Discover and read the best of Twitter Threads about #ECB

Most recents (24)

Thread: This phrase should be sculpted on the #ECB building and both #EU and national parliament. However, it's only partially correct. @jeuasommenulle @nglinsman @dlacalle_IA @bondstrategist @bondstrategist @AlessandroPonz4 @jeuasommenulle @DiMartinoBooth
First, it must be said clearly that while Economist use math, it's a humanistic discipline and not a "science" when taken as a whole, no matter how much you stuff the syllabus with difficult scientific courses.(/)
Anyone involved in the Banking regulation, while quite probably won't admit it under physical torture, would admit that the more "improved" according to "innovation" it got the more difficult it has been to ward off the system from collapsing.(/)
Read 12 tweets
THREAD: at some point, the #FED and the other central banks will have to change status. It might take a creash to do it.(/) @amlivemon @jeuasommenulle @nglinsman @Halsrethink @bondstrategist @DiMartinoBooth @DavidBCollum
1. they might either fall under an higher supervisory authority checking every financial aspect of their activity apart from setting official rate and providing liquidity though banks and have, for example, ALL influence of banking instruments sold wrested away.(/)
2. since their activity has been for over a decade not "policy neutral", they might be forced to become "elected officials", shorn from their patina of indipendence they voluntarily discarded. In fact, at least in the #EU, they might be a first: (/)
Read 8 tweets
In preparation for my slot on #SquawkBox yesterday, I sent the guys a few slides as a synopsis of my last, detailed subscriber report for the discussion.

I called it #Pyromania. Feel free to take a look


#macro #bonds #commodities #dollar #inflation #centralbanks #fiscal
Is it possible to overkill an act of overkill? #JeromePowell & #JanetYellen seem set to let us find out.

Not that they're alone in their folly, of course. The #ECB is outodoing them handsomely, while the #bankofengland is breaking records stretching back to its founding, 327 years ago.
Read 10 tweets
THREAD: The greatest irony is this: Imagine that instead of "whatever it takes", the #ECB had told the politicians imperiling the #EUR this: (/)
@nglinsman @amlivemon @pboockvar @amlivemon
In that case, government bond yields would have been the cushioning variable, instead of #ECB balance sheet. BUT, that in practical terms transfers money from the government coffers to savers.(/)
Conversely, when and if a savvy managers takes power, he gets a DOUBLE positive whammy: State P&L improves, and then improves again due to lower debt service costs.(/)
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#ECB Sabine Lautenschläger giving a powerful account of the central banker view of the world #nextgencentralbanking but also claiming that PEPP is not monetary financing. She makes two arguments, which you will not be surprised I both find unconvincing! 👇
The first argument is that there is market discipline because member states need to pay interest rates on debt that the ECB buys and need to have sufficient ratings. However, interest is mostly paid back to MS as NCB dividend and Greece is included despite rating requirement.
Her second argument is that the objective is not to fund governments but rather price stability. However, (1) there is no contradiction: the objective of facilitating government spending is now itself a means to achieving price stability also (2) who knows! Image
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The ECB's long-standing negative rates policy remains unpopular in a union of chronic high savings (demand deficits) & yield-hungry investors. Here I argue that the ECB must do everything it can to escape its liquidity trap of “negative rates forever” CC @elerianm @VMRConstancio
First, negative rates are a reflection of a problem. Sub-zero arrived in Europe in 2014 in response to a critical problem of policy credibility – the arrival of the zero lower bound for the ECB’s main policy rate in the face of persistently low inflation expectations /thread/ 2/n
Europe, like much of the developed world, had seen a secular decline in the trend real rate even before the Covid19 shock, reflecting ageing populations and slower trend productivity growth - higher hhlds savings demand, lower business demand for capital #ECB #negativerates 3/n
Read 22 tweets
Please tell me if I get the big picture on #Eurozone #QuantitativeEasing right.

1. The EU is a historical political project
2. The #ECB is a child of that project and understandably protects it until its last breath
3. Protecting it means
a) ensuring no member to go bust
b) sovereign spreads to remain at a managable levels

4. These in turn requires heavy purchases of sovereign bonds, on a scale that can only be done with newly created money #M0 i.e. #QE.
5. That money inevitably blows a bubble on nearly all markets of investable assets
6. ...which side effect the ECB does not like but sees no alternative to keep the Eurozone together
7. ECB also needs to keep printing money as #FED is printing money too, and the #EUR would otherwise appreciate, creating huge competitiveness problems for the entire Eurozone.
Read 4 tweets
1/ The #ECB monetary policy decisions are out.

