Gold, Silver, and Currencies

Mohamed El-Erian suggests that Japan's policy of yield curve control will inevitably be ended. So how long can it last? He writes in the Financial Times: After occupying a central role in international trade and currency developments in the 1980s and 1990s, Japan’s influence on the global economy and markets gradually declined. “What happens in Japan stays in Japan” became the mantra for many. But this could change if the Japanese authorities do not prepare well for what increasingly looks like an inevitable exit from its “yield curve control” policy. YCC is a monetary policy regime … [Read more...]

Hackers stole $570 million in tokens from Binance, the world's largest crypto exchange on Friday. The theft is another blow to the trust of crypto owners. Philip Stafford and Scott Chipolina report in the Financial Times: Hackers have stolen around $570mn in tokens from Binance, in a rare blow to the world’s biggest crypto exchange and another dent to the troubled digital assets industry struggling to regain trust after a collapse in prices. Binance initially estimated on Friday that tokens worth about $100mn to $110mn had been taken, pausing the operation of the affected blockchain for … [Read more...]

American companies that generate a lot of their revenues overseas are facing uncertainty over the dollar's surge. The Financial Times reports: A surging dollar creates good headlines for Americans looking to travel or send money abroad. But for US companies that generate a big chunk of their earnings overseas, the greenback’s gain has become a serious pain. The US Dollar Index, which tracks the buck against six other important currencies, is at a near 20-year high. It is up 19 per cent since the start of the year and continues rising. The euro has slipped below parity against the dollar … [Read more...]

New Prime Minister of the UK, Liz Truss, and her team have announced a new plan to cut taxes and spend more. Max Colchester, Anna Hirtenstein, and David Luhnow report for The Wall Street Journal: The British government unveiled the country’s biggest tax cuts since the early 1970s, the boldest move by an industrialized country to kick-start growth at a time when stubbornly high inflation stalks the global economy. Financial markets reacted negatively, prompting a slide in the pound and a big jump in government bond yields, underscoring the difficult choices facing governments as they face a … [Read more...]

Japan has intervened in its currency market for the first time since 1998 to stablilize the yen. Kana Inagaki and Leo Lewis report for the Financial Times: Japan intervened to strengthen the yen for the first time since the late 1990s on Thursday, after the currency tumbled to a 24-year low on pledges by the central bank to stick with its ultra-loose policy. Masato Kanda, the country’s top currency official, said the government had “taken decisive action” to address what it warned was a “rapid and one-sided” move in the foreign exchange market. It was the first time Japan had sold dollars … [Read more...]

A Canadian pension fund, the nation's second-largest, Caisse de dépôt et placement du Québec (CDPQ), is writing off its investment in cryptocurrency lending platform, Celsius Network. The write-off will be $150 million. Explaining the disaster, the fund's chief executive, Charles Emond, explained that "we went in too soon into a sector that was in transition." Scott Chipolina and Josephine Cumbo report in the Financial Times: Canada’s second largest pension fund manager has written off its $150mn investment in crypto lending platform Celsius Network and conceded it went into crypto “too … [Read more...]

Cryptocurrency markets are still in the "wild" stage of their development, despite all the money involved. In the Financial Times, Lex analyzes the state of the crypto market today, writing: In percentage terms, the cryptocurrency crash of 2018 was worse than the winter that is currently gripping crypto markets. The difference this time round is the amount of money involved. In 2018, about $700bn was wiped from the market’s high point, according to price-tracking site CoinGecko. So far this year, the crypto market’s value has fallen by more than $1.2tn. To that total can be added millions … [Read more...]

In an extensive article in the Financial Times, Willem Buiter and Anne Sibert explain the benefits and problems with stablecoins, and how to maximize and solve them respectively. They write: As the world of decentralised finance continues to grow, there is much demand for a digital currency fit for use in blockchain-based applications with near-real-time, peer-to-peer global settlement that can be used as a medium of exchange. However, most cryptocurrencies are too volatile for this and there are also issues with central bank digital currencies. CBDCs may not be based on the distributed … [Read more...]