The Eurosystem and ECB are akin to the Soviet Era Monobank
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 28 July 0
We recently wrote about the extraordinary increases in debt financed by seemingly circular transactions between member state borrowing agencies and the ‘Eurosystem’ –the ECB and all the national central banks. A recent paper by Magnin and Nenovsky considers monetary data from Q4 2007 (when the (...)
The Italian Non-Performing Loan Story: how the 2016 Securitisation Laws have led to Permanent Zombification of Banks
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 30 June 0
The European Banking Authority (EBA) has been aware of the growing problem of non-performing loans (NPLs), especially in Italy, which quickly built up in the recessionary environment following the sovereign debt crisis from 2010. The EBA, hoping that banks could demonstrate solvency, (...)
The ECB’s Pandemic Emergency Purchase Programme (PEPP)
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 26 May 0
What is PEPP? In March 2020, the ECB and European Commission announced the inception of PEPP as a ‘non-standard monetary policy measure’ to deal with the risks to monetary transmission posed by the pandemic. It is in fact the eighth eurosystem bond buying programme. Three of these have been (...)
The Collapse of Hedge Fund Archegos Exposes Weaknesses in the Basel Rules
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 21 April 0
Late in March Archegos Capital, a New York based hedge fund, collapsed and triggered significant losses for its funding banks. The two most exposed lenders are Credit Suisse, who expect to lose $4.7 billion, and Nomura ($2 billion), but the combined losses of all its banks is estimated at $10 (...)
Divergent Software Costs Capital Treatment for UK and EU Banks. Merely a Technicality?
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 24 March 0
In February, the Bank of England (BofE) published its latest proposals for new regulations, which are openly stated to continue the implementation of the global Basel III banking standards. This 87-page Consultation Paper is presented as the next phase of reforms which respond to the 2007-8 (...)
The ECB Accelerates Work on a Central Bank Digital Currency
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 10 February 0
Last October the ECB published a 55-page paper on the pros and cons of a central bank digital currency (CBDC). This paper concluded that research should continue at only a modest pace. It was therefore surprising that a brief statement, accelerating the project, was recently issued. We learn (...)
The Brexit Agreement Omitted Financial Services, Decisions on Which Will be Taken in 2021. What do we Expect?
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 13 January 0
The UK’s 2019 current account deficit with the EU was GBP 118 billion. The Trade and Co-operation Agreement (TCA), commonly referred to as the Brexit agreement, is therefore of greater value to the EU by protecting this imbalance with tariff free trade, than to the UK. However, by excluding (...)
A Digital Euro – What is it, What Form Could It Take and When Might It Happen?
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 16 December 2020 0
The concept of central bank issued digital currencies (CBDC) has been around for several years, arguably since bitcoin became established around 2015. The topic is now very hot even in Europe, with Sweden planning to launch a retail focussed e-krona in 2021. Switzerland is also working on this (...)
Cyprus’ Exploitation of Citizenship Investment Schemes Raises Questions over Many Countries’ Commitment to Europe’s Banking Rules
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 11 November 2020 0
Background and History of Citizenship Investment Schemes (‘CIS’). Sixteen EU member states (plus the United Kingdom) operate schemes enabling a residency permit to be obtained by a non-EU citizen in return for a substantial investment, minimum €1 million. Residence in most member states (...)
Spain’s Caixabank Acquires Bankia, thanks in large part to Badwill
by Gordon Kerr, Cavin O’Driscoll with Enrico Colombatto 14 October 2020 0
Whilst diplomatically presented as a merger, the union of Spain’s third and fourth largest banks, announced mid-September, is in fact the acquisition of Bankia by Caixa. Shares in multiple European banks rose on the news - Société Générale and Paribas of France were up 5%, Commerzbank’s shares rose (...)