A lot of stuff. Nothing really comes as a surprise…
2/ Interest rates are unchanged, and will remain so until inflation is robustly close (but below) to 2%
3/ #PEPP:
a) It is extended until March 2022
b)Envelope increased of €500bn (total €1850bn)
c) It is rolled over until at least the end of 2023
Read 7 tweets
This FT piece on deb #cancellation is interesting and poses a few interesting questions.

Let me begin with what I do not like.

The case against cancelling debt at the #ECB…

#monetization 1/
The excessive focus on Italy is off the mark. Any serious discussion on sterilizing this exceptional debt linked to the pandemics should concern all EMU countries. All have had a spike in deficit

Nor I like the argument that debt sterilization would not bring fresh cash. It would not, and of course it would not be needed. EMU public debt is today (and for a long period to come) in excess demand. On top of that the ECB will keep the PEPP umbrella open for a while

Read 11 tweets
#Financial #Stability #Review, #novembre 2020 #ECB
I responsabili delle politiche devono evitare rischi di precipitazione a breve termine, considerando anche le vulnerabilità a medio termine 1/
L'importanza delle misure politiche nel contenere l'impatto sulla stabilità economica e finanziaria della pandemia rende altrettanto importante la gestione dell'uscita da questo sostegno. 2/
Le riserve di capitale delle banche dovrebbero rimanere disponibili per assorbire le perdite per un periodo prolungato e dovrebbero essere affrontati eventuali ostacoli alle banche che utilizzano le riserve. 3/
Read 20 tweets
“As a biddable ignoramus who has somehow jockeyed his way into becoming your elected representative, I do not consider it my duty to keep abreast of what world leaders or their guiding Technocrats are openly declaring to be their mission”
Let’s fix that for him: 1/x
Ever heard of a country called Japan, Neil?

Look! There’s another #centralbank head who just HAPPENS ro be banging the same drum:- 3/x

#COVID19(33) as a #ReichstagFire
Read 12 tweets
I’m an MP, but. I don’t follow what international bodies and policy makers around the world are discussing - or even what my friends in the Other Place are saying. 1/x #GreatReset l
Head of the #bankofjapan? Ever hear of him?
Can you find Malaysia on a map? 3/x

Read 10 tweets
THREAD on #ECB digital currency:
According to Italian media, there is a relevant news item. (1/7) @nglinsman @Halsrethink @amlivemon @mtmalinen @bondstrategist @chigrl @RobertMCutler
A paper reported that Frascati has been selected as the central repository for all #ECB Central Bank Digital Money transactions. That implies a number of possible inferences:
1. As always, the #EU "Consultation process" is a pathetic farce. Unless you were part of that microscopic part of the population, professionals not compromised with involved entities, no one told you diddly squat.(3/7)
Read 7 tweets
Few important points considering #Centralbanks . A thread.

"When central bank accrues a loss beyond its stream of net interest rate income (gross interest income minus expenses) and seigniorage, it starts to eat through its capital." 1/12
@GnSEconomics Image
"A central bank thus follows normal accounting practice.

But, because the central bank has a control over the monetary base, it can create demand for its liabilities (currency) by buying government securities and earn seigniorage." 2/
"This is the crucial difference between a central bank and a commercial bank.

The central bank can claim to be solvent, based on its future income stream from seigniorage, even with negative net worth." 3/
Read 12 tweets
Trattato criminale - La serie
#BCE #ECB… Image
“This means that the PEPP remains a distinct monetary policy measure in comparison to the Asset Purchase Programme (APP),” Mersch, the head of the ECB’s legal operations, said.… Image
Yves Mersch non ha dubbi e con le sue parole sembra confermare l’indiscrezione fatta filtrare da Reuters rispetto al do ut des imposto da Germania e Paesi frugali a Christine Lagarde in vista dell’implementazione del piano di sostegno.…
Read 12 tweets
Hope you had a good week/end.
Here's my updated look at $USD charts and themes:

📉📈USD index $DXY $DJFXCM shoulderline to hold?
📉📈$USDCNH driving USD weakness but did we bottom?
📈📉$EURUSD strong recent demand out of steam?
$DXY looking oversold trading outside the 1sd band. $DJFXCM equal-weighted index showing similar except it has broken out of channel and completed measured move up, and consolidating back down. Both holding above key shoulderline support area.
$USDCNH completes measured move down from neckline at 6.91 to last weeks low at 6.627. A (weak) weekly reversal candle with momentum divergence on lows all makes a strong technical case for a bounce.

