YouSaid · the spoken record

Frances Coppola

lines on the record: 101
first: 2022-04-25
most recent: 2022-04-25
sittings or episodes: 1
sources: podcast

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“But, and also whether the kind of short term swings in bank stock values and so forth, we're caught up in that sort of volatility as well. But again, I'm not really seeing kind of disastrous collapses. So it will just be a question of regulators making sure that banks are able to withstand kind of sudden political issues like I imagine, I mean, regulators all do stress tests now. I imagine the next stress test is going to have what happens if Putin invades Poland, don't you? And NATO's...”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And so the political decision not to leave out, and it was a political decision, caught Monhop. They weren't prepared for it. And so the whole thing froze. And that's essentially what banks don't cope with. But as long as these are political risks that they can see, they can foresee, they can manage, they can see both sides of the coin, and they can see losses on both sides, losses on that side. Okay, we can make money on this. And that's what they'll do. I think the challenge for regulators is going to be, and there might be some short-term capital strains for some banks, particularly those very exposed to Russia, one way or another, or where they're suffering severe losses on collateral.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“business model that's if we look back to 2008 that is essentially what happened so the failure of Lehman was a political decision after a precedent had been set for bailing out a very similar bank Tauberston had been bailed out so why wasn't Lehman bailed out so banks were counting on Lehman being bailed out as well why wouldn't you”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Well, a high amount of volatility is both a risk and an opportunity, isn't it? There'll be some people in banks making money out of that. Yes, they might have to get out of their Russian businesses, but they'll make on other things. And commodity indexes and so forth might cause them a bit of stress, but they'll have some volatility traders in there making some money for them. So I'm not 100% convinced that banks are going to suffer all that much, at least not if they are doing what banks do. And there will be some banks that will be possibly caught out by it. But the majority of them, whether this storm, I have no doubt. What banks don't cope with really is sudden political decisions that they didn't foresee and that massively impacted”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Is everything now, isn't it? I mean, and my own views have moved on since then. The Golden, I think the kind of golden age of monetary policy is independent from everything else is coming to an end. And the realization is dawning that money is a tool. Money and finance are tools to be used to achieve political ends. And very much so now for the first time in history, we actually in a hot currency war. We've had currency wars before when currencies are competed for supremacy and central banks have kind of competed with each other. That's not what we're in now. What we're in now is actually using currency finance as a weapon. And we've never been there before.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The first rule of dealing with it dictators is believe what they say, and if you actually read what Putin has said In Russia, in Russian and the message he's selling to his people, it is that he isn't going to stop. I mean, yes, he might in the short term seize more of Donbass, but it won't be over. He doesn't think Ukraine should exist one way or another. He wants to eliminate Ukraine.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“People, but they aren't exactly being heard right now because, again, we in the West seem to have forgotten about them. Ukrainian people have stood up to Russia. And whether or not the US backed the Euro-Maiden revolts, I'm inclined to say so what? In the end, it comes down to what the people of Ukraine want. And they overwhelmingly want. Their independence, their sovereignty and their right to self determination.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“We in the West were horrified when Lukashenko in Belarus overturned the democratic decision of his people and brutally repressed them. So why do we think that it would be okay to do that in Ukraine? It clearly isn't either people deserve to have their own independence or they don't what Putin is saying is he does not think that Ukraine is a real country that its people shouldn't have independence. That's what he's saying exactly as his puppet Lukashenko says in Belarus and for the same reason that they were historically part of Russia from his point from Putin's point of view they were historically part of Russia. They are Russian therefore Russians should be Russia should be running them right now Ukrainian people beg to differ on this actually so do the Belarus”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I've heard all these arguments. I mean, I watched Euro Maiden Revolt in 2014. I was aware of what went on. And yes, it's fair to say that the West has supported successive Ukraine governments Does this mean that the Ukrainian people don't want their own to have their own state elected by and elect their own government? No, it does not. Never mind what happened in 2014. In 2019, Zelensky was elected with a landslide.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The consequences of that eventually are that we will have a war in a NATO country and then we will be obliged to admit we're at war. And in the meantime, an awful lot of people will die.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I think we're countries like Germany are going to find it difficult to do what's necessary to bring real pressure to bear on Putin. I think that's the situation.