India's demand for gold has fallen by 6%, even as total spending on the precious metal reached a record high, according to the World Gold Council.

The latest figures suggest that while Indians continue to value gold for weddings, festivals, and investments, soaring prices are changing buying behavior. Consumers are increasingly opting for lighter jewellery, delaying purchases, or waiting for discounts and festive offers. Meanwhile, investment preferences are also evolving, with digital gold and other alternatives gaining traction as physical gold purchases slow.

India's Gold Demand Falls 6% Despite Record Spending | Why Indians Are Buying Less Gold

The European Central Bank has kept interest rates unchanged, as widely expected. But while the decision itself was uneventful, the message from ECB President Christine Lagarde was notably more cautious.

Oil shock back for Global Central Banks | World Business Watch 

Central banks are once again flirting with rate hikes, and as a result markets bet on fresh turmoil. Memories of the 2022 inflation battle are clearly still fresh. Yet talking about rate rises is one thing, delivering them is quite another, and they could win the ‘wrong’ inflation fight. In this next report, we decode how the bar for rate hikes is higher than what markets are betting on.


Investors on Edge as Central Banks Flirt With Rate Hikes

Poland led global gold buying in 2024 with 90t, followed by Turkey (75t) and India (73t) as emerging-market central banks drove demand after geopolitical and economic uncertainty kept gold a preferred reserve asset. Here's the list of the top Central Banks that bought most gold in 2024.

Who’s hoarding the gold? List of the top 5 central banks that bought the most gold

Central banks use gold reserves to protect against inflation, currency risks, and financial crises. The US, Germany, Italy, France, Russia and China hold the largest gold reserves in 2025, securing their economies amid global uncertainties. India and others also increase their holdings. 

10 countries hoarding the most gold in central banks

<div>Global banking regulators agreed to focus more on understanding the financial risks posed by climate change on May 13, despite some opposition from the United States, Reuters reported.</div>
<div></div>
<div>The oversight body of the Basel Committee on Banking Supervision convened to review its climate-related financial risk initiatives and decided to prioritise understanding the financial impact of extreme weather events, according to a statement by the Bank for International Settlements.</div>
<div></div>
<div>This decision comes as policymakers in Europe and the US debate the role of climate change in central bank policy. In Europe, policymakers have doubled down on efforts to address climate-related risks, with the European Central Bank (ECB) making management of climate risks a key priority, while the US efforts have been scaled back.&nbsp;</div>
<div></div>
<div>The group of central bank governors and heads of supervision, which make up the oversight body of the Basel Committee on Banking Supervision, also plans to release a voluntary framework for climate-related financial risks for jurisdictions to consider.</div>
<div></div>
<div>While the Basel Committee has no international authority or enforcement powers, its work on climate sets international standards which have a strong influence on national rule-making.</div>
<div></div>
<h2>US takes a step back</h2>
<div></div>
<div>While European and British regulators are moving forward with integrating climate risks into bank supervision, the US regulators like the Federal Reserve have taken a more cautious approach.&nbsp;</div>
<div></div>
<div>Recently, the US has seen significant pushback, with US President Trump and other Republican leaders criticising climate-focused policies. In a notable move, the Fed withdrew from the Network of Central Banks and Supervisors for Greening the Financial System in January, and the US Treasury Department has also backed away from climate principles for banks.</div>
<div></div>
<div>Analysts predict that the US regulatory bodies, including the Federal Deposit Insurance Corporation, may follow suit and pull out of these joint climate agreements in the near future.</div>
<div></div>
<div>(With inputs from agencies)</div>

Business & Economy: The Basel Committee has placed a significant focus on evaluating the financial repercussions of extreme weather events in its climate risk strategies.

Global banking regulators agreed to focus more on understanding the financial risks posed by climate change on May 13, despite some opposition from the United States, Reuters reported. The oversight body of the Basel Committee on Banking Supervision convened to review its climate-related financial risk initiatives and decided to prioritise understanding the financial impact of extreme weather events, according to a statement by the Bank for International Settlements. This decision comes as policymakers in Europe and the US debate the role of climate change in central bank policy. In Europe, policymakers have doubled down on efforts to address climate-related risks, with the European Central Bank (ECB) making management of climate risks a key priority, while the US efforts have been scaled back. The group of central bank governors and heads of supervision, which make up the oversight body of the Basel Committee on Banking Supervision, also plans to release a voluntary framework for climate-related financial risks for jurisdictions to consider. While the Basel Committee has no international authority or enforcement powers, its work on climate sets international standards which have a strong influence on national rule-making. US takes a step back While European and British regulators are moving forward with integrating climate risks into bank supervision, the US regulators like the Federal Reserve have taken a more cautious approach. Recently, the US has seen significant pushback, with US President Trump and other Republican leaders criticising climate-focused policies. In a notable move, the Fed withdrew from the Network of Central Banks and Supervisors for Greening the Financial System in January, and the US Treasury Department has also backed away from climate principles for banks. Analysts predict that the US regulatory bodies, including the Federal Deposit Insurance Corporation, may follow suit and pull out of these joint climate agreements in the near future. (With inputs from agencies)

Global banking regulators commit to addressing climate risk work

Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week.

A key Asian stock gauge moved in a narrow range.

Following Monday's disappointing retail sales report, mainland Chinese shares managed a little increase while Hong Kong's sank, this indicates a lack of market momentum.

These changes followed a successful trading session on Wall Street, during which the NASDAQ 100 rose over 1 per cent to set a fresh all-time high.

The dollar was largely unchanged.

The yen recovered marginally following six days of losses ahead of the Bank of Japan's decision this week. The currency has fallen sharply, reaching 155 per dollar.

Oil prices levelled off following a dip, as disappointing economic data from China heightened worries about slowing demand in the world's largest oil importer.

Benchmark Brent crude traded below 74 dollars a barrel after slipping nearly one per cent in the previous session. Crude has been trading in a narrow range since mid-October.

The Fed and other major central banks are expected to announce interest rate decisions soon, so traders are being cautious.

This has kept gold steady. After a little increase on Monday, gold was trading at 2,650 dollars per ounce as investors analysed mixed US data.

(With inputs from the agencies)

Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week. A key Asian stock gauge moved in a narrow range.

Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week. A key Asian stock gauge moved in a narrow range. Following Monday's disappointing retail sales report, mainland Chinese shares managed a little increase while Hong Kong's sank, this indicates a lack of market momentum. These changes followed a successful trading session on Wall Street, during which the NASDAQ 100 rose over 1 per cent to set a fresh all-time high. The dollar was largely unchanged. The yen recovered marginally following six days of losses ahead of the Bank of Japan's decision this week. The currency has fallen sharply, reaching 155 per dollar. Oil prices levelled off following a dip, as disappointing economic data from China heightened worries about slowing demand in the world's largest oil importer. Benchmark Brent crude traded below 74 dollars a barrel after slipping nearly one per cent in the previous session. Crude has been trading in a narrow range since mid-October. The Fed and other major central banks are expected to announce interest rate decisions soon, so traders are being cautious. This has kept gold steady. After a little increase on Monday, gold was trading at 2,650 dollars per ounce as investors analysed mixed US data. (With inputs from the agencies)

Asian markets waver as investors await central bank rate decisions

New Delhi
Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week.
A key Asian stock gauge moved in a narrow range.
Following Monday's disappointing retail sales report, mainland Chinese shares managed a little increase while Hong Kong's sank, this indicates a lack of market momentum.
These changes followed a successful trading session on Wall Street, during which the NASDAQ 100 rose over 1 per cent to set a fresh all-time high.
The dollar was largely unchanged.
The yen recovered marginally following six days of losses ahead of the Bank of Japan's decision this week. The currency has fallen sharply, reaching 155 per dollar.
Oil prices levelled off following a dip, as disappointing economic data from China heightened worries about slowing demand in the world's largest oil importer.
Benchmark Brent crude traded below 74 dollars a barrel after slipping nearly one per cent in the previous session. Crude has been trading in a narrow range since mid-October.
The Fed and other major central banks are expected to announce interest rate decisions soon, so traders are being cautious.
This has kept gold steady. After a little increase on Monday, gold was trading at 2,650 dollars per ounce as investors analysed mixed US data.
(With inputs from the agencies)

Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week.



