The sovereign debt crisis would seem to create worry enough for European banks, but there is another gathering threat that has not garnered as much notice: the trillions of dollars in short-term borrowing that institutions around the world must repay or roll over in the next two years. The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is. Their concern is that banks hungry for refinancing will compete with governments -- which also must roll over huge sums -- for the bond market's favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.... Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe. U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.
The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is.
Their concern is that banks hungry for refinancing will compete with governments -- which also must roll over huge sums -- for the bond market's favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.... Banks worldwide owe nearly $5 trillion to bondholders and other creditors that will come due through 2012, according to estimates by the Bank for International Settlements. About $2.6 trillion of the liabilities are in Europe.
U.S. banks must refinance about $1.3 trillion through 2012. While that sum is nothing to scoff at, analysts seem most concerned about Europe because the banking system there is already weighed down by the sovereign debt crisis.
just indenture another few generations into the future, no?
it's the 'dropkick crisis', we had the drop, next... ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
I've been talking about this for some time.
The European Central Bank, the Bank of England and the International Monetary Fund have all recently warned of a looming crunch, especially in Europe, where banks have enough trouble raising money as it is. Their concern is that banks hungry for refinancing will compete with governments -- which also must roll over huge sums -- for the bond market's favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.
Their concern is that banks hungry for refinancing will compete with governments -- which also must roll over huge sums -- for the bond market's favor. As a result, credit for business and consumers could become more costly and scarce, with unpleasant consequences for economic growth.
What's left of central bank independence? | Willem Buiter's Maverecon | FT.com
political independence: the central bank cannot seek or take instructions from any government/state body or other institution/body ... President Trichet of the ECB is already so far down the road of telling governments what to do and what not to do in the fiscal and structural reform domains, that one is hardly surprised by yet another lecture on budgetary policy from the Eurotower. Traditionally, continental European central bankers speak very little about monetary policy in public, and are often unwilling to engage in public debate or answer questions about their monetary duties, but carry on endlessly about budgetary and structural reform matters. It's always easier to speak about things you have no responsibility for, that are not part of your mandate and about which you probably don't know very much. The opposite problem has been encountered in the US, when Ben Bernanke has been so often seen shoulder-to-shoulder with past and present Secretaries of the Treasury, that it is hard to tell (except for the beard) where one begins and the other ends. A Chairman of the Fed ought not to publicly endorse or reject fiscal measures, budgets or plans. It's not his mandate and not his competence. It also further politicises the Fed and undermines its future independence. ... The regulation and supervision of financial institutions and markets is a deeply political activity. Property rights are being assigned, restricted, qualified or taken away. Banks are stopped from doing things they want to do and forced to do things they do not want to do. Barriers to entry and exit are created, lowered or removed. Such activities don't fit the image of an independent, a-political central bank very well. I consider it to be inevitable that when a central bank becomes deeply involved in the supervision of systemically important financial institutions and markets (let alone in their regulation), it will become politicised and lose its independence, even in the domain of conventional monetary policy (setting the official policy rate). This view is strongly supported by the increasing politicisation of the Fed - by far the least operationally independent of the leading central banks in the advanced industrial countries.
...
President Trichet of the ECB is already so far down the road of telling governments what to do and what not to do in the fiscal and structural reform domains, that one is hardly surprised by yet another lecture on budgetary policy from the Eurotower. Traditionally, continental European central bankers speak very little about monetary policy in public, and are often unwilling to engage in public debate or answer questions about their monetary duties, but carry on endlessly about budgetary and structural reform matters. It's always easier to speak about things you have no responsibility for, that are not part of your mandate and about which you probably don't know very much.
The opposite problem has been encountered in the US, when Ben Bernanke has been so often seen shoulder-to-shoulder with past and present Secretaries of the Treasury, that it is hard to tell (except for the beard) where one begins and the other ends. A Chairman of the Fed ought not to publicly endorse or reject fiscal measures, budgets or plans. It's not his mandate and not his competence. It also further politicises the Fed and undermines its future independence.
The regulation and supervision of financial institutions and markets is a deeply political activity. Property rights are being assigned, restricted, qualified or taken away. Banks are stopped from doing things they want to do and forced to do things they do not want to do. Barriers to entry and exit are created, lowered or removed. Such activities don't fit the image of an independent, a-political central bank very well.
I consider it to be inevitable that when a central bank becomes deeply involved in the supervision of systemically important financial institutions and markets (let alone in their regulation), it will become politicised and lose its independence, even in the domain of conventional monetary policy (setting the official policy rate). This view is strongly supported by the increasing politicisation of the Fed - by far the least operationally independent of the leading central banks in the advanced industrial countries.
