Extended Fed Currency Swaps Not Sign of Fresh Concern

Fed extends USD swaps with major central banks
By Sakari Suoninen Frankfurt | Tue Dec 21, 2010 10:58am EST Frankfurt (Reuters) - The world's major Central Banks said on Tuesday they would extend emergency supplies of U.S. dollar funding to money markets, in a sign that authorities remain concerned about financial instability as governments grapple with Debt problems. The European Central Bank, the Bank of Japan, Bank of Canada, the Bank of England and the Swiss National Bank extended their U.S. dollar Liquidity providing operations with t...

FOMC statement: Federal Reserve, European Central Bank, Bank of Japan, Bank of Canada, Bank of England, and Swiss National Bank
The Federal Open Market Committee has authorized an extension through August 1, 2011, of its temporary U.S. dollar Liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. The swap arrangements, established in May 2010, had been authorized through January 2011. ...

EURO GOVT-Bund yields at record lows, peripherals lag
Fri Aug 20, 2010 9:02am EDT * Bund yields at record lows as U.S. growth fears rise * ECB Weber's Liquidity comments boost Bunds, Euribor * U.S. Treasuries favoured over Bunds * Peripheral euro Debt spreads seen wider By George Matlock London, Aug 20 (Reuters) - Longer-dated German Government Bond yields marked record lows on Friday, chasing buoyant U.S. Treasury prices after an ECB rate-setter's comments on extending funding to banks fuelled concerns about the pace of the global recovery. Aft...

Fed throws euro banks a lifeline
Fed throws euro banks a lifeline Posted by Colin Barr December 21, 2010 4:19 pm For an outfit whose policies supposedly are plunging the world into unspeakable conflict, the Federal Reserve is doing an awful lot to avoid another meltdown. The Fed said Tuesday it would extend The Dollar swap lines it provides to Central Banks in Europe, Japan and Canada in a bid to avoid a cash crunch like the ones seen to such devastating effect in 2008. Your dollars, our problem? The swap lines, under which...

Fed extends program to ease Europe debt crisis...
The Fed is Lending dollars to other Central Banks in exchange for their currencies. The Central Banks can lend those dollars out to banks in their home countries to ease financial turmoil. The Fed's "swap" program was set up in May as fears rose that Greece's Debt crisis could engulf other European countries. European Banks need dollars to lend to companies across the continent. European companies that have operations in the U.S. pay their employees in dollars and buy raw materials with the U.S....

ECB's Trichet: Ireland must stick to bailout plan
PARIS | Mon Dec 20, 2010 3:50am EST PARIS (Reuters) - European Central Bank head Jean-Claude Trichet said on Monday euro zone countries must do more individually and collectively to combat the bloc's Debt crisis, and Ireland must stick "rigorously" to its Bailout plan. In a position paper published on its website, the ECB earlier expressed "serious concerns" that Ireland's rescue package could affect the institution's Liquidity operations in the euro zone. Asked if he was concerned about the ...

ECB's Trichet: Ireland must stick to bailout plan
PARIS | Mon Dec 20, 2010 3:50am EST PARIS (Reuters) - European Central Bank head Jean-Claude Trichet said on Monday euro zone countries must do more individually and collectively to combat the bloc's Debt crisis, and Ireland must stick "rigorously" to its Bailout plan. In a position paper published on its website, the ECB earlier expressed "serious concerns" that Ireland's rescue package could affect the institution's Liquidity operations in the euro zone. Asked if he was concerned about the ...

Fed Extends Currency Swap Lines Over Eurobank Dollar Funding Concerns
The party line is everything is fine in bank land….even Eurobank land. But some recent developments suggest otherwise. The business news on Europe has pretty much daily updates on the unfolding and linked Sovereign Debt/ bank solvency crisis. The officialdom insists this looming problem can be resolved but most observers think it can’t be in the absence of a fiscal union, which is a political bridge too Far Right now. In a not-widely-noticed replay of pre-crisis conditions, the co...

