EU Bank Takes ‘Quantum Leap’ to End Fossil-Fuel Financing By Bloomberg



(Bloomberg) — The European Investment Bank adopted an unprecedented strategy to end all funding for fossil fuel energy projects, in a move expected to support Europe’s plans to become the first climate-neutral continent.

The board of the Luxembourg-based lending arm of the European Union decided at a meeting on Thursday to approve a new energy policy that includes increased support for clean-energy projects. The bank will not consider new financing of unabated fossil fuels, including , from the end of 2021.

With more than half a trillion dollars in outstanding loans, the EIB is the biggest multilateral financial institution in the world. It’s owned by EU member states.

The lender’s move to prioritize energy-efficiency and renewable energy projects will reinforce the Green Deal being pushed by Ursula von der Leyen, the incoming president of the European Commission. She wants the institution to become a climate bank and help unlock 1 trillion euros ($1.1 trillion) to shift the economy toward cleaner forms of energy.

“Climate is the top issue on the political agenda of our time,” EIB President Werner Hoyer said in a statement, calling the decision to transition away from financing fossil fuels a “quantum leap in its ambition.”

The 28-nation EU wants to step up its climate ambition in sync with the landmark 2015 Paris agreement to fight global warming, after the U.S. turned its back on the accord. With EU leaders considering committing to climate neutrality by 2050, Europe is a step ahead of other major emitters, including China, India and Japan, which haven’t so far translated their voluntary Paris pledges into equally ambitious binding national measures.

Von der Leyen, who is due to assume her new job as head of the EU’s executive arm in the coming weeks, also wants the bloc to raise its current target of cutting emissions by at least 40 percent by 2030 from 1990 levels. That may involve a reduction in pollution in the order of 50% or even 55% to counter the more frequent heat waves, storms and floods tied to global warming. Fossil fuels such as coal, oil and natural gas are leading contributors to climate change.

The EIB deal resolved a two-month deadlock where Germany and some central European nations sought to soften the proposed rules and make certain natural-gas projects eligible for financing. The strategy adopted on Thursday allows for continued support for projects already in the works that are vital for Europe’s energy security as long as they are appraised and approved by the end of 2021.

“Hats off to the European Investment Bank and those countries who fought hard to help it set a global benchmark today,” said Sebastien Godinot, economist at the environmental lobby WWF Europe. “All public and private banks must now follow suit and end funding of coal, oil and gas to safeguard investments and tackle the climate crisis.”

The EIB new policy includes a new Emissions Performance Standard of 250 grams of carbon dioxide per kilowatt-hour, replacing the current 550 grams standard. That means that in order to qualify for financing, new power-generation projects have to be mitigated by various technologies that significantly improve their emissions performance, EIB Vice President Andrew McDowell said in a conference call.

The EIB, which last year invested more than 16 billion euros in climate-action projects, is preparing to play a larger role in spurring low-carbon technologies.

“This is not a last step, there are many more steps to come,” McDowell said. “But this is probably one of the most difficult parts of this journey that we’re having to take.”

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ECB considers putting climate change risks in future bank stress tests By Reuters


© Reuters. ECB considers putting climate change risks in future bank stress tests

By Elizabeth Howcroft and Marc Jones

LONDON (Reuters) – The European Central Bank is considering including climate-change risks in future European banking stress tests, ECB Vice President Luis De Guindos said on Thursday.

Speaking at a BNP Paribas (PA:) banking conference in London, De Guindos said the monetary policy implications of climate change would come into discussion over the next quarters.

“It is something we are paying much more attention to, especially in terms of financial stability,” he said.

Climate change is becoming a bigger issue for central banks, as demand is rising for investment to be environmentally sustainable.

“Climate change involves a lot of actors and central banks have to play a role,” he said.

“For instance, something that we have started to consider is including climate change potential risks in the adverse scenario of the (banking sector) stress tests.”

A methodology for calculating risks related to climate change is not yet fully developed so it is unlikely to be included in next year’s European Banking Authority stress test, but it could be used in 2022.

The EBA stress test is an assessment of risks to the functioning and stability of financial markets across the European Union. It takes place every two years.

As part of global plans to reduce carbon emissions, the European Commission proposed last year to establish an EU-wide classification scheme for sustainable investments, known as a taxonomy.

De Guindos said the taxonomy was very important.

The ECB vice president also said the risk of a European recession was “very low” and that low bank profitability was the main financial stability risk in the euro zone.