New Delhi Asian stock markets were volatile as investors eyed key rate decisions from major central banks in a 24-hour frenzy, including the Federal Reserve, this week. A key Asian stock gauge moved in a narrow range. Following Monday's disappointing retail sales report, mainland Chinese shares managed a little increase while Hong Kong's sank, this indicates a lack of market momentum. These changes followed a successful trading session on Wall Street, during which the NASDAQ 100 rose over 1 per cent to set a fresh all-time high. The dollar was largely unchanged. The yen recovered marginally following six days of losses ahead of the Bank of Japan's decision this week. The currency has fallen sharply, reaching 155 per dollar. Oil prices levelled off following a dip, as disappointing economic data from China heightened worries about slowing demand in the world's largest oil importer. Benchmark Brent crude traded below 74 dollars a barrel after slipping nearly one per cent in the previous session. Crude has been trading in a narrow range since mid-October. The Fed and other major central banks are expected to announce interest rate decisions soon, so traders are being cautious. This has kept gold steady. After a little increase on Monday, gold was trading at 2,650 dollars per ounce as investors analysed mixed US data. (With inputs from the agencies)

More and more data points to the fact that tight lending and monetary policy have peaked and are now effectively bringing down inflation.

But as major central banks prepare to announce decisions next week, the Federal Reserve and Bank of England won't want to support the recent surge in rate-cut expectations in financial markets.

On Friday, the Reserve Bank of India sounded 'hawkish' compared to predictions for hints of policy easing.

The reason is concerns over elevated food inflation.

The other reason is they don't want to falter again as they did in 2021 when they called surging inflation "transitory."

After six consecutive rate hikes between April 2022 and February this year, the Reserve Bank of India has kept monetary policy on hold.

The likelihood the central bank hints at rate cuts was factored in before today's decision and comments from Governor Shaktikanta Das.

But RBI more or less dashed those expectations by sounding hawkish in its assessment of inflation.

<a href="https://www.wionews.com/business-economy/reserve-bank-of-indias-hawkish-pause-keeps-households-on-edge-667508">Read about RBI's policy </a><a href="https://www.wionews.com/business-economy/reserve-bank-of-indias-hawkish-pause-keeps-households-on-edge-667508">here</a><a href="https://www.wionews.com/business-economy/reserve-bank-of-indias-hawkish-pause-keeps-households-on-edge-667508">.</a>

Governor Das said rate cuts were off the table.

The deputy chief economist for emerging markets at Capital Economics, Shilan Shah, said, "The economy is performing exceptionally well, which limits any immediate need for looser policy."

US: Pushback from the Fed

At the FOMC meeting next week, it is generally anticipated that the Federal Reserve will maintain the Fed funds target range at 5.25–5.5 per cent.

Key Federal Reserve officials actively support the theory that monetary policy is sufficiently tight to drive inflation sustainably down to 2 per cent&nbsp;in the upcoming months, as evidenced by softer activity, cooling labour data, and benign inflation prints.

James Knightley, Chief International Economist at ING Markets, said, "The bigger story is likely to be contained in the individual Fed member forecasts – how far will they look to back the market perceptions that major rate cuts are on their way?"

"We strongly suspect there will be a lot of pushback here," he added.

Global central banks want to be ahead of the curve after dismissing rising price pressures as "transitory" in 2021.

Back then, the world underestimated surging inflation and had to react more aggressively when price pressures soared to multi-decade highs globally.

But bets in recent months have increased for global interest rates to ease next year.

Still, central banks worldwide will be in pain to stave off those expectations and, at the same time, stay away from sounding the alarm bells.

"We think the Fed will eventually shift to a more dovish stance, but this may not come until late in the first quarter of 2024," said ING's Knightley.

"The US economy continues to perform well for now, and the jobs market remains tight. However, there is growing evidence that the Federal Reserve's interest rate increases and the associated tightening of credit conditions are starting to have the desired effect. We look for 150bp of rate cuts in 2024, with a further 100bp in early 2025," he added.

Bank of England to push back, too

With the "higher for longer" mantra that central banks have been hammering home for months, financial markets are quickly giving up.

The Bank of England (BoE) has yet to be as active with its market repricing.

However, the BoE is beginning to raise the alarm with three rate cuts already scheduled for 2024.

Recently, Governor Andrew Bailey stated that he is "against assumptions that we're talking about cutting interest rates".

Those remarks came after the Bank strengthened its guidance in November, indicating that it anticipated rates to remain restrictive for "an extended period of time".

The fact that the data is at least beginning to trend in the right direction will also satisfy the BoE.

Inflation in services fell short of the Bank's most recent estimate. The market's assumption that the BoE will start cutting rates later than its European counterparts may be accurate.

Could the Bank take a step further and declare in the announcement next week that markets are overpricing the 2024 easing?

It has yet to make a statement like this since November 2022, at a volatile period in the market.

"Policymakers may be uneasy about the recent repricing of UK rate expectations, but central banks globally have learned the hard way over the last couple of years that trying to predict and commit to future policy, with relative certainty, is a fool's game," said James Smith, Developed Markets Economist at ING.

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More and more data points to the fact that tight lending and monetary policy have peaked and are now effectively bringing down inflation. But as major central banks prepare to announce decisions next week, the Federal Reserve and Bank of England won't want to support the recent surge in rate-cut expectations in financial markets.

