The regulation of financial markets should take into account the business models of those who deal on them, as different business models involve different risks.
The experts of the IW Financial Expert Survey predict a steeper yield curve with a larger increase in long-term than in short-term interest rates by the end of the first quarter of 2019. Moreover, the average forecasts indicate higher stock market indices, a mild depreciation of the Euro vis-à-vis the US-Dollar with a larger appreciation in the first quarter of 2019.
The experts of the IW Financial Expert Survey predict a steeper yield curve with a larger increase in long-term than in short-term interest rates by the end of 2018. Moreover, the average forecasts indicate higher stock market indices, a mild depreciation of the Euro vis-à-vis the US-Dollar, but a larger drop in oil prices by the end of the fourth quarter of 2018.
In the IW Financial Expert Survey for the second quarter of 2018 the surveyed experts predict, on average, a steeper yield curve, i.e. a larger increase in the long-term than in the short-term interest rate.
Banks have changed their asset allocation. While the number of loans to non-financial corporations on their balance sheets is slowly growing after a period of deleveraging, banks’ demand for Euro-area sovereign bonds is still accelerating. The high demand for safe and liquid assets is not only driven by risk aversion and liquidity preferences, it is also a side effect of financial regulation.
With its Fintech Action Plan, the European Commission intends to promote new business models in the financial sector as well as new forms of business financing. The plan also includes the so-called Initial Coin Offerings (ICO), which could benefit above all young start-ups from the technology sector. However, the Commission’s proposal is not sufficiently far-reaching.
The IW Financial Expert Survey for the first quarter of 2018 revealed that the surveyed experts predict, on average, higher interest rates and stock market indices, a depreciation of the Euro vis-à-vis the US Dollar, and lower oil prices by the end of the first half of 2018.
Start-up activity is declining, private equity is growing, and households and institutional investors are shying away, write Markus Demary and Klaus-Heiner Röhl in LSE Business Review.
For several years now the number of listed companies in Germany and other industrialised countries such as the United Kingdom and the USA has been declining, with de-listings significantly outnumbering flotations.
The German Constitutional Court has rightly expressed doubts about the monetary policy of the European Central Bank (ECB) and has asked the European Court of Justice for a legal review of it. This time, the case is about the Public Sector Purchase Program (PSPP), within which the ECB has already purchased bonds worth 1.6 trillion euros. The limits on the asset purchases have to be clarified.
The experts of banks and insurance companies expect interest rates to increase in this and the forthcoming quarter. At the same time they predict a higher oil price and a depreciation of the Euro. These are the results of the first IW Financial Expert Survey of the Cologne Institute for Economic Research (IW). The survey is the continuation of the former ZEW-Prognosetest of the Centre for European Economic Research (ZEW).
Senior Economist for Monetary Policy and the Economics of Financial Markets
Tel+49 221 4981-732
Maildemary@iwkoeln.de
@DemaryMarkus
Head of the Research Unit International Economics and Economic Outlook
Tel+49 221 4981-754
Mailmatthes@iwkoeln.de
