What we’re reading: Banks owing money to borrowers; Japan biggest US creditor; Durckenmiller’s interview; Women on banknotes

Here you have a few articles that our content team has read this week and recommends you.

Gonçalo MoreiraGonçalo Moreira, CMT – Content Advisor

Tumbling Interest Rates in Europe Leaves Some Banks Owing Money on Loans to Borrowers

In monetary economics, the quantity theory of money states that money supply has a direct, proportional relationship with the price level.  That is, if the currency in circulation increased, there would be a proportional increase in the price of goods, what is called inflation.
In many countries now, banks will pay you for the privilege of borrowing money. This is a world in which banks don’t want your money. ZIRP – or below zero- politics  are intended to make banks averse to hoarding cash and force them to lend it to entrepreneurs.
Under ZIRP conditions, we have this unexpected behaviour which even experts are struggling to explain. Nobody seems what it means and how the world will look like in the near future. Should we start considering the demand side? What if people are just loosing confidence?

Read The Wall Street Journal’s article

Gus FarrowGus Farrow – Analyst and Chief Editor

Japan just passed China as the biggest US creditor for the first time since 2008

Japan has become the largest holder of US Treasuries, reclaiming the top spot from China. Sung Won Sohn, an economics professor at the Smith School of Business at California State University writes, “Economic growth and export growth are slowing in China and as a result China has less money to invest overseas, while Japan’s central bank is pursuing policies that will keep the Japanese yen weaker against the dollar and thus make dollar investments more attractive to Japanese investors.”

Read Business Insider’s article


Ivan DelgadoIván Delgado – Editor and Asian Session Leader

Stan Druckenmiller: Zero-Interest Rates Unnecessary Now

Stanly Druckenmiller (American hedge fund manager) spoke at the Lone Tree Club on January 18. The transcript was supposed to be private but got leaked and it has gone viral. Bloomberg’s Stephanie Ruhle got it and interviewed him at Bloomberg headquarters in New York City. Great video, A+++ insights there: EURUS target of 80, china economy recovery within 6-9months… worth watching. His view on EURUSD in a nutshell… in 2000 was 82… comparing where EU is now vs US, do you think EU is in better shape than US? He also says that it would be almost unprecedented to see such a policy divergence (ECB vs Fed) with a trend that only last 10m, minimum is 2y… barring any major Fed blackswan of course. So EURUSD finding bottom very unlikely, pause (wash), squeeze (rinse) and continuation (repeat), yes…

Watch Bloomberg’s video

Maud GilsonMaud Gilson – Communications Manager

Which country has the least sexist banknotes?

“Women on 20’s” is a movement in the US that wants to put a woman’s face on the $20 bill. They conducted an online poll and asked people to vote for their three favorite candidates to appear on the paper currency, among 15 historical female leaders. More than 256,000 people across America voted, the final voting round is still ongoing. “We believe this simple, symbolic and long-overdue change could be an important stepping stone for other initiatives promoting gender equality. Our money does say something about us, about what we value.” is a statement we can read on the Women on 20’s website.
Elle Metz reports about the US movement and makes a review of banknotes figures and illustrations in several countries around the world. And us in Europe? We have windows, doorways and bridges. That’s less controversial for sure.

Read BBC News’ article


Leave a Reply