Others will follow Australia’s shift into the renminbi
This from the FT’s Josh Noble:
The Australian central bank plans to invest about 5 per cent of its foreign reserves in Chinese government bonds, in the latest move to build closer economic ties between the two countries.
The lead set by the Reserve Bank of Australia and a few others is likely to be followed by central banks elsewhere. Read more
Reinhart-Rogoff Initial Response
Here below is the full statement from Carmen Reinhart & Kenneth Rogoff giving an initial response to criticisms of their work: Read more
Boston Fed: Labour force participation
The Boston Fed’s annual economic conference has opened with a paper on labour force participation, presented by two senior Federal Reserve Board economists Christopher Erceg and Andrew Levin, that has pretty dovish implications for monetary policy.
Like most other research on this subject, they find that the big decline in labour force participation since 2007 is mainly cyclical, not structural. More interestingly, they split the “employment gap” — the gap between current employment and maximum possible employment — into an “unemployment gap” and a “participation gap”.
Three months after revealing that banks were using wildly different models to measure risk in their trading books, the Basel Committee on Banking Supervision has signaled that it looking for similar issues in the banking book.
In a report to the Financial Stability Board, the committee said it was looking at data from 100 banks in 15 jurisdictions to see how and why they assigned different risk-weights to their portfolios. Read more
Surprise! Wealth is more evenly distributed in the eurozone than in the US
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
BoJ revolution: five things you need to know
The Bank of Japan delivered a statement of intent on Thursday. Under its new governor, Haruhiko Kuroda, the central bank intends to eliminate the persistent deflation of the past 15 years within a two-year horizon. The FT news story provides the main details, save to say that in planning to double the monetary base (notes and coins, plus electronic money created by the BoJ) by the end of 2014, Mr Kuroda means business. Central bank communication does not often use words such as “massive”. Here are five answers to the big questions. Read more
Goldman still the Fed’s #1
Goldman Sachs is still the Fed’s favourite counterparty for buying and selling Treasuries – or at least it was in the first quarter of 2011. The data comes out two years in arrears and we are now at the period when $600bn of QE2 purchases were in progress.
Goldman got twice as much of that business as anybody else, which is mildly embarrassing for the New York Fed, but reflects the pecking order in the Treasury market. If you know what happened to Citi’s business during that period then please explain in comments. Read more
The ONS gets left behind
In late February, the Office for National Statistics decided to classify the Treasury’s raid on the Bank of England’s accumulated interest payments from quantitative easing as a receipt for the public sector.
You can have a long and reasonable argument on whether the raid, euphemistically called a “cash management operation”, is a good idea. But I argued a few days later that the treatment of an internal public sector transfer of money as government revenue in the headline figures was a poor decision by the Office for National Statistics. There was no world in which the underlying public finances had been improved by the move, I argued.
As a journalist I was appalled that Britain’s independent statistical authority was setting out a legalistic argument for an economic question and for a set of statistics that were not governed by international conventions. I felt the statistics for borrowing and debt could not be trusted any more.
As a member of the public, I wrote to the chairman of the UK Statistical Authority, the statistics watchdog, to ask for a review of the ONS decision (email reproduced below). Today, I received a reply from Andrew Dilnot, the UKSA chairman (also reproduced). I am delighted to say the UKSA thinks I raised important points and has set up a short review. Read more
The UK economy is at a standstill and opinions on how to get it going are divided. Should we rely on an aggressive monetary policy or is it time to borrow more and invest? Martin Wolf, chief economics commentator, and Chris Giles, economics editor, put forward their opposing views on what George Osborne’s Budget needs to deliver. Who do you think is right?
With the Eurozone wobbling, the European Central Bank and the Bank of England are holding policy meetings as they increase efforts to revive the economy.
By Lina Saigol, Tom Burgis and Ben Fenton with contributions from FT correspondents. All times are GMT.
| About this blog | Blog guide |
Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
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