US Fed extends dollar lifeline for central banks
The US Federal Reserve on Tuesday extended until August an emergency tool for other Central Banks to access US dollars, amid market jitters and high demand for the safe haven greenback. The deal, which had been due to expire in January, allows the Central Banks of Britain, Japan, Canada and Switzerland, as well as the European Central Bank, to exchange local currency for US dollars. The swap agreements were sealed in May, but as a Debt crisis and slow Economic Recovery continues to roil markets ...

China may try new ways to manage bank credit
Beijing | Tue Dec 21, 2010 8:58am EST Beijing (Reuters) - China's Central Bank is considering changing a key component of its Monetary Policy management by altering the way it manages bank credit, three sources close to the matter told Reuters on Tuesday. Under the proposed changes, the People's Bank of China (PBOC) may judge how much a bank can lend by looking at its capital adequacy ratio, Liquidity conditions and provisions for bad loans. That means the PBOC may set different deposit reser...

Economist recommends raising rates to 2% to stimulate lending
Once again, another Economist telling us that we should raise the benchmark Federal Funds Rate to 2%. Steve Hanke is an Economics Professor at Johns Hopkins and a Senior Fellow at the Cato. I would recommend 1.5%, but that is just a guess. Stay tuned as we have a more substantive piece coming up about where the Interest Rates should really be. Via Cato: In the monetary sphere, the Fed has, in a standard Keynesian manner, flooded The Economy with high-powered base money since the onset of the cr...

Spain makes progress, but huge reforms vital: OECD
Spain has every chance of rising above its economic crisis if it enacts bold reforms, the OECD said on Monday, just as the government a Pension overhaul, the latest in steps over two weeks to regain market confidence. Spain, in the eye of Financial Markets which are shunning its Debt bonds, has done much right in fighting the crisis, but must reform its labour Legislation and employment practices, the Organisation for Economic Cooperation and Development said. The Economy, which stalled in the t...

Spain makes progress, but huge reforms vital: OECD
Spain has every chance of rising above its economic crisis if it enacts bold reforms, the OECD said on Monday, just as the government announced details of a Pension overhaul, the latest in a series of steps over two weeks to regain market confidence. Spain, in the eye of Financial Markets which are shunning its Debt bonds, has done much right in fighting the crisis, but must reform its labour Legislation and employment practices, the Organisation for Economic Cooperation and Development said. Th...

Fed throws euro banks a lifeline
For an outfit whose policies supposedly are plunging the world into unspeakable conflict, the Federal Reserve is doing an awful lot to avoid another meltdown. The Fed said Tuesday it would extend The Dollar swap lines it provides to Central Banks in Europe, Japan and Canada in a bid to avoid a cash crunch like the ones seen to such devastating effect in 2008. Your dollars, our problem? The swap lines, under which the Fed provides foreign central Bankers with essentially unlimited stocks of doll...

Reserve Currency Roulette
Following up on our post from Friday, in which we illustrated the currency reserve and GDP market share of a number of different countries, a kind reader asked a question: “I wonder what percentage of the world’s foreign exchange reserves The Dollar had when it was redeemable among central banks in gold?” Our source for the graph, the IMF, only showed data going back to 1995, so we dug a little more and found the answer in a paper written by Barry Eichengreen of the University ...

Fed extends program to ease Europe debt crisis
The Federal Reserve extended a program set up earlier this year to ease strains from the European Debt crisis. The program, which was set to expire in January, will now run through Aug. 1, the Fed announced on Tuesday. The Fed is Lending dollars to other Central Banks in exchange for their currencies. The Central Banks can lend those dollars out to banks in their home countries to ease financial turmoil. The Fed's "swap" program was set up in May as fears rose that Greece's Debt crisis could eng...