More and more data points to the fact that tight lending and monetary policy have peaked and are now effectively bringing down inflation. But as major central banks prepare to announce decisions next week, the Federal Reserve and Bank of England won't want to support the recent surge in rate-cut expectations in financial markets. On Friday, the Reserve Bank of India sounded 'hawkish' compared to predictions for hints of policy easing. The reason is concerns over elevated food inflation. The other reason is they don't want to falter again as they did in 2021 when they called surging inflation "transitory." After six consecutive rate hikes between April 2022 and February this year, the Reserve Bank of India has kept monetary policy on hold. The likelihood the central bank hints at rate cuts was factored in before today's decision and comments from Governor Shaktikanta Das. But RBI more or less dashed those expectations by sounding hawkish in its assessment of inflation. Read about RBI's policy here. Governor Das said rate cuts were off the table. The deputy chief economist for emerging markets at Capital Economics, Shilan Shah, said, "The economy is performing exceptionally well, which limits any immediate need for looser policy." US: Pushback from the Fed At the FOMC meeting next week, it is generally anticipated that the Federal Reserve will maintain the Fed funds target range at 5.25–5.5 per cent. Key Federal Reserve officials actively support the theory that monetary policy is sufficiently tight to drive inflation sustainably down to 2 per cent in the upcoming months, as evidenced by softer activity, cooling labour data, and benign inflation prints. James Knightley, Chief International Economist at ING Markets, said, "The bigger story is likely to be contained in the individual Fed member forecasts – how far will they look to back the market perceptions that major rate cuts are on their way?" "We strongly suspect there will be a lot of pushback here," he added. Global central banks want to be ahead of the curve after dismissing rising price pressures as "transitory" in 2021. Back then, the world underestimated surging inflation and had to react more aggressively when price pressures soared to multi-decade highs globally. But bets in recent months have increased for global interest rates to ease next year. Still, central banks worldwide will be in pain to stave off those expectations and, at the same time, stay away from sounding the alarm bells. "We think the Fed will eventually shift to a more dovish stance, but this may not come until late in the first quarter of 2024," said ING's Knightley. "The US economy continues to perform well for now, and the jobs market remains tight. However, there is growing evidence that the Federal Reserve's interest rate increases and the associated tightening of credit conditions are starting to have the desired effect. We look for 150bp of rate cuts in 2024, with a further 100bp in early 2025," he added. Bank of England to push back, too With the "higher for longer" mantra that central banks have been hammering home for months, financial markets are quickly giving up. The Bank of England (BoE) has yet to be as active with its market repricing. However, the BoE is beginning to raise the alarm with three rate cuts already scheduled for 2024. Recently, Governor Andrew Bailey stated that he is "against assumptions that we're talking about cutting interest rates". Those remarks came after the Bank strengthened its guidance in November, indicating that it anticipated rates to remain restrictive for "an extended period of time". The fact that the data is at least beginning to trend in the right direction will also satisfy the BoE. Inflation in services fell short of the Bank's most recent estimate. The market's assumption that the BoE will start cutting rates later than its European counterparts may be accurate. Could the Bank take a step further and declare in the announcement next week that markets are overpricing the 2024 easing? It has yet to make a statement like this since November 2022, at a volatile period in the market. "Policymakers may be uneasy about the recent repricing of UK rate expectations, but central banks globally have learned the hard way over the last couple of years that trying to predict and commit to future policy, with relative certainty, is a fool's game," said James Smith, Developed Markets Economist at ING. WATCH WION LIVE HERE

Global central banks pushing back on rate cut expectations; why?

As major central banks in the US, euro zone, and the UK temporarily pause rate hikes, their counterparts in Europe's northern region face critical decisions.

According to Bloomberg, Sweden's Riksbank, is set to make an announcement on Thursday, regarding raising the rates by a quarter-point to combat inflation, or opt for alternative strategies, creating uncertainty among economists and investors.

Norway's central bank, a pioneer in rate hikes, contemplates further tightening in December amid encouraging signs in inflation and wage growth. The Nordics, particularly sensitive to foreign-exchange pressures, grapple with unique challenges in their pursuit of economic balance.

US economic insights amid holiday week

The US Federal Reserve is set to release minutes from its latest policy meeting on Tuesday, offering insights into its decision to maintain interest rates. As the country observes the Thanksgiving holiday, economic data includes expected reports on existing home sales, weekly jobless claims, and October orders for durable goods. S&amp;P Global's indexes of manufacturing and services activity on Friday will contribute to understanding the nation's economic trajectory. Chair Jerome Powell's indications of a cautious approach to economic and inflation assessments will be scrutinised.

Asia's Economic Landscape: China, Australia, and More

China is anticipated to maintain its loan prime rates on Monday, with expectations of a year-end cut amid uneven economic recovery. The Reserve Bank of Australia will release minutes from its November 7 meeting on Tuesday, offering insights into its decision to resume rate hikes.

Regional highlights include GDP reports from Thailand, Singapore, and Indonesia, with significant policy implications. South Korea's early trade data on Tuesday and Japan's national inflation data on Friday will provide essential glimpses into global demand and potential shifts in monetary policies.

Europe, Middle East, Africa: Fiscal policies and ECB assessment

In Europe, Bank of England Governor Andrew Bailey's testimony on Tuesday will be pivotal as UK inflation eases. Chancellor of the Exchequer Jeremy Hunt's Autumn Statement on Wednesday outlines growth-focused measures, potentially impacting taxation and economic stimulus.

European Commission's budgetary recommendations on Tuesday for EU members, just ahead of the bloc's 3 per cent deficit limit, hold significance. ECB President Christine Lagarde's insights into Germany's hyperinflation history and comments from other policymakers throughout the week contribute to the overall economic outlook.

Latin America's Economic Trends: Elections, contractions, and inflation

Chile's third-quarter economic performance, possibly shifting from contraction to expansion, reflects its reliance on mining, particularly copper. Peru faces a likely third consecutive quarterly output decline due to setbacks in mining and construction.

Argentina's presidential election on Sunday, with contenders Sergio Massa and Javier Milei, holds broader economic implications amid a projected 3 per cent economic shrinkage and over 180 per cent inflation in 2023.

Mexico's economic activity and consumer price trends are closely watched indicators for the region.

(With inputs from Bloomberg)

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As major central banks in the US, euro zone, and the UK temporarily pause rate hikes, their counterparts in Europe's northern region face critical decisions. According to Bloomberg, Sweden's Riksbank, is set to make an announcement on Thursday, regarding raising the rates by a quarter-point to combat inflation, or opt for alternative strategies, creating uncertainty among economists and investors.

As major central banks in the US, euro zone, and the UK temporarily pause rate hikes, their counterparts in Europe's northern region face critical decisions. According to Bloomberg, Sweden's Riksbank, is set to make an announcement on Thursday, regarding raising the rates by a quarter-point to combat inflation, or opt for alternative strategies, creating uncertainty among economists and investors. Norway's central bank, a pioneer in rate hikes, contemplates further tightening in December amid encouraging signs in inflation and wage growth. The Nordics, particularly sensitive to foreign-exchange pressures, grapple with unique challenges in their pursuit of economic balance. US economic insights amid holiday week The US Federal Reserve is set to release minutes from its latest policy meeting on Tuesday, offering insights into its decision to maintain interest rates. As the country observes the Thanksgiving holiday, economic data includes expected reports on existing home sales, weekly jobless claims, and October orders for durable goods. S&P Global's indexes of manufacturing and services activity on Friday will contribute to understanding the nation's economic trajectory. Chair Jerome Powell's indications of a cautious approach to economic and inflation assessments will be scrutinised. Asia's Economic Landscape: China, Australia, and More China is anticipated to maintain its loan prime rates on Monday, with expectations of a year-end cut amid uneven economic recovery. The Reserve Bank of Australia will release minutes from its November 7 meeting on Tuesday, offering insights into its decision to resume rate hikes. Regional highlights include GDP reports from Thailand, Singapore, and Indonesia, with significant policy implications. South Korea's early trade data on Tuesday and Japan's national inflation data on Friday will provide essential glimpses into global demand and potential shifts in monetary policies. Europe, Middle East, Africa: Fiscal policies and ECB assessment In Europe, Bank of England Governor Andrew Bailey's testimony on Tuesday will be pivotal as UK inflation eases. Chancellor of the Exchequer Jeremy Hunt's Autumn Statement on Wednesday outlines growth-focused measures, potentially impacting taxation and economic stimulus. European Commission's budgetary recommendations on Tuesday for EU members, just ahead of the bloc's 3 per cent deficit limit, hold significance. ECB President Christine Lagarde's insights into Germany's hyperinflation history and comments from other policymakers throughout the week contribute to the overall economic outlook. Latin America's Economic Trends: Elections, contractions, and inflation Chile's third-quarter economic performance, possibly shifting from contraction to expansion, reflects its reliance on mining, particularly copper. Peru faces a likely third consecutive quarterly output decline due to setbacks in mining and construction. Argentina's presidential election on Sunday, with contenders Sergio Massa and Javier Milei, holds broader economic implications amid a projected 3 per cent economic shrinkage and over 180 per cent inflation in 2023. Mexico's economic activity and consumer price trends are closely watched indicators for the region. (With inputs from Bloomberg) WATCH WION LIVE HERE

