Russia: Deripaska calls for changes at “ridiculous” central bank

From beyondbrics April 20, 2012

Russia: Deripaska calls for changes at “ridiculous” central bank

What’s on the mind of billionaire Oleg Deripaska, the controlling shareholder in Rusal, the world’s biggest aluminium company? At a meeting with journalists on Friday, he talked about the outlook for the alumnium industry (cautious), the planned toughening of Russia’s enviromental rules (a game-changer), his dispute with business partner Viktor Vekselberg (almost no comment) and the long-running row at Norilsk Nickel (hostilities suspended).

But what excited Deripaska most were Russian lending rates. At 9 per cent a year and more, they are far too high, he says. And the answer is: a change in the “ridiculous” management team at the central bank.

Continue reading: “Russia: Deripaska calls for changes at “ridiculous” central bank”

Tags: Oleg Deripaska, Rusal, Sberbank
Posted in Central banks | Permalink

Farewell, Emma

May 20, 2011 3:47 pm by FT writers

Emma Saunders leaves the FT on Friday to return to banking.

We thank her for her contributions and wish her all the best in her new role.

Tags: Global
Posted in Uncategorized | Permalink

From FT.com April 14, 2011

Inflation fears force Singapore tightening

The Singapore dollar jumped to a record level against the US dollar on Thursday after the island state tightened monetary policy for the second time in six months to combat rising inflation. Economists said the move was likely to be followed by a round of interest rate rises across Asia as governments sought to curb inflation generated by rapid economic growth in the region and loose monetary policy in the west.

Singapore, which conducts its monetary policy through changes to the exchange rate, rather than through interest rates, said it was responding to faster than expected economic growth and a fall in commercial interest rates triggered by abundant global liquidity. The Monetary Authority of Singapore, the country’s central bank, said it had shifted its exchange rate policy band upwards to below the prevailing level of the Singapore dollar’s nominal effective exchange rate.

The central bank does not reveal details of its policy settings for the local dollar, which is managed against a basket of currencies, the composition of which is not disclosed. However, economists said they believed the bank had effectively increased its target value by between 1 and 1.5 per cent. The bank said it had not changed the width of the band within which the currency is allowed to fluctuate on a daily basis, the so-called policy “slope”, which dictates the pace at which the currency is allowed to appreciate over time.

Tags: Asia, inflation, interest rates, monetary authority of singapore, singapore
Posted in Uncategorized | Permalink

From FT.com April 13, 2011

Greek goal of return to market in doubt

Greece needs time to convince international investors about its reform programme and may not be able to return to financial markets next year as planned, its finance minister has admitted.

George Papaconstantinou’s comments in a Financial Times interview highlight how Greece continues to struggle to turn its economy round almost a year after the launch of an €110bn European Union and International Monetary Fund bail-out. They may fuel speculation that European leaders will have to find fresh ways of alleviating Greece’s debt problems to avert a default scenario.

Greece’s budget plans are fully funded this year but Athens will have to raise between €25bn-€30bn on financial markets in 2012 – a step that would mark the first stage of its international rehabilitation. But Mr Papaconstantinou suggested that goal was in doubt and the timetable would not become clearer until an EU-IMF agreement had been struck for Portugal, the latest victim in the eurozone debt crisis. “A judgment cannot be made before the summer and before Portugal closes its deal,” he said.

Tags: bail-out, bail-outs, Europe, eurozone, greece
Posted in Uncategorized | Permalink

From FT.com April 12, 2011

US lacks credibility on debt, says IMF

The US lacks a “credible strategy” to stabilise its mounting public debt, posing a small but significant risk of a new global economic crisis, says the International Monetary Fund.

In an unusually stern rebuke to its largest shareholder, the IMF said the US was the only advanced economy to be increasing its underlying budget deficit in 2011, at a time when its economy was growing fast enough to reduce borrowing. The latest warning on the deficit was delivered as Barack Obama, the US president, is becoming increasingly engaged in the debate over ways to curb America’s mounting debt.

To meet the 2010 pledge by the Group of 20 countries for all advanced economies – except Japan – to halve their deficits by 2013, the US would need to implement tougher austerity measures than in any two-year period since records began in 1960, the IMF said.

Tags: government debt, North America, US
Posted in Federal Reserve | Permalink

From FT.com April 12, 2011

Central bank policy ‘puts Turkey’s banks at risk’

Turkey’s banking industry could be damaged unless the central bank reverses last year’s decision to stop paying interest on required reserves, the head of one of the country’s biggest lenders claims.

