- London Stock Exchange (LSE) wants to sell Milan stock exchange to Euronext
- Johannes Borgen’s summary of the FinCEN Files
- ECB swap and repo operations
- How knowledge of organizational operations empowers and alienates (academic research that rings true to me)
- How reliable are trade statistics? (One should also account for smuggling and trade misinvoicing)
- How great is the customer support of (UK) banks?
- What are TARGET2 balances?
- Steffen Murau on the eurozone architecture embedded in the global offshore US dollar system
- Euro area statistics
- Cross-border coordination of European financial organizations
- Commercial data sources are (often) bad
- Inside the Iraqi kleptocracy (several examples of corruption using banks)
- Vincent Grossmann-Wirth (Banque de France) talks about the ECB’s response to the “pandemic emergency” on Macro Musings.
A global currency means global power for the Fed: How U.S. sanctions depend on the Federal Reserve
Russian exports invoiced in euro rather than dollar
Delusional talk from the ECB: Unleaching the euro’s untapped potential at global level
- ABN AMRO exits all its non-European corporate banking activities
- CaixaBank and Bankia are planning a merger
- HSBC wants to sell its French retail network
The strategy of European banks ever since the Global Financial Crisis has been to focus on profitability1. How do you achieve a higher return on equity? There are two commonly followed options. Either you cut costs, e.g. by merging banks in the same geography and closing down the redundant branches. Or you sell the business, especially when you’re an also-ran outside of your home market.
Two insightful articles by Adam Keesling (Napkin Math) on education and content creation:
Why MasterClass isn’t really about mastery (tldr: MasterClass doesn’t compete against universities, it sells credibility and inspiration)
Why software is more profitable than content (tldr: “Content products talk to humans, while software products talk to computers. That’s why the value of content decays faster than the value of software.”)
Alex Zhu (TikTok) also discusses the challenges of online content and learning at the beginning of this interview:
His key insights:
- people want light content, both as consumers and as creators
- education goes against human nature: most people use their smartphone for communication and entertainment, not to learn
I especially liked his discussion of “front book, back book“. Banks and insurers accumulate a long-term book of assets. These generate a predictable stream of income (interest and premiums). Unfortunately, this “back book” exposes them to unexpected losses. As a result, financial firms need a lot of capital.
The business model of Software-as-a-Service (SaaS) companies is also based on a back book. However, unlike banks, their portfolio of subscribers does not require a lot of capital.
In the same newletter, Rubinstein discusses the possibility of bank M&A funded by badwill, as I suggested earlier.
M. Kasongo Kashama of the National Bank of Belgium (NBB) has written an assessment of modern monetary theory (MMT).
The article cites the MMT literature (Mosler, Tymoigne, Kelton…) directly, rather than relying on a description by mainstream economists.
I haven’t read it in detail yet, maybe I’ll write more when I do.
BNP Paribas expanded its balance sheet by 23% (!) in the first quarter of 2020, as companies took out emergency loans in response to the coronavirus panic.
Sean Pawley talks about banking in East Africa on the Palladium Podcast (discussion about banks between 6:50 and 22:15). Multiple issues with banking in Rwanda and other countries in the region: economy runs on cash payments -> banks lack reliable data on borrowers -> high default rates -> unstable banks, high interest rates and fees, preference of cash over bank deposits. His solution: a narrow bank that eliminates credit risk. Provide a cellphone-based payment solution. Collect payment data. Based on the data, start making loans.
Climate change’s new ally: big finance discusses the role of asset managers in reducing emissions.
A model of the Eurozone architecture embedded in the global US dollar system by Steffen Murau (using the analytical framework of interlocking balance sheets!)
Facts and myths about bank leverage ratios (from 2014, but timeless). Dan Davies explains why reducing risk to a single metric cannot work.
More on the miracles of bank regulation:
Revisiting the Ides of March: how banks’ liquidity rules complicated the corporate demand for cash during the coronavirus panic of March 2020.
Is het een drama dat iemand tijdelijk meer krijgt om thuis te blijven dan om te gaan werken?
Dit verhaal uit Amerika toont wat er kan gebeuren wanneer mensen per se willen gaan werken uit schrik om geld te verliezen:
Wat kost de economie en de maatschappij meer?
The Unleashed podcast with Will Bachman offers practical advice:
European Union leaders agreed on a package of measures to support the economy after the damage done by Covid-19.
The summit took four days, because of tensions between member states that will be net payers and those that will be net receivers of EU funds.
However, I had a more elegant alternative, as I explained on Twitter (thread):
The EU missed an opportunity to provide macroeconomic support that matches the size of the corona shock, to increase safe assets and to avoid transfers between member states.