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The war is between Russia and Ukraine, and the West is supporting Ukraine, but the West is not at war. I think this is wrong. I think the West is at war. And it's time we recognized it. We are at war with Russia. In fact, we've been at war with Russia since 2014. That was essentially what I was saying in my piece, which we've been at war with Russia since 2014. And we never even noticed. And we certainly are now. And if we leave it, it will only escalate more, if we accommodate Putin in some way by continuing to buy his energy or by not arming Ukraine sufficiently, or by persuading Ukraine to concede parts of itself to Russia, it will just empower him to do more. It's not a sustainable arc. It's not a solution. Until we recognize that we are at war.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I don't think Germany's taken this seriously, to be frank. And yes, they're very unwilling to bite that bullet. And to my mind, that really plays back to the general Western attitude. And I have to say this is led by the US, that we are not at war.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Gentleman who knows a fair amount about that subject, and he said what Olaf Schultz wants to do, take three to four years under normal circumstances. Olaf Schultz wants to do it in eight months. And that is technically possible, but it would require a World War II-like attitude where this is the top priority and there's going to be, it's a war economy. This is nothing else. What have you gathered? Is Germany putting enough resources on the line to build an infrastructure that would be an alternative to Russian gas? And if not, how realistic is it that they will go off Russian gas?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Even though rearmament or armament and military actions, stuff like no-fly zones, even though that carries with it a much greater military risk in terms of nuclear weapons, I think, and maybe I'm wrong, the thing that would cause the greatest displeasure, let's put it in the voting public in Europe would be the energy ban because if 70% of natural gas for Germany comes from Russia and that's cut off, what is the ceiling for the price of natural gas? And is there alternative? I know earlier you mentioned Olaf Schultz, the Chancellor of Germany. He in, I believe, late February expressed a very ambitious plan to have a fleet of natural gas tankers that would come from the US and they wouldn't need to regasify. And I was speaking to a”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I'm surmising here, but that's just the way I see it tactically, that if we stays out of this conflict and expresses fear of escalation in this conflict, they're empowering Putin to try on with a NATO country. Just to push the boundaries and just see what happens.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Create seizing what's known as Suvalki Corridor, which is between the bitter Poland that separates Kaliningrad from Belarus, would be beneficial to both of them. If Putin is partially successful in Ukraine, say he manages to seize Donbass and establish a corridor along the Black Sea coast to Crimea and maybe even as far as Odessa, then I would say that Moldova is probably toast and he might be feel empowered given that Belarus hasn't been involved in the Ukraine conflict to try and seize the Subalki gap. And if that happened, then it would be hard for NATO not to be involved because the countries that he would be attacking would be NATO countries.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“But Belarus does not have access to the Black Sea because there are some countries in the way, the countries that are in the way are Poland and Lithuania. There's There is Russia, of course, does have access to the Black Sea because of the Kaliningrad enclave, not just St. Petersburg, obviously, but also because of Kaliningrad enclave, which is between Lithuania and Poland. And it is cut off from the rest of Russia. So if you look at it from Putin's point of view and Lukashenko's point of view,”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Because the way I see it is that even a partial success in Ukraine or something that Putin can build as a success in Ukraine will then lead him to further aggression against other countries. So that might include Moldova. That might include Georgia. Then it might include Poland, and the reason I say that is that there's this nice little agreement between Putin and Lukashenko in Belarus being quite a significant and murderous dictator, as you probably know, who is illegal because he overthrew a democratically elected government and seized power with the backing of Putin And there was a report recently of a meeting between Putin and Lukashenko in which Lukashenko said he would like access to the Black Sea. And Putin agreed with him.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And I think this is the problem that we've allowed ourselves to become so scared of escalation, particularly of nuclear escalation, that there are significant voices saying we can't afford to do anything. We can do some sanctions, but we can't arm Ukraine because Putin will take that as escalation. And oh no, we couldn't possibly intervene even to support to provide cover for humanitarian corridors because Putin would regard that as escalation. Even though United Nations, if I recall correctly, did provide cover for humanitarian corridors in Georgia. So I kind of don't get this. The West has become ridiculously scared of escalation. But at some point, I think... If history is any guide at some point the West is going to have to call Putin's bluff on the nuclear question.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“maintain his army and that's important i i know there are people who think that sanctions really strict sanctions making russia a complete pariah in the world might bring about a regime change and i look at north korea and go why Russia is a much bigger country than North Korea much better able to support itself. So I'm sorry I don't get this, I don't buy it. But Throckmorton the War Machine, I think, is more likely. But they will only work because they will only have time if the West also arms Ukraine and it will have to arm it significantly and take the risk that Putin will regard that as escalation.