DAILY012323
BIS: How Low Can Central-Bank Equity Go?
An historical examination of central-bank negative equity was published last week by the BIS. Doubtless undertaken as central banks such as the Fed record losses, the paper assesses how low central-bank equity can fall before it adversely affects confidence in fiat money. Noting as Karen Petrou’s book does that money is a “social convention,” the paper describes wide fiat-money acceptance depends in part on central-bank credibility based largely on the collapse of the Bank of Amsterdam in 1820. This has limited application to the Federal Reserve and other modern central banks in that the Bank of Amsterdam largely lacked fiscal backing and thus could not print money to rebuild equity.
Bank Big-Bank Merger Opponent Joins Justice Antitrust
With Jeremy Kress now in place as senior counsel to Jonathan Kanter in the Department of Justice’s Antitrust Division, it seems likely that pending big-bank mergers will get still more skeptical scrutiny. It is also possible that Mr. Kress was brought on to press Justice to finalize long-promised bank-merger guidelines that have been on hold since 2020 (see Client Report MERGER5). Mr. Kress is also a former colleague of Fed Vice Chairman Barr, who has indicated concern with larger-bank consolidation both directly and indirectly via the Fed/FDIC super-regional resolution proposal (see FSM Report RESOLVE48).