Global central banks navigate rate hike dilemma: Nordic nations take centre stage

The world's leading central banks jointly announced new action to try to keep U.S. dollars flowing easily through the global banking system. It comes after Credit Suisse was bought by UBS in a state-backed rescue deal.

Central banks take action to to keep cash flowing amid investor fears

After Sunday's merger agreement of Credit Suisse and UBS, the global central banks are setting off to cater to the credit flow challenges.&nbsp;Many central banks including Bank of England are now scrambling to boost the cash flow after growing concerns gripped US banking sector.&nbsp;&nbsp;

The US dollar liquidity "swap line" arrangement will kick off from Monday. As per US federal reserve, the swap lines are designed to improve liquidity conditions in dollar funding markets in the US and across the globe. With the help of swap line arrangement global central banks get the capacity to deliver US dollar funding to institutions in their jurisdictions, in times of market stress.

Also Read | <a href="https://www.wionews.com/world/one-arrested-after-khalistani-extremists-vandalised-indian-high-commission-in-uk-573718">One arrested after Khalistani extremists vandalise Indian High Commission in UK</a>

Bank of England, Bank of Canada, Bank of Japan, US Federal Reserve, the European Central Bank, and Swiss National Bank initiated a joint action to ease strains.&nbsp;

The UBS-Credit Suisse merger deal was brought about after intervention of the Swiss bank. The official statement said that the deal was necessary for the survival of struggling Credit Suisse.&nbsp;The deal was finalized in accordance with the emergency ordinance issued by the Swiss Federal Council wherein the merger was implemented without approval of the shareholders.&nbsp;

The announcement by the central banks is an "important backstop to ease strains in global funding markets." The move will reduce the affect on the supply of credit to households and businesses.

Also Read | <a href="https://www.wionews.com/world/south-african-investigator-cloete-murray-who-looked-into-state-corruptions-shot-dead-573769">South African investigator Cloete Murray, who looked into state corruptions, shot dead</a>

British banks will have the option of borrowing directly from the Bank of England, which will borrow money from the US Federal Reserve, rather than the open market. The same will apply to banks in the US, Canada, Japan, Switzerland, and the Eurozone. This financing will be available to banks on daily basis.

This kind of arrangement was initiated earlier also at the time of&nbsp;2008 financial crisis and the Covid pandemic. The swap line will continue "at least through the end of April", as per the Bank of England.

Watch | <a href="https://www.wionews.com/videos/after-iran-saudi-pact-china-to-play-peacemaker-in-ukraine-war-573689">After Iran-Saudi pact, China to play peacemaker in Ukraine war?</a>

Silicon Valley Bank collapse was the worst US banking collapse since 2008. US President Joe Biden gave assurances that US banking system is safe however, the SVB collapse cut open many vulnerabilities as the global banking stocks continued to tumble.&nbsp;

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You can now write for wionews.com and be a part of the community. Share your stories and opinions with us <a href="https://www.wionews.com/content-contribution-registration-form">here</a>.

After Sunday's merger agreement of Credit Suisse and UBS, the global central banks are setting off to cater to the credit flow challenges. Many central banks including Bank of England are now scrambling to boost the cash flow after growing concerns gripped US banking sector.

After Sunday's merger agreement of Credit Suisse and UBS, the global central banks are setting off to cater to the credit flow challenges. Many central banks including Bank of England are now scrambling to boost the cash flow after growing concerns gripped US banking sector. The US dollar liquidity "swap line" arrangement will kick off from Monday. As per US federal reserve, the swap lines are designed to improve liquidity conditions in dollar funding markets in the US and across the globe. With the help of swap line arrangement global central banks get the capacity to deliver US dollar funding to institutions in their jurisdictions, in times of market stress. Also Read | One arrested after Khalistani extremists vandalise Indian High Commission in UK Bank of England, Bank of Canada, Bank of Japan, US Federal Reserve, the European Central Bank, and Swiss National Bank initiated a joint action to ease strains. The UBS-Credit Suisse merger deal was brought about after intervention of the Swiss bank. The official statement said that the deal was necessary for the survival of struggling Credit Suisse. The deal was finalized in accordance with the emergency ordinance issued by the Swiss Federal Council wherein the merger was implemented without approval of the shareholders. The announcement by the central banks is an "important backstop to ease strains in global funding markets." The move will reduce the affect on the supply of credit to households and businesses. Also Read | South African investigator Cloete Murray, who looked into state corruptions, shot dead British banks will have the option of borrowing directly from the Bank of England, which will borrow money from the US Federal Reserve, rather than the open market. The same will apply to banks in the US, Canada, Japan, Switzerland, and the Eurozone. This financing will be available to banks on daily basis. This kind of arrangement was initiated earlier also at the time of 2008 financial crisis and the Covid pandemic. The swap line will continue "at least through the end of April", as per the Bank of England. Watch | After Iran-Saudi pact, China to play peacemaker in Ukraine war? Silicon Valley Bank collapse was the worst US banking collapse since 2008. US President Joe Biden gave assurances that US banking system is safe however, the SVB collapse cut open many vulnerabilities as the global banking stocks continued to tumble. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Credit Suisse, UBS merger sets off central banks catering to bolster cash flow

China's central banks are all set to adopt new revamped policy of differentiated regulatory systems for assessing commercial banks' capital adequacy and risk management, in a step to better prevent risks in the country's financial system

China to revamp risk management strategy

Former central banker and professor of finance at Chicago's Booth School of Business, Raghuram Ranjan has expressed concerns over global central banks' framework of handling inflation.

&nbsp;

In his opinion report in Financial Times, Rajan pointed out how nobody anticipated the impending crisis of inflation bothering all realms of the global economy.

&nbsp;

Central banks have enough influence to garner an audience of trust in institutions. Such credibility comes as a result of a mix of past outcomes, policy tools, and policy driven frameworks, said Rajan,

&nbsp;

However, this credibility alone cannot help them sail through the crisis in a smooth manner and by its very nature, credibility does not turn on a dime, he added.