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Chile Central Bank Announces FX Swap Program as Peso Dives By Bloomberg



(Bloomberg) — Chile’s central bank will offer $4 billion of currency swaps after the peso weakened 6% in three days amid a wave of social unrest and investor concern about a new constitution.

The currency fell to a record low against the dollar this week, triggering a verbal intervention from the central bank on Tuesday. At the same time, the implied volatility in the peso spiked to the highest levels since 2006. The measures announced today will come into affect Thursday and continue until Jan. 9, the bank said in an e-mailed statement.

“I wouldn’t take this as something that will turn the market around,” said Alejandro Cuadrado, a currency strategist at BBVA (MC:) SA in New York. “It will accommodate any liquidity squeeze, but it’s not fighting the depreciation. I don’t think it’s a game-changer.”

Chile has been wracked by a wave of protests and riots since Oct. 18. The peso only edged lower at first before collapsing this week after the government on Sunday backed plans to rewrite the constitution, spooking traders concerned about extended uncertainty. President Sebastian Pinera in a speech to the nation last night failed to announce new measures or reassure the market.

“What it’s doing with the swaps is to increase the availability of foreign currency,” said Nathan Pincheira, an economist at Fynsa SA in Chile. “Whoever asks for the dollars will have to return them. It’s trying to relieve the short-term drought.”

The peso declined Wednesday after the government said yesterday that it would pull $1 billion from its sovereign wealth fund in the next few days and another $1.4 billion in early 2020. That money will end up being exchanged into pesos.

The swaps will provide liquidity in dollars without draining central bank reserves, since they will have to be repaid. Brazil’s central bank uses a similar system of swaps, which it either rolls over or allows to mature.

The central bank intervened in 2008 and 2011 to prevent the peso from strengthening, both times through programs of dollar buying. More recently in 2017, Mexico’s central bank offered a program of currency forwards to help prop up its peso.

On this occasion, strengthening the peso may counteract the bank’s monetary policy, which has an easing bias. On the other hand, a weaker peso tends to push prices higher.

(Adds analyst comment in the fourth paragraph)

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Thai central bank to lower growth outlook, still has scope to support economy By Reuters



By Orathai Sriring and Kitiphong Thaichareon

BANGKOK (Reuters) – Thailand’s central bank will lower its economic growth forecasts for this year and next, a deputy governor said on Wednesday, and still has monetary policy space for action to support the economy despite cutting its key interest rate to a record low.

Southeast Asia’s second-largest economy is not in a crisis, however, as the country’s economic fundamentals and banks remain strong, said Deputy Bank of Thailand Governor Mathee Supapongse.

The central bank will review its 2019 and 2020 economic growth forecasts – currently at 2.8% and 3.3%, respectively – at its next monetary policy meeting on Dec. 18.

“They will likely come down, but by how much will depend on latest economic data at that time,” Mathee told Reuters in an interview.

Thai exports have been hit by global trade tensions and the strength of the baht – Asia’s top performing currency this year – has further put pressure on the trade-reliant economy.

Last week, the BOT’s monetary policy committee (MPC) cut its policy rate by 25 basis points to 1.25%, a record low last seen during the global financial crisis.

“Monetary policy is data-dependent. Our rough forecasts suggested growth and inflation would be less than expected, so the committee thought monetary policy should be eased further,” Mathee said.

He added that the MPC had got “ahead of the curve” by acting before official third-quarter gross domestic product (GDP) data is released next Monday by the state planning agency.

Although July-September growth is expected to be lower than the BOT’s forecast, it should be higher than the second quarter’s 2.3% pace, which was the weakest in nearly five years, and there should be no quarter-on-quarter contraction, he said.

Last week’s rate cut, the second in three months, prompted commercial banks to lower borrowing costs, and Mathee said that should help the economy, purchasing power and inflation.

Although the policy rate is now at a record low of 1.25%, there is still room to help the economy if necessary, said Mathee, who is a member of the central bank’s policy committee.

“I think it’s not a limitation that we have reached the bottom already,” he said, adding that Thailand had no need to cut the key rate to zero, as other measures and fiscal policy were also helping.

The BOT is still concerned about the baht’s strength, although there is no evidence of speculation in the currency, he said.

The baht weakened after the rate cut and the BOT’s further relaxations on rules to encourage capital outflows.

