Gaspard Koenig has been sounding off, entertainingly, at the Centre for Policy Studies on the costs associated with the Banque de France — whose governor, Christian Noyer, has been pressing Hollande’s government to make deeper and quicker cuts…
Let’s take a look at the Banque de France, which recently published its annual report. Apart from being lavishly located in the Hotel de Toulouse, a 17th-century gem, its operating costs are bewilderingly high. It employs 13,000 agents for a total human resources expenditure of nearly €1.5 bn a year (including pensions). With 6% of its staff aged under 30 and 32% over 55, the Banque de France’s age pyramid looks more like a cocktail glass. Read more
Poor Jens Weidmann.
After weeks of macro-economic sniping following his isolation at the European Central Bank over its new bond-buying policy, Jens Weidmann on Tuesday resorted to Goethe’s Faust to make his point. The classic play highlighted, he argued, “the core problem of today’s paper money-based monetary policy” and the “potentially dangerous correlation of paper money creation, state financing and inflation”. Read more
Mario Draghi has run into Bundesbank resistance over easing access to ECB offers of three-year liquidity for eurozone banks, reports the FT, highlighting German unease over the measures the ECB president has taken to turn the region’s fortunes. The ECB’s 23-strong governing council gave the go-ahead on Thursday for seven national central banks to expand the assets that can be used as collateral when obtaining liquidity. The rule changes would temporarily allow the broader use of bank loans, boosting by about €600bn the pool of assets that can be used as collateral in ECB operations, before haircuts were applied. However, Jens Weidmann, Bundesbank president, voiced concern about a lowering of credit standards and Mr Draghi admitted the council decision had not been unanimous. The Bundesbank’s concern is significant because Mr Draghi has tried to repair the damage created by conflicts with sceptical German policymakers over eurozone crisis measures under Jean-Claude Trichet, his predecessor. Read more
There’s a certain Italian elegance to this intraday chart of Iti 10 year sovereign debt, no?
Technical analysts might spot an upside down head with a shoulder-shrug. Maybe. Read more
Nick Clegg has warned David Cameron to show no signs of triumphalism when the prime minister reports back to MPs on Monday on his decision to veto an EU treaty change, the FT reports, as the row escalated into the most serious threat yet to the stability of the coalition. Mr Cameron will defend his decision as right for Britain and being in the interests of the City and is expected to receive a hero’s welcome from Conservative MPs in the Commons. But Mr Clegg warned on Sunday that the rift in Brussels could leave Britain “isolated and marginalised”. Faced with a furious backlash from Liberal Democrat ministers and grandees, Mr Clegg attempted to distance himself from the use of the veto and has urged Mr Cameron to use his Commons statement to start rebuilding bridges in Europe. Meanwhile Germany continued to dampen speculation of increased bond-buying by the ECB, with Bundesbank president Jens Weidmann telling Frankfurther Allgemaine that the onus was on governments to resolve the crisis with financial backing, and “financing of sovereign debt through central banks is and remains forbidden by treaty,” reports Bloomberg. The Obama administration was disappointed by the lack of progress in bolstering the European bailout fund, says the WSJ, and US officials want the continent to increase its firepower by as much as $2tn to dissuade investors from betting against the countries’ debt and driving up their borrowing costs. Read more
The president of Germany’s powerful Bundesbank has firmly rebuffed international demands for decisive intervention in the bond markets by the European Central Bank to combat the eurozone debt crisis, warning that such steps would add to instability by violating European law. Bundesbank president Jens Weidmann told the Financial Times that only politicians could resolve the crisis, and he rejected the idea of using the ECB as “lender of last resort” to governments. Blogger Deus Ex Macchiato reads the FT article and asks “Is Jens Weidmann the most dangerous man in the world?” FT Alphaville reads the same thing, then discusses what ECB bond-buying tactics would work best. German Chancellor Angela Merkel, meanwhile, states that it’s time to embrace a “political union” in Europe and that there should be “more Europe step by step”, reports Bloomberg. Read more
The president of Germany’s powerful Bundesbank has firmly rebuffed international demands for decisive intervention in the bond markets by the European Central Bank to combat the eurozone debt crisis, warning that such steps would add to instability by violating European law. Bundesbank president Jens Weidmann told the Financial Times that only politicians could resolve the crisis, and he rejected the idea of using the ECB as “lender of last resort” to governments. Blogger Deus Ex Macchiato reads the FT article and asks “Is Jens Weidmann the most dangerous man in the world?” Read more
Germany’s new central bank president took office on Monday calling for a return to “normal” monetary policy in the eurozone – a clear hint he would back further rises in European Central Bank interest rates, reports the FT. Jens Weidmann’s first public speech as Bundesbank head also warned against maintaining for too long exceptional support measures for banks and financial systems. The speech suggested the Bundesbank will keep its traditionally hawkish reputation under its new president, former economics adviser to Angela Merkel, German chancellor. He spoke as the ECB confirmed it had, in effect, already suspended one exceptional measure – the government bond purchasing programme launched at amid the eurozone debt crisis a year ago. No bonds had been purchased for a fifth consecutive week, its longest period of abstinence so far, the bank said. Read more