European Central Bank

Michael Steen 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.

 Read more

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

Michael Steen 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

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Posted in Central banks, European Central Bank |
From Gavyn Davies October 12, 2012

When David Marsh wrote his definitive biography of the Bundesbank in 1993, he chose the following sub title: “The Bank That Rules Europe“. Feared and revered in equal measure, the Bundesbank was the model on which the ECB was built. Imitation was not, however, the sincerest form of flattery for Germany’s central bank. The arrival of the ECB removed most of its direct authority over monetary policy, leaving it with only one out of 23 votes on the governing council of the new central bank.

Recently, the Bundesbank’s President Jens Weidmann has been in a minority of one on the question of whether to launch the ECB’s new programme of Outright Monetary Transactions, to which he is fundamentally opposed. He views the proposed purchases of government debt in the troubled eurozone economies as a thinly disguised monetary bail-out of profligate governments, something which the Bundesbank had believed from the very beginning to be outside the intention of the treaties.

 Read more

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Posted in Bundesbank, European Central Bank |

Michael Steen Gender politics meets monetary policy

October 11, 2012 10:22 pm by Michael Steen
File photo of Yves Mersch

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

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Posted in European Central Bank |

Claire Jones The week ahead in central banking

October 5, 2012 5:57 pm by Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

IMF/ World Bank meetings

Many of the world’s top central bankers will travel to Tokyo this week for the IMF/ World Bank annual meetings. The meetings take place on Friday and Saturday.

Details of the meetings and the full programme of seminars is available here. Highlights include a talk by Zhou Xiaochuan, governor of the People’s Bank of China, on Sunday at 11:30 a.m Tokyo time (2.30am GMT), and appearances by Fed chair Ben Bernanke and ECB president Mario Draghi at a BoJ/IMF event later in the day. Read more

Posted in Bank of England, European Central Bank, Federal Reserve, International Monetary Fund, People's Bank of China, World Bank |

Claire Jones Live blog: Draghi presser

October 4, 2012 1:15 pm by Claire Jones
Mario Draghi. Image by Getty.

Mario Draghi. Image by Getty.

Hello and welcome to our live blog on the European Central Bank’s press conference, which follows the governing council’s vote earlier today.

Today’s presser is held in Kranj, Slovenia. ECB president Mario Draghi will be flanked by Vitor Constâncio, ECB president, and Marko Kranjec, governor of the Slovenian central bank.

All times are London time.

14.26 And that’s that from Kranj. The ECB president painted a gloomy picture of the economic outlook, but there was little indication of what the central bank would do if conditions worsened.

14.25 Time for one more question. This one on the possibility of a conflict of interest between supervising banks and monetary policy. “We have to make sure that we have an organisation that ensures separation between monetary policy decisions and banking supervision,” Mr Draghi says.

14.20 Mr Draghi reiterates for the umpteenth time that the ball is now very much in the court of governments: “The ECB is there to make an environment that is conducive to reforms, but the decision is with governments,” he says.

14.15 Marko Kranjec, governor of Slovenia’s central bank, says the country’s borrowing costs “don’t reflect fundamentals.” The governor says he expects them to fall in the months ahead. A related question from Peter Spiegel:


Quick: who can cite yields on Slovenian 10yr bonds off top of their head?
October 4, 2012 2:13 pm via Twitter for BlackBerry®ReplyRetweetFavorite
@SpiegelPeter
Peter Spiegel

Any takers? Read more

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Posted in European Central Bank |

Claire Jones The week ahead in central banking

September 28, 2012 6:02 pm by Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

ECB vote

The European Central Bank’s governing council decamps to Ljubljana next week for its October policy vote. This from the FT’s Frankfurt bureau chief Michael Steen on what to expect: Read more

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Posted in Bank of England, European Central Bank, National Bank of Poland, Reserve Bank of Australia |

Michael Steen 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

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Posted in Bundesbank, Central banks, European Central Bank, European Union (EU), International Monetary Fund |

Michael Steen Towering ambition at the ECB

September 20, 2012 6:22 pm by Michael Steen

There is, in these troubled days for the eurozone, arguably a hint of Ozymandias-in-reverse about the enormous new €1bn headquarters that the ECB is building for itself on the eastern edge of Frankfurt.

The risk is not so much that a traveller will one day find “two vast and trunkless legs of stone” in a desert, but rather a vast and shiny glass-and-steel tower block near the river Main with no one in it. At least that might be the suspicion of those who think the euro may not last long enough to see the moving vans arrive from the centre of town in 2014, where the ECB now has its offices. Read more

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Posted in Central banks, ESRB, European Central Bank, European Union (EU), Uncategorized |

Claire Jones The week ahead in central banking

September 14, 2012 5:35 pm by Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

BoE minutes

The Bank of England’s latest Monetary Policy Committee meeting minutes are out on Wednesday morning at 9.30am UK time (8.30am GMT).

Now that Adam Posen has stepped down from the committee, the most likely candidate for dissent is David Miles. However, most think Mr Miles will have resisted calling for further easing at this month’s meeting and that all of the MPC will have backed the decision to hold policy firm. This from Nomura’s Philip Rush: Read more

Posted in Bank of England, European Central Bank, Federal Reserve, Reserve Bank of Australia, South African Reserve Bank, Swiss National Bank |
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