tag:blogger.com,1999:blog-8764541874043694159.post5599176478991140571..comments2024-03-29T10:48:38.142+00:00Comments on Coppola Comment: European banks and the global banking glutFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-8764541874043694159.post-67374976390389507062019-07-06T09:57:25.469+01:002019-07-06T09:57:25.469+01:00And that last scenario would not require Dollars f...And that last scenario would not require Dollars from The USA if the US bank accepted debt as a asset from the euro-dollar bank.Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-87948479130112855572019-07-04T09:53:04.117+01:002019-07-04T09:53:04.117+01:00> Frances
See this paper by Milton Freidman 1...> Frances <br /><br />See this paper by Milton Freidman 1971 <br />The Euro-Dollar Market : Some First Principles<br /><br />https://www.chicagobooth.edu/~/media/44CEE6C8A25B4FF2A48925163DAA2F85.pdf<br /><br />A bank outside of the USA does not require a source of deposits from the USA, to conduct Eurodollar banking, make dollar loans, or buy securities in exchange for Eurodollars.<br />A Deposit is a liability of a bank and the bank can denominate it in the currency of its choosing.<br />Although if at a future date there was a deposit holder that wanted the Euro-dollar transferred to a USA bank then the bank would then have to source dollars.Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-63137673897593514522019-06-13T12:14:24.342+01:002019-06-13T12:14:24.342+01:00"macro policy stops rather often on your econ..."macro policy stops rather often on your economy's border" - this is the heart of the matter. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30390230464362192032019-06-13T10:40:43.062+01:002019-06-13T10:40:43.062+01:00There is something that I'm not happy about th...There is something that I'm not happy about this story for quite a long time. That's still how the crisis happened but not why (and what is the alternative). Rather it seems more like some economists see through a macro lens - Basel II, securitization in the us, monetary policy lax/tight (generally governmental regulation) and all those shenanigans to circumvent regulation by finance (shadow banking, too). What would be the alternative if finance and regulation were satisfactory in the eyes of economist? No, bubbles banks would lend trustworthy, "safe" assets were provided, corporate sector invests successfully (private/household slighty, too), governments (and overall everyone) reduces their debts and generally no leverage anywhere. Everyone gets their cake and can it eat or what?<br /><br />I wouldn't neglect the "saving glut" in an overall globalised economy. Just the narrative that this was the problem of the crisis is wrong. Let's say there was no housing bubble, no leverage of finance and shadow banking, but still existing savings that comes from different countries through trade surpluses/deficits and finance connects them (no credit binge from china since 2008). Pair that with pay-go and what do you get?<br /><br />Isn't a "safe" asset in the end at least nominally backed up by the government? Who else is truly capable to produce "safe" assets. Oh, how I hate that word the same for investment.<br /><br />I like the approach of international regulation, but weirdly it does contradict with some other mantra competition in a globalised world. Economist need to truly understand what globalization even is - macro policy stops rather often on your economies border.Alexhttps://www.blogger.com/profile/03062444630433735504noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-27703434052200688912019-06-10T10:43:54.056+01:002019-06-10T10:43:54.056+01:00Surely the bottom line is that the eurodollar mark...Surely the bottom line is that the eurodollar market is the "real" supplier of global credit and is the global currency. Furthermore, it exists offshore and therefore at the edge, if not beyond, regulation from any authority. I wonder if the term 'central' bank has not become a misnomer as these institutions are nearer the fringe than the centre of this global market. This article is written mostly in the past tense suggesting that this is what was going on leading up to the financial crisis has been understood but there is plenty of evidence that the global bank balance sheet explosion has continued. Maybe the financial instruments have morphed a little and some of the property collateralised debt has reduced but the overall growth of collateralised eurodollar lending is still rampant. There is lots of evidence of a eurodollar squeeze at present and it is not at all clear that the Federal Reserve is willing /capable /knowledgeable to do much to alleviate it. Maybe a return to zero US interest rates is much closer than expected.Richard Gracehttps://www.blogger.com/profile/00331806303407100222noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-61994786449549878672019-06-09T12:56:38.833+01:002019-06-09T12:56:38.833+01:00This comment has been removed by the author.jerred seiysllhttps://www.blogger.com/profile/17375770046164311780noreply@blogger.com