Bank of England raises alarm over surge in high-risk lending

Link: https://www.theguardian.com/business/2018/oct/17/bank-of-england-high-risk-lending-leveraged-loans

Date: 17th October, 2018

Media: The Guardian

• What happened?

The Bank of England has issued a stark warning over the rapid growth in lending to indebted companies around the world, drawing parallels with the US sub-prime mortgage market that triggered the 2008 financial crisis. Gross issuance of leveraged loans by UK companies reached a record £38bn in 2017.

That is, they are making packages with the leveraged loans and the banks sell them to third-party investors, for this, the FPC (financial policy committee) said, adding that it would assess the risks to British banks in the 2018 banking industry stress tests.

• Whom and where it affects?

This situation affects the Bank of England and as a consequence, also the financial market.

• What sort of public or private institutions are involved?

The public institutions are the Bank of England

As private institution,  Reserva Federal de EE.UU .

• Why is it important for Banking and Finance?

Because there are growing concerns that companies will be unable to repay their debts as central banks begin to raise interest rates 10 years on from the crash, including three hikes this year by the US Federal Reserve; and this triggers a crisis.

• What do you think will be the consequences in the foreseeable future?

If the right measures are not taken now on the previous situation, it could trigger another systemic crisis, as happened with sub-prime mortgages.

• Key words: leveraged loans, sub-prime mortgages, stress test, financial crisis.

Bitcoin: the cryptocurrencies’ revolution.

Bitcoins: The Cryptocurrencies' Revolution

Billions

• Title: Billions                                                                                               
  
• Duration: 2 seasons of 12 episodes each, around 50 minutes per episode.
• Country: United States of America
• Director: Andrew Ross Sorkin, Brian Koppelman and David Levien.
• Script: Willie Reale, Andrew Ross Sorkin, Brian Koppelman and David Levien.
• Year: 2016
• Trailer: https://www.youtube.com/watch?v=_raEUMLL-ZI
• Synopsis: Nothing is what it seems in the world of high finances. Everyday there are lies, treason, intelligence and agility and the both main characters of this series must use all of this: The Federal Prosecutor Chuck Rhoades and the ambitious king of the hedge funds, Bobby “Axe” Axelrod. Rhoades has started a personal fight with Axelrod. And through this titanic battle where there can be only one, both will use their ability, power and influence to win the other. So that, the series explores the narrow and dark relation between power and politics in the world of high finances of New York. Like the name of the series says, in this conflict there are big amounts of money in the game.

"Banking and Finance" in the series.

Throughout the series, there are a big amount of scenes with financial content. In these examples it can be observed how financial stocks are bought and sold, how the decisions are taken with the analyst's opinions or how an investment fund works. Unike other films or series, Billions' aim is not to explain the financial world to the audience because it uses technical language. An example of this are these scenes:

First Scene (season 1, episode 1). In this scene in the begining of the series, one of the workers of Axe Capital suggests to his boss to invest in an operation with  wide margins. However, Bobby Axelrod, the CEO, shows them that they were misunderstanding some information and why it is not a great operation to deal.

Second Scene (season 1, episode 11). Here we can see the differences between the profit which you can obtain depending on the risk you take, and even how they decide whether to run or not the risk based on the information that their analyst provide. In this case the decision was wrong, bringing a huge loss to the company. On the other hand, it is used some terms like close a position.

Personal commentary

Billions is a financial series which can quickly arouse your curiosity with the character of Bobby Axelrod, a billionaire and CEO of a company of brokers which survived to the September 11th atacks and to the financial colapse of 2008, and now this company is the king of hedge funds. Nevertheless, that privileged knowledge of the stock market is not casuality. He got to commit fraud and now he has issues with the justice.

But the strong point of the series are the interpersonal relationships of all the people involved that come out when the origin of this huge amount of capital is being investigated. Whendy Rhoades, the psychiatrist of the company, is also Charles Rhoades'  wife, who is the state prosecutor in charge of the investigation of Bobby.

In our opinion one of the most important aspects of Billions is how it creates the financial scenario. Far from ruthless speculators, the main character has achieved keeping a worthy public image. Many films have shown how brokers act, but until now a series has never covered it. Another aspect of Billions' script is its sense of humor, sometimes even rude.

In addition, this series is perfect nowadays when having a minimum financial knowledge is essential. While the economic differences are getting bigger and few people is ruling the world, with this we can imagine to reach them.

World's central bank can't ignore the Bitcoin boom.

Link:  http://economictimes.indiatimes.com/markets/stocks/news/worlds-central-banks-cant-ignore-the-bitcoin-boom-bis-says/articleshow/60729048.cms

Date: Sep 18^th, 2017

Media: The Economic Times

What happened?

The Bitcoin growth could cause a risk in the stability of the international financial system. Because of this, central banks are considering the issue of a digital currency. In fact, there are many countries who have created their own cryptocurrencies for internal use.

Whom and where it affects?

The bitcoin, and in case that the central bank decides to issue its own digital currency, could affect everyone worldwide because it would have financial, economic and monetary policy repercussions. Specially in countries like Sweden where the cash use is dwindling.

What sort of public or private institutions are involved?

The public institutions are the World Central Bank and the national central banks all over the world.

As private institution, one finds JPMorgan Chase & Co.

Why is it important for Banking and Finance?

Because cryptocurrencies can change the world of Banking and Finance and, even in the article it is already considered as a “revolution” in finance.

What do you think will be the consequences in the foreseeable future?

Gradually, cash is disappearing as a result of the growth of the electronic transactions. So, the digital currencies are rising their presence in the international financial system. As a consequence, we believe that central banks will finish issuing digital currencies for keeping the control of the system.

Key words: Bitcoin, Central Bank, Financial System, Digital Currency, Monetary Policy.