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☆ The biggest threat to the US dollar is America's exorbitant debt load, JPMorgan says
▼ + stars: | 2024-09-17 | by ( Filip De Mott | ) www.businessinsider.com time to read: +4 min

One of the main takeaways was that the biggest threats to dollar dominance are swelling US debt levels and fiscal deficits, which officials in Washington could step up to tackle. "The biggest challenge to US dollar dominance is the US itself given the mounting public debt levels and elevated fiscal deficits," JPMorgan said, in a note summarizing the webinar. For instance, many alarmists have focused on the dollar's share in foreign reserve holdings, often pointing out that the foreign central banks have piled into gold as an alternative. But this fixation omits the fact that bank deposits, sovereign wealth fund assets, and other dollar instruments have been on the rise among reserve holdings, JPMorgan said. "In China's case, it has had an explicit target to bring down dollar holdings in FX reserve but has shifted USD holdings to state-owned entities.

Persons: —, Peter G, Mark Sobel —, Trump, Sobel Organizations: JPMorgan, Service, US, Peterson Foundation, Treasury, Monetary, Financial, greenback Locations: Washington, China

☆ How a Trump 2.0 presidency could threaten dollar dominance, according to a think tank
▼ + stars: | 2024-07-12 | by ( Filip De Mott | ) www.businessinsider.com time to read: +3 min

If elected, Donald Trump has promised to maintain the dollar as the world's reserve currency. But his policies risk deteriorating faith in the greenback, according to one think tank. At number 13, the former president pledged to keep the US dollar in place as the world's main reserve currency. But a second Trump term might actually erode greenback's dominant role, wrote Mark Sobel, US chair of the Official Monetary and Financial Institutions Forum. During his first term, Trump threatened to leave NATO and took the US out of key agreements, such as the Iran nuclear deal, Paris Climate Accord and Trans-Pacific Partnership, Sobel wrote.

Persons: Donald Trump, OMFIF, —, Donald Trump's, Mark Sobel, Sobel, Trump, Biden Organizations: Service, Republican National, Trump, Monetary, Financial, Treasury, Social Security, NATO, Paris Climate Accord, Pacific Partnership Locations: Iran, Paris

☆ The biggest threat to the dollar isn't other countries but America's own dysfunction, think tank experts say
▼ + stars: | 2024-06-10 | by ( Filip De Mott | ) www.businessinsider.com time to read: +3 min

Foreign de-dollarization efforts are unlikely to spur the greenback's demise. Instead, internal dysfunction could cut into the dollar's dominance, two think tank experts wrote in the FT.That's because the US's global and economic power are the basis for the currency's might. Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. AdvertisementWhile they've grabbed a lot of attention, foreign efforts to advance the trend are questionable at best, Kamin and Sobel wrote. Amplifying de-dollarization is rising trade protectionism and the potential for unilateral financial sanctions.

Persons: —, Steven B, Kamin, Mark Sobel, they've, Sobel, bode Organizations: Service, Financial Times Locations: Russia, Ukraine

☆ Russia's economic decline is in only in the early stages, and the country is masking significant 'degradation,' think tank says
▼ + stars: | 2024-02-13 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +4 min

Russia's economic decline is still in the early stages, according to a London-based think tank. But talk of Russia's economic resilience is misguided, and there are deep-rooted issues that will continue to plague its economy, the think tank said. AdvertisementRussia's robust military spending has been a key factor in propping up its economic growth so far. "Significantly greater isolation and economic degradation is baked into the cake for the Russian economy and people." Russian inflation grew 7.2% year-per-year in January, well above the nation's 4% inflation target.

Persons: —, Mark Sobel, Sobel, Brent, that's Organizations: Service, Official Monetary, Financial, International Monetary Fund, Bloomberg, Yale School of Management . Companies Locations: London, Ukraine, Russia, Oilprice.com, Moscow

☆ US faces pushback on plan to bolster IMF funding without shareholding changes
▼ + stars: | 2023-10-06 | by ( David Lawder | ) www.reuters.com time to read: +5 min

[1/2] The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. Doing so, Ivory Coast President Alassane Ouattara said on Thursday, would "increase the voice and agency of member countries who are the most vulnerable" at the Fund. Martin Muhleisen, a former IMF strategy chief, said the plan "puts the Chinese on the spot to agree". A delay would be a major disappointment for the IMF after contentious 2019 negotiations left quota resources and shareholding untouched. "The Fund's not tight," said Mark Plant, a former IMF official now with the Center for Global Development.

