Group of 20 leaders likely will consider a coordinated exchange-rate policy when they meet this month in response to a significant drop in emerging-market currencies, European Central Bank Executive Board member Benoit Coeure says. "Given the difficulties that big emerging-market countries are having, there's a risk that their currencies will keep weakening," he said.
Billionaire Michael Bloomberg is considering candidacy for the White House, saying he is disappointed by the poor quality of debate. "I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters," he said, adding that Americans deserve "a lot better."
Investors will be listening to Federal Reserve Chair Janet Yellen's testimony before Congress on Wednesday for a hint of the central bank's next policy move in light of falling expectations for global economic growth. The US unemployment rate is at 4.9%, but declining oil prices likely put a 2% inflation target out of reach.
President Barack Obama will ask Congress to increase funding by 11% for the Securities and Exchange Commission and by 32% for the Commodity Futures Trading Commission in his fiscal 2017 budget proposal, according to a blog post from White House economic adviser Jeffrey Zients. The proposal backs user fees to fund the CFTC, Zients says.
New York Mayor Bill de Blasio has impressed investors with his $82.1 billion budget proposal, which reserves $5 billion in case of sudden economic downturns. The city plans to sell $1 billion in bonds today, backed by a 15% increase in tax revenue last year.
The Basel Committee on Banking Supervision is expected to finalize derivatives rules by the end of this year, but the US version may not surface until 2017 since the presidential election may lead to a change in regulatory leaders.
Citadel Securities proved last year that succeeding in the swaps market no longer means you have to be a bank offering many services to a range of customers around the world, writes Duncan Wood. Some banks appear to be taking another look at their operations and how best to position themselves for swaps-market success.
While designing an identifier for over-the-counter derivatives will be challenging, International Securities Identification Numbers are not the answer, Societe Generale's Bill Stenning writes. "What is abundantly clear is that to be fit-for-purpose as a trade identifier, a symbol needs to carry a minimum amount of trade-specific pricing information. This, at present, cannot be a securities-style instrument identifier, at least not in the way these identifiers currently work," he writes.
A Reserve Bank of India panel has recommended introducing over-the-counter and exchange-traded options for investors to hedge interest-rate risks. "The financial entities, including banks, do not have any instruments to manage the embedded options on their balance sheets," the panel said Monday. "Thus market participants in India need a hedging instrument to manage interest rate option risk.”
Low interest rates are creating a profitability crisis for European banks, and negative deposit rates could force banks to increase borrowing costs, exacerbating the problem. The European Central Bank has cited bank profitability as the greatest financial risk in 2016.
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