what does balance sheet of central bank w deeply unconventional approach to financial globalisation look like?
@CentralBank_TR Turkey: no capital controls/interest rates to contain non/resident outflows, instead burn fx reserves and failing to contain TRY depreciation 1/n
asset side looks familiar to students of EM:
the action in foreign assets, while traditional business of central banks - issuing reserves to banking system - around 15% of assets, and outright ownership of TRY sovvies negligible
the 'Foreign Assets' rubric is a big black box:
other EM cbs typically report Net Foreign Assets so things like cb fx swaps are accounted but clearly not here
any EM central bank w large fx reserves would accumulate them by purchasing USD/EUR from local exporters/banks (large capital inflows) & pay in local cb reserves or base money
so it's liabilities side would have either bank reserves or sterilization instruments
not Turkey cb
Turkey's cb borrows USD/EUR from banks, state and non-residents (unclear if official like Emirates or private).
quite remarkable how much of TRY defence effort is conducted with local banks' fx reserves (and how vulnerable to residents withdrawing deposits CBRT is)
if @Brad_Setser were active here he'd clarify mystery of negative open market operations (OMOs) position
really struggling to get my head around negative central bank liability - is it accounting for CBRT's fx swaps?
but why negative if on asset side it increases fx reserves?
OMOs typically conducted to adjust supply of bank reserve:
- repo loan increases reserves
- sterilizations of fx interventions trigger adjustments on liabilities side: lower reserves account, increase reverse repo/cb debt, certificate of deposits etc
but negative OMOs???
you'll say accounting tricks, but every accounting trick needs some conceptual reasoning behind, and I cannot imagine how I'd explain negative liabilities to my students
a promise to pay that is actually promise to receive but not an asset? one for @i_aldasoro & BIS colleagues
also, how do counterparties to those negative OMOs record them on their balance balance sheet?
a negative asset?
of course, balance sheets alone wont tell you much about daily fx management strategy - but it does tell us something about structural vulnerabilities (and crazy accounting)
Two amazing Global South progressives and a Nobel prize winner walk into an Oxfam panel on post-neoliberalism
Stiglitz: w neoliberalism, the growth of financial markets changed the political game tremendously
Lula 's special advisor @AAbdenur - clear mismatch - Global North openly exposing industrial policy but pushing IMF/World Bank to continue with austerity and partnerships for hyper-financialisation
missing from this @FT account of the rapid rise of infrastructure as an asset class is the sustained effort that G20 governments have put into derisking infrastructure assets for institutional capital - this is the derisking state in action #WallStreetConsensus
@FT with @BJMbraun we've termed this a weak derisking macrofinancial regime - a set of policies (as in the G20 Infrastructure as an Asset Class agenda, or World Bank Maximising Finance for Development) that seeks to mobilise private capital into infrastructure osf.io/preprints/soca…
BlackRock 's recent acquisition of GIP is a bet that governments - under ideological or real constraints on fiscal space - will not pursue public infrastrucuture projects but instead continue to derisk private capital
I did not expect this, but Rachel Reeves' Mais lecture is a lot more interesting - and dare I say, promising - than either the commentariat focused on fiscal rules or the past weeks of 'maxxed credit cards' would have us believe
some parts are taking a direct swipe at us advocates of Big (Green) State, but it's a careful articulation of the alternative rather than the empty austerity ideology of 'maxxed out credit cards'
1. We're getting climate politics back at the Bank of England.
Remember, under Carney, it became a world leader in climate policy making, not the greenwashed US Fed version of 'disclosure'/single materiality that Bailey prefers.
it is a strategic and tactical mistake for progressives to centre the superrich in climate politics.
Tactics - global tax system is organised to enable rampant tax avoidance + evasion for both high net worth individuals & corporations.
Recent efforts to reform have been far less successful than we'd have expected a decade after Piketty made inequality politically salient at global level. Fighting for global solutions around taxes is important, but shouldnt be the key front.
Global South voices - here the President of Colombia - read in the European/US support of the genocide in Gaza a blueprint, an experiment for ecofascism that 'treats us as disposable lives'.
'we are heading to barbary. Humanity, especially in the South, depends on the road we choose to address the climate crisis produced by the Global North. Gaza is the first experiment to treat us as disposable lives.'
Clearer European minds anticipated this response to von der Leyen - but the damage is done
the @ecb hiked rates to highest level ever today, but this matter less.
@Lagarde promised European Parliament to return ECB to Paris climate commitments but still nothing!
in a new report we show it can do Green Unwinding @AuroreLalucq @henrikehahn greenpeace.de/publikationen/…
we are in the middle of a climate emergency, and the @ecb has stepped back from cleaning its portfolio of dirty bonds -
for no other reason except the (imagined) danger that @lagarde may be seen as 'Mme Climate' instead of fighting inflation.
but fighting inflation & pursuing its 'within mandate' climate rules are not at odds with each other - the opposite.
Mme @lagarde should remind her PR team that subsidising fossil capital, as ECB continues to do via its portfolio of corporate bonds, amplifies supply pressures