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's really hard, isn't it? Because sanctions are a slow burn. They do work over time. Sanctions, they're like capital controls. They're always leaky. So, you know, you'll always find ways around them. People who find ways around them will have to be stamped on. And countries that break them will have to be stamped on. At some point, US is going to have to have a reckoning with India, I think. And I'm a little bit disturbed by my own Prime Minister's behavior going and trying to seek a trade deal with India when India is kind of really supporting Putin and clearly quite keen on the guy. I'm a bit disturbed by this, to be honest. So there's that aspect, but they do work over time because they will over time throttle the war machine. They will make it impossible, make it very difficult for Putin to...”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“So really we should have expected based upon Russia's history and what the Tsars were always like that he would be seeking acquisitions outside Russia's immediate territory. We've just forgotten if you like that that's what Russia does.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“who never wanted this and Russia seized Crimea, annexed it with a referendum organized by Russia against the wishes of the Ukrainian government at the time. And we in the West kind of just let it happen and didn't really do anything to stop it. And so the message we've been sending over the last 20 years, including that invasion in 2014, is that Putin can seize parts, maybe even all, of smaller states in his neighbourhood. And nobody's going to say, and nobody in the West is going to stop him. It's not that surprising, therefore, that he thought, I mean, he's been fighting a war in Ukraine for eight years, actually, because the invasion of Luhansk Kandonixt wasn't wanted by the population in Donbass. And so the Ukrainian has been fighting back, has been fighting a war against Russia in Donbass since 2014.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And it was this, I think, particularly that made me think that I was talking about when I said they sleepwalked into this. We talk about Ukraine as if this is a new war, but it's not. It started in 2014 because that's when Russia invaded Ukraine. It was in 2014. It seized Luhansk Kondonetsk then. I know it talks of them as independent republics and separatists and all the rest, but the separatists actually are a small proportion of the population there. Most of the population are Ukrainian speakers.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And there were war crimes in Grosni, which don't get talked about. The West doesn't talk about it. It's over. He then seized parts of Georgia in 2008. You know, we were so focused on the financial crisis that we forgot about it. The peace deal there was brokered by the French president Sarkozy. But it's been left with there being two quasi-independent parts of Georgia, the South Ossetia and Abkhazia, which are Russian-facing and which potentially would give Russia a means, an excuse, if you like, to come in and do to Georgia what they've done to Ukraine. And they also are an obstacle to Georgia joining the EU because they're an unresolved border conflict. And then, of course, in 2014.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“This is a kind of geopolitical question in any way. It is fair to say that the leaders of the West did not read the signals. That made it clear what Putin's intentions were. And those signals have existed for twenty years, so they started really as soon as he came to power, and he came to power really on a mandate to break Chechnya, which was trying to seek independence at the time, and he succeeded. How many people even know about that? And what's playing out in Mariupol right now is what played out in Grosni. shortly after he came to power. In other words, he crushed it, he reduced it to rubble.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“ending all their Russian interests. And that's a major, major retrenchment for them because a lot of their businesses in Russia. And even as you say, German banks like Deutsche Alliance said Germany is an Eastern European country. It faces East. It lends to Russia. It always has. Yeah. And so if banks are forced to retrench on all of that, then they're going to take a hit to their capital. And it'll be interesting to see how the ECB handles that because the European regulators handle that EBA and the ECB handle that is to whether they soft pedal on capital requirements for a while to allow them to recover. I don't know. We'll see.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, the further east you travel in Europe, the more exposed the banks are to Russia. So one of the things we've seen is banks such as Rafisenbank and Ersterbank in Austria sort of rethinking their business. We're interested to see how Rifis and Bank will get out of Russia for this.