Suzan Sabanci, chairman of Akbank, told the Financial Times that new rules requiring banks to lodge 15 per cent of short-term lira deposits with the central bank risked fundamentally weakening banks unless they received interest in compensation. “The government is trying to be cautious that the economy doesn’t grow too fast. And I agree with that,” she said. “But we need to be recompensed. They should start paying interest in six months’ time.”

Turkey’s economy grew 8.9 per cent in 2010, with year-on-year credit growth surging to 35 per cent. The central bank has kept interest rates at historic lows as it tries to deter capital inflows. It has almost trebled required reserve ratios to 15 per cent since November in an effort to slow loan growth and stop the economy overheating.

Tags: banking, Europe, interest rates, reserve requirements, turkey
Posted in Central bank of Turkey | Permalink

From FT.com April 8, 2011

ECB blamed for Portugal aid request

A senior Portuguese banker has said that the European Central Bank pressed the country’s lenders to stop increasing their use of its liquidity – setting in train events that led Lisbon to ask for a bail-out this week.

António de Sousa, head of the Portuguese Banking Association, said that the message from the ECB and Portugal’s central bank not to expand their exposure to ECB funding further came a month ago.

The main reason for the banks’ heightened exposure was linked to their financing of public sector and government debt, he said, and the instruction led them to conclude they could not increase their exposure to state debt. Jean-Claude Trichet, president of the ECB, fiercely denied that it had pushed Portugal into accepting outside help.

Tags: bail-outs, Europe, eurozone, eurozone crisis, portugal
Posted in European Central Bank | Permalink

From Gavyn Davies April 7, 2011

ECB takes the right decision, with major risks

The ECB decision to raise its policy rate by 0.25 per cent to 1.25 per cent is a seminal moment for the global economy. Not only is this the first of the leading central banks to raise rates, it is the first time for decades that Europe has initiated a rate rising cycle ahead of its counterparts at the Fed. I believe that it is wrong to view this as an isolated occurrence: economic fundamentals are far more supportive of rate rises in the eurozone than they are in the US, and that will remain the case for some time to come. And the ECB is deliberately sending a very strong message to member states that they have not gone far enough to fix the sovereign debt problem. Although the markets have already to some extent anticipated the front-loading of ECB rates, relative to those set by the Fed, they may not yet have moved far enough in that direction.

The main reason for today’s rate rise is of course entirely obvious. Eurozone inflation has persistently come in higher than expected in recent months, and the headline CPI rate reached 2.6 per cent in March, mainly because of higher oil prices. Since the ECB tends to be more influenced by the headline inflation rate, while the Fed places more emphasis on the (much lower) core rate, it was always likely that the two central banks would react in different ways to a commodity price shock.

However, this is not the only reason for the ECB’s greater hawkishness. The Fed (rightly in my view) is convinced that there is still plenty of spare capacity left in the US economy, because the unemployment rate remains far above the equilibrium or structural rate of unemployment. By contrast, the ECB is less confident about the margin of spare capacity in the European economy.

Continue reading: “ECB takes the right decision, with major risks”

Tags: Europe, eurozone, inflation, interest rates
Posted in European Central Bank | Permalink

From FT.com April 6, 2011

Irish debt repayments should be linked to growth

Irish central bank governor Patrick Honohan writes:

The focus should be increasingly on measures that can help unblock growth. One dimension which, in my personal view, has not yet received the attention it deserves is the potential for mutually beneficial risk-sharing mechanisms. A variety of financial engineering options could be considered going beyond the plain vanilla bonds currently employed.

A simple version, which could indeed be useful beyond the specific case of Ireland, would, over time, shape the arrangements with European partners in such a way that Ireland pays more if its GNP growth is strong; less and slower if growth remains weak. The aim of such GNP-linked bonds or similar risk-sharing innovations must be to restore, through growth, a favourable dynamic to the sovereign debt ratio, putting its sustainability too, like that of the banks, beyond doubt.

Tags: debt, Europe, eurozone, Ireland
Posted in Bank of Ireland | Permalink

From FT.com April 5, 2011

IMF gives ground on capital controls

The International Monetary Fund has proposed its first ever guidelines for using controls on flows of speculative capital, legitimising a controversial tool that it once campaigned against.

The guidelines – which are not yet official Fund policy – say that countries can control capital inflows when their currency is not undervalued, when they already have enough foreign exchange reserves, and when they are unable to use monetary or fiscal policy instead.

The IMF said that around one-quarter to one-third of a group of countries that it studied are “currently likely” to meet its criteria for the use of controls. The framework is the IMF’s attempt to recognise the short-term use of capital controls to manage inflows of “hot money” but distinguish them from long-term barriers against foreign capital.

Tags: capital controls, Global, hot money
Posted in International Monetary Fund | Permalink

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