Wednesday, January 18, 2012

Global Market Weekly Review, 9 - 13 January 2012

Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties. “During a period of stress, banks would be expected to use their pool of liquid assets, thereby temporarily falling below the minimum requirement,” the Basel Committee on Banking Supervision’s governing board said in a statement on its website yesterday, following a meeting in the Swiss city. The aim of the measure, known as a liquidity coverage ratio, is to ensure that lenders hold enough easy-to-sell assets to survive a 30-day credit squeeze.

Consumer borrowing (CICRTOT) in the U.S. surged in November by the most in 10 years, showing households are optimistic enough to take on debt and banks are willing to lend. The advance was almost twice as big as the highest forecast of 31 economists surveyed by Bloomberg News.

The European Central Bank held interest rates steady after two straight cuts as signs of respite from the sovereign debt crisis gave it scope to pause. ECB policy makers kept the benchmark interest rate at a record low of 1%, as predicted by 47 of 53 economists in a survey.

Indonesia kept interest rates unchanged for a second month, extending a pause in monetary easing as a weakening Rupiah and a government plan to contain fuel subsidies threaten to spur inflation. Bank Indonesia kept the reference rate at 6%. The decision was predicted by 13 of 18 economists in a survey, with the rest expecting a quarter-percentage-point cut.

Source: ING Funds Berhad

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