When there is no big demand for credit and, at the same time, the banks have little appetite to lend, they should focus on repairing balance sheets and not expanding them. And they can use those resources they hold with negative cost to repair their balance sheets.
Francesco Saraceno | FT Alphaville‘s Matthew Klein goes back to the issue of financial stability and monetary policy. A recent speech of Bank of Canada’s Timothy Lane is the occasion for Klein to reassess monetary policy before the crisis, when policy makers (in particular he refers to Ben Bernanke, but the Fed chair was in good company) dismissed fears of asset price bubbles, thus failing recognize, and to counter, the buildup of the crisis.
China’s problem continues to develop. And it can be resumed in three lines: for many years, the external sector, the exchange rate and its currency reserves have been essential for China. Between 1990-2014 approximately, China enforced a competitive exchange rate policy which allowed it to maintain a very low interest rate differential. As a consequence, its reserves saw a continuous increase.
Markets around the world are turning bearish. An understandable move as investors are confronted with dismal global growth prospects. Emerging countries face a rather gloomy outlook and even the most developed regions do not escape this uninspiring scenario. Europe’s recovery lags behind, as usual, while US growth loses momentum.
Leandro Cañibano and Felipe Herranz | The International Accounting Standards Board (IASB) has reintroduced the concept of prudence to its draft revised Conceptual Framework approved in 2015. But the scope is different from that contained in the 1989 Framework and, of course, very different from what it normally is.
In an attempt to out-macho the US and impress Germany , the ECB under Trichet decided to stamp on headline inflation hitting nearly 3% in early 2011, while core remained solidly below 2%.
Yishu Zhou | The latest Forum on China-Africa Cooperation (FOCAC), held last December in Johannesburg, South Africa, was monumental for a number of reasons—not least Chinese President Xi Jinping’s unveiling of an unprecedented $60 billion development and investment deal in aid of Africa over the next three years.
Vincent Chan via Caixin | The Hong Kong dollar has been under pressure recently. On January 20, the value of the currency plunged to an eight-year low of 7.8228 to the U.S. dollar. Meanwhile, the stock market’s benchmark Hang Seng Index fell 3.8 percent from the previous day to 18,886.3, the lowest level in 42 months.
Marcus Nunes | The answer is that much more is needed, especially since lately we´ve had the Fed and the ECB/BoJ pulling in opposite directions. Some policy coordination would greatly increase their productivity.
UBS | The Bank of Japan has now fearlessly (sort of fearlessly) embraced negative interest rates. The negative rates will not be comprehensively applied in Japan, but yet another central bank has broken through zero. Rates are, or have been, negative in Japan, the Euro area, Switzerland, Sweden and Denmark. From an economic point of view what does this mean? There are good and bad aspects to negative interest rates.