Daily Archives: March 15, 2010

Simone Baribeau

According to the newly released highlights of Christopher Dodd’s proposed regulatory overhaul, the Federal Reserve would be facing some major changes. In brief:

  • The New York Federal Reserve Bank president would be appointed by the president “with the advice and consent of the Senate”, rather than chosen by the bank’s directors.
  • A to-be-created consumer watchdog would be housed within the Fed.

 

… and apparently the Republicans are warming to it. Early days and no doubt there will be many more posts on this topic. But for now, here’s what we have.

From Tom Braithwaite, ft.com

Imagine walking down the high street, cash in hand, to place your savings into your local deposit bank. Now imagine going to a different bank to check on your loan balance. And a third bank to find out about insurance. Each bank only offers a specific service: they are local and they do not compete with each other.

Such a set-up would redefine the concept ‘bank’. 

Simone Baribeau

It’s not often that the US’s two gaping deficits make the news the same day, so today we’re able to have our fill of gap developments (though, we’re unlikely to be much closer to filling the gaps themselves.)

This morning, in a letter to Tim Geithner, treasury secretary, and Gary Lock, commerce secretary, 130 members of Congress asked for action on “currency manipulation” in China. 

Motoring expenditure is driving inflation at an accelerating rate. Each year the national statistics office re-examines the goods in the inflation basket – the 18,000 or so prices gathered monthly across 150 locations in the UK that, in aggregate, determine the consumer price index.

The weighting of those goods shifts over time. As the chart shows, housing has extended its weighting over the past 20 years, as we would expect. 

Israel’s third-largest bank will stop taking shekel deposits from Palestine Islamic Bank and will reconsider relations with other Palestinian banks, for as yet unidentified reasons.

From Reuters: 

Barclays Capital has rejected as “unjustified” the negative watch placed on Vietnam’s sovereign rating last week by Fitch. Bloomberg reports regional economist Prakriti Sofat as saying in a note: “The Fitch rating outlook change to negative is hasty and short-sighted.” She adds: “When the State Bank of Vietnam devalued the dong in early February, spot Vietnamese dong did not immediately jump to the top end of the new band, as was the case in previous devaluations, which suggests underlying pressures were not that stretched.”

Fitch placed their long-term local and foreign currency issue rating of BB- on negative watch, meaning that, with no further change, a downgrade would be imminent. The ratings agency cited a deterioration in confidence in the Vietnamese dong and a lack of financial transparency among its concerns.

Reuters reports from an interview with K D Ranasinghe, chief economist at the Sri Lankan central bank:

Sri Lanka will seek a waiver from the International Monetary Fund (IMF) after failing to meet the 2009 budget deficit target agreed under a $2.6bn loan deal, the central bank said on Monday. 

Ralph Atkins

Germany’s Bundesbank is getting jumpy, and I am not sure it is doing Axel Weber, its president, many favours.

The cause of its agitation is the proposal for a European Monetary Fund by Wolfgang Schäuble, the country’s finance minister. Jean-Claude Trichet, European Central Bank president, has said the EMF idea is worth considering if it would make existing arrangements more effective. But the Bundesbank has set itself squarely against the proposal, which is aimed at making the eurozone better equiped to control future crises, such as currently being experienced (traumatically) over Greece’s finances. The proposal is simply a distraction at this stage, the Bundesbank believes.