But it has still risen 7.6% against the dollar so far this year, sustained by Thailand’s hefty current account surplus.

The BOT will also cut its forecasts for headline inflation for this year and next, currently 0.8% and 1.0%, respectively, said Mathee, though he added Thailand was not expected to face deflation.

Headline inflation was just 0.11% in October, the lowest in 28 months and far below the BOT’s 1-4% target range, which is being reviewed.



Kiwi takes flight as New Zealand’s central bank surprises by standing pat By Reuters



By Tom Westbrook

SINGAPORE (Reuters) – The beaten-up New Zealand dollar soared 1% on Wednesday after the central bank unexpectedly left interest rates on hold, while most other major currencies were little changed.

“It’s flying. It was a massive surprise,” said Imre Speizer, head of New Zealand strategy at Westpac Bank in Auckland. “There’s a lot of position exiting going on.”

Almost all analysts had forecast a cut in the 1% benchmark rate to a record-low 0.75%. Futures markets had priced in a better-than-75% chance of a cut as slack spending and a global slowdown held New Zealand’s economic growth at a six-year low.

But after two cuts this year, the Reserve Bank of New Zealand said it saw no urgency to ease policy again. Short positions, which had crept up to their highest level in more than four years , unwound fast.

The zoomed almost a cent higher after the decision, before settling a percentage point stronger for the day at $0.6303. Yields on two-year New Zealand bonds () jumped by their most in more than two years.

The currency has been one of the worst performing majors this year, dropping 4.7%. The day’s rise, while other currencies were mostly flat, has it on track for its sharpest one-day jump since January.

“It’s all been about the New Zealand dollar,” said Commonwealth Bank FX analyst Joe Capurso.

Elsewhere, the U.S. dollar was mixed and moves slight as investors looked for news on U.S.-China trade negotiations and awaited testimony from Federal Reserve Chairman Jerome Powell before a congressional committee at 1600 GMT.

The first public hearings in Trump’s impeachment inquiry also begin an hour earlier at 1500 GMT.

Hopes for an imminent deal to wind back tit-for-tat tariffs the world’s two largest economies have imposed on each other have lifted the dollar 1% this week to an overnight one-month high of 98.423 against a basket of currencies ().

Jitters over violence in Hong Kong and a lack of fresh details on trade talks in an overnight speech from U.S. President Donald Trump provided some support, holding the greenback steady and also lifting the safe-haven Swiss franc.

Against the Japanese yen the dollar bought 109.06 yen – not far below the 5-1/2-month high of 109.48 it hit last week. The Swiss franc rose 0.2% to 0.9908 per dollar, its strongest in a week.

The dollar scaled a month-high against the euro () overnight and traded marginally below that level at $1.013 on Wednesday.

The Australian dollar was pinned at $0.6842 by weak, but largely expected, wage data.

The British pound was steady at $1.2847, after a brief boost from the Brexit Party’s decision not to contest Conservative-held seats at December’s election faded.

Trump’s speech at the Economic Club of New York mostly reprised well-worn criticism of the U.S. Federal Reserve for failing to cut interest rates deeply enough and rhetoric about China’s “cheating” on trade.

However his remark that a deal “could happen soon,” was enough to steady the dollar, while his threats of further tariffs if talks fail knocked the .[CNY/]

“(It) was heavy on rhetoric and light on detail, leaving markets none the wiser,” National Australia Bank’s senior FX strategist Rodrigo Catril said in a note.

China’s yuan weakened past the 7-per-dollar mark after the speech and fell a little further to 7.0178 per dollar on Wednesday.





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Canada’s Largest Bank Mulls Crypto Exchange After Bitcoin Ban — Report By Cointelegraph


© Reuters. Canada’s Largest Bank Mulls Crypto Exchange After Bitcoin Ban — Report

A Canadian bank, which banned its clients from buying (BTC), could now become the first in the country to launch a cryptocurrency exchange.

As innovation economy news outlet The Logic reported on Nov. 11, the Royal Bank of Canada (RBC) is now rumored to be considering the plans.

Continue Reading on Coin Telegraph

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Bank of Italy says government’s 2020 growth forecast ‘reasonable’ By Reuters


Bank of Italy says government’s 2020 growth forecast ‘reasonable’

ROME (Reuters) – The Italian government’s 0.6% growth forecast for 2020 is “reasonable” while the target of 1% set for 2021 is reachable, the Bank of Italy’s deputy governor said on Tuesday.