PBOC are concerned about sharp $CNY appreciation which can hurt exports and ...
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[THREAD] According to Bloomberg, Thomas #Jordan - the chairman of the Swiss National Bank (#SNB) - faces questions today from the supervisory board about the allegations published by @swissinfo_de on Sept 2 and the @RepublikMagazin on Sept 24 and Oct 1. Here is what they discuss:
(2/7) On Sept 2, @swissinfo_de documented the high share of men in leading positions at the #SNB (81%; #ECB: 69%, #BoE: 68%, #Fed: 57%). In 84% of all cases since 2000, the SNB promoted men to "director" or "vice director". Out of 28 promotions to director, only 3 were female.
(3/7) In contrast to other major central banks, the #SNB has no targets for the share of women in leading positions (#ECB: 40% by 2026) and for the share of women it wants to promote (#ECB: 50% on all levels). Neither does it have a program to foster gender equality.
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(1/4) Update re #ECB Q-end balance sheet released today. Confirms adjustments to asset holdings which distorted the flow of asset purchases published Monday. *Applying these corrections shows PEPP purchases during wk ended 2 Oct were EUR13.1BN & total asset purchases EUR20.6BN*.
(2/4) This still represents a softening in the pace of net asset purchases from EUR29.5BN the previous week and the lowest for 4 weeks, but redemptions of EUR8BN across all programs during the week also weighed on the flow. Updated chart below:
(3/4) Eurosystem bank reserves/deposits increased EUR247BN during the week, driven by net EUR157BN increase in PETLTRO claims, EUR77BN reduction in gov deposits, & EUR12BN addition of liquidity due to asset purchases (adjusted.)
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(1/8) #ECB today published an update on govvie purchases under PEPP (Aug-Sep) & PSPP (Sep) which shows the huge benefit from PEPP in terms of purchase pace & capital key deviation during times of stress.
(2/8) For example, total PEPP purchases of non-supra govvies slowed in Aug/Sep from EUR184BN in June/July to only EUR121BN. Partly this is seasonal, as August is a stale month for markets. But this also reflects the prior need to front load PEPP purchases.
(3/8) In terms of flexibility, chart shows share of PEPP govvie purchases over the 3 periods for which data is available. In Aug/Sept, as well as slowdown in purchases, deviations from capital key were much smaller than earlier this year. Image
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A lot of talk about the role of the #Centralbanks going forward.

I think now would be a good time to recap the market bailout operations during the past few years.

So, a thread on the 'stealth socialization' of the financial markets by the central bankers. 1/20
#Fed #ECB
In late November 2008, the U.S. Federal Reserve announced it would start buying the debt of Government Sponsored Enterprises and mortgage-related securities in the secondary market.

In March 2009, the Fed extended the program to include US Treasuries. QE -program was born. 2/
The #Fed ran three sequential QE -programs.

The Bank of England started its QE program in March 2009, the Bank of Japan (BoJ) in October 2010, the European Central Bank (ECB) in March 2015 and the People’s Bank of China (PBoC) in July 2015. 3/
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On Friday, I gave a speech at Deutscher @juristentag about the distributional effects of the COVID-19 pandemic and the danger of “unequal scars”. My goal was to add a European dimension to the debate. Here is my usual Twitter summary, including some of the charts. 1/11
The pandemic is a global shock that hit all euro area countries almost simultaneously. But it has become increasingly clear that the pandemic has very different impacts on different countries, as can be seen from the @EU_Commission’s forecast of economic growth. 2/11
There is a negative correlation between the projected fall in GDP for 2020 and (a) the extent of government-imposed restrictions, measured by the Oxford Stringency Index, and (b) the dependency on tourism. 3/11
Read 11 tweets
'Pulling #consumption forward' is an unhelpful euphemism for 'engaging in #capital consumption': more graphically, 'writing cheques the people can't cash'.
Self-sustaining #growth requires coherence between consumption & production not just today, but over time.
1/x #centralbanks
That latter is difficult enough to achieve without #centralbankers & policy-makers in general trying to impose their own vision of the balance (one always narrowly biased to the present) on a system composed of billions of interacting needs & preferences.
The unavoidable (Rumsfeldian) uncertainty -as well as the calculable risks- is made much greater when every fluctuation today -itself a direct result of IN-coherence, largely inflicted from above- is greeted with yet another blunt-force trauma assault on the capital structure
Read 9 tweets

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