Opinion/Central Banks
Is the IMF an endangered species in Asia?
This article says last week's meeting of the Asian Development Bank marked the resurrection of the idea of an "Asian Monetary Fund". This step, along with the Asian Bond Fund, will not only move Asia further down the path of integration, but also reduce…
Central bankers have to practise silence
This article published on Wednesday 11 May says central bankers have an obligation to speak out when politicians' actions threaten price stability, but on matters of tax and expenditure policy, central bankers, including Alan Greenspan, should tread…
RBA's fragile independence
This article published on Thursday 5 May says that although discussion is an integral tool in setting monetary policy, the jawboning should be the domain of the governor of the Reserve Bank of Australia. Unfortunately, over the past six months, the…
Fed's blunder should make Asia green with envy
This article published on Thursday 5 May says no policy maker in Asia can claim to match the Fed's mastery over "open mouth operations". Where many of the Asian central banks go wrong is in thinking they'll get more respect from the market by being…
Greenspan misses the point about yuan
This article looks at Alan Greenspan's recent comment on China that "They're going to have to, for stability's purposes, move their currency." In theory, Greenspan is right about the central bank "finding some difficulty" in selling debt. However, the…
CBN on learning curve
In almost one year of Charles Soludo's appointment as governor of the Central Bank of Nigeria his tenure the CBN is in a learning curve, this article says. This has manifested in three major policies, among them the restructuring of the CBN and the…
Dilemma facing Southeast Asia's central banks
This article published on Thursday 21 April looks at the situation of Asian central banks. A cocktail of rising inflation, slower economic growth and "an aggressive" Federal Reserve is forcing local central banks to raise interest rates when their…
When will China loosen its peg?
This article says that China was likely to have been conspicuous by its absence at the G7 gathering in Washington on the weekend of 16-17 April. Beijing is moving at its own pace on currency reform, it says, and it would seem just a matter of time before…
Philippines makes Greenspan's job look easy
This article published on Monday 11 April looks at the changeover taking place in July when deputy governor Amando Tetangco replaces Rafael Buenaventura as governor at the Philippine central bank. Tetangco sees his tenure as being about "fusing…
History explains Indian comfort with reserve surge
This article says the trauma of the 1991 crisis, triggered by the drying up of capital flows and withdrawals by non-resident Indians, goes along way to explain why India is comfortable increasing its stockpile of reserves. "There's no faith in the…
Can Bank of England's Mervyn King take on Blair?
With a general election set for 5 May in the UK, this article asks whether the Bank of England will take on Tony Blair and raise rates on Thursday risking a political backlash from the party that looks set to win the election. Or keep them on hold, and…
Are Korea's rising foreign reserves bane or boon?
Korea's massive foreign reserves have sparked debate on the optimum level of reserves and the management of the currency supply. But according to this article, 'Are rising foreign reserves bane or boon?', the key question is not what level the central…
How foreign reserves could make China yet stronger
This article says China's burgeoning foreign exchange reserves could provide an ideal remedy if the country's financial system is too fragile to sustain high growth levels in the long term. Up to $500 billion could be put into a social reconstruction…
Asian central banks' dilemma
Diversification away from dollar denominated foreign exchange reserves is a natural reaction for Asian central banks, this article says. But because of the size of their holdings, any sudden move to sell a substantial part of these holdings could cause a…
The Bank should act soon
The Bank of England should act soon to raise interest rates, according to this article published on Friday 4 March by the Financial Times. With a general election expected in May, the Bank risks being accused of political motivations if it doesn't hike…
Asian central bankers affecting markets
The dollar's nearlythree-year decline has led many central banks to consider diversifying into other types of money, especially in the face of a more valuable euro. According to this article, the reaction to recent comments from South Korea serves as a…
Should the euro be the reserve currency?
In this article published on Sunday 27 February, Roger Bootle says that although South Korea denied speculation it is considering switching some of its reserves out of dollars and into euros, it would be startling if South Korea, and other countries,…
Foreign reserves, Asia's problem of plenty
The dilemma facing many of emerging Asia's economies over how best to use their massive stock of dollar reserves is hardly new, this article says, but some economists suggest spending central bank reserves on domestic projects, rather than leaving them…
A slow boat to yuan devaluation
This article says China is probably a decade away from a free floating yuan and full-blown capital liberalization. A more realistic option, it says, would be a two-stage program that involves a widening of the yuan trading band and the adoption of a…
Minneapolis Fed: Avoiding monetary policy mistakes
The Federal Reserve Bank of Minneapolis Quarterly Review December 2004 article 'Avoiding significant monetary policy mistakes' by Gary Stern and Preston Miller deduces properties of optimal monetary policies based on modern theory and standard empirical…
IMF gold sales - Why it will be a non-event
This article considers the idea of the IMF selling off some of its gold reserves and using it to give poor nations debt relief. It says the IMF should instead return the gold to member nations or at least use the gold as a reserve asset as it was meant…
Fed officials don't see China dropping peg soon
According to this article published Friday 11 February, Federal Reserve officials aren't optimistic that China will drop its currency peg against the dollar anytime soon with the decision in the hands of the State Council.
Fed's increase is case of perfect transparency
The FOMC's recent action to raise interest rates had been fully anticipated with not a single point move on the yield curve, from two years to 10 years. This article describes the move as a case of perfect transparency.