Gold, Silver, and Currencies

Big banks BNP Paribas and JPMorgan are using digital tokens in their short-term trading operations. Eva Szalay reports for the Financial Times: JPMorgan’s blockchain allow banks to lend out US government bonds for a few hours as collateral, without the bonds leaving their balance sheets. Post-crisis regulatory requirements demand that banks hold large amounts of liquid assets — which can be bought and sold easily even during times of market stress — such as Treasuries as a safety buffer. By tokenising these assets banks can temporarily turn them into collateral for a few hours, but without … [Read more...]

In the Financial Times, Zach Pandl examines recent yen depreciation, writing: The yen has been the worst performing major currency this year, sliding around 12 per cent against the dollar and underperforming even the Turkish lira and Argentine peso. Relative to a basket of trading partner currencies and adjusted for inflation, the yen has fallen to levels last seen in the early years of the Reagan administration, before the 1985 Plaza Accord. But this state of enyasu (weak yen) will probably be shortlived. The yen is an undervalued haven asset at a time of rising recession risks around … [Read more...]

The implementation of crippling sanctions on Russia's central bank may encourage other countries to diversify away from the dollar, lest they fall victim to the same pressure tactics in the future. Gita Gopinath, the IMF's first deputy managing director, suggests there could be "fragmentation," of the world currency market. Johnathan Wheatley and Colby Smith report for the Financial Times: Gita Gopinath, the IMF’s first deputy managing director, said the sweeping measures imposed by western countries following Russia’s invasion, including restrictions on its central bank, could encourage the … [Read more...]

When a central bank offers to buy an unlimited number of its government's bonds, is it any surprise when its currency falls hard on the news? The value of the yen has dropped sharply on the news that the Bank of Japan will buy an unlimited number of 10-year Japanese government bonds to support the country's economic stimulus. The Financial Times reports: The yen dropped to a seven-year low on Monday as the Bank of Japan bucked the global trend for tighter monetary policy, stoking speculation that the central bank could intervene to prop up the currency for the first time since 1998. The … [Read more...]

For policymakers using currency debasement as a "solution" to their problems, there could be nothing worse than cryptocurrency. Its status as a "hard" currency alternative to fiat money makes cryptocurrency a friend to people living in hyper-inflationary environments. The anonymity of many cryptos also makes them desirable for people in oppressed nations. That combo is hitting Turkey like a double-whammy. Laura Pitel and Eva Szalay report on Turks flocking to cryptocurrency in the Financial Times, writing: Despite having a masters degree and a stable job, a middle-class lifestyle has felt … [Read more...]

In what seems like a relentless drive toward self-actualization, discussion of the digitalization of the dollar has been winding its way through economic and financial news and analysis. But does America need a digital dollar? And are there dangers in such a creation? Alexander William Salter, an associate professor of economics in the Rawls College of Business at Texas Tech University and a senior fellow with the Sound Money Project, discusses some of the dangers of digitizing the world's reserve currency in The Wall Street Journal, writing: The Federal Reserve plans to consider the idea of … [Read more...]

Germany's inflation has climbed to a 29-year high of 4.1%. That's higher than at any point during Germany's participation in the euro currency bloc. This is perhaps most startling because of Germans' traditional aversion to inflation, which is understandable after having undergone one of history's worst hyper-inflations. Martin Anrold reports in The Financial Times: German inflation hit 4.1 per cent in September, its highest level for 29 years, prompting some economists to question whether central bankers are right to assume the surge in prices is only temporary and will disappear next … [Read more...]