But regardless of the form, money is only credible as long as everyone agrees that it has value, i.e. there’s a large enough market size of people willing to use it. This fundamentally comes down to trust and confidence. But Venezuela’s example shows how quickly that very thin veneer of trust and confidence can shatter, plunging a country into chaotic hyperinflation.
"After a year in which reality has managed to surpass even seemingly unlikely calls, 2017 may be a wakeup call which sees a real departure from the 'business as usual'..." Will this be the year when China exceeds growth expectations, Brexit turns into Bremain, the Mexican peso soars and Italian banks turn out to the best performing equity asset class?
A probe into October’s sterling "flash crash" has focused on the Japanese trading operations of Citigroup, which fired off repeated sell orders that exacerbated the pound’s fall. One of the US bank’s traders "panicked" and placed multiple sell orders when the currency slumped in unusually fragile market conditions.
"Has monetary policy robbed savers to pay borrowers? Has the MPC been Robin Hood in reverse? In a word, no." said BOE governor Mark Carney, which was surprising because in a study earlier this year, the BIS found that monetary policy has done precisely that.
As all experience from the past clearly demonstrates, it is a mistake to believe that the gold price is set solely by dollar interest rates, or its relative strength in other currencies. This being the case, the current weakness of the gold price is simply a reflection of temporary dollar shortages, and nothing more.
While the term 'stress test' has been applied almost mockingly to European and US banks in an effort to create confidence for investors (because if the government sees risks 'contained' then why worry), this morning's Bank of England stress test results highlighted "capital inadequacies" for three major UK banks. While Barclays and Standard Chartered fell short, it is taxpayer-owned Royal Bank of Scotland that is slumping on a need to cut costs, raise capital, and sell assets.