Category Archives: Finance sector

Too much debt? There is a better way

Pretty much all financial crises involve too much debt. The global financial crisis was triggered by excessive lending for US property purchase. The slow recovery from the crisis is probably because of too much debt. China’s successful plan to insulate its economy from the post-crisis recession has left it with its own debt problem. Those… Continue Reading

Greece repays IMF using the IMF’s own “currency”

Greece this week repaid €750m to the International Monetary Fund (IMF) which it funded by drawing on its SDR account at the IMF. This legitimate but unusual move caught many commentators by surprise and drew attention to the little known SDR. * The SDR – Special Drawing Right – is something of a curiosity in… Continue Reading

Still debating the causes of the world financial crisis

Major world historical events such as the financial crisis that swept much of the world in 2007-09 typically have multiple causes. In 2014 there was an outpouring of new books about the causes of the First World War which started a century before. Historians continue to disagree about why the nations of Europe went to… Continue Reading

The accidental trillionaire

China’s $3.9 trillion foreign exchange reserves were not planned but arose as a side effect of a strategy, now ended, of keeping the RMB exchange rate lower than the market would have set it. * Last week I visited the home of China’s SAFE – the State Administration of Foreign Exchange. SAFE’s reserve management division… Continue Reading

The changing shape of the asset management industry

The asset management industry is huge, growing in size, especially in Asia, and increasingly dominated by a small number of giant companies. Asset management includes traditional “institutional” investors such as pension funds, insurance companies, mutual funds and money management companies, plus hedge funds. There are economies of scale in asset management: you can manage $1… Continue Reading

Why is it so hard to finance new infrastructure?

There is a great need for infrastructure investment in both developed and developing countries. The former need both refurbishment of old assets and additional capacity. The latter need lots of new capacity, mainly arising from rapid urbanisation. There is also a large pool of savings in pension funds, companies and sovereign wealth funds that is… Continue Reading

Why MFin students are a good fit with central banks

Central banks, which are the most important financial institutions in most countries, have typically employed lots of economcs graduates in the past. They might benefit from adding a few finance graduates in future. Central banks have responsibility for controlling inflation and influencing the wider economy. In some nations they also have responsibility for regulating the financial… Continue Reading

Could we do without physical money?

Physical money is becoming increasingly unnecessary in everyday life. Could it be heading for extinction and does it matter? I’ve just spent three days on holiday in the wonderful city of Copenhagen, using physical cash only once (when the ice cream seller’s card machine was broken, and the ice cream is really good so I couldn’t… Continue Reading