is 2026. If applied broadly that demand – and a slowing economy – would hinder Italian banks’ ability to deliver decent medium-term returns.

Germany may outdo Italy as a bank bail-in wrecker

9 January 2019

NordLB needs at least 1.2 billion euros to help provision dud loans after merger talks with rivals failed. Along with smaller Italian peer Carige, the regional German lender is a prime candidate for resolution. Politics means a mix of private equity and public funds is a likelier solution.