The European Central Bank (ECB) will introduce quantitative easing (QE) this week, but in a manner that shares risks among all eurozone nations, following concerns from Germany, the Financial Times reported yesterday.
The ECB is to hold its first policy meeting of the year on Thursday and is widely expected to announce some sort of program of sovereign bond purchases — or QE — to try to kick-start the eurozone’s sluggish economy.
German government officials, as well as central bank Deutsche Bundesbank President Jens Weidmann, have repeatedly voiced concern about such a program.
They believe it will take away the pressure on governments to push through essential, but painful, economic reforms, and taxpayers, particularly German ones, could end up footing the bill should another country be unable to repay its debt, the critics argue.
The Financial Times reported that, in a compromise move, “the most likely option at this stage [is] for the ECB to force the 19 national central banks that make up the eurozone stand behind their own sovereign bonds.”
German news magazine Der Spiegel reported on Friday that national central banks would only be allowed to buy the sovereign debt of their respective countries, to ensure they alone carried the risk of a possible default.
The weekly said that ECB president Mario Draghi had presented the scheme to German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble in a meeting on Wednesday.
Merkel’s office confirmed a meeting took place, but refused to reveal what was discussed.
The weekly, in a pre-released copy of a story to appear in today’s edition, said that under the revised scheme, the national central banks will only be allowed to buy the sovereign debt of their respective countries.
That means that each national central bank alone will carry the risk of a possible default by their government, and that Germany, Europe’s paymaster, will not have to bail out another country, the magazine said.
In addition, a ceiling of between 20 percent and 25 percent will be set on how much a central bank can buy of a government’s debt, Der Spiegel said, without revealing its sources.
Greece will not participate in the scheme, because its sovereign debt does not fulfil the necessary quality criteria, the report said.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year. The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion. The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development. Growth accelerated for
RSS