Latvia’s government decided on Tuesday formally to adopt 2014 as its target year for euro zone entry. Latvia has already said it wants to adopt the euro in 2014 and the date is part of its €7.5bn bailout programme with the International Monetary Fund and European Union.
Gordon Brown has intervened to block legislation to reform hedge funds and the private equity industry. Eighty per cent of the European hedge fund industry is based in London.
The issue has been dropped from the agenda of the next meeting of European Finance Ministers, though this is only a postponement. Officials say the vote should happen by June, handily after the British election. More on ft.com.
Is the Swiss National Bank allowing its currency to appreciate?
It may be coincidence, but the three previous times we reported rumours of bank intervention in the forex markets, the level at which they appeared to intervene was about 0.684 EUR per CHF (1, 2, 3).
Watch out for greater agreement between the government and central bank of South Korea. The President has just named Kim Choong Soo governor of the central bank, to succeed Lee Seong Tae when his tenure expires at the end of the month. The nomination is subject to cabinet approval on March 23.
Mr Kim is currently envoy to the Paris-based Organization for Economic Cooperation and Development, according to Bloomberg. Mr Kim “sounds far less hawkish than the current governor, based on my impressions of his reported interviews and his career,” Lim Ji Won, a senior economist at JPMorgan Chase told Bloomberg. “This suggests the possibility that the new governor and government are likely to speak in one voice, at least for the time being.”
Two of the least appealing features of central banks through the crisis have been their petty point scoring and over-complication of their operations. This creates the impression of big differences in approach, which I will explain is not true.
First, let me demonstrate what I am talking about with the use of a few examples. Spencer Dale, the Bank of England’s chief economist, crowed last week that “unlike some other central banks”, the Bank of England can “withdraw the stimulus, raising the bank rate and selling assets” without the “need to create new instruments to drain excess reserves or alter the terms of existing facilities”. But he was was not brave enough either to say that he was talking about the Fed, or to mention the complete failure of the Bank’s own sterling monetary framework during the crisis and its subsequent “alteration”.
But Spencer is far from alone. As Ralph has regularly pointed out, the ECB believes it spotted the crisis earlier than anyone else, thinks its liquidity operations were superior to those operated by the Fed and Bank of England before the crisis, and suggests it is ahead of the game on exit strategies.
The Fed, meanwhile, has got everyone excited about reverse repos and a whole raft of three and four-letter acronyms which serve, more often than not, to obscure its underlying policy rather than reveal it.
Rather than get irritated or confused by these traits, I would suggest that everyone remember the four following points about the banks’ plans to exit from their extremely loose policies:
1. They are all gradually eliminating their extraordinary liquidity policies
At its peak, the Fed was lending
I’ve done a preview of this week’s Bank of Japan policy board meeting for the paper today.
The near universal expectation is that the BOJ will expand its operations at the three-month maturity or extend them to the six-month term. I’d note that there is still a real chance these expectations will be disappointed: it’s not a step the Bank will take with any great enthusiasm and it has the excuse of waiting for more Tankan data in April.