Rome should seize the opportunity offered by low interest rates to start lowering Italy’s debt-to-GDP ratio, Luigi Federico Signorini said during a parliamentary hearing on the 2020 budget.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



China October new bank loans dip to 22-month low, more easing expected By Reuters


© Reuters. Headquarters of the PBOC, the central bank, is pictured in Beijing

By Judy Hua and Kevin Yao

BEIJING (Reuters) – New bank loans in China fell more than expected to the lowest in 22 months in October, but the drop was likely due to seasonal factors and policymakers are still expected to ramp up support for the cooling economy in coming months.

Chinese regulators have been trying to boost bank lending and lower financing costs for over a year, especially for smaller and private companies which generate a sizeable share of the country’s economic growth and jobs.

But domestic demand remains sluggish as investment and consumption weakens, while escalating U.S.-China trade tensions weigh on exports, suggesting more policy stimulus is needed.

“We think the central bank will need to loosen policy more aggressively in the coming months in order to drive a turnaround in credit growth and prevent economic activity from slowing too abruptly,” Julian Evans-Pritchard at Capital Economics said in a note.

Chinese banks extended 661.3 billion yuan ($94.55 billion) in new yuan loans in October – the weakest since December 2017, data from the central bank showed on Monday, down sharply from September and falling short of analyst expectations.

Analysts polled by Reuters had predicted new yuan loans would fall to 800 billion yuan in October, down from 1.69 trillion yuan in September.

Household loans, mostly mortgages, fell to 421 billion yuan in October from 755 billion yuan in September, while corporate loans dipped to 126.2 billion yuan from 1.01 trillion yuan.

“The data reflects weaker demand for credit from companies as their confidence has been affected by the trade war,” said Nie Wen, a Shanghai-based economist at Hwabao Trust.

Broad M2 money supply in October grew 8.4% from a year earlier, central bank data showed on Monday, matching estimates of a forecast in the Reuters poll. It rose 8.4% in September.

Outstanding yuan loans grew 12.4% from a year earlier. Analysts had expected 12.5% growth, in line with September’s 12.5%.

ROOM FOR EASING SEEN LIMITED

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.7% in October from a year earlier and from 10.8% in September.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

In October, new TSF tumbled to 618.9 billion yuan – the lowest since July 2016 – from 2.27 trillion yuan in September. Analysts polled by Reuters had expected 1 trillion yuan.

The central bank is expected to maintain its policy easing to support growth, but room for further action could be limited by worries about debt and housing risks, as surging food costs push up consumer inflation, analysts said.

“The room for easing could be limited by factors including inflation, which could have some negative impact on the economy,” Nie said.

Data on Saturday showed China’s producer prices fell the most in more than three years in October, while consumer inflation soared to the highest in nearly 8 years.

To support growth, the central bank has cut bank reserves seven times since early 2018 to spur lending – alongside modest lending rate cuts, while local governments have stepped up debt issuance to accelerate infrastructure spending.

Last month, the central bank cut the interest rate on its medium-term lending facility (MLF) for the first time since early 2016.

China’s finance minister has said that local governments were on track to complete bond issuance within the 2.15 trillion yuan annual quota by the end of September.

The statistics bureau said last month that China would front-load some 2020 special local government bond issuance to this year.

China’s economic growth slowed a near 30-year low of 6.0% in the third quarter. Growth is expected to cool to 6.2% in the whole of 2019 and then hit 5.9% in 2020, according to a Reuters poll.



New Zealand central bank seen cutting rates as economic growth slows: Reuters poll By Reuters



By Charlotte Greenfield

WELLINGTON (Reuters) – Most economists are expecting New Zealand’s central bank to cut rates to a record low at its last monetary policy decision of the year on Wednesday after the bank signaled in recent months it was willing to ramp up stimulus if necessary to combat slowing economic conditions.

Twelve out of 15 analysts polled by Reuters expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%.

“The short-term growth outlook is subpar and risks are skewed to the downside, with the RBNZ needing to take out more insurance to prevent a more protracted undershoot of its employment and inflation objectives,” Mark Smith, senior economist at ASB Bank, said in a research note.

All 13 economists who forecast beyond this week’s meeting expected the bank to have cut rates by at least 25 basis points by the end of next year, with ANZ Bank forecasting rates would be as low as 0.25%.

