ECB's balance sheet rises to €2.73
trillion The European Central Bank's loans last week to
financial institutions to help with liquidity resulted in a
balance-sheet increase for the ECB, to a record €2.73 trillion.
However, stocks dropped and the euro weakened after the move. "The
market reaction is slightly incomprehensible," said Jens Kramer, an
economist at Norddeutsche Landesbank. "After that record liquidity
injection, it would follow that the balance sheet would swell.
Seeing the figure in black and white, and the fear of what would
happen to the ECB if a country defaulted, may have spooked the
market."Bloomberg(28 Dec.)
Global banks brace for US tax
regulations Banks worldwide are bracing for US rules mandated by
the Foreign Account Tax Compliance Act of 2010. The regulations are
prompting some financial institutions to drop American
clients.The Wall Street Journal(29 Dec.)
Chinese banks must prepare for
euro-zone split, analyst says Bank of China analyst Li Jianjun said Chinese banks
should prepare for a euro-zone breakup. Their largest risk is in
securitised euro-denominated debt, Li said. "That will be a big
problem, because banks have to clear up not only euro debt but also
related debt if the situation worsens," he said.China Daily (Beijing)(29 Dec.)
PBOC might suspend sale of 3-month
bills as banks hoard cash China's central bank might drive up money market
rates by suspending a sale of three-month bills, traders said.
"It's probably a temporary suspension because of the cash crunch,"
said Liu Junyu, a bond analyst at China Merchants Bank. "The
central bank may cut the reserve-requirement ratio before the Lunar
New Year to add liquidity to the financial system."Bloomberg(28 Dec.)