&nbsp;

The situation at hand requires us to deal with tackling high inflation, which remains drastically different from countering the regime of low inflation, when the Fed regained its credibility, perhaps under the influence of Paul Volcker, said the former Reserve Bank of India Governor.

&nbsp;

Technocratic central banks gained ground and equipped with an inflation targeting framework, thus regaining their title of "inflation firefighters", said the former IMF economist and added, following the global crisis, inflation fell below the benchmark, reinstating the need to push it back.

&nbsp;

Rajan said central banks tried a new move, rather than fighting inflation ferociously, they chose to "credibly promise to be irresponsible" in the words of Paul Krugman.

&nbsp;

With newer tools in hand, the central banks remained slow in raising rates in late 2021, he said.

&nbsp;

Finally, they switched their method to embed inflation tolerance within them. This new structure, adopted in 2020, was different from pre-emptive repulsion of inflation, said the former central banker.

&nbsp;

However, this came in very late, at a time when inflation was directly staring the global economy in the eyeballs, warned Rajan, adding this proved to be rendered ineffective given that the banks would not drastically increase interest rates.

&nbsp;

With the pandemic and the Ukraine war, a pushback happened to increase the inflation rates at a striking rate, and the series of events exposed the dubious nature of credibility of the central bank's role to demonstrate a hawkish stance in terms of inflation, said the former RBI governor.

&nbsp;

With the loss in credibility and changing inflation regimes, the environment is bound to change again, he added.

&nbsp;

Nonetheless, central banks still remain to be the most effective as they commit to fight inflation on a global scale, with an effective delegation of responsibility to governments and private sector, they could aim to sustain long term growth, said Rajan.

WATCH WION LIVE HERE: 

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Former central banker and professor of finance at Chicago's Booth School of Business, Raghuram Ranjan has expressed concerns over global central banks' framework of handling inflation.

Former central banker and professor of finance at Chicago's Booth School of Business, Raghuram Ranjan has expressed concerns over global central banks' framework of handling inflation. In his opinion report in Financial Times, Rajan pointed out how nobody anticipated the impending crisis of inflation bothering all realms of the global economy. Central banks have enough influence to garner an audience of trust in institutions. Such credibility comes as a result of a mix of past outcomes, policy tools, and policy driven frameworks, said Rajan, However, this credibility alone cannot help them sail through the crisis in a smooth manner and by its very nature, credibility does not turn on a dime, he added. The situation at hand requires us to deal with tackling high inflation, which remains drastically different from countering the regime of low inflation, when the Fed regained its credibility, perhaps under the influence of Paul Volcker, said the former Reserve Bank of India Governor. Technocratic central banks gained ground and equipped with an inflation targeting framework, thus regaining their title of "inflation firefighters", said the former IMF economist and added, following the global crisis, inflation fell below the benchmark, reinstating the need to push it back. Rajan said central banks tried a new move, rather than fighting inflation ferociously, they chose to "credibly promise to be irresponsible" in the words of Paul Krugman. With newer tools in hand, the central banks remained slow in raising rates in late 2021, he said. Finally, they switched their method to embed inflation tolerance within them. This new structure, adopted in 2020, was different from pre-emptive repulsion of inflation, said the former central banker. However, this came in very late, at a time when inflation was directly staring the global economy in the eyeballs, warned Rajan, adding this proved to be rendered ineffective given that the banks would not drastically increase interest rates. With the pandemic and the Ukraine war, a pushback happened to increase the inflation rates at a striking rate, and the series of events exposed the dubious nature of credibility of the central bank's role to demonstrate a hawkish stance in terms of inflation, said the former RBI governor. With the loss in credibility and changing inflation regimes, the environment is bound to change again, he added. Nonetheless, central banks still remain to be the most effective as they commit to fight inflation on a global scale, with an effective delegation of responsibility to governments and private sector, they could aim to sustain long term growth, said Rajan. WATCH WION LIVE HERE:

Global central banks' credibility at risk over rising inflation: Raghuram Rajan

US banking giants are forecast to report lower fourth quarter profits this week as lenders stockpile rainy-day funds to prepare for an economic slowdown that is battering investment banking.

World Business Watch: U.S. banks get ready for profit crunch

The Swiss National Bank expects a $143 billion loss for the 2022 financial year, the biggest loss in its 116-year history. Watch this to know more.

World Business Watch: Swiss central bank posts biggest loss in 116 years

Why do central banks raise interest rates to curb inflation? What is the rationale behind this move? Molly Gambhir explains.

WION Fineprint: Why do central banks raise interest rates to curb inflation?

World&nbsp;stocks&nbsp;on Friday closed out their steepest weekly slide since the pandemic meltdown of March 2020, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth.

The US&nbsp;Federal Reserve's biggest rate hike since 1994, the first such Swiss move in 15 years, a fifth rise in British rates since December and a move by the European Central Bank to bolster the indebted south all took turns roiling markets.

The Bank of Japan was the only outlier in a week where money prices rose around the world, sticking on Friday with its strategy of pinning 10-year yields near zero.

Also read |&nbsp;<a href="https://www.wionews.com/business-economy/day-after-fed-rate-hike-us-stocks-plunge-amid-recession-fears-488925">Day after Fed rate hike, US stocks plunge amid recession fears</a>

After sharp early losses, world&nbsp;stocks&nbsp;steadied somewhat to ending Friday's session down by just 0.12 per cent. The weekly slide of 5.8 per cent&nbsp;was the steepest since the week of March 20, 2020.

Wall Street's Dow Jones Industrial Average slipped 0.13 per cent, the S&amp;P 500 added 0.22 per cent, and the Nasdaq Composite jumped 1.43 per cent.

For the week, the S&amp;P 500 dropped 5.8 per cent, also its biggest&nbsp;fall&nbsp;since the third week of 2020.

"Inflation, the war and lockdowns in China have derailed the global recovery," economists at Bank of America said in a note to clients, adding they see a 40 per cent chance of a recession in the United States next year as the Fed keeps raising rates.

"We look for GDP growth to slow to almost zero, inflation to settle at around 3&nbsp;per cent&nbsp;and the Fed to hike rates above 4 per cent."

The Fed on Friday said its commitment to fight inflation is "unconditional". Fears that its rate hikes could trigger a recession supported Treasury prices and slowed the rise in yields, which&nbsp;fall&nbsp;when prices rise. Ten-year Treasury yields retreated to 3.22944&nbsp;per cent&nbsp;after hitting an 11-year high of 3.498% on Tuesday.

Southern European bond yields dropped sharply after reports of more detail from ECB President Christine Lagarde on the central bank's plans.

Watch |&nbsp;Steepest weekly slide in world stocks since March 2020 as tighter monetary rules worry investors

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"The more aggressive line by central banks adds to headwinds for both economic growth and equities," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "The risks of a recession are rising, while achieving a soft landing for the US&nbsp;economy appears increasingly challenging."

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell to a five-week low, dragged by selling in Australia. Japan's Nikkei fell 1.8&nbsp;per cent&nbsp;and headed for a weekly drop of almost 7 per cent.

Japanese Yen Dives

Bonds and currencies were jittery after a rollercoaster week.

Overnight in Asia, the yen tanked after the Bank of Japan stuck to its ultra-accomodative policy stance. The yen fell 2.2% by late Friday, bolstering the U.S. dollar, which rose 0.73% against a basket of major currencies.