The RBNZ at its monetary policy review in August stunned markets with the size of its 50-basis-point cut and signaled it would be willing to slash rates further, although it held steady at an official cash rate decision in September.

A slowing global economy, the protracted China-U.S. trade war and warnings of recession have spurred major central banks across the world to ease monetary policy.

At home, gloomy business confidence has been concerning the bank and poses a risk to growth as firms indicate their own activity is slowing and they are holding off on investment.

Gross domestic product data released in September showed that annual growth had slipped to 2.1% in the second quarter, the lowest since 2013.

The bank has struggled to support inflation around the 2% midpoint of its target band, with the number slipping to 1.5% in September.

The RBNZ now has a dual mandate of targeting maximum sustainable employment, meaning labor figures are also keenly in focus. Data released last week showed unemployment ticking up from a decade low but still lower than the bank had forecast in August.

Some economists believed that might tip the finely balanced decision in favor of staying put.

“The labor market is in better fettle than one would expect given the state of business confidence,” said Dominick Stephens, chief economist at Westpac Bank, which has forecast the bank will hold this week and cut in the first quarter of next year. “The RBNZ decision on Wednesday is a close call.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Bank of England surprises as two officials back rate cut By Reuters


© Reuters. FILE PHOTO: Bank of England Governor Mark Carney attends a Bank of England news conference, in the City of London

By David Milliken and Andy Bruce

LONDON (Reuters) – Two Bank of England officials unexpectedly voted to lower interest rates on Thursday to ward off an economic slowdown, and others including Governor Mark Carney said they would consider a cut if global and Brexit headwinds do not ease.

Economists polled by Reuters had expected the BoE to vote unanimously to keep Bank Rate at 0.75%, and the announcement of the 7-2 split pushed sterling to a two-week low as market odds on a cut next year rose as high as 80%.

To date, the BoE has resisted following the U.S. Federal Reserve and the European Central Bank in cutting its main interest rate, but Thursday’s Monetary Policy Report positions the BoE for a change in stance.

Carney said the BoE’s central scenario was that a slowdown in global growth would stabilize and that Prime Minister Boris Johnson’s Brexit deal – which parliament has yet to approve – pointed the way to a reduction in Brexit uncertainty.

If this scenario unfolds, the BoE would still be able to stick to its long-standing message about limited and gradual rate hikes.

But if the outlook deteriorates, the BoE said a rate cut would become more likely.

“These are pretty big tectonic forces operating right now,” Carney told reporters. “If global growth fails to stabilize or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth.”

For Monetary Policy Committee members Michael Saunders and Jonathan Haskel, it was already time to act – they cast the first votes for a rate cut since shortly after the 2016 Brexit referendum.

“In the short term at least, it seems the MPC is more concerned about the downside risks to growth and is prepared to pull the trigger on a rate cut if and when these risks materialize,” PwC economist John Hawksworth said.

The BoE is also grappling with uncertainty about an election which Johnson has called for Dec. 12, in a bid to get a majority to pass his Brexit deal before a new deadline of Jan. 31.

The two main political parties are promising to end years of austerity and spend billions on infrastructure – aided by record-low interest rates – to try to fuel growth.

JOB MARKET WORRIES

Saunders and Haskel noted reduced job vacancies that suggested Britain’s hitherto strong labor market was turning as well as risks from the world economy and Brexit.

Other MPC members showed a new openness to cutting rates if things soured. They also softened their language on the need for limited and gradual rate hikes in the medium term, saying they “might” rather than “would” be necessary.

The BoE as a whole painted a darker picture for Britain’s economy over the next three years, predicting it will grow 1% less over the period than it had forecast in August, mostly due to a weaker global economy and a recently stronger pound.

But part of the growth downgrade reflected Johnson’s Brexit plans.

The BoE now assumes Britain will strike a trade deal that leads to new customs checks and puts up barriers to exports of financial and legal services.

The growth forecast would have been weaker still without higher spending announced by the government in September which the BoE said would add 0.4% to the economy.

Inflation, currently 1.7%, is forecast to drop to 1.2% in the middle of next year due to lower oil prices and regulatory caps on electricity and water bills.

But over the next couple of years, the BoE sees economic growth picking up from 1.4% in 2019 to 2.0% in 2022. The 2022 growth rate is above Britain’s long-term trend and would push inflation back above the BoE’s 2% goal, the central bank said.

(This story corrects paragraph 18 to say .. without higher spending ..not.. with higher spending)