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The voices arguing that digital e-money should be added to the central bank/government toolkit are not only rising in number, they’re getting louder as well.
Among the first to argue the point, of course, was Willem Buiter back in 2009, before he took up the position of chief economist at Citi. But there’s also been a strong patter of support from advocates such as Mobino’s Jean-Francois Groff and Slate’s Matt Yglesias (to name a few). Read more
The working theme at FT Alphaville towers is that we’re in somewhat of a damned if we do taper/suspend QE, and damned if we keep going with it.
What’s more, we now know that even the whiff of tapering — which is anything but an unwind, as we’ve noted here — can cause undue chaos in risk assets. In which case, perhaps tapering isn’t as much of an option as many believe it to be.
After all, QE reflects the sovereign put. It’s the government subsidy which takes volatility away. If you stop dishing it out, there’s every chance bad things may happen.
The Bank of England has ushered some new risks into its biannual risk survey.
Out of the list of top seven key risks go funding risk, the risk of financial market disruption/dislocation and the risk of tightening in credit conditions. In their place we get the risk of property price falls, operational risk (‘cyber’ security), and risks surrounding the low interest rate environment. Read more
Live markets commentary from FT.com
G8 dispute breaks out on Syria arms || Trade deal would benefit US more than EU, Ifo study finds || Apple reveals US government data requests || Bid to relaunch synthetic CDO unravels || Bolton to step down at Fidelity China fund || Official negative rate policy at SNB seen unlikely || Co-operative Bank outlines restructuring plan to raise £1.5bn Read more
Paul Krugman is getting serious about the effects of technology and robots on the economy. He’s made noises about this theme before, but this time he’s taking things a bit further by offering a potential solution to the more sour consequences of the new industrial revolution.