For those following the saga:
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The FT reported last week that China was reviewing its holdings of eurozone debt in the wake of the crisis that has swept through the region’s bond markets.
China subsequently denied that it was set to change its diversification policy.
In a follow up piece, Reuters spoke with officials in Brazil, India, Japan and South Korea, who told the news agency that their central banks will also continue to invest in the euro.
Via Reuters: Read more
The arrival of Vítor Constâncio as the European Central Bank’s new vice-president this week has led to a reshuffling of responsibilities on the bank’s six-person Frankfurt-based executive board. For ECB-watchers, the obvious questions are: who’s up and who’s down? I am not sure if much has changed.
As expected, Mr Constâncio, a former Portuguese central bank governor, will take over responsibility for financial stability issues from his predecessor, Lucas Papademos. That will take up much of his time in coming years, so it is probably not a big deal to him that responsibility for ECB research has been transferred to José Manuel González-Páramo, perhaps the biggest winner from today’s moves. Mr González-Páramo remains in charge of market operations – a busy beat in recent years. Read more
And so Japan loses another prime minister (an annual event in recent years). The economic consequences are hard to read but here are some questions:
A stronger or a weaker government?
Relocation of the Futenma airbase in Okinawa is the issue that turned Mr Hatoyama’s administration into a lame duck with such startling speed. But even right after last year’s election Mr Hatoyama never seemed to have much to say about the economy. His leadership was one reason why, for example, any real confrontation between the government and the Bank of Japan seemed unlikely.
The departure of Ichiro Ozawa as the Democratic Party of Japan’s secretary-general is probably even more important (assuming he doesn’t continue to run things from even deeper in the shadows). His old-style Japanese interest-group politics never sat well with economic reform and cuts to the fiscal deficit. Tobias Harris is worth reading on this.
Unless a new leader can save the DPJ’s upper house majority in July elections, however – and that still looks unlikely – then the government will be weakened. A change in the BOJ law, for example, would go from unlikely to very unlikely. Another question is whether new leaders can contain conflict within the DPJ as successfully as the inoffensive Mr Hatoyama and the menacing Mr Ozawa.
Will it be Naoto Kan? Read more
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