The Board of Governors of the Federal Reserve System (“FRB”) announced the designation of the chairs and deputy chairs of each of the 12 Federal Reserve Banks for 2014. Each Reserve Bank has a nine-member board of directors. The Board of Governors in Washington appoints three of these directors and each year designates one of its appointees as chair and a second as deputy chair.
Click here for a complete list of the various bank chairs and deputy chairs.
Janet Yellen was nominated by President Obama to serve as Chair of the Board of Governors of the Federal Reserve System (“FRB”).
See: Janet Yellen Statement; Ben Bernake Statement.
See also: Chairman Hensarling Statement.
The FT printed a thoughtful letter by Mr. Peter Clarke.
Clarke applies Keynes’ thinking to present day circumstances with conclusions differing from consensus.
To read: “Reach of Keynes’ thinking deserves to be appreciated“
Today we release CFS monetary and financial measures for July 2013. CFS Divisia M4, which is the broadest and most important measure of money, grew by 3.8% in July 2013 on a year-over-year basis versus 4.3% in June.
For Monetary and Financial Data Release:
http://www.CenterforFinancialStability.org/amfm/Divisia_Jul13.pdf
Today we release CFS monetary and financial measures for June 2013. CFS Divisia M4, which is the broadest and most important measure of money, grew by 4.2% in June 2013 on a year-over-year basis.
CFS monetary data provide particular insights regarding a shift in Federal Reserve policy and future policy moves. For special analysis, please contact LeAnn Yee at lyee@the-cfs.org.
For Monetary and Financial Data Release:
http://www.CenterforFinancialStability.org/amfm/Divisia_Jun13.pdf
This morning, Min Zeng and Carolyn Cui from the WSJ wrote a terrific piece For Treasury, a Question of Fundamentals / Department Seeks Answers for Inflation-Protected Securities.
I would add that two factors are operative in pushing real yields (TIPS) higher:
First, investors are re-balancing their portfolios from bonds to stocks on the heels of tapering comments. A Fed less active in purchasing Treasury obligations at some future date reduces the constant bid for all Treasuries – TIPS included.
Second, the TIPS market was mispriced with negative yields. Inflation is positive at present…and will likely remain substantially above zero for the foreseeable future. June CPI inflation reached 1.8% on a year-over-year basis up from 1.4% the previous month,
The bottom line is Fed purchases have distorted pricing in the Treasury market. Changes on the margin prompt swift shifts in pricing and yields.
Elizabeth A. Duke submitted her resignation as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2013. Ms. Duke has made no announcements about her future plans.
CFS Advisory Board Member Henry Kaufman offers insights regarding the Fed in the Financial Times today. Highlights include:
– Countervailing challenges posed by QE for the next Chairman.
– A related dilemma regarding Dodd-Frank’s lapse in solving the too-big-to-fail problem.
– New ideas for Fed governance.
For the full FT editorial.
Today the Federal Reserve is expected to vote on revised capital regulations, widely known as the US version of Basel III, with the other agencies likely to follow suit. I am excited about this, in part because it brings back fond memories from November 2, 2007, the day the Basel II Final Rule was approved. Just as then, it is my hope that today’s new regulations will both strengthen individual institutions and reduce systemic risk. But this time around I am not waiting nervously outside the Board room and I was not involved in the writing of The Rule.
Although the exact details of the regulations should be released later today, there are unlikely to be any major surprises. For now, let me just mention two certainties:
I’m guessing that most Fed-watching market participants have been more focused on the exit-timing of quantitative easing than the timing of the Basel III Final Rule. But a cursory glance at the Fed’s website highlights nearly as many speeches (year-to-date) by Fed officials on the topic of banking regulation as on the economy or monetary policy. So it’s worth taking notice. Some important links to documentation leading up to today’s Basel III Final Rule are included below.
The Final Rule documents should be available via press release later today, as well as published in the Federal Register.
Notice of Proposed Rulemaking (issued June 7, 2012).
Public comments received in response
Bank for International Settlements Basel III documents
Steve H. Hanke of Johns Hopkins University recently wrote about North Korea and hyperinflation. Though he titled the article “North Korea: From Hyperinflation to Dollarization,” he could have titled it “North Korea: From Hyperinflation to Yuan-ization.” As Hanke points out, there are some solid reasons for yuan-ization. North Korean markets along the Chinese border now conduct approximately 80% of their transactions in Chinese yuan and China accounts for more than half of North Korea’s foreign trade and the lion’s share of its foreign direct investment.
North Korea stands to benefit from such a policy. “Yuan-ization would put an end to North Korea’s inflation woes, at least creating the potential for domestic economic growth. It would also facilitate increased trade with China and perhaps other countries, as well.”
To read the report click here.