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Will it stop Putin? I don't think so It will only stop Putin if it makes it impossible for him to continue his offensive and to do that you've got to choke off the supply of military equipment and arms including parts and potentially things like things like food and you've also got to improve the opposition which so we come back to the same thing which is sanctions are appropriate if they choke off the war efforts but they need to be coupled with arming Ukraine and to my mind we are not progressing far enough or fast enough on that And so I still regard the sanctions package mammoth though it is as half-hearted because we're not doing what we really need to do and that's because we're afraid of escalation and we don't really think we're at war”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“With the exception of the apparently sacrosanct energy sector. Yeah, basically. I'm sure the West will think up more sanctions. They'll sanction more people. They've sanctioned central banker now, which is interesting. Nabiolina, as of yesterday, Canada has sanctioned her personally. I expect that more countries will follow. And I think the UK has sanctioned military generals now. So we're still very much focusing on individuals. Well, this work, I don't know. This is an unprecedented package of sanctions and yet it's not working. I have to come back to that. It's having an effect on the Russian economy without question. And there have been some retaliatory sanctions as well. I mean, virtually the whole of the UK government has been sanctioned by Russia. Which is quite hilarious. So, and there'll be more of those.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And certainly the majority of non-Russian investors holdings of Russian assets, those assets have either been frozen or they've been destroyed in value. Is there anything more that the West can do or has, are these things now trading at pennies on the dollar? So really more action would sort of just be for the show of it, so to speak.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Was still beautiful. Yeah, it's Lex Monte, it's still a default. Lex Monte basically says the sovereign that can pay in any currency if it wants to. Investors don't have to accept it It can still be regarded as sovereign fault, yes. And so as it stands, one ratings agency at any rate regards it as sovereign doctrine default, and if my memory serves me right, I think that is, D, has also treated it as a credit event, which means that credit fault swap insurance is paying out. So again, that would be default. Even if there are people who aren't regarding this as default right now, they will eventually. But then engineering a default is turning on Russia forcing investors to dump their debt.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“The US was clearly trying to engineer its fault. Let's put it that way. And they've evidently succeeded. The question is how people will regard that. I think it's really important in the sense that if no one will hold externally denominated Russian debt, then it makes it much more difficult for Russia to tap investors for foreign currency, which is what it was able to do before. Now you could say it was very difficult for it to do that anyway, but actually saying you simply can't pay. You can't pay your coupons. You are going to default simply because we're not going to let you pay it does kind of.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Standard and pause said it was a default. They basically still within the grace period, but even so Standard and Paul's decided that Russia wasn't going to pay within the grace period. It's 30 days, by the way. They're still within that. But standard Pauls think they won't pay. So they have downgraded Russian debt to selective default.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“She's good at her job. She is an exceptionally skilled central banker. Nobody I know would argue with that. I'm sure that people the world over would want to offer a job, but she's Russian. And obviously her loyalty is to Russia.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“With a sort of combination of restrictions on banks, restrictions on exporters, restrictions on foreigners, yeah, range of capital controls. So yeah, and she is very good. She's one banker of the year, central banker of the year twice, I think. She is very good. And sad in a way that early on the kind of mood music from her was she was not at all happy about this invasion, but she's got a job to do and she's going to do it. To protect”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“But what she did, and actually what Putin did as well was in post-capital controls. And that's actually what you do to preserve your reserves when your currency is under pressure. So she's done this, they've done this in various ways. preventing people from taking dollars and euros out of the country, trying to force foreigners to pay for gas and oil in rubles and various other measures as well really to keep the reserves that they're able to tap sacrosanct and to arrest the fall of the currency. And she's successfully done that actually.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, she's very, very good. When we spoke before, I remember you were commenting that the Russian Central Bank was issuing press releases all the time, whereas every other central bank was almost silent. And I went and looked at those press releases and what she was doing. And what she was doing was shoring up banks. And she was giving out instruction after instruction to banks to shore up their liquidity to protect them. It was very effective. Now, the problem she's got... Is that when a currency is under pressure like that, when you hit a central bank like that, you remove the anchor for its currency?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Actually, quite far east. And no, now they're unified. No, they do to some extent phase east. So we shouldn't forget that Europe as a whole is going to be much more affected by the Ukraine war. So there will be inflation, but there will also be recessionary pressures because of the Ukraine war, because of the effect of sanctions, and because of disruption to things that people take for granted, like their gas supplies.