Daily Archives: April 24, 2012

Claire Jones

Banque de France governor Christian Noyer might have failed to assure credit rating agencies that it was Britain, not France, that should see its triple-A status removed.

But in the latest issue of the French central bank’s well-respected annual Financial Stability Review, there are a series of articles that make a convincing case for the UK having returned to an era of financial repression, not seen since the decades following the second World War.

Financial repression describes a situation where governments ensure the yields on their debt are kept artificially low by encouraging domestic banks to hold their bonds, either through financial regulation or other policies which affect the cost of credit, such as monetary policy. Unsurprisingly, such “repression” tends to become more common when debt-to-GDP ratios soar.

It also might go some way to explaining why the UK has remained in the rating agencies’ good books. Read more

Ralph Atkins

Use of emergency liquidity assistance by eurozone banks could be considerably higher than previously thought. That is the conclusion I draw from a change today in European Central Bank reporting procedures.

If I am right, it could be that a bank (or several banks) somewhere in the eurozone is (are), in effect, being bailed out by national authorities. Fingers will inevitably point to Spain.

ELA is only given in the direst of circumstances, when a bank is no longer eligible to take part in regular liquidity operations, and has to be specially approved by the ECB’s 23-strong governing council in Frankfurt. Read more