Aurelia Butler

BERN (Reuters) – Swiss National Bank (SNB) Chairman Thomas Jordan on Wednesday defended the central bank’s handling of the Credit Suisse crisis including handing out emergency cash to the stricken lender contrary to its normal rules.The SNB bought time for a solution by providing massive liquidity for Credit Suisse before UBS bought the bank in March, Jordan told an event in Bern.The acquisition of the fallen 167-year-old lender prevented a global financial crisis, he said.”The SNB’s willingness and ability to provide liquidity was crucial in managing the acute crisis at Credit Suisse and thus in avoiding a financial crisis with serious economic consequences for Switzerland and the rest of the world,” Jordan said.The SNB provided 168 billion Swiss francs ($185 billion) in emergency liquidity after Credit Suisse suffered massive outflows as rattled customers withdrew their funds in March.”Never before had a central bank provided such a large amount of liquidity to a single bank,” Jordan told the SNB and its Watchers event.Some of the cash was provided via an emergency scheme called ELA+, or emergency liquidity assistance.The money was secured only via preferential rights in bankruptcy proceedings and not against collateral like mortgages which is usually demanded by the SNB.”Without ELA+ Credit Suisse would have been in jeopardy of being unable to meet its financial obligations … entailing substantial risks for financial stability,” Jordan said.But while the SNB played a key role in resolving the situation, there were limits to what the central bank could do and important lessons to be learned, he said.Liquidity regulations must be adapted in the light of faster and larger outflow of customer deposits, Jordan said.It was also crucial for banks to prepare sufficient collateral to transfer to central banks to obtain emergency liquidity in a crisis.There also needed to be an effective public liquidity backstop to enable the SNB to provide liquidity to lenders that do not have sufficient collateral and which was covered by a state guarantee.”ELA+ should not become part of the SNB’s regular set of instruments,” Jordan said.($1 = 0.9098 Swiss francs) More

Despite the slowing deceleration of inflation and solid economic growth, Powell and other Fed officials, including Christopher Waller, a member of the Fed’s governing board, are not ruling out a potential final rate hike. Michael Arone of State Street (NYSE:STT) Global Advisors highlighted the importance of the Fed’s stringent stance on inflation.Since March 2022, the Fed has raised its key rate from near zero to approximately 5.4% in response to four-decade high inflation in 2022. This action has affected mortgages, auto loans, and credit card debts. Consequently, the average 30-year fixed mortgage rate has climbed to nearly 8%. Despite these measures, annual inflation has dropped from a peak of 9.1% to 3.7%.U.S. economic growth experienced a boost in the July-September quarter due to strong consumer spending and increased hiring rates. However, volatile financial markets have resulted in higher long-term rates on U.S. Treasurys, lower stock prices, and increased corporate borrowing costs.Wall Street economists suggest that these market trends may lead to an economic slowdown and ease inflation pressures without additional rate hikes. The yield on the 10-year Treasury note has reached 5%, a level unseen in 16 years, due to a surge in Treasury yields. This surge is driven by factors such as the government’s anticipated sale of potentially trillions more dollars in bonds in the coming years to finance large and persistent budget deficits while the Fed reduces its bond holdings.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

The situation is further complicated by the impending decision on interest rates by the U.S. Federal Reserve. This move could significantly sway global markets and add to the existing economic uncertainty. As investors worldwide navigate these concurrent events with caution, global shares have seen a slight increase.The Israeli military’s north and eastward push towards Gaza City has been marked by fierce battles with Hamas militants and the targeting of besieged apartments. These developments are contributing to the volatility in the oil market and driving up prices.Investors worldwide are cautiously observing these unfolding geopolitical tensions. The potential impact on the global economy of these concurrent events – the escalating conflict and pending interest rate decision – is inducing a sense of caution among market participants.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

“I will almost certainly be calling on many of you in the audience who are in academia and industry to be part of this consortium,” she said in a speech to the AI Safety Summit in Britain. “We can’t do it alone, the private sector must step up.” Raimondo added that she would also commit for the U.S. institute to establish a formal partnership with the United Kingdom Safety Institute. “We have to get to work together,” she said. More

A major constraint on South Africa’s economic growth potential in the last decade has been rolling power cuts as utility Eskom struggles with breakdowns at its coal-fired power plants. Underperformance at state-owned logistics company Transnet has also weighed on growth.This, coupled with a significant drop in mining revenue as commodity prices fall, has resulted in lower tax receipts. Revenue collections in the current 2023/24 fiscal year were projected to be 56.8 billion rand ($3.04 billion) below estimates in the main February budget, the treasury said.The treasury said it remained committed to stabilise public finances. This will be achieved through spending reductions, moderate tax revenue measures and efficiency measures across the government – including the reconfiguration of government that would involve the merging or closure of public entities.”Given the extent of fiscal consolidation required, the Minister of Finance will propose tax measures to raise additional revenue of 15 billion rand in 2024/25 in the 2024 budget,” the treasury said.The treasury did not elaborate on the specific measures, but Finance Minister Enoch Godongwana said in his budget speech that “our most effective way of funding government is through an efficient tax administration and by broadening the tax base”.South Africa’s 2023 economic growth is forecast at 0.8% from 0.9% seen in February. The economy grew by 1.9% in 2022.A consolidated budget deficit of 4.9% of gross domestic product (GDP) is expected in 2023/24, wider than a 4.0% deficit seen in February. Next year the treasury predicts a deficit of 4.6% of GDP and the following year 4.2% of GDP, wider than the 3.8% and 3.2% seen in February.South Africa’s gross debt is expected to rise to 6.52 trillion rand in 2026/27 from 5.24 trillion rand in 2023/24. As a percent of GDP, gross debt is seen stabilising at 77.7% of GDP in 2025/26 compared with 73.6% of GDP in the same year seen in February.($1 = 18.7143 rand) More