ECB

Bond-buying scars will open European can of worms

16 Dec 2022

The ECB faces large losses if it keeps hiking interest rates, because of higher payments to banks on 3.9 trln euros of reserves amassed through asset purchases. National central banks will pick up the tab. And governments will bicker on how to share the pain.

ECB, BoE will fight to regain anti-inflation mojo

15 Dec 2022

The European Central Bank and the Bank of England hiked rates by 50 basis points, less than recent jumbo increases. Recession fears, and the central banks’ initial hesitancy, are making investors sceptical of a sustained tightening. Sticky inflation will prove them wrong.

Capital Calls: Rio Tinto, Grocery delivery M&A

9 Dec 2022

Concise views on global finance: After a shambolic process, the $118 bln miner has succeeded in buying out the 49% of Turquoise Hill Resources it doesn’t own; Turkish grocery delivery player Getir gobbles up German rival Gorillas for $1.2 bln.

ECB’s bank loan-loss worries look overdone

7 Dec 2022

Chief supervisor Andrea Enria fears that BNP, ING and others are flying blind into a 2023 default storm. But rate hikes will give the 10 largest lenders a 120 bln euro profit buffer before their capital gets hit. The big banks can afford to keep going with dividends and buybacks.

Inflation confusion increases odds of ECB mistake

30 Nov 2022

Euro zone prices rose a less-than-expected 10% in November, yet remained stubbornly high after stripping out fuel. That leaves central bankers in a pickle. To burnish their hawkish credentials with a sceptical market, they may keep tightening policy even as the economy falters.

Europe’s diverging prices complicate ECB’s task

1 Nov 2022

Inflation is running at 7% a year in France and 22% in Estonia. These differences make the European Central Bank’s stance too aggressive for some states and too timid for others. The controversy about monetary policy will only intensify as the ECB pushes rates higher.

Capital Calls: ECB’s bank-earnings squeeze

27 Oct 2022

Concise views on global finance: Seeking to shrink its balance sheet, the European Central Bank introduced less favourable terms for cheap loans it offered to lenders during the pandemic.

ECB $2 trln bank-loan unwind is fraught with peril

25 Oct 2022

The European Central Bank may tweak a funding scheme to stop lenders minting money at its expense. Fiddling with the terms is legally dubious. Other options could undercut its fight against inflation. But the status quo, indirectly costing taxpayers billions, is unsustainable.

Capital Calls: Italy’s next finance minister

14 Oct 2022

Concise views on global finance: Rightist leader Giorgia Meloni is likely to pick a pro-European politician as finance chief.

UK mess bolsters case for Italian budget prudence

6 Oct 2022

Market turmoil forced British Prime Minister Liz Truss to partly ditch unfunded tax cuts. The humbling saga should help Italian would-be premier Giorgia Meloni resist her allies’ spending requests. Picking a technocrat as finance minister would give investors further comfort.

Capital Calls: Byju’s revenue fail

15 Sep 2022

Concise views on global finance: Byju’s topline shrunk after its auditor advised it to recognise its revenue differently.

Capital Calls: U.S. railways steer clear of crisis

15 Sep 2022

Concise views on global finance: Major U.S. railroads and unions reached a tentative deal, avoiding a shutdown that could have widespread consequences on the U.S. economy.

Capital Calls: Oil vs. ESG

13 Sep 2022

Concise views on global finance: The price of a barrel of Brent crude has fallen 30% since mid-summer, and over 10% in two weeks. If it stays below $100 a barrel, oil companies will start to become worse investments. That could help solve backlash to ESG investing.

Capital Calls: ECB rate hike

8 Sep 2022

Concise views on global finance: Europe’s central bank risks recession to combat inflation.

ECB plays with fire while unspooling its hose

21 Jul 2022

President Christine Lagarde hiked interest rates by 0.5%, double the amount she flagged last month, and unveiled a vague tool to control euro zone bond yields. If monetary tightening hastens an economic slowdown, the central bank will need its new powers sooner rather than later.

ECB risks forgetting 1990s currency crisis lessons

18 Jul 2022

President Christine Lagarde may soon unveil the central bank’s tool to control sovereign bond yields. Struggles with semi-fixed exchange rates before the euro offer a cautionary tale. To fend off speculative attack, authorities are best off keeping targets and methods vague.

Japan’s post-Abe future, Europe’s currency problem

14 Jul 2022

The assassination of former Prime Minister Shinzo Abe is an end of an economic era. In this Viewsroom podcast, Breakingviews columnists debate how his party’s success could bring about big spending. Also, the euro’s decline is a problem for central bank chief Christine Lagarde.

Euro weakness forces itself on ECB’s agenda

12 Jul 2022

The single currency is nearing parity with the dollar for the first time in 20 years. It’s due to the U.S. economy’s strength and fears of a continental gas crisis. It also reflects the European Central Bank’s late response to inflation, which a weak euro makes harder to fight.

Italy starts countdown to risky life after Draghi

5 Jul 2022

The 5-Star party may bring down Mario Draghi’s coalition government. A crisis would hurt growth and raise the chances of a less EU-friendly executive. Worse, market jitters due to rising political uncertainty may complicate the European Central Bank’s efforts to tame bond yields.

Capital Calls: EU bank windfalls

4 Jul 2022

Concise views on global finance: The European Central Bank is worried banks will pocket a windfall on special loans when it starts raising rates. But deciding whether the bonanza is too big is a political choice.