Latest news with #ChristineLagarde
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Business Standard
14 hours ago
- Business
- Business Standard
Best of BS Opinion: Why policy must shelter everyone without favour
It's that season again, when the rains surprise you. You step out without an umbrella, only to see someone near you pull one out, wide and sturdy but only for themselves. Or worse, they tilt it just enough to keep their shoulder dry while yours soaks. That's what bad policy often looks like. Advice or governance that shelters a few, but leaves the rest exposed. Advisory should be like a good umbrella; broad, responsive, and meant for all. Let's dive in. Pan Gongsheng, China's central bank chief, wants to widen the global monetary umbrella, away from dollar dominance. With six foreign banks joining China's SWIFT alternative and ECB's Christine Lagarde echoing concerns, there's a visible push. But, as our first editorial notes, China's capital controls and credibility gaps mean the renminbi (Chinese Yuan) isn't a ready replacement. Instead, we may end up with a fragmented financial drizzle with more transaction costs and less shelter for all. Closer home, Uttar Pradesh is building something more inclusive. The state is planning 15 MSME zones across 11 districts, using over 700 acres to energise small businesses. Programmes like One District One Product are reshaping exports, but the umbrella is still lopsided, argues our second editorial. Only one in three MSMEs are run by women, and agro-processing remains underscaled. For MSMEs to truly flourish, policies must unfurl beyond land to credit access, rural skilling, and logistical ease. Air safety, argues K P Krishnan, urgently needs its own umbrella. India's DGCA is shackled, lacking autonomy, money, and modern recruitment. Global regulators like the FAA and CAA operate with real independence. India needs an Aviation Safety Authority through a full Act of Parliament, with financial muscle and legal teeth. After all, umbrellas shouldn't only open after the thunderclap. And Vinayak Chatterjee writes of a nuclear pivot. From Small Modular Reactors to private sector entry, India's ambitious 100 GW goal by 2047 demands updated laws and new investors. But unless vendor liability rules, fuel security, and financing reforms come through, the umbrella will remain stuck at half-open. Finally, in Private Revolutions: Coming of Age in a New China, as reviewed by Gunjan Singh, Yuan Yang reminds us that in China too, the umbrella of reform has left many standing at the edge. Her portrait of four women reveals how revolutions may roar from the state but the everyday act of staying dry is personal, persistent, and quietly radical. Stay tuned and remember, advisory shouldn't be weather-dependent or selective. Open it wide or what's the point?
Reuters
a day ago
- Business
- Reuters
Breakingviews - China's new currency order faces same old problems
HONG KONG, June 19 (Reuters Breakingviews) - It's a good time to pitch alternatives to the U.S. dollar , but it pays to be specific. On Wednesday, People's Bank of China Governor Pan Gongsheng told attendees of a financial forum in Shanghai that he expected the largely greenback-based global monetary system to become multipolar, ultimately helping to 'better safeguard global financial stability'. Pan had clearly read the room: just a day prior, European Central Bank President Christine Lagarde wrote, opens new tab in the Financial Times that a 'global euro' moment had arrived as the dollar's dominance is called into question, pointing to 'protectionism, zero-sum thinking and bilateral power plays'. It's not difficult to imagine a scenario in which the dollar retreats as the euro increasingly dominates European finance and the yuan comes to dominate Asian finance. In reality, though, getting there is much harder. Figures, opens new tab from the Bank for International Settlements show outstanding U.S. government debt securities at roughly $31 trillion, while those of China and the euro area are both at about $11 trillion each. Combined, the latter two come closer to the dollar total, lending some credence to Pan's scenario. But size alone is not enough. China, for instance, offers a large, single pool of government debt denominated in its own currency with a common credit rating — key prerequisites for reserve currency status. However, its capital account is largely closed, currency hedging options are restricted and domestic banks controlled by the state buy up the lion's share of government bonds issued and hold them to maturity. That saps market liquidity. Meanwhile the euro area has an open capital account and proper hedging tools, but is comprised of 20 member states with individual credit ratings and differing appetites for bond issuance. For both the euro and yuan to pose a serious challenge to the dollar, then, requires two major changes: China needs to open its capital account and substantially change the investment behaviour of its banks; and the eurozone needs most of its member states to sufficiently improve their credit ratings while also spurring enough issuance. From this perspective, a multi-pronged assault on U.S. dollar hegemony looks like a long shot - especially given that the new measures Pan flagged this week to boost yuan internationalisation were marginal at best, in line with President Xi Jinping's stated desire for a firm exchange rate. The ECB may well take a crack at dethroning the greenback, which Beijing will cheer. But for as long as it keeps its capital account cloister-tight, China won't be ramping up its own efforts. Follow Hudson Lockett on Bluesky, opens new tab and X, opens new tab.
Bloomberg
a day ago
- Business
- Bloomberg
ECB's Lagarde Says More Regional Trade Can Offset Global Losses
By and Daryna Krasnolutska Save European Central Bank President Christine Lagarde said greater trade in the region could help compensate for losses suffered as a result of global fragmentation. Speaking in a surprise visit to Kyiv, she recalled that the bulk of the euro zone's exports go to other European countries, including the UK, Switzerland and Norway.
