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VeryMeanReversion

Non Sterling Bank Liabilities

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Prior to the bank bailouts, most UK debt was in Sterling form. This allowed the government the ultimate excuse of printing more if push came to shove.

With the nationalisation of several banks, they are likely to have liabilities in non Sterling currencies that we cant print.

Anybody see a little Icelandic-like issue with this?

I know very little about this subject so any info appreciated.

VMR.

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Prior to the bank bailouts, most UK debt was in Sterling form. This allowed the government the ultimate excuse of printing more if push came to shove.

With the nationalisation of several banks, they are likely to have liabilities in non Sterling currencies that we cant print.

Anybody see a little Icelandic-like issue with this?

I know very little about this subject so any info appreciated.

VMR.

This is a very good post and something I was thinking about while driving to work. The Banks have been very guarded about their non UK liabilities and this could be the silver lining for the HPC'ers wanting higher interest rates and stronger currency. This could very well be the unintended consequence of trashing sterling in the way the Government have been doing.

Details are only just emerging about our non Sterling liabilities but given the financial sector accounted for 30% of UK GDP you can guarantee we have a lot of it!

Just look at the £2.5 Billion RBS loan to the Russian Oligarch!

What as mess :ph34r:

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Prior to the bank bailouts, most UK debt was in Sterling form. This allowed the government the ultimate excuse of printing more if push came to shove.

With the nationalisation of several banks, they are likely to have liabilities in non Sterling currencies that we cant print.

Anybody see a little Icelandic-like issue with this?

I know very little about this subject so any info appreciated.

VMR.

This article mentions non-sterling liabilities:

Buiter

While there is no net foreign exchange exposure of the banking system in the UK, banks are banks. The foreign currency liabilities of the banking system are therefore likely to have shorter maturities than the foreign currency assets. The foreign currency assets are also likely to be less liquid than the liabilities. I don’t have information on the maturity and liquidity composition of foreign currency assets and liabilities to confirm or refute this presumption. Let me just say that Iceland’s banks were brought down despite an aggregate match between foreign currency assets and foreign liabilities.

Peter.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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