ECB torn between two roles in Greek bank support

March 20, 2015

The central bank’s monetary policy wing has delayed a plan by its supervisory arm to legally stop Greek banks increasing their stocks of illiquid assets. The stability-searching supervisors have the right idea. But the policy group has an even higher political responsibility.

EU insurers’ solvency is shakier than it looks

December 16, 2014

A quarter of Europe’s insurers would fail to meet a basic gauge of capital health if Japan-style low-yield conditions were to persist, recent stress tests found. But actual euro zone yields are even lower. With the bloc on the brink of deflation, that’s not a reassuring sign.

Draghi can only dream of moving like BOJ’s Kuroda

October 31, 2014

The ECB chief might fantasise about taking big decisions with a one-vote margin, as the Bank of Japan leader just did. But realpolitik requires a goodly majority. The euro zone’s inevitable compromises complicate Draghi’s fight against stubbornly low inflation.

ECB’s trillion-euro race may start slowly

September 17, 2014

A first round of liquidity injections this week will test Mario Draghi’s attempt to fight deflation in the euro zone. A small take-up could increase pressure for more ambitious sovereign debt purchases. But the ECB has time, and several ways to boost its balance sheet as planned.

Euro has further to fall

September 5, 2014

The single currency has dropped sharply since the ECB eased policy this week. The central bank now openly hankers for a weaker euro to boost inflation, and is doing all it can to bring this about. Traders sometimes fight central bankers. This time they look happy to go along.

Cash calls misstate likely EU bank equity deficit

July 3, 2014

The first half of 2014 saw a spate of European bank share sales ahead of stress test results this autumn. It would be wrong to conclude that all the new equity will go to plug a capital hole. Some lenders are being preemptive, some are just cautious.

Central banks abet the complacency they fret about

June 4, 2014

Monetary policymakers worry that today’s torpid markets carry the seeds of tomorrow’s torrid moves. They’re right to worry, but the problem is of their own making. Cheap money is making investors complacent, so they underestimate the risk of big adverse price swings.

Central bankers live in silent fear

By Edward Hadas
April 3, 2014

It’s scary to think what higher policy interest rates might do to a financial system accustomed to virtually free money. Stress tests aren’t foolproof. Yellen et al look calm. They may be overconfident. Or maybe they know that expressing worries could provoke panic.

The question ECB hasn’t answered: why wait?

April 2, 2014

The latest euro zone inflation numbers show that the European Central Bank is failing to provide price stability, its only mandate. The ECB may not believe that disinflation is here to stay, but even if that’s right, there’s little risk in acting now to help Europe’s economy.

Markets may flare again without Fed and ECB hoses

February 12, 2014

After being burned by emerging-market fires in January, investors reacted complacently to Janet Yellen’s debut. But the new Fed chair wants to keep cutting asset purchases, and hopes for more liquidity from the ECB may be vain. The risk of further market fires is high.