Eurozone: Long-term interest rates would be markedly higher without financial repression – Natixis
30.12.2020, 09:20

Eurozone: Long-term interest rates would be markedly higher without financial repression – Natixis

FXStreet reports that the long-term interest rate in the eurozone is now zero and the core eurozone countries' long-term interest rate is now negative. However, holdings of public sector bonds or debt have not declined. One possible explanation is financial repression, rules that force investors to hold public debt, according to economists at Natixis.

“Financial repression is the set of rules that force investors to hold public debt. This can involve for foreign central banks, rules that limit investment to risk-free bonds, with a virtual obligation to hold bonds from core euro-zone countries. For eurozone banks, the liquidity ratio (LCR) requires them to hold liquid risk-free assets, including in particular government bonds, which is one of the explanations for the high level of government debt held by banks. For insurers, the Solvency II rules (Solvency Capital Requirement, SCR) are based on an analysis of the risk of loss over a 12-month horizon, and therefore heavily penalise risky assets, driving insurers to buy risk-free bonds. Moreover, as euro funds have a capital guarantee at all times, they are also inevitably heavily invested in risk-free bonds.”

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Izvršenje trgovinskih operacija sa finansijskim instrumentima upotrebom marginalne trgovine pruža velike mogućnosti i omogućava investitorima ostvarivanje visokih prihoda. Međutim, takav vid trgovine povezan je sa potencijalno visokim nivoom rizika od gubitka sredstava. Проведение торговых операций на финанcовых рынках c маржинальными финанcовыми инcтрументами открывает широкие возможноcти, и позволяет инвеcторам, готовым пойти на риcк, получать выcокую прибыль, но при этом неcет в cебе потенциально выcокий уровень риcка получения убытков. Iz tog razloga je pre započinjanja trgovine potrebno odlučiti o izboru odgovarajuće investicione strategije, uzimajući u obzir raspoložive resurse.

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