Polish banks have to pay for losses on Swiss Franc mortgages

Though the exchange rate of the Swiss franc was floated by the Swiss National Bank in January 2015, yet in Poland the problem that arose in connection with it regarding housing loans taken out in Swiss francs is far from being solved. The deadline for the final decision in this respect has again been extended, which further heightens the tension both on the part of some half a million of the borrowers and on the part of the lending banks. The chances are that the banks may sustain a cost of up to 50 bn PLN or approximately 12 bn euros, which is equivalent to three times as much as the whole profit made by the banks for the year 2014.

On 15 of January 2015 the Swiss floated the exchange rate of the Franc: prior to this day the exchange rate was PLN 3,57 to CHF 1, thereafter it rose to PLN 4,33 to CHF 1. During the following months the rate settled at PLN 3,92 to CHF 1. What does that mean for 560 thousand families that pay the Swiss franc loans back? Taking into consideration that the average exchange rate when the loans were taken out stood at PLN 2,4 to CHF 1, it means for an average debtor a loss of PLN 1,5 for each Swiss franc borrowed¹. Continue reading →

Portugal’s anti austerity government

Portugal is one of the European countries that was the most affected by the financial and Euro crisis. In 2012 interest rates on Portuguese bonds reached more than 17% and public debt reached 124% GDP. The Portuguese financial crisis led to an international rescue plan agreed upon by the Portuguese government on the one hand and the European Union, the European Central Bank and the IMF on the other. Portugal is a Euro-Zone member which is why the country cannot devalue its currency. With fiscal devaluation, tax cuts on labor that is compensated for by an increase in VAT, Portugal and European authorities try to improve Portuguese competitiveness. The troika pushed for labor market reforms such as lower wages and the reduction in unemployment benefits. The reforms were carried out by the Partido Social Democrata PSD and the Centro Democratico Social CDS (both members of EPP), a coalition government headed by Passos Coelho, who took over from the Socialists in 2011.
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Half of all British jobs could be replaced by robots, warns Bank of England’s chief economist

As many as 15m jobs are under threat of replacement by smart machines, the Bank of England’s chief economist Andy Haldane warned. New generation of increasingly creative robots could replace “at risk” jobs over the next 20 years, such as those held by accountants and sales people. Source: The Telegraph

Britain says Irish won’t be affected by benefits curbs on EU migrants

The British foreign secretary, Philip Hammond, has privately assured Ireland’s government that the hundreds of thousands of its nationals living in Britain would not be affected by any new conditions that may be introduced by the UK to restrict EU migrants’ access to the welfare system. The Guardian

Iran Return to Intensify Europe Oil-Price Competition, IEA Says

Oil price competition in Europe is set to intensify when Iranian crude returns to the market after sanctions on its nuclear program are lifted, the International Energy Agency said. Europe will be the battleground between producers of sour crude grades, including Russia, Iraq, Saudi Arabia and Iran. Source: Bloomberg

Negative interest rate will not boost inflation

Low inflation or deflation is a feature of our times. The central banks in Sweden and in Switzerland have already reacted by decreasing the interest rates below zero. How have prices responded?

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Brussels plans deposit guarantee fund by 2024

Brussels is drawing up plans to gradually siphon cash away from national bank deposit guarantee schemes over the next decade to fund a new eurozone-wide insurance system, a move likely to trigger a bitter clash with Germany. Source: FT