The Bank of England is going from twiddling bank capital to also twiddling mortgages themselves to try and stop risk in the UK’s housing market.
That’s big and part of an international trend among central banks. Interestingly, the Financial Policy Committee on Thursday sought direct powers to cap loan to value or debt to income ratios, versus leaving them to the PRA. Read more
Hooray, the final version of the Iosco ‘Principles for Financial Benchmarks’ is out. It’s dull.
At least given the stakes: moving Libor — and a great deal of basic pricing in finance beyond it — towards a basis in actual transactions. Read more
The following is a guest post from Chris Cook, a senior research fellow at the Institute for Security and Resilience Studies at University College London. His work is focused on a new generation of networked markets – which will, in Chris’s view, necessarily be dis-intermediated, open, decentralised and, therefore, resilient.
Following the recent upsurge in interest in Modern Monetary Theory (MMT) I was rash enough to make the comment that the central insight of MMT – that modern ‘fiat’ money is a credit instrument ultimately based upon the government’s power to tax – is muddied by disputes as to what the proper basis for taxation actually is, or indeed, whether there should be any taxation at all. Read more
The price difference between Dubai and Brent crude has fallen to its lowest in a year as strong demand in Asia drives up the cost of the Middle East benchmark and lacklustre consumption in Europe caps the cost of the North Sea oil, the FT reports. The Dubai-Brent price differential – or spread – is important for physical markets because it determines whether Atlantic basin crude, from Nigeria and Angola to Norway and Algeria, flows towards Asia. Moreover, it is one of the most popular relative-value trades among oil-focused hedge funds. The so-called Brent-Dubai exchange of futures for swaps, or EFS, touched a session low of $3.16 a barrel, the lowest since early December 2010 and down 58 per cent from a five-year high of $7.61 a barrel set in April, according to Reuters. The narrower spread comes on the back of multiple factors, oil analysts said. On the one hand, Asian demand for Middle East crude has been strong over the last two months, driven by soaring consumption for diesel and fuel oil in China and elsewhere in the region.