Sterling fell 1% in New York as investors focused on the gap between U.S. and UK rates. The Bank of England is opting for a more moderate approach than the Fed.

"If a central bank does not move aggressively, yields and risk price in more in the way of rate hikes down the road," said NatWest Markets' strategist John Briggs.

Also read |&nbsp;<a href="https://www.wionews.com/world/bank-of-japan-keeps-easing-despite-global-rate-hikes-489112">Bank of Japan keeps monetary easing despite global rate hikes</a>

"Markets may just be continuously adjusting to an outlook for higher global policy rates as global central bank policy momentum is all one way."

Slower growth could dent fuel demand, so U.S. crude fell 6.42% to $110.04 per barrel and Brent was at $113.30, down 5.43% on the day.

Gold was off 0.8% at $1,841.13 an ounce, weighed down by a firmer dollar.

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You can now write for wionews.com and be a part of the community. Share your stories and opinions with us <a href="https://www.wionews.com/content-contribution-registration-form">here</a>.

World stocks on Friday closed out their steepest weekly slide since the pandemic meltdown of March 2020, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth.

World stocks on Friday closed out their steepest weekly slide since the pandemic meltdown of March 2020, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth. The US Federal Reserve's biggest rate hike since 1994, the first such Swiss move in 15 years, a fifth rise in British rates since December and a move by the European Central Bank to bolster the indebted south all took turns roiling markets. The Bank of Japan was the only outlier in a week where money prices rose around the world, sticking on Friday with its strategy of pinning 10-year yields near zero. Also read | Day after Fed rate hike, US stocks plunge amid recession fears After sharp early losses, world stocks steadied somewhat to ending Friday's session down by just 0.12 per cent. The weekly slide of 5.8 per cent was the steepest since the week of March 20, 2020. Wall Street's Dow Jones Industrial Average slipped 0.13 per cent, the S&P 500 added 0.22 per cent, and the Nasdaq Composite jumped 1.43 per cent. For the week, the S&P 500 dropped 5.8 per cent, also its biggest fall since the third week of 2020. "Inflation, the war and lockdowns in China have derailed the global recovery," economists at Bank of America said in a note to clients, adding they see a 40 per cent chance of a recession in the United States next year as the Fed keeps raising rates. "We look for GDP growth to slow to almost zero, inflation to settle at around 3 per cent and the Fed to hike rates above 4 per cent." The Fed on Friday said its commitment to fight inflation is "unconditional". Fears that its rate hikes could trigger a recession supported Treasury prices and slowed the rise in yields, which fall when prices rise. Ten-year Treasury yields retreated to 3.22944 per cent after hitting an 11-year high of 3.498% on Tuesday. Southern European bond yields dropped sharply after reports of more detail from ECB President Christine Lagarde on the central bank's plans. Watch | Steepest weekly slide in world stocks since March 2020 as tighter monetary rules worry investors "The more aggressive line by central banks adds to headwinds for both economic growth and equities," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "The risks of a recession are rising, while achieving a soft landing for the US economy appears increasingly challenging." In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell to a five-week low, dragged by selling in Australia. Japan's Nikkei fell 1.8 per cent and headed for a weekly drop of almost 7 per cent. Japanese Yen Dives Bonds and currencies were jittery after a rollercoaster week. Overnight in Asia, the yen tanked after the Bank of Japan stuck to its ultra-accomodative policy stance. The yen fell 2.2% by late Friday, bolstering the U.S. dollar, which rose 0.73% against a basket of major currencies. Sterling fell 1% in New York as investors focused on the gap between U.S. and UK rates. The Bank of England is opting for a more moderate approach than the Fed. "If a central bank does not move aggressively, yields and risk price in more in the way of rate hikes down the road," said NatWest Markets' strategist John Briggs. Also read | Bank of Japan keeps monetary easing despite global rate hikes "Markets may just be continuously adjusting to an outlook for higher global policy rates as global central bank policy momentum is all one way." Slower growth could dent fuel demand, so U.S. crude fell 6.42% to $110.04 per barrel and Brent was at $113.30, down 5.43% on the day. Gold was off 0.8% at $1,841.13 an ounce, weighed down by a firmer dollar. WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.

Stocks in biggest weekly loss since 2020 on interest-rate worries

RBI governor Shaktikanata Das address amid Covid-19 outbreak. Rbi lowered the key repo rate by 75 basis points (bps) to 4.4 per cent, to help the economic slowdown in the wake of the coronavirus outbreak. The reverse repo rate now stands at 4 per cent, down 90 bps.

RBI briefing amid coronavirus outbreak | Slashes Repo rate by 75 bps

As odds of the global recession rises the government and central banks around the world are racing to restore the economic damage from the spread of the novel coronavirus. The death toll has already landed hard on the jittery financial markets. Watch report:

Global stocks plunge on coronavirus fears

Last year Facebook announced its digital currency - Libra - which seen as a savvy business move, but American lawmakers raised red flags over the entire project.

However, the Bank of England has different ideas - they might end up embracing cryptocurrency.

From being hailed as the future of money to being snubbed and barred, the cryptocurrency has faced the entire spectrum.

But now it could find more legitimacy than ever before because of some of the world's largest central banks. &nbsp;

Right after Facebook revealed its plans, the European central bank expressed an interest. China too has been busy readying plans for a state-backed cryptocurrency. 
 
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And now the Bank of England has created an international group for it. The central banks of Japan, Sweden, Switzerland and the Eurozone have joined the initiative along with the bank of international settlements.

This new group will be co-chaired by ECB board member Benoit course and Bank of England Deputy Governor Jon Cunliffe. The cryptocurrency industry has given the move a double thumbs-up expectedly. They are glad that the potential of the bitcoin is finally being recognised.

But they are also aware that this is just the beginning of what could be an extremely long-winding process. In the meantime, the facebook-led project libra itself has faced intense regulatory pushback.

Central bankers from the US to Europe have warned about potential risks of Libra to global financial stability. Vodafone is the latest company to leave Facebook's digital currency project which has seen an exodus of backers including PayPal, e-bay and Mastercard amid regulatory scrutiny.

China has been racing to issue its own central bank digital currency, but its efforts in the space have so far been sketchy in terms of details. 
&nbsp;

Last year Facebook announced its digital currency - Libra - which seen as a savvy business move, but American lawmakers raised red flags over the entire project.

Last year Facebook announced its digital currency - Libra - which seen as a savvy business move, but American lawmakers raised red flags over the entire project. However, the Bank of England has different ideas - they might end up embracing cryptocurrency. From being hailed as the future of money to being snubbed and barred, the cryptocurrency has faced the entire spectrum. But now it could find more legitimacy than ever before because of some of the world's largest central banks. Right after Facebook revealed its plans, the European central bank expressed an interest. China too has been busy readying plans for a state-backed cryptocurrency. WATCH: × And now the Bank of England has created an international group for it. The central banks of Japan, Sweden, Switzerland and the Eurozone have joined the initiative along with the bank of international settlements. This new group will be co-chaired by ECB board member Benoit course and Bank of England Deputy Governor Jon Cunliffe. The cryptocurrency industry has given the move a double thumbs-up expectedly. They are glad that the potential of the bitcoin is finally being recognised. But they are also aware that this is just the beginning of what could be an extremely long-winding process. In the meantime, the facebook-led project libra itself has faced intense regulatory pushback. Central bankers from the US to Europe have warned about potential risks of Libra to global financial stability. Vodafone is the latest company to leave Facebook's digital currency project which has seen an exodus of backers including PayPal, e-bay and Mastercard amid regulatory scrutiny. China has been racing to issue its own central bank digital currency, but its efforts in the space have so far been sketchy in terms of details.

