Barring a miracle, it won’t be part of the current package, but debt relief is still the big issue that will have to be tackled at some stageWhatever deal is, or possibly is not, cooked up for Greece, there is an important point to remember: the country’s debts, standing at €320bn (£235bn), or about 180% of GDP, are unsustainable. One way or another, a debt writedown will have to happen at some stage. Barring a miracle, it won’t be part of the current package.This has been easy to forget as the euro circus has travelled between Athens, Berlin, Brussels and Riga in recent weeks and months. The talks have concentrated on setting the terms for the release of the last €7.2bn tranche of loans from the previous bailout. Continue reading...

Rumours swirl that Greece could hold elections if it cannot reach an honourable compromise with its lenders, who are sending a new proposal to Athens on Wednesday.

IMF economists explore radical approach for states with large public debts – if the cure is worse than the disease, why not just live with the debt?One of the most obvious legacies of the global financial crisis is the sharp increase in public debt. Countries scrambling to avert the collapse of their economies or banking systems built up stocks of debt at a pace previously unseen during peacetime.Attention has more recently turned to how quickly that debt should be paid down. In the UK, Chancellor George Osborne has made cutting the national debt as a share of GDP a key pledge.Related: The austerity delusion | Paul Krugman“While there are some countries where clearly debt needs to be brought down, there are others which are in a more comfortable position to fund themselves at exceptionally low interest rates, and which could indeed simply live with their debt (allowing their debt ratio to decline through growth or windfall revenues),” Ostry and Ghosh write in a blogpost to accompany the discussion note.“This is a case where the cure may be worse than the disease: paying down the debt would require further distorting the economy, with a corresponding toll on investment and growth,” says the discussion note, which the Fund points out does not necessarily represent IMF views or IMF policy.“The mantra that it is always desirable to reduce public debt must not go unquestioned. A comparison of costs and benefits must underpin policy advice. For countries in the green zone, the case for living with the debt is a strong one.” Continue reading...

This entertaining history of bitcoin traces the cryptocurrency’s nerdy origins and vast potentialThe history of money goes back a long way – at least to 2000 BC– and one way of studying the evolution of human societies (and indeed of entire empires) is to follow the money that they used. Coins evolved into banknotes which evolved into cheques which evolved into credit and debit cards, which is more or less where we are now. The big question is what happens next.In one sense the answer is obvious: money has to all intents and purposes metamorphosed into digital bits. When you wave your new contactless debit card (or, soon, your iPhone 6) over a retailer’s card-reader, what you’re really doing is instructing a computer to reduce a number stored in a ledger on your bank’s hard drive and increase a number stored on the retailer’s bank’s ledger by a corresponding amount. No physical cash has changed hands: all that’s happened is a transfer of digital information. Continue reading...

Exclusive: Politicians told they could view the current Trans-Pacific Partnership negotiating text if they signed a four-year confidentiality provisionAustralian politicians have been told they can view the current confidential negotiating text for the Trans-Pacific Partnership agreement, but only if they agree not to divulge anything they see for four years, despite expectations the deal could be finalised within months.As 10 years of highly secret negotiations over the 12-nation trade and investment pact draw to a close and the US Congress debates whether to grant president Barack Obama fast-track authority, MPs and senators were briefed on the deal Monday night by the Department of Foreign Affairs and Trade assistant secretary Elizabeth Ward and other officials.Related: Here’s how much corporations paid US senators to fast-track the TPP bill Continue reading...

Goldman Sachs may be right: a technical default by Greece, creating even more pressure on its banking system, may be necessary to encourage a dealGreece’s latest “crunch” week – a €300m payment is due by Friday to the International Monetary Fund – started in familiar confused fashion. At the weekend, Alexis Tsipras, the Greek prime minister, blamed creditors’ “absurd proposals” for the failure to reach a deal to release bailout cash, arguing that eurozone hardliners wanted to create a “two-speed Europe.”Then Greece’s new representative at the IMF withdrew from the job under pressure from MPs within the ruling Syriza party. Despite all that, there was brief excitement when it was rumoured that a funding and reform package was set to be announced within hours. Naturally, nothing materialised. Continue reading...

Central bank responses to the financial crisis are feeding booms and bubbles while market illiquidity will eventually trigger a bust and collapseA paradox has emerged in the financial markets of the advanced economies since the 2008 global financial crisis. Unconventional monetary policies have created a massive overhang of liquidity. But a series of recent shocks suggests that macro liquidity has become linked with severe market illiquidity.Policy interest rates are near zero (and sometimes below it) in most advanced economies, and the monetary base (money created by central banks in the form of cash and liquid commercial-bank reserves) has soared – doubling, tripling, and, in the US, quadrupling relative to the pre-crisis period. This has kept short- and long-term interest rates low (and even negative in some cases, such as Europe and Japan), reduced the volatility of bond markets, and lifted many asset prices (including equities, real estate, and fixed-income private- and public-sector bonds). Continue reading...

