The fallout of the holy NIRP is upon us
Cash hoarding in Europe up +8% Yoy - "The amount of cash across the euro zone rose to more than 1 trillion euros ($1.1 trillion) last year, ECB data has shown, as nervous individuals keep more of their money at home or in a vault. Cash in circulation is almost double the amount of 10 years earlier and has risen steadily throughout the debt crisis. Cash across the 19-country bloc climbed to 1.08 trillion euros at the end of last year, roughly 8 percent higher than at the start of 2015. The rush for cash effectively reduces deposits at banks, thereby weakening them. As cash in circulation rose last year, deposits edged up at only a quarter of the pace. "There are two issues: lack of trust in the banking system and concern about where to invest your money," said Stavros Zenios, an academic and former member of the Board of Directors at Cyprus's central bank. "It has a major impact on the economy," said Zenios. "This hoarding is working against what the ECB is trying to do - get more liquidity into the system." - Reuters
A lack of trust in banking, and where can you invest? Going to cash drains deposits, strains the banks, already contracting economy and drains liquidity, which is at a premium right now.
"Where and when negative becomes the norm, the front runners who "can", go to the can, coffee that is. Some are converting to cash while others who don't have that luxury are in the midst of a major rotation, involving the liquidation of many dollar assets. Happened in Europe, now happening in Asia and it will effect systemic wholesale liquidity." - Yours Truly
The post BOJ NIRP market rotation which we referred to here, accelerated today with Sweden's Riksbank cutting the repo rate to minus 0.50 percent from minus 0.35 percent. Global stock markets tanked on the news. No surprise here.
In fact, the JPY/USD has gone from 123 to 113 in less than two weeks. The BOJ went NIRP to induced INFLATION vis a weaker Yen. Meanwhile with a stronger Yen, the Yen libor has gone through the floor, wonder how thats working out for the BOJ right about now? Out, but more to come.
A lack of trust in banking, and where can you invest? Going to cash drains deposits, strains the banks, already contracting economy and drains liquidity, which is at a premium right now.
"Where and when negative becomes the norm, the front runners who "can", go to the can, coffee that is. Some are converting to cash while others who don't have that luxury are in the midst of a major rotation, involving the liquidation of many dollar assets. Happened in Europe, now happening in Asia and it will effect systemic wholesale liquidity." - Yours Truly
The post BOJ NIRP market rotation which we referred to here, accelerated today with Sweden's Riksbank cutting the repo rate to minus 0.50 percent from minus 0.35 percent. Global stock markets tanked on the news. No surprise here.
In fact, the JPY/USD has gone from 123 to 113 in less than two weeks. The BOJ went NIRP to induced INFLATION vis a weaker Yen. Meanwhile with a stronger Yen, the Yen libor has gone through the floor, wonder how thats working out for the BOJ right about now? Out, but more to come.
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