{"id":18500,"date":"2016-03-06T15:03:32","date_gmt":"2016-03-06T20:03:32","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18500"},"modified":"2016-03-06T15:04:11","modified_gmt":"2016-03-06T20:04:11","slug":"the-market-has-lost-faith-in-our-board-bank-of-international-settlements-laments","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18500","title":{"rendered":"The Market Has Lost Faith In Our Board, Bank Of International Settlements Laments"},"content":{"rendered":"

The Market Has Lost Faith In Our Board, Bank Of International Settlements Laments<\/a><\/h3>\n
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The BIS\u2019 Claudio Borio was vindicated in January – and it was a long time coming.<\/p>\n

When last we checked in with Claudio, it was December and the bank\u2019s Head of the Monetary and Economic Department was busy explaining what may befall $3.2 trillion in EM USD debt in the persistently strong dollar environment. \u201cThe stock of dollar-denominated debt, which has roughly doubled since early 2009 to over $3 trillion, is still there [and] in fact, its value in domestic currency terms has grown in line with the US dollar’s appreciation,\u00a0weighing on financial conditions and weakening balance sheets<\/strong>,\u201d he warned.<\/p>\n

We also laid out the progression of Borio\u2019s most recent warnings as delineated in the banks\u2019 widely-read, if on occasion perfunctory, quarterly reports. Below, is a brief review.<\/p>\n

From 2014<\/a>,\u00a0warning about the market\u2019s dependence on central bank omnipotence:<\/p>\n

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To my mind, these events underline the fragility – dare I say growing fragility? – hidden beneath the markets’ buoyancy. Small pieces of news can generate outsize effects. This, in turn, can amplify mood swings. And it would be imprudent to ignore that markets did not fully stabilise by themselves.\u00a0Once again, on the heels of the turbulence, major central banks made soothing statements, suggesting that they might delay normalisation in light of evolving macroeconomic conditions<\/strong>. Recent events, if anything, have highlighted once more the degree to which markets are relying on central banks: the markets’ buoyancy hinges on central banks’ every word and deed.<\/em><\/div>\n<\/blockquote>\n

From March of 2015, speaking out about the dangers of increasingly illiquid secondary markets for corporate bonds:<\/p>\n

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As a result, market liquidity may increasingly come to depend on the portfolio allocation decisions of only a few large institutions. And, more broadly, investors may find that liquidating positions proves more difficult than expected, particularly in the context of an adverse shift in market sentiment.<\/em><\/p>\n<\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Market Has Lost Faith In Our Board, Bank Of International Settlements Laments The BIS\u2019 Claudio Borio was vindicated in January – and it was a long time coming. When last we checked in with Claudio, it was December and the bank\u2019s Head of the Monetary and Economic Department was busy explaining what may befall […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1764,57,1269,1719,124,130,305,8768,452,7124,6910,534,1264,10387,4318],"class_list":["post-18500","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-international-settlements","tag-bank-of-japan","tag-bis","tag-bond","tag-central-banks","tag-china","tag-federal-reserve","tag-flight-to-safety","tag-japan","tag-market-sentiment","tag-meltdown","tag-monetary-policy","tag-recession","tag-stress-test","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18500"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18500\/revisions"}],"predecessor-version":[{"id":18502,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18500\/revisions\/18502"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}