Australia’s central bank, the Reserve Bank of Australia (RBA), will invest up to 5 percent of its foreign currency assets in Chinese government bonds, announced its Deputy Governor Philip Lowe on Wednesday, marking a new milestone in the economic relationship between the two APEC countries.
German officials on Tuesday took turns to criticise European Commission President Jose Barroso for his recent remarks advocating an end for austerity, pledging to continue their “growth-friendly consolidation” policies despite growing weariness to the contrary.
On Monday, Barosso had told a Brussels panel discussion that it was time to rethink the bloc’s emphasis on belt-tightening, warning that “we are reaching the limits of the current policies.”
A United States proposal to force foreign banks to hold more capital is costly, unfair and potentially damaging to the global economy, said EU commissioner Michel Barnier, who warned of “potential retaliation” against U.S. banks.
Under the Federal Reserve’s proposal, which could come into effect later this year, foreign lenders would be forced to organise that their U.S. subsidiaries under a locally regulated holding company, with its own reserves of capital and easy-to-sell assets that can be accessed in crises.
Scotland may not be allowed to use the Pound Sterling as its currency in the event that its voters opt for independence next year, said the U.K. Treasury on Tuesday, citing the recent tumult in the euro area as a warning to the challenge of sustaining a formal currency union.
Unveiling a report prepared by a group of non-partisan civil servants and independent economists, the Treasury warned that “even with constraints in place, the economic rationale for the U.K. to agree to enter a formal sterling union with a separate state is not clear.”
Over the past week or so, a series of market shocks managed to throw investor confidence worldwide off balance. Although individually, none of these tremors were relatively big deals, collectively, they shook both investors and economists – and may ultimately impact policy, going forward.
Archimedes said that if he had a lever long enough and a place to put his feet, he could move the world. Investors have access to incredible pools of capital and can lever immensely. They too thought they had some place to put their feet.
After the G20 meetings in Washington last week, Europe was forced to make growth a higher priority. This Friday, the United States releases its Q1 GDP data and preliminary estimates show the world’s largest economy growing at 3 percent in the first three months of 2013 – a remarkable rate at least by the standards of advanced economies.
Monday, April 22
Five global trade bodies have appealed to the G20 to overrule the European Union’s controversial financial transaction tax, arguing that it would have “unprecedented extraterritorial impacts, contrary to G20 principles”. The tax, also known as the “Robin Hood Tax”, is likely to be levied at 0.1 percent on the value of financial transactions and 0.01 percent on derivatives when it comes into effect next year.
The International Monetary Fund on Wednesday issued a warning against excessive austerity, singling out the United States and the United Kingdom as countries who can afford to slow the pace of what it described as “overly strong” belt tightening. According to the Fund, fiscal adjustment needs to proceed gradually, building on measures that limit damage to the economy in the short term.
The funeral of former British PM Margaret Thatcher saw a nation divided in hatred and love for one of the most iconic world leaders of modern times. While, Inner London today is one of the richest parts of the entire European Union, in the North of England there are towns still with persistently high levels of unemployment due to Thatcher’s past policies.
The U.K. property market is beginning to show some signs of activity again after a couple of years of relative inactivity. February in 2013 saw slight average house prices increases, of 0.2 percent according to Nationwide Building Society or 0.5 percent according to Halifax. Halifax’s figures for the first quarter show increases of 1.9 percent.