Global central banks could adopt cryptocurrencies

A concentrated burst of interest rate cutting and other measures to loosen global financial conditions by the world's central bankers looks to have largely run its course, and policymakers now appear content to wait and see if their handiwork staves off a deeper slowdown in the months ahead.

Led by the US&nbsp;Federal Reserve's nearly yearlong pivot away from a tightening bias, rate-setters from Australia to Brazil and the eurozone to the Philippines have lowered borrowing costs in recent months to blunt the headwinds from global trade tensions headlined by the standoff between Washington and Beijing.

It is an easing wave that appears to have crested for now.

For their parts, the Big Three in the central bankersphere - the Fed, European Central Bank and Bank of Japan - are in no rush to drive rates any lower, especially in Europe and Japan where they are already in negative territory.

The Fed last week cut rates for the third time since July, but officials emerged from the meeting with a near-explicit declaration to expect no more for the moment.

In Europe, meanwhile, a changing of the guard at a deeply divided ECB likely means that its September rate cut will not be followed in the near future, with their focus instead being on jawboning the trading bloc's political leaders to step up their own efforts at a stimulus.

In Japan, a BOJ weary of expending its limited ammunition has so far avoided cutting rates at all in the latest global wave. It would prefer to hold fire for as long as possible, relying instead of pledges of more accommodation in the future should it be needed.

And in the developing world, the pace of easing has slackened notably from a crescendo reached in August, although October marked the ninth straight month of net rate cuts by emerging market central banks.

How long a pause?

To be sure, the factors allowing policymakers to take a breather may prove fleeting - on the trade front in particular.

In mid-October, the International Monetary Fund pinned the blame on the US-China trade war when it slashed its global growth forecast to the slowest pace since the 2008-2009 financial crisis.

The dispute, initiated by US&nbsp;President Donald Trump, is in a state of detente as the two sides work to complete "Phase One" of a wider deal. But the erratic American president has abruptly changed stance before and may again.

Still, the messaging in the past two weeks from central bankers in Frankfurt and Tokyo was consistent with the Fed's new stance: Let's see how what we've done plays out.

"We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook," Fed Chair Jerome Powell said in his press conference last week after the US central bank cut its benchmark rate by a quarter-point to a range of 1.50-1.75 per cent.

A solid upside surprise on job growth in October only cemented that view. "We've done the adjustment," Fed Vice Chair Richard Clarida said in an interview on Bloomberg TV after Friday's payrolls report.

The ECB has restarted a 2.6 trillion euro bond-buying program after cutting its interest rate on deposits in September. Back then investors were betting on two further rate cuts by March of next year, but have since pared their expectations as deep divisions emerged among ECB policymakers on the path ahead.

New ECB President Christine Lagarde, who took office on Friday, will have to heal a rift between representatives of cash-rich countries such as Germany, the Netherlands and France, who opposed the decision to resume bond purchases, and the struggling periphery.

The former managing director of the IMF has struck a balanced tone, saying an accommodative monetary policy was needed but also had side effects that needed monitoring.

The issue is that the economic benefits of pushing the deposit rate, currently at -0.5 per cent, further below zero are dubious. Mario Draghi, who just turned over the reins to Lagarde, acknowledged in his farewell speech that the negative rate was "not delivering the same degree of stimulus as in the past" because the return on investment in the economy had fallen.

The BOJ decided to hold fire on Thursday and instead buy time with a tweak to its forward guidance. It now pledges to keep rates ultra-low or even cut them for as long as necessary to gauge whether overseas risks have heightened enough to erode the economy's path toward achieving its 2 per cent&nbsp;inflation target.

While Governor Haruhiko Kuroda has stressed the BOJ still has room to deepen negative rates or take any other steps to spur growth, many analysts see last week's decision as underscoring the central bank's desperation in trying to save its dwindling ammunition for when the economy takes a turn for the worse.

Communication will remain a key challenge for the BOJ even under the new guidance, which removed a specific timeframe on how long interest rates will stay low.

"It's wise the BOJ ditched a calendar-based commitment. But it's hard to tell whether the BOJ committed to keeping rates long for a longer period than it previously did ... and how much lower it could bring down rates," said Nobuyasu Atago, a former BOJ official who is now chief economist at Okasan Securities.

A concentrated burst of interest rate cutting and other measures to loosen global financial conditions by the world's central bankers looks to have largely run its course, and policymakers now appear content to wait and see if their handiwork staves off a deeper slowdown in the months ahead.

A concentrated burst of interest rate cutting and other measures to loosen global financial conditions by the world's central bankers looks to have largely run its course, and policymakers now appear content to wait and see if their handiwork staves off a deeper slowdown in the months ahead. Led by the US Federal Reserve's nearly yearlong pivot away from a tightening bias, rate-setters from Australia to Brazil and the eurozone to the Philippines have lowered borrowing costs in recent months to blunt the headwinds from global trade tensions headlined by the standoff between Washington and Beijing. It is an easing wave that appears to have crested for now. For their parts, the Big Three in the central bankersphere - the Fed, European Central Bank and Bank of Japan - are in no rush to drive rates any lower, especially in Europe and Japan where they are already in negative territory. The Fed last week cut rates for the third time since July, but officials emerged from the meeting with a near-explicit declaration to expect no more for the moment. In Europe, meanwhile, a changing of the guard at a deeply divided ECB likely means that its September rate cut will not be followed in the near future, with their focus instead being on jawboning the trading bloc's political leaders to step up their own efforts at a stimulus. In Japan, a BOJ weary of expending its limited ammunition has so far avoided cutting rates at all in the latest global wave. It would prefer to hold fire for as long as possible, relying instead of pledges of more accommodation in the future should it be needed. And in the developing world, the pace of easing has slackened notably from a crescendo reached in August, although October marked the ninth straight month of net rate cuts by emerging market central banks. How long a pause? To be sure, the factors allowing policymakers to take a breather may prove fleeting - on the trade front in particular. In mid-October, the International Monetary Fund pinned the blame on the US-China trade war when it slashed its global growth forecast to the slowest pace since the 2008-2009 financial crisis. The dispute, initiated by US President Donald Trump, is in a state of detente as the two sides work to complete "Phase One" of a wider deal. But the erratic American president has abruptly changed stance before and may again. Still, the messaging in the past two weeks from central bankers in Frankfurt and Tokyo was consistent with the Fed's new stance: Let's see how what we've done plays out. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook," Fed Chair Jerome Powell said in his press conference last week after the US central bank cut its benchmark rate by a quarter-point to a range of 1.50-1.75 per cent. A solid upside surprise on job growth in October only cemented that view. "We've done the adjustment," Fed Vice Chair Richard Clarida said in an interview on Bloomberg TV after Friday's payrolls report. The ECB has restarted a 2.6 trillion euro bond-buying program after cutting its interest rate on deposits in September. Back then investors were betting on two further rate cuts by March of next year, but have since pared their expectations as deep divisions emerged among ECB policymakers on the path ahead. New ECB President Christine Lagarde, who took office on Friday, will have to heal a rift between representatives of cash-rich countries such as Germany, the Netherlands and France, who opposed the decision to resume bond purchases, and the struggling periphery. The former managing director of the IMF has struck a balanced tone, saying an accommodative monetary policy was needed but also had side effects that needed monitoring. The issue is that the economic benefits of pushing the deposit rate, currently at -0.5 per cent, further below zero are dubious. Mario Draghi, who just turned over the reins to Lagarde, acknowledged in his farewell speech that the negative rate was "not delivering the same degree of stimulus as in the past" because the return on investment in the economy had fallen. The BOJ decided to hold fire on Thursday and instead buy time with a tweak to its forward guidance. It now pledges to keep rates ultra-low or even cut them for as long as necessary to gauge whether overseas risks have heightened enough to erode the economy's path toward achieving its 2 per cent inflation target. While Governor Haruhiko Kuroda has stressed the BOJ still has room to deepen negative rates or take any other steps to spur growth, many analysts see last week's decision as underscoring the central bank's desperation in trying to save its dwindling ammunition for when the economy takes a turn for the worse. Communication will remain a key challenge for the BOJ even under the new guidance, which removed a specific timeframe on how long interest rates will stay low. "It's wise the BOJ ditched a calendar-based commitment. But it's hard to tell whether the BOJ committed to keeping rates long for a longer period than it previously did ... and how much lower it could bring down rates," said Nobuyasu Atago, a former BOJ official who is now chief economist at Okasan Securities.

