Category Archives:

monetary policy

QE goes global: the case of Indonesia

The COVID-19-induced slowdown of the past few months has been different from past crises for a number of reasons. One of the most significant differences has been the greater ability of emerging market central banks to provide support to their economies, as we wrote about a few weeks ago. An interesting example is that of Indonesia. Last week, Indonesia’s central bank (Bank Indonesia – “BI”) c…

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It wasn’t perfect, but it was the best we had

No doubt the main thing that Mario Draghi will be remembered for is his famous “whatever it takes”. He told financial markets that the Eurozone was not about to collapse and made it clear that the ECB would save the banks and peripheral sovereign nations of Europe.

More interestingly, however, is to think about how Draghi found himself in the position to be able to QE and to undertake othe…

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Will the Bank of England join the loose money bandwagon?

As the year of the 325th anniversary of the Bank of England’s foundation, and as the month of one of the Bank’s more important rate-setting decisions since 2008, September provides a congruous occasion on which to reflect on the history of the BoE and consider what the future holds for it. Founded in 1694 as a private bank to the government, it was in 1998 that the BoE was granted independence…

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The moon landing, the Fed and a “pro-bubble”

Economists usually think of “bubbles” as being negative for economies and societies. Think of the US housing bubble and its role in the 2008 Global Financial Crisis as a great example. Defining a bubble is tricky, and often its causes are difficult to explain even with the benefit of hindsight. In their paper “Bubbles in Society – the Example of the Apollo Program” Gisler & Sornette say that…

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The MAS and its peculiar tightening policy

In its latest semi-annual statement, the Monetary Authority of Singapore (MAS) said it would slightly tighten monetary policy by increasing the slope of appreciation of the Singapore dollar Nominal Effective Exchange Rate’s (S$ NEER) policy band. This is the second increase this year, following one in April, and it confirms the broader monetary tightening recently seen in many Asian economies, …

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Just like 2008? Oil up, ECB tightening – all we’re missing is a credit accident

As we pass the 10-year anniversary of the Lehman default and we started thinking about what we were doing back in 2008 (desperately moving my savings out of certain banks was high on the list for me, whilst listening to MGMT and Los Campesinos; album of the year? TV On The Radio’s Dear Science), I went back to our blog, to see what the early warning signs were in the summer of that year.

It is …

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Author interview – Adam Tooze: Rewriting the Global Financial Crisis

Ten years after the outbreak of the Global Financial Crisis (GFC) it is time to pause and reflect about an event whose consequences still have a major impact on financial markets and people’s daily lives. In his book “Crashed: How a decade of financial crisis changed the world,” UK economist and Columbia University professor Adam Tooze challenges the way the GFC has been storified, points at so…

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A life less easy for the ECB

Back in 2017, the economic outlook was increasingly rosy for the Eurozone. After years of ultra-loose monetary policy, a synchronised global recovery was in train. The Eurozone economy expanded apace, regularly surprising to the upside, unemployment continued to fall, the banking system had partially recapitalised and funding costs for corporates and sovereigns alike remained low on any measure…

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An update on Argentina

Argentinian assets have been under material pressure in recent days.  I thought it would be useful to write my thoughts on the recent moves and implications for markets going forward.

Over the past two months, the Argentinian peso had become overvalued in real terms following large inflows from foreign investors in 2017. These capital flows caused the nominal exchange rate to depreciate by much…

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The reversal of Operation Twist and ramifications for the yield curve

The flattening of the yield curve is carefully watched by investors as it is traditionally a good indicator of an economic slowdown. However, we always need to question conventional wisdom, and one thing we can say about the great financial crisis, and the great financial recovery, is that the actions central banks have taken to meet their mandates has been quite different this time.

The Fed ha…

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