BOJ Said to See Significant Room for More Bond Purchases (Dec 2013)

BOJ

Source: Bloomberg – BOJ Said to See Significant Room for More Bond Purchases

Notable excerpts:

Bank of Japan officials see significant scope to boost government bond purchases if needed to achieve their inflation target, according to people familiar with the discussions, signaling little concern with perceptions of underwriting fiscal deficits.

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PBOC Will ‘Basically’ End Normal Yuan Intervention: Zhou (Nov 2013)

Renmimbi-Yuan

Source: Bloomberg – PBOC Will ‘Basically’ End Normal Yuan Intervention: Zhou

Notable excerpts:

China’s central bank will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading limit, Governor Zhou Xiaochuan said, without giving a timeframe.

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There’s a liquidity crunch developing

inflation

Source: GoldMoney.com – There’s a liquidity crunch developing

By Alasdair Macleod

This week an article in Euromoney points out that liquidity in bond markets is drying up. The blame is laid at the door of regulations designed to increase banks’ capital relative to their balance sheets. Furthermore, the article informs us, new regulations restricting the gearing on repo transactions are likely to make things worse, not only reducing bond market liquidity further, but also affecting credit markets. The reason this will be so is that in a repurchase agreement a bank supplies credit to non-banks for the period of the repo.

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The Federal Financial Triangle

federal-reserve

Source: The American –  The Federal Financial Triangle

As odd as it may seem to us now, under the National Banking Act from 1863 to 1913, local banks with national charters were the official issuers of U.S. currency, and the government had no central bank. Hundreds of national banks in towns and cities all across the country were issuing dollar bills. They were replaced in this essential role by the Federal Reserve Banks under the Federal Reserve Act of 1913.

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