Capital Flow Watch » World Economy

Multiple central banks weaken the euro - Euros versus the dollar

John Schroy — Fri, 02 Jul 2010 16:26:17 +0000

The multiplicity of independent central banks is the Achilles heel of the eurosystem. A bank, controlled by the government, in a fiat money environment, that acts as the paying agent for that government, has — in effect — the capability to print money (although not necessarily banknotes).Imagine, tomorrow the headlines in the Wall Street Journal read "$100 billion is inflationary euros issued without the knowledge of the European Central Bank". What would be the effect of the news on the value of the euro as a reserve currency?

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Who chooses the global reserve currency? - International finance

John Schroy — Sat, 23 May 2009 22:14:49 +0000

Who determines the 'world reserve currency'? Central bankers? IMF officials? College professors?The answer is 'none of the above'. In an open, global economy, the world reserve currency is determined by the judgment of millions of importers and exporters in many countries.The world reserve currency is decided by consensus and the personal decisions of exporters as to what currency they will accept for their goods.On this basis, it's too early to count the dollar out.

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Finding a job in the new capital market - Hard Times

John Schroy — Fri, 17 Apr 2009 21:21:51 +0000

The Crash of 2008 was the end to what I call, "the old capital markets".A new era is beginning, but form and detail are hidden in the mists of change. It may be a decade or so before new structures and directions are visible.Many were thrown out of work by the Crash, but before getting into the unpleasant chore of actually looking for a job, you should consider whether or not you even want to work in the new capital markets.

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US Treasury supports dollars - Devaluation threatens investors

John Schroy — Mon, 30 Mar 2009 07:29:20 +0000

In the financial crisis, the US Treasury took steps to protect the dollar as the world reserve currency, allowing AIG funds to pass through to foreign banks and engaging in currency swaps with foreign central banks.However, the Pelosi-Reid Congress, by unprecedented domestic spending, has raised a real possibility of future high-level inflation. It will be up to US voters whether government finances return to a reasonable basis. The Federal Reserve cannot neutralize the negative impact an out-of-control Congress.

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US Dollar falls 50% against Brazilian Real - Decline of the dollar

John Schroy — Wed, 20 Jun 2007 13:35:44 +0000

Since 2003, the US dollar has fallen almost 50% against the Brazilian Real. What caused this to happen and what does it mean for the future of the dollar?The reason for the strong real is the excess of Brazilian exports over imports. Government policy resulting in extremely high internal interest rates attracts holders of these dollar reserves to invest in short-term Brazilian debt.However, not all is rosy in Brazil.

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The rise of demutualized stock exchanges - Stockbrokers lose clout

John Schroy — Sat, 27 Jan 2007 01:07:58 +0000

Securities exchanges are being transformed from "stockbrokers' clubs" into profit-oriented companies selling services to customers. Long the 'masters of the universe', stockbrokers are expected to become less influential. Free from the constraints of small broker-dealers, demutualized exchanges are in the midst of rapid modernization and dramatic change. Computerized trading, book-entry settlement, central depositories, and cross-border exchanges are now the norm, not the exception.

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National flow of funds accounts: Japan - Capital Flow Analysis

John Schroy — Sat, 11 Mar 2006 13:58:12 +0000

The Bank of Japan publishes quarterly statistics on Japanese national flow of funds accounts in Excel format, in English, on their website.The flow of funds accounts is a matrix showing financial transactions among various economic entities, and corresponding stock data on financial claims and liabilities of them.

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UN SNA: Not ready for prime time - Capital Flow Analysis

John Schroy — Fri, 10 Mar 2006 16:25:11 +0000

In 1993, after thousands of hours of committee work by economists and bureaucrats from all nations, the United Nations, with the blessing of the International Monetary Fund, issued a recommendation for a System of National Accounts (known as SNA 1993).Compared to the Federal Reserve National Flow of Funds Accounts, the United Nations SNA 1993 is not a product that is ready for prime time.

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What is ‘international liquidity’? - World Economy

John Schroy — Sun, 19 Feb 2006 15:14:16 +0000

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners.After Bretton Woods and the advent of the dollar-gold exchange standard, liquidity came to mean access to dollars, either held as reserves or as credit lines, or the SDR system maintained by the International Monetary Fund.

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