Jens Weidmann, the Bundesbank’s president, claimed today that the decision by the central bank to more than double the provisions for losses on assets held on its balance sheet on the back of “risks stemming from monetary policy operations” was not politically motivated.
Here at Money Supply, we beg to differ.
In fact, the three figures below, taken from the Bundesbank’s 2011 balance sheet, out today, highlight rather nicely just why the relationship between Buba and the European Central Bank is becoming more fraught. Read more
As most suspected, the Bank of Japan did little today to step up its fight against deflation.
Bar some tinkering with its special lending facilities, the BoJ kept policy on hold with the size of its asset purchase programme remaining at Y65tn.
However, there are signs that the central bank could do some proper easing in the coming months.
I always enjoy reading speeches by Paul Fisher, executive director for markets at the Bank of England. They clearly set out his views and appear to come straight from the central propaganda unit of the BoE. If you want to know the official line on the new Financial Policy Committee or macroprudential policy, read Paul’s speech from last night, for example.
The speech blames the lack of powers available to the BoE for officials’ inability to control the crisis, but reassures us that the new FPC is now seeing its recommendations implemented.
The logic of the speech is that the BoE’s voice could not work before the crisis so the BoE cannot be blamed. Yet voice is succeeding now, so the BoE must get the credit.
What is remarkable is that Mr Fischer seems to forget that the powers available to the BoE now are precisely the same as those available to the BoE in the crisis. New powers will come only when legislation is passed and certainly not until 2013.
Read the speech to feel the full righteousness of the BoE official line. Or you can read the best quotes below. Read more