Modern Monetary Theory: it’s a currency question

Modern Monetary Theory (MMT) is a political reaction to the constraints and costs of private financing for public spending. It is the explicit position that fiscal policy and monetary policy should be coordinated in order to avoid these constraints and costs. History is relevant. The future is untold. Money is currency is money. I hope …read more

Trade, Trump and stability of the Chinese yuan

The concept of stability in the Chinese currency has been of great interest to investors, especially since the introduction of the People’s Bank of China’s (PBoC) preferred measure of CNY strength, the ‘CFETS index’. As it stands, the official stance of Chinese policymakers is to manage the bilateral exchange rate versus USD such that CNY …read more

Swiss Interest Rates: Lower for Longer ?

• Has the SNB reached the Zero Lower Bound? After last week’s ECB deposit rate cut, we assess the likelihood of further accommodative monetary policy in Switzerland.
• By applying a Taylor Rule approach to reveal the SNB’s own estimate of the neutral real interest rate, we estimate that there is indeed room for further interest rate cuts, especially as domestic Swiss real interest rates are still moderately elevated.

SNB vs CNB : Currency Interventions

•The economic rationale for entering, and ultimately exiting a regime of exchange rate interventions is markedly different for the Czech National Bank relative to the Swiss National Bank.

•The central bank balance sheet, politics and nature of the underlying economy (and currency) are, amongst other things, important factors in helping determine the likelihood of a central bank continuing to intervene in the FX market.