ECB

Euro zone bank rally is built on sand

9 January 2020

The bloc’s 20 largest lenders, such as BNP and ING, are worth $84 bln more than in October. Investors believe the ECB is now done with rate cuts, which squeeze profit. But renewed trade frictions could change such thinking. And rising capital requirements will weigh on returns.

ECB feuding will have a new front in coming year

11 December 2019

Christine Lagarde took the helm of the European Central Bank with a promise to review strategy. A debate on how to define its price stability mandate will embolden those rate setters who are fed up of ultra-loose policies. The battle will be bitter and played out in public.

German fiscal rethink might backfire on euro zone

13 November 2019

ECB boss Christine Lagarde wants Germany and the Netherlands to spend more. Even if she gets her way, the economic benefits for others may be limited. Especially if a northern European rebound lifts the single currency and bond yields, or forces a rethink of easy monetary policy.

Mario Draghi’s tacit advice to Christine Lagarde

24 October 2019

The outgoing ECB boss says his successor needs no guidance. But his last big news conference contained clues. First, never give up, though economic risks are rife. Second, turn the page on infighting. Third, be wary of financial bubbles. Fourth, expect brickbats, whatever you do.

Christine Lagarde gets lucky with German ECB pick

23 October 2019

Berlin is set to nominate Isabel Schnabel to the central bank’s board. The university professor would bring economic expertise, and, judging by public comments, more open views on monetary policy than her Teutonic predecessor. The new ECB president would welcome both qualities.

Mario Draghi’s detractors prepare for next fight

10 October 2019

The outgoing ECB boss ignored technocrats’ advice not to resume bond buying, the FT says. The leaked guidance reflects increasingly vocal dissent. The central bank won’t reverse its looser policy any time soon. But incoming chief Christine Lagarde faces clear battle lines.

Bank of Japan tests the limits of monetary policy

1 October 2019

The weakest Japanese government-bond auction in three years caused global yields to jump. The swift reaction, rooted in uncertainty about new policies designed to keep rates low, should teach Europe a worrying lesson: A bond-purchasing safety net can sometimes be dangerous.

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.