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What are the limits to monetary policy?

29 April 2015

In this issue of Investorama, we focus on the monetary policy of central banks in the recent history. Meanwhile, in the Interview we take a look at the impact of the rapid plunge of the oil price. Even the “the number” has to do with oil.

In the beginning was the word, and not only according to the Biblical account of the Creation; it came to pass in exactly the same way when, in the more recent history of monetary policy, worlds founded on monetary illusion were brought into being. From what does monetary magic draw its power? Where are the limits? Even "unlimited" interventions must, in the final analysis, be proportionate. After all, despite their monetary magic, central banks are not omnipotent: while their balance sheets – and hence, seemingly, their capacity for intervention, too – are theoretically capable of infinite extension, the only capital on which they can really rely at the end of the day is their own credibility.

One person's joy is another's woe

After the steep fall in the oil price, many investors have been looking at the emerging markets with concern. Mark Rall, Head Fixed Income at LGT Capital Partners, explains why the outlook is not so bleak, and why emerging markets local currency bonds in particular offer opportunities.

Our money tale is all about oil and russia and their interdependence. But what does 3 have to do with oil and Switzerland? Read "The number" to find out more...

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