Big central banks go into 'wait-and-see' mode

Authors: Co-Pierre Georg and Qobolwakhe Dube*

With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment.

Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value.

Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created &ndash; up to an agreed limit &ndash; by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain.

Bitcoin, like other assets like gold, doesn&rsquo;t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer.

Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable.

The more immediate fears about bitcoin center on the recent dramatic rise in its value. There&rsquo;s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800.

The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world&rsquo;s largest investment banks declared that he would fire any employee trading bitcoin for being stupid.

In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed.

All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts.

The blockchain factor

There is no doubt that Bitcoin &ndash; and in particular blockchain, the technology behind it &ndash; has the potential to revolutionise the financial services industry.

A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network.

Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role.

The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain.

But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin.

Volatility versus returns

The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times.

When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds.

Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile.

The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn&rsquo;t hold true. More and more private investors have been flocking to bitcoin &lsquo;exchanges&rsquo; that have sprung up all over the internet and that are aggressively advertised on social media.

Overvalued

There is a huge risk that bitcoin is already overvalued.

The practical use cases for bitcoin are limited. It doesn&rsquo;t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn&rsquo;t offer any functionality other than pseudonymous transactions &ndash; transactions where the true identity of the counterparties is hidden.

Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.)

Regulatory risk

The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling.

Despite the claim that bitcoin is a &ldquo;global currency&rdquo;, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion.

Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown.

Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology.

The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers.

A classic bubble

There are real risks that many consumers investing in cryptocurrency don&rsquo;t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin.

Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble &ndash; from the dotcom bubble to the tulip mania. It&rsquo;s also true in every pyramid scheme.

As always, investors should be extremely wary with any scheme that promises quick returns.

This article was originally published on <a href="http://theconversation.com" rel="nofollow">The Conversation</a>. Read the <a href="https://theconversation.com/bitcoin-is-a-highly-speculative-investment-why-caution-is-required-88440" rel="nofollow">original article</a>.

Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town.

(Disclaimer: The author writes here in a personal capacity).

The astronomic rise of the price of bitcoin over the past 12 months raises fears that the cryptocurrency is set to crash which could see many people lose money

Authors: Co-Pierre Georg and Qobolwakhe Dube* With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment. Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value. Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created – up to an agreed limit – by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain. Bitcoin, like other assets like gold, doesn’t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer. Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable. The more immediate fears about bitcoin center on the recent dramatic rise in its value. There’s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800. The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world’s largest investment banks declared that he would fire any employee trading bitcoin for being stupid. In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed. All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts. The blockchain factor There is no doubt that Bitcoin – and in particular blockchain, the technology behind it – has the potential to revolutionise the financial services industry. A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network. Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role. The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain. But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin. Volatility versus returns The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times. When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds. Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile. The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn’t hold true. More and more private investors have been flocking to bitcoin ‘exchanges’ that have sprung up all over the internet and that are aggressively advertised on social media. Overvalued There is a huge risk that bitcoin is already overvalued. The practical use cases for bitcoin are limited. It doesn’t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn’t offer any functionality other than pseudonymous transactions – transactions where the true identity of the counterparties is hidden. Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.) Regulatory risk The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling. Despite the claim that bitcoin is a “global currency”, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion. Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown. Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology. The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers. A classic bubble There are real risks that many consumers investing in cryptocurrency don’t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin. Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble – from the dotcom bubble to the tulip mania. It’s also true in every pyramid scheme. As always, investors should be extremely wary with any scheme that promises quick returns. This article was originally published on The Conversation. Read the original article. Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town. (Disclaimer: The author writes here in a personal capacity).

Opinion: Bitcoin is a highly speculative investment. Why caution is required

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London&#39;s financial centre was at risk of losing its prized &quot;EU passport&quot;. 
 
Banks based in London rely on a so-called EU passport to operate across the bloc&#39;s capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. 
 
The City of London will not be able to keep that passport if Britain leaves the EU&#39;s single market of trade in goods and services, Villeroy told France Inter radio. 
 
&quot;There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,&quot; he said. 
 
&quot;It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market.&quot; 
 
Central banks are efficiently dealing with the fallout of Thursday&#39;s UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: &quot;The euro is a solid currency.&quot; 
 
&quot;What happened on Thursday is bad news, first of all for Britain,&quot; he said. &quot;Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy.&quot; 
 
Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. 
 
(Reuters)

Some London-based banks have said they would shift operations to the euro zone if Britain left the EU

Talks on Britain leaving the European Union must be carried out quickly to limit uncertainty, ECB Governing Council member Francois Villeroy de Galhau said today, adding London's financial centre was at risk of losing its prized "EU passport". Banks based in London rely on a so-called EU passport to operate across the bloc's capital market unhindered. Some banks have said they would shift operations to the euro zone if Britain left the EU. The City of London will not be able to keep that passport if Britain leaves the EU's single market of trade in goods and services, Villeroy told France Inter radio. "There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules," he said. "It would be a bit paradoxical to leave the EU and apply all EU rules, but that is one solution if Britain wants to keep access to the single market." Central banks are efficiently dealing with the fallout of Thursday's UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: "The euro is a solid currency." "What happened on Thursday is bad news, first of all for Britain," he said. "Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy." Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016. (Reuters)

ECB's Villeroy: Brexit talks must be quick, City of London at risk of losing 'EU passport'

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Opinion: Bitcoin is a highly speculative investment. Why caution is required

ECB's Villeroy: Brexit talks must be quick, City of London at risk of losing 'EU passport'