Crypto’s Carbon Footprint
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 17 November 0
Cryptocurrency assets are now mainstream, with multiple banks and businesses globally investing in crypto software and financial architecture. Seven million individuals have accounts with Coinbase, the US’ largest, though only one of multiple, exchanges. As prices of bitcoin and Ethereum (...)
The Real Estate Exposure of the Bank of England Questions its Independence as Rate Setter
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 13 October 0
We analysed in May the extent to which ECB & Eurosystem funding, combined with new EU programmes such as the Pandemic Emergency Purchase Programme and the Next Generation EU Fund, are increasingly crowding out markets and becoming by far the dominant source of funding for both banks and (...)
The Finance Industry Lobby Seeks to “Rehabilitate” Securitisation
by Gordon Kerr and Bob Lyddon, with Enrico Colombatto 22 September 0
As Europe emerges from the Covid economic slump and seeks to rebuild by deploying the multiple sources of liquidity we considered here, the main finance industry lobbying body for the UK and Europe is seizing the moment to push hard for reform of securitisation regulations. The Association of (...)
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 (...)