Central bankers gathered in Berlin Wednesday confirmed the European Central Bank (ECB) is set to finally discuss the end of its massive bond-buying program — something that its President Mario […]
Central banks are moving towards the ‘QE exit’. The US Federal Reserve (the Fed) this month began reducing the total size of its asset holdings bought under successive rounds of quantitative easing (QE). The European Central Bank (ECB) has just announced a planned reduction in the value of its monthly asset purchases. And the Bank of Japan (BoJ) has been quietly reducing the pace of asset purchases since it began targeting bond yields.
The European Central Bank on Thursday left interest rates unchanged at historic lows and said its bond-buying programme (quantitative easing, QE) would fall from the present rate of 60 billion euros a month to 30 billion from January to September.
It will continue at 60 billion a month until December. The purchases would continue at least until September 2018.
Most big eurozone banks are well braced for possible future interest rate rises, the European Central Bank said Monday after running dozens of them through a stress test. On a scale running from a top mark of 1 to the lowest of 4, 60 out of 111 banks scored 1 or 2 in the test, the ECB said.
For the first time, the stress test examined how sudden changes in interest rates will affect banks’ income and the value of their assets. Of the other banks, 34 received a mark of 3 and 17 scored a 4.
With initial coin offerings getting attention from regulators around the world, European Central Bank governing council member Ewald Nowotny has disclosed that the European Central Bank is looking at putting regulation on the books regarding ICOs.
"Bitcoin is not a currency, it is highly speculative and volatile, it is not subject to any supervision either, and the stock market movements of the recent period make it clear,” explains Nowotny speaking in an interview with the Austrian weekly magazine Trend as covered by Bloomberg.
President Mario Draghi gave little indication about the next steps for monetary policy in the euro zone during a speech on Wednesday ahead of a key meeting between central bankers. The European Central Bank chief seemed to have learned from his own mistakes by avoiding commenting on how and when he might bring monetary stimulus to an end.
Speaking at a conference in Lindau, Germany, Draghi praised economists’ research and said that adjustments to monetary policy are "never easy." However, he made no reference to how the bank might adjust its own policy to the improving economic data across the euro zone, a highly debated issue among market participants.
Eurozone inflation was stable in July and unemployment reached its lowest rate since February 2009. In your opinion, how that can impact the ECB’s interest rates?
I think that that the ECB might be happy about the growth outlook, but inflation is still looking really subdued. There is still some more slack in the economy, which would mean the European Central Bank is fairly patient and extremely gradual in its policy.
An opinion exists that London’s euro-clearing hub works very efficiently and that making any alterations to current practices will hurt the EU economy. Therefore, it might be a purely political question rather than economic. What do you think on this matter? Why?
I think London’s clearing system does work pretty efficiently, but there are issues related to the clearing of euro-denominated securities taking place in the jurisdiction beyond the ECB’s influence that will arise once the UK leaves the EU. A great concern is how the efficiency of the overall clearing system will be affected once euro-denominated clearing moves to somewhere in the EU, more precisely, in the Euro zone. Does it make sense for banks to have one part of their clearing infrastructure in London and another part somewhere in continental Europe? In my opinion, such system certainly becomes less efficient, but the issue is whether some banks and other institutions decide to move the entire clearing infrastructure to another part of Europe. I am not sure whether we have a complete parity over that yet, but it is certainly a problem that will come forward over the next two years
