Interbank Market News Scan: Riksbank sees some clouds ahead …

Interbank, Riksbank.  Sveriges Riksbank, Sweden’s central bank, today reported that while the Swedish economy is on the mends, that investors should expect a slow down in growth in the second half of 2022.  The Riksbank noted that household debt was outpacing growth in gross domestic product; that investors were concerned about the uncertainty of interest rates and the effects on asset prices; and that real estate companies were heavily in debt.

Policy wise, the Riksbank believes that it may be time to phase out the temporary easing of bank regulations. 

Currently, the USD/SEK is trading at 8.5963.

Interbank, Bank of England, central bank digital currency.  Yesterday, the Bank of England announced efforts to further explore the creation of a central bank digital currency.  A consultation, starting in 2022, is expected to last several years, according to BOE, as the Bank considers specifications, design, and feasibility of a central bank digital currency.  Should a central bank digital currency meet criteria for deployment, the BOE estimates a launch sometime in the second half of the decade.  

Interbank, Federal Reserve, central bank digital currency.  Peter Morici, professor emeritus at the University of Maryland, lays out a case for a central bank digital currency. Rather than imposing on consumers a multi-layered, federal Reserve-commercial bank payment system with onerous fees and subject to fraud, Professor Morici advocates for a central bank digital currency supporting a payments system that gives consumers and businesses the option of having their accounts at the central bank.  Consumers and businesses would benefit because of the faster and more efficient exchange of payments between consumer and commercial accounts held by the central bank.

Professor Morici uses the topic to weigh in on a potential replacement of current Federal Reserve Board chairman Jerome Powell with Lael Brainard who, according to Professor Morici, has a better understanding of why a central bank digital currency is an imperative for the financial system.  

Traders should contact their brokers for more information on how foreign exchange rates may react to events described in the above blog post.