Newsletter: A monthly brief of new insights on important economic, financial and policy issues.
Financial Stability & Dynamics
This briefing presents our views on recent market volatility in oil, stocks and exchange rates and how these markets will evolve in 2016.
This report introduces new analysis of financial risk in the economic cycle, highlighted by the imbalance between net wealth and national income that emerges late in the cycle. As the economic cycle ages, the underlying demand for tangible wealth and supporting financial assets exceeds the ability of the economy to generate new financial claims to meet this demand. This creates volatility and instability in financial markets, making a financial event that triggers an economic shock and recession more likely.
New quantitative easing measures from the European Central Bank have prompted a sudden drop in the euro, causing substantial yen appreciation against the euro. The impact on Japanese export competitiveness should lead to further monetary easing measures from the Bank of Japan in an effort to devalue the yen in an effort to drive export growth as a stimulus to the economy.
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