Kroll Bond Rating Agency (KBRA) has released a new research report, “Swiss Francs & Global Debt Deflation”. The report makes the following points:
- Kroll Bond Rating Agency (KBRA) believes that the financial cost associated with the sudden upward revision in the value of the Swiss Franc (“CHF”) is likely to become clear over the upcoming days and weeks in the form of losses to financial institutions and investors. At this time, based upon the information available, we do not expect any changes in the ratings of the global banks maintained by KBRA’s Subscription Ratings Service.
- KBRA notes that low interest rate policies maintained by the Fed and other central banks have created asset bubbles around the globe. The cause of the sudden crisis involving the SNB has its origins in the zero interest rate monetary policies followed by the Federal Open Market Committee (FOMC) and other major central banks since the 2008 financial crisis erupted in the U.S. KBRA believes that the FOMC and other central banks, by keeping interest rates too low for too long, have innocently created a liquidity trap that is now feeding global deflation.
- We believe that the prospect of asset purchases by the European Central Bank (ECB) raises the prospect of further economic distortions in the future. We believe that the Fed and global central banks need to tailor their policies so as not to add greater risk and volatility to the markets and instead support the process of debt restructuring and normalization that must occur in the coming year in order to restore stability and growth to the global economy.
To access the report, click here.
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