Greek leader Alexis Tsipras lashes out at EU, European Central Bank and IMF for months of fruitless negotiations as strains show within Syriza governmentGreece’s beleaguered prime minister, Alexis Tsipras, has blamed the “absurd proposals” of creditors keeping the debt-stricken country afloat for the failure to reach a deal that could release emergency aid to avert default.In a hard-hitting article for the French daily Le Monde, the leader lambasted the uncompromising approach of the EU, European Central Bank and International Monetary Fund for five months of fruitless negotiations.Related: Bruised and confused: why Greeks voted against the gods of Europe | Elena PanaritisRelated: Yanis Varoufakis dismisses rumours he intends to resign as 'grossly premature'Rumours of my impending resignation are (for the umpteenth time) grossly premature...@nikimoza1 "In the long run we are all dead." J.M.Keynes. (In the medium run, those nostalgic of the troika days are stuck with me @ FinMin)“Sometimes I get the impression that people are waiting for an accident so that they can really focus [on] avoiding a bigger disaster. It’s too long, this time that has been taken to find a solution. I believe it’s important now to find that solution.” Continue reading...

Central banks would have liked by now to have returned monetary policy to a more normal setting so they have wriggle room when things turn nastyFor 75 months it has been the same story. The nine members of the Bank of England’s monetary policy committee gather, consider all the latest evidence and decide that official interest rates should remain at 0.5%.Interest rates are at rock-bottom levels pretty much everywhere in the developed world and the moment for raising them continues to be pushed back. But central banks have not just relied on interest rates. They have also been active in the financial markets, exchanging bonds and other assets for cash. This process, known as quantitative easing, has increased the supply of money and driven down long-term interest rates. Continue reading...

Fresh from victory, a new government makes big fiscal changes as early as it can. What that means for Britain this time has already been spelled out all too clearlyThe first budget of a new parliament tends to be the most dramatic and influence the agenda for years ahead – even decades, in the case of Anthony Barber (chancellor 1970-74), Sir Geoffrey Howe (1979-83) and Nigel Lawson (1983-89). The impending July budget of the new chancellor – sorry, folks, but not really so new – will almost certainly fit the traditional pattern.On this occasion, however, it will be a true blue Conservative budget, not watered down by a coalition partner. And how those Liberals who deserted their own party in the recent election are going to regret it!It will be shameful if, as expected and indeed promised, he goes ahead with his attack on welfare and public services Continue reading...

Why did Andrei Guriev, or early 20th-century industrialist Arthur Crosfield and his family of just three, want to buy Witanhurst house – London’s biggest residence, besides Buckingham Palace, with 25 bedrooms and 365 windows?Highgate these days is full of Russians,” my friend Diana Athill said recently as we drove past the steep lane that leads to the cemetery and the grave of Karl Marx. Diana is rather old – she was born only a few weeks after the Bolsheviks stormed the Winter Palace – so you might say that her life has spanned every jump in modern Russian history, from the last tsar to Lenin, from Lenin to Stalin, from Stalin to Gorbachev and from Gorbachev to Putin; though by “Russians” she meant the most recent, oligarchical kind rather than those who, down the hill 30 years ago, would queue in their badly made suits to lay their official bouquets beside Marx’s great bronze head. Of course, both kinds of Russians are often the same people in different guise: apparatchiks whom historical opportunity has turned into plutocrats.Diana said she’d once asked a taxi driver if he ever drove any Russians. “He replied, ‘No, but I often drive their cooks.”’ She laughed at this. Despite their prominence in conversation, Highgate’s Russians are unobtrusive as pedestrians, pub goers and frequenters of the local shops, possibly because they are too rich for any of these ordinary activities. Theirs is the world of the bodyguard and the black-glass limousine. A few of the big names are known, including Alisher Usmanov, who is ranked third by Forbes in its list of Russian billionaires, and owns a regency villa on the edge of Hampstead Heath. But easily the most visible evidence of Russian wealth is an enormous house called Witanhurst, which stands only a few hundred yards from the high street, and for the past five years has been surrounded by scaffolding, shipping containers and Portakabins – evidence of its extravagant remodelling for an anonymous owner, of whom until this week nothing was known, other than the likelihood that he or she was Russian. Continue reading...

With 20% of bank accounts going unused in developing countries according to the World Bank, financial inclusion must take centre stage in poverty reduction