Coppola Comment

I wrote a number of posts on Forbes about Russia at the back end of 2014. At the time, there was a lot going on with the currency, the central bank and the banks. So for ease of reference, I've collected them here, in chronological order. Why the Russian Central Bank can't defend the ruble Has the Russian Central Bank thrown in the towel? The Russian Central Bank is regaining control, but for how long? Oil, sanctions and Russian politics How to destroy a currency, Russian style Russia and the banks How OPEC destroyed the Russian ruble Russian ruble: Let it fall, let it fall, let it fall The Great Russian Bank Bailout Why does Venezuela think Russia is its friend? No doubt there will be more in due course. Russia and its problems are not going away any time soon.

At Forbes, more on Russia's currency problems: After the Central Bank of Russia (CBR) established free float with the condition that it would intervene to protect domestic financial stability, the ruble immediately rallied , but then fell again. Many people forecast dire consequences . I admit I was a little worried, but I thought the ruble would stabilize once markets became used to the lack of routine intervention from the CBR. After all, the whole point of allowing a free float is to enable the currency to find its own level – and more importantly, restore control of monetary policy to the central bank. When a country operates a fixed exchange rate system, it de facto adopts the monetary policy of whichever country issues the currency to which it pegs its own currency. In the case of the ruble, that is the United States. And as I have noted before , because China has large US$ reserves and a currency peg to the US$, the Fed’s policy is to a degree determi...

Two pieces (so far) at Forbes on the Russian central bank's desperate defence of the ruble. Well, it appears desperate, anyway. But is it, really? Firstly, I explain why the Russian central bank can't defend the ruble and shouldn't try to: When a currency is rising in value due to capital inflows, the central bank can cap its rise by buying assets and foreign currency. This is what the Swiss central bank has been doing for a few years now. Its purchases of Euros amount to possibly the largest QE program in the world relative to the size of its economy. Since it can create infinite amounts of Swiss francs, it is unquestionably the most powerful player in the Swiss franc market, and no market participant will oppose it. Instead, market participants will happily co-operate with it by selling Euros at the price that it sets. Similarly, when a currency is falling sharply in value, the central bank can support it by selling assets, including foreign currencies. But...

Two posts that centre on the troubled Austrian bank Hypo Alpe Adria. For a small bank in a small country, it is causing an AWFUL lot of trouble. Firstly, the ongoing saga of HAA's Balkan network, which the Austrian government is attempting to sell. As the bidding enters its final stages, it becomes apparent that the eventual owner will be determined more by politics than money: The present tension between the EU and Russia creates a difficult dilemma for the Austrian authorities. On the one hand, they should get the best deal for Austrian taxpayers, which would imply that they should accept the higher bid even though it involves a sanctioned Russian bank. On the other hand, allowing a sanctioned Russian bank to buy financial companies in the Balkans would seem contrary to the spirit if not the letter of EU sanctions.... Despite my earlier warning , a consortium backed by a sanctioned Russian bank is still in the running to buy HAA's Balkan network. Read about it h...

Especially when it is disguised. My latest post at Forbes takes a jaundiced look at who is in the race to acquire Hypo Alpe Adria's network of Balkan banks. I'm not usually much of a conspiracy theorist, but this is the Balkans, after all - the far-fetched is mundane in that part of the world. There is something very shady going on, and I reckon the Russians are behind it. Read about it here . Oh, and in case the Balkans look like a black hole to you, here's a map (courtesy of Wikipedia).

At Forbes: On June 17, the US announced further sanctions against Russia because of its support for rebels in the Ukrainian civil war. The new sanctions are widely considered to be tough. But they are also difficult to understand. The extent of their legal and practical application is by no means clear. Yet – they are very clever. However they are interpreted, they are bad news for Russia. Find out here how they should be interpreted and why they amount to financial warfare.