14 June 2019 FT — Articles to Read

Question: According to MSN: Money, what is U.S. student debt as of 1st quarter 2019?

ECB joins Brussels in pushing for greater global role for euro – Pg. 3

  • The ECB has joined Brussels in a push to promote the euro internationally as it attempts to counter the US-led retreat from globalization and free markets
  • The European Commission has argued for a more global role for the euro amid concerns that elements of US foreign policy, such as “America First” and sanctions on Iran, cannot be bypassed in a world order where most global trade and financial transactions are priced in dollars
  • The euro is the second most important global currency but lags behind the dollar’s influence because of the US currency’s widespread use in trade transactions, and the depth and liquidity of US bond markets, which dwarf those of other currency zones
  • …dollar’s popularity had declined since the global financial crisis of 2008
  • While the ECB does not consider this a big benefit, it agrees that the use of the US dollar in global trade enables Washington to more effectively impose tariffs on the rest of the world

Ebola escalation subjects World Bank’s pandemic bonds to critical scrutiny – Pg. 21

  • The World Bank’s pandemic bonds are under scrutiny again following an escalation in the Ebola outbreak in central Africa
  • First issued in 2017, such bonds use private investment to help developing nations tackle outbreaks of infectious diseases.  The particular bond that covers Ebola, among other diseases, pays investors a coupon of 11.1% over Libor, funded by donor nations Japan and Germany
  • …since their introduction, pandemic bonds have yet to pay out to affected nations and have faced criticisms over their structure: helping to handle outbreaks only when the virus crosses an international border
  • Since the first case of Ebola last August, almost 1,400 people out of 2,000 infected have died in eastern Congo, a region with rich mineral deposits but one of the poorest countries in the world…
  • If the bonds mature without paying out, investors get their money back, plus the chunky coupons

Answer: $1.4tn