Daily Archives: February 1, 2010

By Adam Thomson, Mexico correspondent

The new head of Mexico’s central bank has promised closer co-operation with the government will underpin his six-year tenure, a move likely to heighten investor concerns about his institution’s independence. Read more

The Norwegian central bank is risking an asset bubble by keeping interest rates close to the US benchmark in order to contain krone gains and protect exporters.

So says Nouriel Roubini, NYU professor, and, more important these days, one of the few who correctly predicted the financial crisis. “Even in Norway there is no willingness to raise rates – despite inflation and robust growth – because of concerns about the currency. That means you are feeding real estate and other bubbles,” Mr Roubini told Bloomberg in Oslo today. Read more

“The only thing that may be missing is a basic knowledge of banking and what to consider in overseeing a bank.” Thus the Fed addresses green new bank directors in a website just launched.

The site – which includes a section called “What is a bank?” – should be laughable, were it not for recent history, which strongly suggests such training is needed. Read more

The Bank of Thailand has ended restrictions on the amount Thai firms can invest abroad, raised the foreign investment limit for Thai mutual funds to $50bn from $30bn and cleared the way for wealthy Thais to spend more in overseas property markets, deputy governor Bandid Nijathaworn told a news conference.

The changes will reverse the effects of capital controls imposed in 2006 during a political crisis. The Thai stock exchange announced yesterday that it too would soften regulations, to encourage the listing of companies worth Bt100bn ($3bn). Read more

Central bank governor Martin Redrado has gone, but the story continues. It transpires the Argentine President may seek changes to the central bank’s charter to allow the government to tap the institution’s reserves, an Argentine newspaper has said.

Cristina Fernandez de Kirchner and her husband, lawmaker Nestor Kirchner, want to be able to use the reserves to help create jobs or finance infrastructure projects, said La Nacion, without stating its source. Apparently the proposal may be sent to Congress next month.

Ralph Atkins

The eurozone is likely to be significantly worse affected than the US economy by the drying-up of bank lending, according to research published by the European Central Bank just days before its next interest-setting meeting.

The results of a study into the links between bank lending and eurozone growth could strengthen the hands of those on the ECB’s 22-strong governing council urging caution as it unwinds emergency measures taken to shore up the financial system. Read more

Quote of the week:

“What we see in the United States is a statistical recovery and a human recession” – Larry Summers at Davos

Vietnam’s central bank has asked the country’s largest bank by assets to slow loan growth in general, but to increase rural lending. The Chinese recently made the same requests of several Chinese banks (1, 2).

The State Bank of Vietnam has asked unlisted Agribank to limit loans this year to 20 per cent, after their loan book grew 24.4 per cent last year. Agribank should also increase its proportion of rural loans to at least 75 per cent in 2010, from 68.3 per cent last year, governor Nguyen Van Giau was quoted as telling the lender at its annual meeting last Friday. Read more

Surprise data from the Bank of England shows mortgage approvals fell in December – the first drop in more than a year. Analysts had expected the number of loans to rise.

So, while expecting an increase of 3.1 per cent, the number of mortgage approvals actually fell by 1.7 per cent, the Bank of England said today. Read more

The governor of Israel’s central bank has denied the country is experiencing a property bubble. “We have a problem of real estate market and people call it a bubble. But this is not a bubble,” Professor Stanley Fischer said at the tenth annual Herziliya conference.

Bubble denials are always tantalising, as only time can confirm or deny them, with ample room for speculation in between. House prices rose 5.6 per cent in 2009, contributing to an inflation rate of 3.9 per cent last year. This does not settle the bubble question, of course. We need to know about supply and demand. Read more