Michael Steen | Money Supply

Key points from the ECB press conference

June 6, 2013 4:50 pm by Michael Steen

Last week anti-capitalist protesters outside the European Central Bank were dominating (at least the local) news in Frankfurt, this week it was the turn of the policymakers inside the building. The ECB is keeping its rates on hold at 0.5 per cent and Mario Draghi, president, has been quizzed on where the eurozone is headed.

The ECB staff’s quarterly economic forecasts have been tweaked, so this year’s contraction is greater than previously forecast at 0.6 per cent and next year’s growth forecast creeps up to 1.1 per cent (but then a year is a long, long time in economic forecasting.)

What else have we learnt? Read more

Tags: Draghi, ECB, fed, interest rates, omt, QE
Posted in Central banks, European Central Bank, European Union (EU), Federal Reserve | Permalink

You can take my Pfennigs, but the cent stays

May 21, 2013 4:42 pm by Michael Steen

Small change

Search the pockets, wallets, purses, car cigarette ashtrays and homes of anyone in (almost) any eurozone country and you are likely to find significant heaps of small, brown iron-and-copper 1 and 2 euro cent coins.

They cost more to make than they are worth, there’s precious little you can buy with them (though the German post office does sell a €0.03 stamp) and they tend to accumulate in drawers and on flat surfaces at an alarming rate. So, one might reasonably ask, why not just get rid of them? Read more

Tags: bundesbank, cents, circulation, coins, European Commission, Germany, minting
Posted in Bundesbank, European Central Bank, European Union (EU), Uncategorized | Permalink

Five quick takeaways from the eurozone GDP numbers

May 15, 2013 12:40 pm by Michael Steen

You still need a strong constitution or a taste for gallows humour to read most eurozone economic statistics, as today’s release of the preliminary Q1 gross domestic product ~~growth~~ contraction data shows.

The bloc is now in its longest recession since the birth of the single currency, beating the post-Lehman Brothers slump in duration, though not in the depth of the downturn. Read more

Tags: austerity, ECB, Europe, eurozone, GDP, growth, stimulus, unemployment
Posted in European Central Bank, European Union (EU) | Permalink

Surprise! Wealth is more evenly distributed in the eurozone than in the US

April 11, 2013 12:28 pm by Michael Steen

One of the benefits of the European Central Bank’s new household finance and consumption survey is that it allows eurozone household data to be compared with that of the US, since the surveys use comparable methodologies.

The survey already caused something of a stir in Germany earlier this week because it appeared to show that the typical Cypriot household was better off than the typical German one. (In 2010, anyway, and subject to a lot of caveats and nuance, summarised in the story.)

Today’s ECB monthly bulletin also picks over some of the data in the HFCS and highlights this ability to compare data with the US Federal Reserve’s Survey of Consumer Finances. One interesting tidbit it points out is quite how much wealth distribution differs between the US and (the euro-wielding corner of) Europe. Read more

Tags: data, distribution, Europe, eurozone, hfcs, households, income, survey, US, wealth
Posted in European Central Bank, European Union (EU) | Permalink

A grave crime, and embarrassment at the Bundesbank

January 17, 2013 3:39 pm by Michael Steen

What could be worse in the eyes of a central banker than money counterfeiting? Well, killing people, even if judicially mandated, seems to be the answer. Germany’s Bundesbank on Thursday beat a hasty retreat from plans to send experts to Bangladesh next month to help combat a recent spate of money forgers. Read more

Tags: bangladesh, bundesbank, counterfeiting, forgery
Posted in Bundesbank | Permalink

ECB’s Yves Mersch on monetary policy

December 18, 2012 1:43 pm by Michael Steen

Yves Mersch. Getty Images

Yves Mersch, the former governor of the bank of Luxembourg, whose elevation to the European Central Bank’s six-person executive board became the subject of a row about the lack of female central bankers, has given his first interview since taking up the post on Monday.

