Oh dear. China’s ‘big four’ commercial banks lent money so willingly in 2009 that their capital adequacy ratios are barely above the statutory minimum of 11 per cent. The Bank of China, for instance, is apparently at 11.14 per cent.
Why should this affect China’s – and, by some accounts, the world’s – largest sovereign wealth fund? Because its domestic arm is the majority shareholder of the ‘big four’*. So China Investment Corporation has asked for a cash injection from the State Council, the country’s cabinet.
That cash would head for Central Huijin Investment Ltd., the domestically orientated Read more
The central bank of Russia has cut the key refinancing rate to 8.25 from 8.5 per cent. The bank cited a lack of confidence in the recovery. The reduction aims to reduce the cost of borrowing, increase the availability of credit, and boost domestic demand, the bank is reported as saying. The rouble has also been strengthening significantly, and the reduced interest rate will make the currency less attractive to foreign investors.
The blue line on the chart shows the refi rate since January 2007 (left axis). The green line shows the basis point increase/cut per day, derived from the interest rate change and the number of days between cuts (right axis). Today’s cut – effective Monday – shows a very slight increase in the size of the daily cut (chart data). Read more
Following Tim Geithner’s testimony on Tuesday, George Soros writes:
The business model of Fannie Mae and Freddie Mac is fundamentally unsound. These public-private partnerships were supposed to serve the public interest and the interest of shareholders. But this was never properly defined and reconciled… Read more
I’ve been asking around Tokyo about views on the push in the US for a stronger renminbi. See also Kevin Brown’s excellent piece in the paper yesterday.
The basic answer is: yes, a controlled and gradual appreciation in the renminbi against the dollar would be a good thing, to sustain global growth and reduce global imbalances. Read more