Spanish banks

The ECB replies to the Treasury: the tax on banks is discriminatory, harms solvency and slows down credit

The opinion of the European Central Bank (ECB) on the new bank tax, which is currently before Congress, is already public. The banking supervisor has issued a tough and detailed opinion in which it warns of the negative effects that the tax, as it is designed, could have on the banking sector, such as damage to profitability, competition, solvency and the granting of credit, while warning of the risks of…

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The ECB policy decision had a hawkish tilt

Peter Goves, MFS Investment Management | Despite acknowledging the uncertainty stemming from the Ukraine conflict, the ECB policy decision had a hawkish tilt. Indeed, the ECB chose to wind down the APP schedule more quickly than the December guidance and revised its rate guidance. The ECB also tweaked its guidance and removed a previous dovish bias which referenced the prospect of rates remaining at present or lower levels. The market…

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A Tale of Two Central Banks

J.P. Marín Arrese | Charles Dickens opens his novel by describing the contrast between the sedate life in London and the bloody spasms shaking Paris under the Revolution with the famous sentence: ‘It was the best of times, it was the worst of times…’. While the current economic scenario bears little in common with the dramatic events described by the prominent author, we enjoy a robust recovery but face an…

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Draghi in drag

SAO PAULO | By Marcus Nunes via Historinhas | The European Central Bank opened the door to a dramatic escalation in its campaign to stimulate the eurozone’s stagnant economy early next year, signaling a new chapter in the bank’s fight against excessively weak inflation in the heart of Europe. ECB President Mario Draghi said after the bank’s monthly meeting that officials discussed purchases of government bonds, known as quantitative easing or QE, but that they needed more time to gauge the effects of policies that they have already implemented while assessing how falling oil prices may affect the bank’s consumer-price outlook.

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“No need for unanimity” for QE

MADRID | The Corner | The ECB avoided taking any new measures to fight stagnation in the eurozone, although its growth forecast is significantly lower than 3 months ago. As Mario Draghi announced on Thursday, the Frankfurt-based institution intends (he said, using that word instead of ‘expects’) to expand its balance sheet by $1Tr, yet it won’t act before 2015, as many were expecting. A sovereign QE, despite the Bundesbank’s opposition, is a closer possibility, but the Governing Council will wait until next year to assess the impact of the existing policy measures and of falling oil prices.

ECB's upcoming tapering

QE fails to work in Europe

MADRID | By JP Marín Arrese The inability to implement a common economic stance aimed at delivering growth and jobs in Europe is putting the onus on monetary policy. The ECB stands as the only hope for redressing a dismal state of affairs. Yet, such high expectations could prove ill-founded. While Draghi saved the Euro’s plight back in mid-2012, he now seems utterly helpless to prevent deflationary bouts looming on the EZ horizon. His quantitative easing (QE) plan, far from achieving its goal, has lost steam. Many observers have put the blame on the ECB’s reluctance to enlarge the asset basket it is currently buying, demanding fully fledged QE, which involves junior debt and sovereigns. Yet, the flaw might lie in Europe’s failure to fully profit from monetary easing.


Waiting for QE (hope it’s not like Godot)

MADRID | By Ana Fuentes | ECB policy makers are increasingly open about an eventual QE. Executive Board Member Benoît Coeuré was recently interviewed by French newspaper Le Monde. He weighed in austerity measures taken, and how could the ECB influence the level of the euro. As the central bank seems to be actually leaning towards unconventional measures, bonds and equity markets have already anticipated any announcements by Mario Draghi. But some fear what would happen if it was only lip service. What happened with the “whatever it takes” to preserve the eurozone’s integrity?