Asian fight against capital flight helps dollar

October 8, 2014

The region’s central banks fear foreign capital will flee when U.S. rates start rising. They hope higher rates at home will stem the flow. But domestic investment dips when interest costs rise. The result: spare Asian savings go into safe dollar assets, pushing the greenback up.

China’s $100 bln missing reserves look ominous

January 16, 2012

Poor-performing European investments caused some of the unexplained decline in the foreign reserves pile in the fourth quarter. But over half of it looks like money leaving the country. The exit of hot money is welcome. Genuine capital flight would be another story.

China FX swap may blur Bank of England mandate

January 28, 2013

The central bank is under pressure to set up a swap facility with its Chinese counterpart. Doing so would boost renminbi trading in London. But the BOE’s main concern should be financial stability, not the City’s competitiveness. Confusing the two would be a mistake.

Banks’ escape won’t solve capital woes

September 29, 2009

One by one, Europe's banks are trying to wriggle free from state control. BNP Paribas is the latest escapee, with a plan to replace government-owned preference shares with common equity raised from shareholders. Judging by the market's reaction, it is unlikely to be the last. But the upbeat mood obscures the fact that banks have so far done precious little to expand their capital buffers.