LeMonde
3 days ago
- Business
- LeMonde
'To gain financial autonomy, Europe must create a large-scale debt market'
"Sell America." The turmoil caused by Donald Trump's back-and-forth on tariffs has led to an unusual mantra spreading through the world of finance: Sell (some of) your American assets to avoid being too exposed to the whims of the US president. As a result, many investors have shed both their American stocks, their US bonds and their dollars. While the stock market has rebounded – at least temporarily – the greenback has still fallen nearly 10% against the euro since February. Selling America is one thing, but what should one buy instead? The answer is far from obvious. Japan's economy is stagnant, China is not considered a reliable partner and emerging markets are extremely volatile. In theory, Europe could seize this opportunity. It may not be dynamic, but it is wealthy and the rule of law is respected. In that context, could the euro – the world's second-most traded currency, though still three times less important than the dollar – take on a greater role? The stakes are high; this is about European sovereignty, and with it, Europe's ability to fund itself more easily. Ultimately, it comes down to shifting the "exorbitant privilege of the dollar" toward an "exorbitant privilege of the euro." "There is an opportunity that is opening now (...) but my conclusion is that it is not going to be granted to us; it should not be taken as a given," warned Christine Lagarde, president of the European Central Bank, on June 5. To take advantage of the chaos caused by Trump, she explained, Europe needs to reform. Above all, it must address its main weakness, namely fragmentation among the 27 countries (20 in the eurozone). Creating a large-scale debt market This is especially clear when it comes to funding the economy. While the US has $29 trillion in sovereign bonds – until recently considered the world's safest assets – the European Union (EU) has 27 separate sovereign debt markets. Germany's − seen as the safest − is worth $2.5 trillion, which is nearly 12 times smaller. For an American or Japanese investor looking to put their money in Europe, this makes things complicated. To gain financial autonomy, Europe must create a large-scale debt market capable of competing with that of the US.
Daily Mail
3 days ago
- Business
- Daily Mail
Lagarde bids for euro primacy - but don't bet against the dollar just yet, says ALEX BRUMMER
Christine Lagarde has never been short of ambition, as her translation from French finance minister to head of the IMF and now president of the European Central Bank (ECB) demonstrates. The ECB chief's latest target is to end the also-ran status of the euro as a reserve currency. Her aim is to displace the dominance of the dollar, which represents 58 per cent of foreign currency reserves, with the euro which accounts for around 20 per cent. Lagarde recognises that the EU may not be trusted until it completes the single market, reduces regulatory burdens and builds a robust union of capital markets. In Europe's favour, largely thanks to Germany, is the EU-wide debt-to-GDP ratio of 89 per cent against 100 per cent in the UK and 124 per cent and rising in the United States. Lagarde's demarche comes at a moment of high tension for the guardians of the dollar at the US central bank, the Federal Reserve. It began a two-day interest rate setting session yesterday under fire. Donald Trump's tariff mayhem and a so far ill-fated effort at securing world peace have been dominating headlines. Plan: European Central Bank chief Christine Lagarde's latest target is to end the also run status of the euro as a reserve currency The US President's unrelenting attacks on the Fed's chairman Jay Powell have been under the radar but may inadvertently be holding up the very interest rate cuts Trump craves. Ideally, American interest setters might want to lower the official federal funds rate from its current range of 4.25 per cent to 4.5 per cent. But to do so might give the impression to markets, businesses and consumers that the central bank is vulnerable to political pressure and not serious about hitting a 2 per cent inflation target. We shouldn't underestimate the pressure on Powell. Using disobliging language, the Fed chairman variously has been described by Trump as a 'loser' and a 'numbskull' for not bringing rates down more quickly to facilitate growth. Indeed, the president has gone as far as to name a preferred successor, Fed governor Kevin Warsh. He is a critic of central bank mission creep beyond its monetary role of fighting inflation. It is not just Trump who is gunning for the Fed. Texas Senator Ted Cruz, a potential Republican presidential candidate in 2028, advocates a halt to the Fed's practice of paying interest rate on its reserves. This policy gobbled up $280billion in 2023 and has cost as much as a trillion dollars over a decade. The approach is sometimes given a run-out in Britain with Reform among those suggesting that cancelling the Bank of England payouts could save £35billion of interest rate bills a year. The Fed has good reason to be cautious irrespective of political pressure. Core inflation and the US central bank's preferred data, the personal consumption expenditure index, are both running above the 2.5 per cent target. The ongoing tariff war threatens to raise domestic prices as the levy is passed onto consumers. The current Israel-Iran war raises the prospect of higher energy prices ahead of the summer driving season. Andrew Bailey, the governor of the Bank of England, is fortunate that former junior colleague Rachel Reeves is not throwing Trump-style brickbats at the central bank. It is irksome that Reeves defends her stewardship of the economy by referring to the four quarter-of-a-percentage point reductions in the bank rate since Labour took office 11 months ago. That is a far milder aspersion on the Bank's independence than anything heard in America. Reeves' botched budgetary decisions fly in the face of an assertion that fiscal policy created the stability that allowed borrowing costs to fall. Freed from such pressures, Lagarde has been able to guide EU rates down and at 2 per cent they are now half those in the US and UK. Europe's moribund economies need a boost as they retool for a greener energy future. But it is a big jump for the euro from distant second to be being a favoured reserve currency. After all, the dollar is the currency of commodities and global trade. It is also able to finance a bigger deficit than the EU because of the resilience of the American economy, which can grow its way out of difficulty. Too soon to sound the last post for the greenback.
