Bank of England says banks' demand for cheap finance doubles in last week

[Fully Detached]

19 hours ago, Ah-so said:

Definitely on the right lines. I think that they are building up cheap term funding before the year end accounts finalise. This will give them a good term funding profile, improving their NSFR percentage and its cheapness will help support banking margins. 

Ah, thanks, that makes sense! Interesting that the BoE declined to comment, but perhaps we'll find out more over the next few months.

[mathschoc]

Found this

 

https://petition.parliament.uk/petitions/175794

 

[LiveinHope]

22 minutes ago, zugzwang said:

I hate the phrase paradigm change but this really is. Guaranteed lending margins for the banks and implied insurance against the strictures of Basel III thrown in for good measure.

Instructive too, I think, how little discussion of the 'Scheme' there's been. The chatter is still all about how much more Hammond will borrow and spend, no mention of Carney's potentially open-ended contribution to the national debt.

Initially, I typed insightful as inciteful, as that is how that policy made me feel; but I thought someone would come along and correct my spelling. It will have a major impact on the value of money.

Edited December 24, 2016 by LiveinHope

[Maynardgravy]

3 hours ago, doomed said:

You can't taper a ponzi; more of the same until the eventual collapse. 

If you could, wouldn't that make it turd shaped?

[Odin]

3 hours ago, LiveinHope said:

Initially, I typed insightful as inciteful, as that is how that policy made me feel; but I thought someone would come along and correct my spelling. It will have a major impact on the value of money.

Please elaborate on the "major impact on the value of money" part.

 

If I understand it, the plebs value of money/credit is based around an interest rate as published by the BoE that credit cards / high-street lending is based on as we know.

Previously interbank lending provided low interest rates, and use of BoE was limited as it was a punitive last resort lender, but now banks don't trust each other (or can see through Basel XYZ compliance) the other bank is also a risk or even affecting their own risk in a feedback loop.   Or those other banks are just not able to perform better in the market as there is only so many "sure things" / "highly profitable gigs" in the world to make loans out to.  Also every bank is struggling to be high performing while being compliant with Basel (as they all needed to be at it when the going was good - otherwise they become the poor performer while Northern Rock burned bright, in 2016 they are all rushing to be compliant).

So now every bank has the similar performance and to lend their excess capacity to another bank does not make as much money as going to the high-street for new loans directly, as all the profit is in that end of the game.  There is no low interest rate interbank lending.

So now there is TFS and which is providing the lowest interest rate for a bank to finance its own lending.  But to use TFS all the banks need to be compliant with Basel version NextGen ?  So there is oversight / limits / progressive-schedule where there was not before ?

 

Please correct if I misunderstand, and how can we see this changing the value of money and to whom.

With an interest rate margin the banks get to make money here, which they badly need to continue to inflate the balance sheets (as well as to look good and report profits)

[LiveinHope]

1 hour ago, Odin said:

Please elaborate on the "major impact on the value of money" part.

 

If I understand it, the plebs value of money/credit is based around an interest rate as published by the BoE that credit cards / high-street lending is based on as we know.

Previously interbank lending provided low interest rates, and use of BoE was limited as it was a punitive last resort lender, but now banks don't trust each other (or can see through Basel XYZ compliance) the other bank is also a risk or even affecting their own risk in a feedback loop.   Or those other banks are just not able to perform better in the market as there is only so many "sure things" / "highly profitable gigs" in the world to make loans out to.  Also every bank is struggling to be high performing while being compliant with Basel (as they all needed to be at it when the going was good - otherwise they become the poor performer while Northern Rock burned bright, in 2016 they are all rushing to be compliant).

So now every bank has the similar performance and to lend their excess capacity to another bank does not make as much money as going to the high-street for new loans directly, as all the profit is in that end of the game.  There is no low interest rate interbank lending.

So now there is TFS and which is providing the lowest interest rate for a bank to finance its own lending.  But to use TFS all the banks need to be compliant with Basel version NextGen ?  So there is oversight / limits / progressive-schedule where there was not before ?

 

Please correct if I misunderstand, and how can we see this changing the value of money and to whom.

With an interest rate margin the banks get to make money here, which they badly need to continue to inflate the balance sheets (as well as to look good and report profits)

Strikes to me as desperate measures in a zombie economy.

[Si1]

2 minutes ago, LiveinHope said:

Strikes to me as desperate measures in a zombie economy.

I think they're just trying to prevent the triple shocks of the new btl taxes, brexit and trump, from being magnified by the banking system suddenly gumming up. 

[Blod]

On 24/12/2016 at 4:51 PM, Si1 said:

I think they're just trying to prevent the triple shocks of the new btl taxes, brexit and trump, from being magnified by the banking system suddenly gumming up. 

Exactly in one case sentence. TFS will also be helping devalue Sterling.

[Si1]

30 minutes ago, Blod said:

Exactly in one case sentence. TFS will also be helping devalue Sterling.

Sterling devaluation seems at once unavoidable and also part of the mechanism.

[spyguy]

On 24/12/2016 at 4:51 PM, Si1 said:

I think they're just trying to prevent the triple shocks of the new btl taxes, brexit and trump, from being magnified by the banking system suddenly gumming up. 

I dont think business are borrowing much - thats proper businesses.

As far as devaluing sterling. Might have worked 20-30 years ago when most countries had a lot of locally sourced goods - Imports become more expensive, so people switch to buying local products.

These days? Nope. Stuff just becomes more expensive. Incomes take a bigger hit.

BoE Ex King is on the radio, saying we've got to size the chance. He's true, mainly because weve no other option.

I like the quote 'rethinking support for farmers' He shold say what he means - either merge Defra with the DSS or remove all farming subs.

Farmers are going to get, rightly, thrown under the bus.

 

[Si1]

8 minutes ago, spyguy said:

I dont think business are borrowing much - thats proper businesses.

As far as devaluing sterling. Might have worked 20-30 years ago when most countries had a lot of locally sourced goods - Imports become more expensive, so people switch to buying local products.

These days? Nope. Stuff just becomes more expensive. Incomes take a bigger hit.

BoE Ex King is on the radio, saying we've got to size the chance. He's true, mainly because weve no other option.

I like the quote 'rethinking support for farmers' He shold say what he means - either merge Defra with the DSS or remove all farming subs.

Farmers are going to get, rightly, thrown under the bus.

 

I disagree. Devaluing the pound devalues our debts and increases export and associated profits.

[spyguy]

2 minutes ago, Si1 said:

I disagree. Devaluing the pound devalues our debts and increases export and associated profits.

We've already had a devaluation. Exports did not go up.

FTSE100 did well though.

[Si1]

7 minutes ago, spyguy said:

We've already had a devaluation. Exports did not go up.

FTSE100 did well though.

Takes a while to filter through. Much of our exports are highly capital intensive wth long lead times, ie aerospace engineering, pharma, automotive, consultancy. But it's true, if that is the case, my point has not been proven by it, yet. ?