I see the world's politicians are having another go at the banks for "failing to lend". US, UK, Eurozone - the message is the same everywhere.
What they don't seem to have realised is that banks can only lend money that they have. Their only sources of that cash are either deposits or borrowing in the bond markets - either short or long term.
The new rules, instigated by regulators at the behest of politicians mean that corporate deposits and short term bond borrowings are no longer regarded as core funding as so effectively can't be used to make long term loans.
Only retail deposits and long term bond issues count.
Retail is a bit strapped for cash right now. And he bond markets are effectively shut thanks to those self same politicians failing to get to grips with the Eurozone sovereign crisis.
Net result - banks can't lend even if they want to. The fact that they probably don't want to lend merely compounds the problem.
Deleveraging is coming to everyone, whether you like it or not.
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