Fed extends dollar lifeline for central banks
The Federal Reserve Building in Washington, DC. The US Federal Reserve on T... The US Federal Reserve on Tuesday extended until August an emergency tool for other Central Banks to access dollars, amid market jitters and high demand for the safe haven greenback. The deal, which had been due to expire in January, allows the Central Banks of Britain, Japan, Canada and Switzerland, as well as the European Central Bank, to exchange local currency for dollars. The swap agreements were sealed in May,...

China frets about spreading EU debt woes
By Langi Chiang and Kevin Yao Beijing | Tue Dec 21, 2010 2:37am EST Beijing (Reuters) - China urged European authorities to back their tough talk with action on Tuesday by showing they can contain the euro zone's simmering Debt problems and pull the bloc out of its crisis soon. China, which has invested an undisclosed portion of its $2.65 Trillion reserves in the euro, said it backed steps taken by European authorities so far to tackle the region's Debt problems, but made clear it would like ...

Fed throws euro banks a lifeline
For an outfit whose policies supposedly are plunging the world into unspeakable conflict, the Federal Reserve is doing an awful lot to avoid another meltdown. The Fed said Tuesday it would extend The Dollar swap lines it provides to Central Banks in Europe, Japan and Canada in a bid to avoid a cash crunch like the ones seen to such devastating effect in 2008. Your dollars, our problem? The swap lines, under which the Fed provides foreign central Bankers with essentially unlimited stocks of doll...

The Federal Reserve: Aging Magician of the Welfare State
December Currency deposits__ supply_          growth rate        increase__              2005                       728.9              3,233.3 ...

On the Gutting of Financial Services Reform
Bloomberg has a well done but disheartening account of the watering-down-to-meaninglessness of Financial Services industry reform, with the case example being Basel III. Basel III is the latest iteration of capital standards for banks, which is hoped to be implemented more or less true to form by various national bank Regulators. Richard Smith has been ably covering the substance of this beat (see here and here for earlier posts) and the details are indeed more that a bit convoluted. However, ...

Feds Bullard: Full of Self-Contradictions
James Bullard, President of the Federal Reserve Bank of St. Louis was on CNBC Monday, December 20, 2010 mostly defending the Fed’s Controversial $600 billion Treasury purchasing program (QE2) announced in Nov. What struck me as totally self-contradictory were Bullard’s statements regarding the QE2, treasury yield, Inflation expectations, and inflation, which I will outline and rebuff below. Bullard – Higher Treasury Yield = QE2 Success During the interview, aside from the ...

Mexican Banks Save Millions Using IBM Software
ARMONK, N.Y. and Mexico City, Dec. 22, 2010 /PRNewswire/ -- IBM (NYSE: IBM) today announced that Indeval, Mexico's central securities depository (CSD), is using IBM software to settle securities trades in seconds, reducing the risk of financial losses and shielding the country from fluctuating market conditions. Rapid trade settlement has reduced the amount of cash that banks must have on hand to cover trades by 52 percent and saved Mexican banks more than $240 million in interest in 18 months. ...

Fed Increases its Treasury Security Purchase Limit to 70%
When the Federal Reserve decided to execute a new course of Monetary Policy in November, it had a problem. It wanted to buy more longer-term Treasury securities, but it was already nearing its concentration limit for the amount of each specific Treasury Security it could hold. But since the rule was self-imposed, it lifted the limit, effectively doubling the amount it can purchase of any given Treasury Security issue. This is a pretty big change. The Central Bank had temporarily relaxed its 35 ...

China ready to buy $5.3 billion of Portugal debt: report
The paper said, without citing any sources, that a deal reached between the two governments will lead to China buying Portuguese Debt in auctions or in the secondary markets during the First Quarter of 2011. China's Central Bank declined to comment on the report. The euro rose to the day's high versus The Dollar on Wednesday on the back of the report, climbing around 30 pips to a session high of $1.3168 according to Reuters data. Portugal has moved into the eye of the storm in Europe's Debt cri...