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“And the Balkan country Croatia and the Baltic countries and of course Germany, Austria, much of that side of the EU faces east and these countries have significant relationships with Russia and with Russian satellite countries which are majorly disrupted by the Ukraine war. And of course they have relations with Ukraine itself which again are majorly disrupted. So just from that source alone we're going to see quite a bit of disruption to the European economy which say the US would not be suffering to the same extent and even Western European nations wouldn't be suffering to the same extent. I think we sometimes forget that Germany is in many respects an Eastern European nation or part of you is in my lifetime there were two Germanys of course it was West Germany and East Germany but both of them in terms of Europe”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“I wouldn't rule it out. It really depends. How badly the whole European economy is hit by Ukraine? I mean, you have to come back to that because it's easy for the US and Canada across the water to impose sanctions because actually in a way it doesn't hurt them quite as directly. But Europe, because much of Europe does face the east and we forget this, so we look at France and Spain and Italy and say, why does it affect them? But you shouldn't forget about countries like Poland and Hungary.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“whether they are judging monetary policy right and it's interesting, isn't it, that nowhere here have I mentioned inflation? And yet the ECB is meant to have a price stability mandate, but actually in 2012, when Drake did his whatever it takes, that moved the ECB from a price stability target to maintain the euro at all costs targets, because actually they can't maintain price stability unless they keep the euro together. So that's their target. And that's what they'll be watching tensions rising within the euro. And for that reason, the spreads over bonds will be incredibly important.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Eurozone members, including Greece, and that's separate from the QE program. Greece is excluded from the QE program, but it was included in the PET program. And so there's a huge problem for Greece if the ECB suddenly closes down the PET program. So they've been trying to find ways of winding it down gradually in such a way that it doesn't hurt periphery countries. One of the things that they'll be watching very closely, I think, will be BTP yields. That yields on Italian bonds, because it is like the canary in the coal mine. When BTP yields start rising, we've got tensions rising within the euro as a single currency. You know, we've got the start of yield divergence and contagion. So they'll be watching that very closely, I think, to see.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“That was the program under which the ECB essentially bought backstopped sovereign bonds so that all the countries of Europe could afford to support their economies with, give fiscal support to their economies and it bought the bonds of all”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“There was a little bit of wobble when Lagarde first took charge when she said it's not our business to control spreads. And bond yields in periphery countries suddenly went like that. And the ECB hastily had to issue a climb down saying, oh, there's about corporate bonds, it's not about sovereign bonds The ECB has been supporting sovereigns during the pandemic, so it's had the PET program, which it is winding down, but it's having to do it extremely carefully and at the moment casting around, for example, to find ways of not suddenly pulling the plug on Greece, which has had a little bit of easing, a slightly easier time fiscally during the pandemic, which was much needed. Greece is having the poor the plug pulled on that all of a sudden are being pushed back into depression again.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's not that easy for the ECB. You see, the thing about the Fed is it's only dealing with one country and it's dealing with the country which the debt of that country is the premier safe asset in world markets. So in a way, the Fed can do things that the rest of us can't. And the problem the ECB's got is that it is representing 19 countries and influential in a further eight. And some of them their current currencies are pegged to the euro, so Denmark and Bulgaria, for example. So, the problem it's got is that if you think back to 2012 when Draghi did his whatever it takes, what the ECB essentially promised to do was to manage monetary policy across the Eurozone in such a way that we didn't get the kind of contagious divergence in bond spreads over bonds that we did in 2011, 2010 to 11 right?”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Like I said, people see Germany's export surplus as a strength and it doesn't ever occur to anybody that there are weaknesses in it. So I think everybody's seeing Germany as resilient, even though from my point of view there are serious frigilities in its economy, not least its dependence on Russia for gas. So presumably they are hoping that Germany will weather this storm or Germany's companies will weather this storm.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“Supply chains were to abruptly reverse if everybody said, oh, we've got to go self-sufficient, we've got to cut back and so forth. Or even if countries simply went into recession, started buying less, Germany's surplus could fall. And that would have a serious knock on effect into its economy.”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT
“But even if it's exporting to other countries, that can be hit by recession in those countries, by supply chain difficulties, by complicated clearing through banks, all sorts of things like that. Germany's external surplus is a fragility for it. I know people see it as a strength and I have a long thought that being that reliant on your external, on the kindness of strangers, if we could put it that way, we get very concerned about countries who are reliant on the kindness of strangers to fund their imports, but we're not really concerned enough about the people who are reliant on the kindness of strangers to buy their exports, and yet it's two sides of the same coin. If”
2022-04-25 · Forward Guidance · Can Europe's Economy Handle Russian Sanctions? | Frances Coppola · IDENTIFIED FROM THE TRANSCRIPT