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January 2012

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  • How can the dollar rise in value? By sending it to the moon. Rich Jurek, a former PR executive at Northern Trust, has launched a virtual museum of $2 bills that have been flown into space – with some of those bills valued in the thousands, if not tens of thousands, of dollars at auction. Astronauts and cosmonauts often took the rare $2 bills on their space voyages for good luck. At Jurek’s Jefferson Space Museum, named after the president that appears on the notes, there are eight such bills. The most valuable is one once owned by Gene Cernan, who travelled with the bill on three space journeys, including a moon landing with Apollo 17 in 1972.
  • Russia’s capital markets remain upbeat, despite negative forecasts from the IMF. Amid the eurozone crisis, market players see an opportunity for the country to prove itself as a developed and reliable financial centre. Bankers, investors and issuers discuss what needs to happen next.
  • Bankers and corporate treasurers discuss what they are looking for from their relationships and the challenges of funding, the eurozone, Basle III and Sepa.
  • Banks often end up with assets that you would not expect. It’s a phenomenon that is clearly on the rise as borrowers struggle to pay back their loans.
  • In the run-up to Christmas, I met up with three bank chief executives. This opening sounds a bit like a line from the carol The 12 days of Christmas. In that case, it would be followed by a chorus of "and a partridge in a pear tree". I found the chiefs weary after an unexpectedly tough year. One was recovering from flu, another had suffered a nasty bout of pneumonia and the third looked shattered.
  • In these anxious times, amid fears of financial meltdown and pressure on bankers to prove their social utility and dispel popular loathing, Euromoney is heartened to sit down with a whey-faced senior banker in the week before Christmas. He has done well to make the early appointment, in fact his second after a client breakfast, having spent the small hours of the morning pleading with security at the venue for his firm’s Christmas party.
  • If the evidence of a recent competition to find the best-dressed banker in the City is to be believed, bank staff working in credit are more likely to be well dressed than their counterparts on the equity side.
  • City of London: The history; David Kynaston; Chatto & Windus
  • More coals were heaped on the head of Johnny Cameron after the details in December’s FSA report on the failure of RBS revealed how little he appeared to understand the mechanics of structured credit when he was head of global banking and markets at the firm.
  • Banks face tough decisions on how hard they should fight to retain sales and trading market share in different sectors, as the great deleveraging drive of 2012 gets under way.
  • Europe’s leaders aren’t giving the currency what it needs: reform, fiscal discipline and international support.
  • "Yes, but it’s been a really good day. And it’s a new year"
  • It is hard to be optimistic about 2012. But much of the bad news is reflected in prices and a confluence of factors could yet provide support for equity markets and other risky assets.
  • "Rehypothecation is not a four-letter word"
  • When, in December, Brazil withdrew its IOF tax on foreign investments in Brazilian equities many breathed a sigh of relief – not just for the marginal benefits that the removal will have on the poorly performing Bovespa, but because it could be seen as the end of the currency wars. The rapid appreciation of emerging market currencies had led Brazil to introduce a range of capital controls aimed at stemming the capital inflows that pushed the real to $1.50.
  • IMF senior economist Manmohan Singh has become something of a celebrity since the summer. Several commentators have seized on his recent writings on collateralized lending, rehypothecation and the shadow banking system to make the case that the downfall of the financial system stems from the overleveraged, unregulated, off-balance-sheet shadow banking system. What Singh is saying, however, is that the shadow banking system is a necessary part of the monetary universe, and therefore something that regulators and policymakers must thoroughly understand if they are to have any success in improving economic performance. In an exclusive interview, Euromoney spoke to Singh as he prepared to celebrate Christmas in Washington DC.
  • So long as Asian markets remain risk-on bets to global portfolio managers, capital will continue to flee when things get bad elsewhere.
  • Will Europe’s leaders do enough to convince banks to finance its problem sovereigns through an ECB-led carry trade?
  • A look at 2011’s investment-banking business makes grim reading for banks fearing a further decline this year.
  • Compensation levels in the US show that most bank CEOs have yet to learn the meaning of the word restraint.
  • Russia’s capital markets face a difficult future. Even if the will for change is there, it will be a long and difficult process.
  • Cost of protection under scrutiny as demand for risk transfer grows.
  • Historians will judge 2011 as a year of crisis. Will 2012 be worse, more of the same, or an unexpected pick-up in the world’s economic fortunes? As politicians, business leaders and bankers gather in Davos for the World Economic Forum, we assess the risk factors in an increasingly fragile global economy and market.
  • Controls boosting black market and run on banks; Venezuela-style parallel currency feared
  • Brazil and Mexico got off to a good start on the first trading day of 2012 by both coming to the international bond markets. The success of the new $2 billion United Mexican States 10-year bond and the reopening of Brazil’s 2021s proved the availability of liquidity for international Latin America debt issuance. However, despite the success of these two sovereign deals there is no guarantee that liquidity will be available for lesser credits and other structures and currencies.
  • Brazil is one of the largest and fastest growing emerging markets for investment banking. And the locals are coming out on top. The lesson for other emerging markets, they say, is to neutralize international banks’ claims over distribution to institutional investors.
  • As the European bank-funding crisis pushes banks to fund themselves ever shorter-term, concerns are growing that collateral, the lifeblood of all secured borrowing, is running out. Can the shadow banking system ride to the rescue?
  • Scarce collateral threatens funding; New systems complex and expensive
  • Depreciation eases concern over speculation; Internationalization might pressure euro
  • JPMorgan still top earner; Nomura fee income falls by 34%