UBS | On 29 February the People’s Bank of China (PBOC) announced a 50bps cut in the reserve requirement ratio (RRR). We think RRR cuts are having a diminishing impact on banks’ inc entives to lend, since the loan -to- deposit ratio (LDR) limit of 75% has been removed.
Erik Berglof via Caixin | On December 14, the board of governors of the European Bank for Reconstruction and Development (EBRD) approved China’s application for membership. China is, of course, already a shareholder in several global and regional development institutions, but the EBRD is different in its focus on private sector development.
Benjamin Cole via Historinhas | Thanks to the extraordinary insights of blogger Kevin Erdmann, the issue of US housing costs and inflation has been brought into better focus. Erdmann recently brought up manufactured housing, or house-trailers, a wonderful topic.
James Alexander via Historinhas | I was pleased to report some traction in the Market Monetarist campaign to see inflation targets substituted by, or added to, an NGDP growth target. One common pushback I’ve received recently is if the central bank can’t hit a 2% target how can it hit a tougher target? It’s a reasonable question.
Nick Ottens via Atlantic Sentinel | Political scientists Torben Iversen and David Soskice have found, to their surprise, that democracies with low inequality, like Denmark and the Netherlands, are politically more polarized than countries that are less equal, such as the United States.
Jarno Lang | For the past 12 months, headlines over refugees and capsized boats have dominated the news agenda. The first month of 2016 was the deadliest January to date, counting casualties in the Mediterranean alone. The number of displaced people—about 60 million—is now on par with that experienced during World War II.
Michele Geraci via Caixin | The Asian Infrastructure Investment Bank. The “belt and road” initiatives. The yuan entering the International Monetary Fund’s basket of reserve currencies. The Winter Olympics in Beijing. President Xi Jinping’s many trips abroad. His banquets with Queen Elizabeth and handshake with Japan’s prime minister, Shinzo Abe.
UBS | Between 2010 and 2014 global investors showed tremendous generosity towards EM, helping it issue forever larger amounts, and easily roll over debt coming due. In 2015 sentiment began to sour, and the primary market is even less benign today.
Sovereign wealth funds could sell nearly $404 billion of stocks in the course of this year if crude prices remain low, according to predictions by the Institute of Sovereign Wealth Funds. This would mean doubling the divestments made in 2015, which totalled $213.4 billion.
BARCLAYS | In chess, the concept of zugzwang refers to a point in the game where any change in the status quo weakens a player’s position. The ideal choice would be to not make a move, except that “pass” is not an option. This concept effectively explains the choices that confront China’s policy makers.