Persons: Yuri Gripas, Joe Biden, Janet Yellen, Alassane Ouattara, Mark Sobel, Martin Muhleisen, Mark Plant, David Lawder, Andrea Shalal, Marcela Ayres, Peter Graff Organizations: Monetary Fund, REUTERS, Rights, International Monetary Fund, IMF, World Bank, Reuters, U.S . Congress, U.S, Treasury, U.S . Treasury, Brazilian, Center for Global Development, Thomson Locations: Washington , U.S, U.S, China, India, Brazil, Marrakech, Morocco, Ukraine, Saharan Africa, Coast, Washington, Beijing, Brasilia

☆ IMF's Argentina predicament: Seek reforms and tango on or kill the music
▼ + stars: | 2023-09-15 | by ( Jorgelina Do Rosario | ) www.reuters.com time to read: +7 min

But that programme failed to put South America's second-largest economy back on its feet. Even if he wins the Oct. 22 election and takes power in December, Milei would need alliances in Congress to push through reforms and a new IMF programme - Argentina's 23rd. That effort paved the way for the $57 billion programme, which ultimately failed and was replaced by the current one. Reuters Graphics Reuters GraphicsPREFERENTIAL TREATMENTThe current programme could end before its expiration in September 2024, but Argentina will still require funds. Without mentioning Argentina, the U.S. - holding the largest voting power in the Fund - recently raised its concerns.

Persons: Javier Milei, Agustin Marcarian, Mauricio Macri's, Mark Sobel, Milei, Sobel, Sergio Massa, Martin Muehleisen, Muehleisen, Nestor Kirchner, Stephen Nelson, Nelson, Walter Stoeppelwerth, Simon Quijano, Evans, Gemcorp Capital, Jay Shambaugh, Jorgelina, Karin Strohecker, Paul Simao Organizations: Argentine, La Libertad Avanza, REUTERS, IMF, International Monetary Fund, South, Peronist, Analysts, Graphics, Review Department, U.S ., Northwestern University, Reuters Graphics Reuters, Gletir SA, Gemcorp, Thomson Locations: La Plata, Buenos Aires, Argentina, Washington, U.S, Chicago, Zambia, Sri Lanka, Ghana, Egypt, Burundi, Saharan Africa, Rosario

WASHINGTON (AP) — Treasury Secretary Janet Yellen is facing growing skepticism from some leading rich and developing nations as the residual impact of sanctions against Russia is deepening divisions among the Group of 20 countries. Russia and China, meanwhile, have declared a “no limits” partnership of their own. And the economic bloc of Brazil, Russia, India, China and South Africa — known as BRICS — is trying to increase its use of local currencies instead of the U.S. dollar. Russia is hoping it can use its power over Ukraine’s Black Sea exports as a bargaining chip to reduce Western sanctions. That may be difficult as G20 nations increasingly gravitate into blocs and with some leaders, including Chinese President Xi Jinping, opting to skip the summit.

Persons: Janet Yellen, —, Joe Biden, Yellen, Vladimir Putin, Putin, Rachel Ziemba, ”, Xi Jinping, Josh Lipsky, Lipsky, Xi, Mark Sobel, ” Sobel, Ziemba Organizations: WASHINGTON, —, U.S ., West, Center, New, New American Security, Treasury Department, International Fund for Agricultural Development, GeoEconomics, Fund, Center for Strategic, International Studies, U.S, New Development Bank, Monetary Fund, World Bank, ”, European Union Locations: Russia, India, U.S, Moscow, Ukraine, United States, China, Brazil, South Africa, New Delhi, New American, Argentina, Australia, Britain, Canada, France, Germany, Indonesia, Italy, Japan, Mexico, Saudi Arabia, South Korea, Turkey

Fitch told the U.S. Treasury about its ultimate decision about 24 hours ahead of the announcement. Fitch's recent talks with the Treasury did not include the actual downgrade decision, Francis said, because it had not yet been made by the agency's ratings committee. On Monday, Fitch's credit committee met, made a decision, and Treasury officials received the Fitch press release of the downgrade. "The timing of the committee was pure coincidence," Francis told Reuters on Friday, noting the date was set weeks ago. Debt ceiling votes have been "acrimonious for decades," one U.S. official complained, referring to a long history of standoffs.

Persons: Dylan Martinez WASHINGTON, Biden, Donald Trump, Harvard's Larry Summers, Jamie Dimon, Fitch, Joe Biden, Richard Francis, Fitch's, Francis, Mark Sobel, Sobel, Alexander Hamilton, David Lawder, Davide Barbuscia, Heather Timmons, Alistair Bell Organizations: Fitch, REUTERS, White House, Reuters, U.S . Treasury, Republicans, Congress, U.S, AAA, Treasury, Social Security, Capitol, Trump, longtime Treasury, Thomson Locations: Canary Wharf, London, Britain, U.S

"China is not trying to supplant the IMF," said Matthew Mingey, a senior analyst with Rhodium Group. "When China has allowed these swap lines to be tapped, in many cases it's to unlock an IMF bailout or ensure an IMF programme stays on track." In turn, China is a major customer for Argentina's soy, corn and poultry exports. "China has every incentive to tightly manage Argentine drawings under the swap lines as the risks are very high." The swap line that the People's Bank of China (PBOC) signed in 2009 with Buenos Aires was the first agreed with a Latin American country.