The ECB normally publishes transcripts of these on its website but has not done so this time, presumably because the interview with Germany’s Frankfurter Allgemeine Zeitung was conducted just before he formally took up post. So as a service to Money Supply readers, here are some of the highlights.

Mr Mersch attempted to pour cold water on speculation that a cut to the ECB’s main refinancing rate (currently 0.75 per cent) is imminent. Read more

Tags: bond buying programme, executive board, interest rates, omt
Posted in European Central Bank | Permalink

ECB’s Benoît Cœuré: enough questions already

October 23, 2012 12:28 pm by Michael Steen

The waiting game grinds on to see when (and it’s hard to find anyone who thinks it is an “if” rather than a “when”) Spain will apply to the EU’s rescue funds for a credit line that would allow the ECB to make use of its “outright monetary transactions” bond-buying programme. A repeated theme of the Spanish government has been to say it would like to know more details about OMT before tying itself fast to the fiscal conditions attached to a rescue programme.

Now some clarity from Benoît Cœuré, the ECB executive board member who oversees market operations, who spells it out:

We’ve been very clear on the modalities of the OMTs. They are ready and we’re not going to provide any more details.

Posted in European Central Bank, European Union (EU) | Permalink

ECB’s bond buying is a game of two halves

October 17, 2012 5:22 pm by Michael Steen

According to the Maradona theory of monetary policy, as outlined by Sir Mervyn King, governor of the Bank of England, a central bank can let expectations that it will act – rather than actual action – do the work for it.

The theory is being tested right now by Mario Draghi, president of the European Central Bank, as his controversial “outright monetary transactions” bond-buying programme is forced to sit on the benches until the prime candidate for help, Spain, applies to the EU’s bailout fund.

As a quick reminder, the Maradona theory refers to the 1986 World Cup quarter final between England and Argentina. Diego Maradona scored a celebrated goal with a run from near the halfway line in which he beat five England players by, er, running in a straight line. Read more

Tags: mario draghi, mervyn king, monetary policy
Posted in Central banks, European Central Bank | Permalink

Gender politics meets monetary policy

October 11, 2012 10:22 pm by Michael Steen

Still not there: Yves Mersch

Yves Mersch’s long, slow ascent to a place on the six-member executive board of the European Central Bank has just hit another potentially serious roadblock.

The governor of the Bank of Luxembourg is male, like all his central bank peers in the eurozone, and the economic and monetary affairs committee of the European Parliament has decided it is time to draw a line in the sand.

In September, the committee, which has to approve his appointment, postponed his confirmation hearing because no women candidates had been considered for the job. This evening, the news from Brussels is that the committee will hold a formal hearing on October 22, but it will make a negative recommendation about his candidacy.

The reason for this remains the committee’s objection that no female candidate was offered for consideration. It is saying it will not make any judgment on Mr Mersch’s competence as a central banker. Read more

Tags: brussels, ECB, gender
Posted in European Central Bank | Permalink

Now the Bundesbank takes on the IMF

September 24, 2012 8:17 pm by Michael Steen

The dust has yet to settle on the Bundesbank’s fight with the ECB over bond-buying, but this has not stopped Germany’s central bank from taking on another heavyweight global financial institution: the International Monetary Fund.

BuBa’s monthly report, published on Monday, includes a whole chapter entitled: “The IMF in a changed global environment.” It becomes clear fairly quickly that eyebrows are being raised in Frankfurt at some elements of the IMF’s stance in the eurozone sovereign debt crisis, where the Fund has taken on its own lending and acted as a member of the “troika” of IMF, ECB and European Commission officials advising on bailouts.

“By taking on excessive risks, the IMF would gradually transform from a liquidity-providing mechanism into a lending institution,” the bank says on the first page of its 15-page discussion. “Such a transformation would neither accord with the legal and institutional provisions of the IMF agreement, nor with the fund’s financing mechanism or its risk control functions.” Read more