Bitcoins, cash and tulips
Bitcoins generated much excitement in 2017, starting off the year valued at just over $1 000 per bitcoin and closing the year at around $10 000, having peaked at close to $19 000 in mid-December 2017. While the extreme volatility of Bitcoin generates both spectacular gains and devastating losses, it significantly reduces the ability of the crypto-currency to serve as a means of payment; the purpose for which it was originally designed. Michala Marcussen, Group Chief Economist, explains the latest trends around the bitcoin.
US tax refrom: Europe must be vigilant
The text of the US tax reform bill passed by the Senate during the night of December 1 now has to be reconciled with the version passed by the House of Representatives on November 16, before the final bill is presented for vote by both Houses, and signed by the White House. The Republicans are hoping to finalize this process before Christmas.
Monetary Policy: back to normal?
The 2008 financial crisis witnessed unprecedented policy responses from the world’s major central banks. Main central banks cut their policy rate to near 0%, exhausting the conventional monetary options. Then, to further ease financial conditions, they started to design a variety of unorthodox monetary policy tools commonly labeled as “unconventional monetary policies”. These have included “lower-for-longer” forward guidance on the short-term rate, large-scale asset purchases, large-scale liquidity provis.
Investment holds the key
Global activity remains strong. Sentiment indicators point to continued expansion in 2018 and firm manufacturing activity supported by a pickup in investment. In the US, a large fiscal impulse will extend the business cycle. With key markets approaching full employment, GDP growth may be constrained by supply-side constraints, giving rise to some inflationary pressures.