Persons: Matthew Mingey, Buenos, Mark Sobel, Sobel, Sergio Massa, Martin Castellano, Alejandro Werner, Werner, Mingey, Jorgelina, Rosario, Karin Strohecker, Jorge Otaola, Joe Cash, Kirsten Donovan Organizations: International Monetary Fund, IMF, U.S . Treasury, Reuters, World Bank, TAG, People's Bank of China, Buenos Aires, Economy, Institute of International Finance, Relations, Georgetown Americas Institute, Western Hemisphere Department, Thomson Locations: China, Argentina, Beijing, Washington, Latin America, Buenos Aires, U.S, Buenos, American, United States, Zambia, Sri Lanka, Taiwan, Ukraine

“They’re going to have concerns about our investment policies toward China,” said Mark Sobel, a former longtime Treasury Department official who is now the U.S. chairman of the Official Monetary and Financial Institutions Forum. Tensions have flared over the flight of a Chinese surveillance balloon over the United States, tougher restrictions on technology from Washington, Beijing’s partnership with Moscow during the war in Ukraine and China’s continued threatening of Taiwan. But new investment restrictions from the United States could escalate the tit-for-tat measures that the two countries have been deploying just as they are trying to set a “floor” under their relationship. But the Biden administration appears to have delayed announcing them given the tumultuous relationship with China. Once the restrictions are proposed, the private sector will have time to comment on the limits, which could shape how they are put in place.

Persons: “, ”, Mark Sobel, China’s, Biden, Yellen, Antony J, Blinken, John Kerry, Biden’s Organizations: longtime Treasury Department, Monetary, Financial, Moscow, U.S Locations: China, U.S, United States, Washington, Ukraine, Taiwan, Beijing

WASHINGTON, April 17 (Reuters) - Just a month after the biggest banking crisis in more than a decade, the world's top economic and financial policymakers gathered in Washington and said surprisingly little about financial system stability - at least publicly. Some officials conveyed a sense that banking system safety was further down the priority list of global economic problems. "But it's still something where we need to stay vigilant and address potential risks which may emerge in our financial system," Dombrovskis told reporters. He added that the European Union's banking system was stable, well capitalized with ample liquidity. But during the IMFC's closed meeting, the possible spillovers from financial stability risks were a main topic, Ukrainian Finance Minister Serhiy Marchenko told Reuters.

"Bank runs have started (and) interbank markets have become stressed," said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey. A furious race to reprice interest rate expectations also buffeted markets as investors bet the Federal Reserve will be reluctant to hike next week. Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. The prospect of higher interest rates had been "the reason investors have been really excited about Japan bank stocks." After marathon weekend talks, HSBC HSBA.L said it was buying the British arm of SVB for one pound ($1.21).

Fears remained on Wall Street on Monday despite the measures announced over the weekend following the collapse of California-based Silicon Valley Bank (SIVB.O) and New York-based Signature Bank (SBNY.O). Some investors have called for further action by banking regulators to reassure markets. But banking experts said regulators would likely want to see the extent of any further contagion before deciding on fresh measures. In addition, the Fed announced Monday it was doing an internal review of its oversight of Silicon Valley Bank, where it was the primary regulator. Prior to Silicon Valley Bank's collapse, banks had been lobbying lawmakers to push back against the Fed's review, arguing it could slow the economy.

Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Shares of First Republic Bank (FRC.N) tumbled more than 60% as news of fresh financing failed to reassure investors, and so did Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O). U.S. bank regulators sought to reassure nervous customers on Monday who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. Regulators also moved swiftly to close New York's Signature Bank SBNY.O, which had come under pressure in recent days. In China, where SVB was the main go-to foreign bank for the majority of start-ups, entrepreneurs and venture funds were also scrambling for alternative funding.

SVB's meltdown sparked a partisan battle in Washington on Monday, with Democrats arguing that a Trump-era change to bank oversight rules undermined the stability of regional banks. In the money markets, indicators of credit risk in the U.S. and euro zone banking systems edged up. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023. On Monday morning, U.S. bank regulators sought to reassure nervous customers who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. A furious race to reprice interest rate expectations also sent waves through markets as investors bet the Fed will be reluctant to hike next week.

Biden said his administration's actions over the weekend meant "Americans can have confidence that the banking system is safe", while also promising stiffer regulation after the biggest U.S. bank failure since the 2008 financial crisis. Shares in U.S. banking giants JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) nevertheless weakened. But your second thought is, how big was that crisis, how big were the risks that this step had to be taken?" U.S. regulators stepped in on Sunday after the collapse of SVB, which had seen a run after a big bond portfolio hit. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023.

☆ Visits to Zambia by Yellen, IMF reflect concern over stalled debt talks
▼ + stars: | 2023-01-23 | by ( Andrea Shalal | ) www.reuters.com time to read: +4 min

Frustrated by the delays, U.S. Treasury Secretary Janet Yellen and International Monetary Fund Managing Director Kristalina Georgieva arrived for separate visits in Zambia on Sunday. Both see a new sovereign debt roundtable - introduced late last year - as a way to make progress on long-stalled debt restructuring processes. Yellen told Reuters en route to Zambia she supported the roundtable as a forum for discussing general principles of debt relief. Yellen, however, noted rates were nowhere near those seen under Volcker and inflation was not out of control. "We're in a higher interest rate environment, and that's something that's linked to the strong dollar, and weaker currencies for many emerging markets, but also Japan and other countries," Yellen said.

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