December 2015 The BulletinVol. 6 Ed. 11 Official monetary and financial institutions▪ Asset management ▪ Global money and credit Strongman returns Wanted: national saviours Jean-Claude Bastos de Morais on Africa Haihong Gao on China’s landmark steps Elliot Hentov & George Hoguet on renminbi Michael Stürmer on rise of the Leviathan OMFIF Advisory Board on 2015 review Africa book launch The Convergence of Nations 10 December 2015 You don’t thrive for 230 years by standing still. As one of the oldest, continuously operating fi nancial institutions in the world, BNY Mellon has endured and prospered through every economic turn and market move since our founding over 230 years ago. Today, BNY Mellon remains strong and innovative, providing investment management and investment services that help our clients to invest, conduct business and transact with assurance in markets all over the world. bnymellon.com © 2015 The Bank of New York Mellon Corporation. All rights reserved. BNY Mellon is the corporate brand for The Bank of New York Mellon Corporation. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Products and services referred to herein are provided by The Bank of New York Mellon Corporation and its subsidiaries. Content is provided for informational purposes only and is not intended to provide authoritative fi nancial, legal, regulatory or other professional advice. Contents Strongman returns Europe From Russia to Hungary, Turkey to Business-friendly policies and peso devaluation David Smith 5 Poland, the era of the strong leader is returning across a broad swathe The great Leviathan back on the stage Michael Stürmer 8 of Europe. Russian president Vladimir Putin, parleying with Monetary polarisation set to widen David Marsh & Ben Robinson 9 embattled French President François Hollande, has gained in stature − posing another problem for German Chancellor Angela International monetary policy Merkel and for the stewardship of the euro. This is worrisome given China’s landmark step Haihong Gao 10 the ascent of France's National Front leader Marine Le Pen, whose Costs and benefits of renminbi move Elliot Hentov & George Hoguet 10 views on Europe are decidedly un- communautaire. ▪ SDR move comes at turning point for China Kevin O'Nolan 10 Fed balancing act over rate hike Darrell Delamaide 11 Focus: Year in review Soft landings amid divergence and crisis OMFIF staff 12 Global optimism in short supply Advisory Board 14 Emerging markets Harnessing African savings Jean-Claude Bastos de Morais 19 Book review A Bank for America George Hoguet 22 You don’t thrive for 230 years Book review George Hoguet reviews America's Bank The Epic Stuggle to Create Draghi: the new mortality by standing still. the Federal Reserve by Roger Lowenstein,− a 'masterful' overview entral bank governors deemed of the history of the US central bank imbued with unusual helpings 'a gripping story, rich in historical C As one of the oldest, continuously operating financial institutions in the world, − of wisdom or power should beware: detail and Informative minutiae'. pride goes before a fall. Mario Draghi, Hoguet says BNY Mellon has endured and prospered through every economic turn and the European Central Bank president, the book is 'highly dubbed ‘super’ just a little too often by a market move since our founding over 230 years ago. Today, BNY Mellon relevant to today’s media and financial fraternity that likes remains strong and innovative, providing investment management and world'. He writes that Lowenstein's to believe in heroes, may be about to investment services that help our clients to invest, conduct business and analysis captures descend to the ranks of mortality. Financial markets expected somewhat History throws up myriad cautionary many debates transact with assurance in markets all over the world. too much from the ECB on 3 December. tales. Hjalmar Schacht, the pre-1939 resonating in The bank cut its deposit rate deeper into Reichsbank president, who was known as American political negative territory and decided to extend ‘The Magician’ after his stabilisation of the and economic history: centralised its quantitative easing to April 2017. More Mark in 1923, ended up in a concentration authority versus local control; swingeing action was turned down by the camp towards the end of the second world Wall Street versus Main Street; Bundesbank and the more conservative war. Another psychologically painful, though central banks. German public opinion less dire, fate befell the Federal Reserve’s services lobby; and East versus regards even the more moderate QE action Alan Greenspan (the ‘Maestro’), lauded West.Washington versus the financial as far too aggressive for the health of the ▪ recognise that his unduly accommodating bnymellon.com will raise interest rates on 15-16 December whilemonetary in policiesoffice yet helped ultimately pave the forced way forto financialhas strengthened system. Thethe hand likelihood of the ECBthat hawks.the US the 2008-09 crisis. ▪ Vol. 6 Ed. 11 © 2015 The Bank of New York Mellon Corporation. All rights reserved. BNY Mellon is the corporate brand for The Bank of New York Mellon Corporation. The Bank of New York Mellon is supervised and regulated by the New York State Department of Financial Services and the Federal Reserve and authorised by the Prudential Regulation Authority. The Bank of New York Mellon London branch is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Products and services referred to herein are provided by The Bank of New York Mellon Corporation and its subsidiaries. Content is provided for informational purposes only and is not intended to provide authoritative financial, legal, regulatory or other December 2015 3 professional advice. About OMFIF Official Monetary and Financial OMFIF Advertising & subscriptions Institutions Forum Promoting dialogue for world finance For advertising and subscription 30 Crown Place details, contact: London The Official Monetary and Financial Institutions EC2A 4EB Forum is an independent platform for dialogue and [email protected] United Kingdom Diary dates and meetings research. 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