Home » Posts tagged 'bank for international settlements' (Page 5)
Tag Archives: bank for international settlements
Here’s a $9 Trillion Question
Here’s a $9 Trillion Question
(Bloomberg) — When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.
That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.
The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy. From the housing markets in Canada and Hong Kong to capital flows into and out of China and Turkey, the question isn’t whether there will be spillovers — it’s how big they will be, and where they will hit the hardest.
“Liquidity conditions globally will start to tighten,” said Paul Sheard, chief global economist at Standard & Poor’s in New York. “Emerging markets won’t be the only game in town. You will have a U.S. economy that is growing more strongly and also offering rising interest rates and a return on capital that is starting to vie for new investment opportunities around the world.”
The broad trade-weighted dollar has strengthened 12.3 percent since June, and it’s forecast to advance further as the Fed tightens while the European Central Bank starts buying sovereign debt and Japan extends record stimulus. The stronger greenback will be the main channel through which the rest of the world feels the effects of a tighter Fed policy, according to Joseph Lupton, a senior global economist at JPMorgan Chase & Co. in New York.
…click on the above link to read the rest of the article…
The Daily Bell – Fed Regulatory Stance Seen Boosting ‘Wall Street Party’
The Daily Bell – Fed Regulatory Stance Seen Boosting ‘Wall Street Party’.
Fed at Odds With BIS on Supervisory Approach … Federal Reserve officials have been clear they would like to use regulatory policy as a first line of defense when dealing with excess risk-taking in financial markets, with interest rates to be employed only in extreme cases when other tools have been exhausted – WSJ
Dominant Social Theme: Either raise rates or regulate borrowing – but do something a hard man would admire.
Free-Market Analysis: We almost missed this strange little article about some very big issues. Seems the Bank for International Settlements is upset with the Federal Reserve over its market posture.
Fed officials want to regulate market risks and forego interest rate hikes. BIS officials are on record stating that rates are too low in the United States and that asset bubbles are being created as a result.
Here’s more:
“Efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment,” Fed Chairwoman Janet Yellen said in a July speech. “As a result, I believe a macroprudential approach to supervision and
– See more at: http://www.thedailybell.com/news-analysis/35951/Fed-Regulatory-Stance-Seen-Boosting-Wall-Street-Party/#sthash.2zez4vBq.dpuf
The US Dollar and the Cone of Uncertainty | Thoughts from the Frontline Investment Newsletter | Mauldin Economics
Currently we have an international monetary non-system. Nobody has to follow any rules. Everybody does what they consider is in their own short-term best interest. The real difficulty is: What is in their short-term interest – for example, following ultra-easy monetary policy – could well backfire somewhere. It might be not in their long-term best interest. And as the easy monetary policy influences the exchange rates, it influences other countries. Almost every country in the world is in easing mode, following the Fed, and we have absolutely no idea how it will end up. We are in absolutely unchartered territory here.
– William S. White, former Chief Economist, Bank for International Settlements, in an interview for Finanz und Wirtschaft
I visualize this process [of forecasting the future] as mapping a cone of uncertainty, a tool I use to delineate possibilities that extend out from a particular moment or event. The forecaster’s job is to define the cone in a manner that helps the decision maker exercise strategic judgment. Many factors go into delineating the cone of uncertainty, but the most important is defining its breadth, which is a measure of overall uncertainty.
Drawing a cone too narrowly is worse than drawing it too broadly. A broad cone leaves you with a lot of uncertainty, but uncertainty is a friend, for its bedfellow is opportunity – as any good underwriter knows. The cone can be narrowed in subsequent refinements. Indeed, good forecasting is always an iterative process. Defining the cone broadly at the start maximizes your capacity to generate hypotheses about outcomes and eventual responses. A cone that is too narrow, by contrast, leaves you open to avoidable unpleasant surprises. Worse, it may cause you to miss the most important opportunities on your horizon.
– Paul Saffo, technology forecaster
Saffo borrows the term “cone of uncertainty” from weather forecasting. While you may not be familiar with the concept, you see it in use every time there is a hurricane forecast. The further away you get from where the hurricane actually is at the moment, the wider the “cone” predicting its possible paths.
Emerging Markets Masking Corporate Foreign-Debt Levels, BIS Says – Bloomberg
Emerging Markets Masking Corporate Foreign-Debt Levels, BIS Says – Bloomberg.
Foreign-debt levels of companies in emerging markets from China to India and Brazil are underestimated, threatening financial stability, the Bank for International Settlements said.
Companies are raising more foreign funds through their offshore affiliates and accounting practices understate the currency risk in such transactions, the Basel, Switzerland-based institution said in its quarterly report. Almost half of the $554 billion that the firms raised in the five years through 2013 came from the affiliates, the BIS said.
“Offshore subsidiaries of emerging-market non-financial corporates are increasingly acting as surrogate intermediaries,” raising money abroad and transferring it to their parent companies, economists led by Stefan Avdjiev wrote. “This trend could have important financial-stability implications. Yet, analysis of it is hindered by conceptual difficulties associated with statistical conventions on the measurement of cross-border flows.”
…click on the above link to read the rest of the article…
