HSBC chief executive Stuart Gulliver, speaking at the same conference in Hong Kong, said that the Belt and Road Initiative (BRI) will increase the usage of RMB even further.
China’s central bank announced new measures earlier this month to encourage cross-border yuan transactions in support of BRI projects.Asia Times
A central bank governor in Athens conspires with the President of the Republic to sabotage the negotiation strategy of his government to weaken it in its negotiations with the European Central Bank. After the government has capitulated, this governor, who is a close friend of the new finance minister and boss of the finance ministers wife, and the President of the Republic travel together to the ECB to collect their praise and rewards. This is not an invention, this is now documented.…Real-World Economics Review Blog
Bundesbank Deputy President Claudia Buch welcomes plans by the European Commission to build a capital markets union. In a guest article for the German daily Handelsblatt newspaper, she writes that improving enterprises' access to capital should be the main thrust of the planned reforms.The Bundesbank believes that the European Commission's most recent actions weaken Europe's fiscal rules. Owing to numerous exceptions, frequent changes and the increasing complexity of the rules, it is now "barely possible" to apply them consistently, the Bundesbank argues in the current edition of its Monthly Report. It sees the weakening of the binding effect of the rules and of the incentives to ensure sound public finances in the euro area as a cause for concern.
…If this sounds like a conspiracy theory for you, just consider what Hans-Werner Sinn, President of the IFO economic research institute, one of the politically better connected economists in Germany, let slip in a guest comment in “Handelsblatt” October 7, 2014 (in German) about the true rulers of Europe. He confides that in autumn 2011 Italian prime minister Silvio Berlusconi wanted to solve Italy’s economic problems by leaving the Euro and devaluating. “To that goal, he had already had some preliminary talks with other governments of the euro area. He had an agreement with the Greek prime minister Papandreou, who had wanted to make his people chose in a referendum between exit and a hard austerity policy”, Sinn informs us and continues: “Both had to step down in November 2011, almost at the same time”. He gives the following reason: “An exit was going against higher-ranking political interests, but also against the interest of the banking system.”
Such wild “conspiracy theories” we are used to hear only from the fringes of politics – not from heads of economic think tanks! If the interests of the banking system are at stake (the interests of the “fifth power”, as the former head of Deutsche Bank, Rolf Breuer, or the former chief economist of the Bundesbank and the European Central Bank, Otmar Issing, named it) then the citizens of European countries have nothing to decide any more. In such cases, they are given a government which does what suits the “higher-ranking interests and the interest of the banking system”. Democracy takes a break. Everybody is invited to figure out for themselves what the “higher-ranking public interests” are and, above all, whose interests these are.
"The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world." — Carroll Quigley (1910-1977) | Professor of History at Georgetown University, member of the Council on Foreign Relations (CFR), mentor to Bill Clinton, in Tragedy and Hope, 1966
Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (PDF)
Volumes 1-8
New York: The Macmillan Company, 1966
The European Central Bank unexpectedly lowered all its interest rates to fresh record lows and took its rate on bank deposits further into negative territory, in an effort to keep ultralow inflation rates from undermining the eurozone’s fragile recovery.
The Bundesbank promptly responded that the rate cuts will have a “negligible” impact, and the BUBA is almost certainly right about that as well. No matter how low a rate, borrowing makes no sense if there is little underlying demand for a businessman’s product. Nor does it makes sense for a consumer with a stagnant income and tenuous employment prospects to take on yet more debt.
Which is why Draghi ventured into the realm of fiscal policy last week at Jackson Hole. He knows that at a basic level, spending=income and if the private sector isn’t yet ready to do the spending (because it is repairing its collective balance sheets), then this has to be undertaken by the government.…In addition, I think that the expectation is that a lower interest rate will effectively devalue the euro somewhat, thereby stimulating external demand from outside the EZ. So the plan is still to use the external sector as an offset rather than fiscal policy. This is a reason that Germany is applauding a weakening of the euro, being an export-driven economy that can no longer rely on the EZ to import its products due to austerity.
…this is a game changer (via left foot forward): the Bundesbank finally understands. Economic policies aimed at financial deregulation, low wages and asset price increases instead of low unemployment, high employment and high income have failed."Finally understands," or getting cold feet at the carnage and prospect of dire potential social and political outcomes.
The European Central Bank has started to debate the idea of negative deposit rates, as a means of slowing inflows into the currency and curb the euro’s strength. Interestingly enough, after appearing to oppose the idea a few months ago, Bundesbank chief Jens Weidman now says that a negative deposit rate could be a way to address the impact of a strengthening currency....
The impact such a step would have to improve bank lending to companies and households was, however, “debatable”, he said.
Well it won’t improve bank lending for the simple reason that he’s got the causation wrong: loans create deposits, not the other way around....
More to the point, negative interest rates on deposits penalize savers.
For some, economics is a religion, not a science.econoblog101
What is certain is that the Bundesbank’s primary focus is Germany’s long-term stability, rather than any immediate eurozone solution. By being attune to the German national interest, the Bundesbank is playing the role of Merkel’s political guardian — fending off the siren voices of Europe’s weaker members who want direct transfer from German taxpayers.Read it at The Telegraph (UK)
But the Bundesbank’s dominance means that the eurozone crisis will not be resolved any time soon. In Weidmann’s words, the only real solution to the crisis is “structural reforms and budgetary discipline” among the periphery.
Long-term, Weidmann sees only two ways for the eurozone to evolve. It will either move towards a complete fiscal union, or revert to the original treaties — albeit strengthened “so they are conducive to stability”.
Spain has set its stall by the former, with Mariano Rajoy, its prime minister, calling for more integration, as has Merkel. Weidmann is said to believe that the latter is more realistic. For those hoping for a resolution and recovery, though, it’s not an inspiring option.
German Chancellor Angela Merkel may be the dominant force in the eurozone but the Bundesbank, Germany’s powerful central bank, is the power behind the throne.
Read it at Calculated Risk
CR: The ECB's LTRO has bought a little bit of time, but if the policymakers stay focused on austerity, they will fail. A key European analyst pointed out last week that essentially all recent sovereign issuance in the periphery has been purchased by in-country banks, and that was related to the LTRO from the ECB. In other words, there is no private market for peripheral sovereign debt. The key analyst concluded: "The EMU (Economic and Monetary Union) is over".
