Bloomberg FX Survey Reveals Skepticism on Regulations & QE3
Foreign Exchange leaders polled at Bloomberg FX11 Summit
London - Leading foreign exchange (FX) executives say it may no longer be valid to use inflation targeting as a factor in monetary policy, according to sentiments reflected in the results of a Bloomberg FX survey revealed today. The poll was taken at Bloomberg’s FX11 Summit, which drew more than 150 portfolio managers, FX traders and executives.
“As the foreign exchange market adjusts to shifting economic conditions, it now faces unprecedented uncertainties regarding looming regulation,” said Tod Van Name, global head of Bloomberg’s FX business. “We designed the Bloomberg FX11 Summit as a conduit for conversations amongst industry leaders to share concerns, exchange information and develop solutions to key issues.”
FX executives were asked about macroeconomic factors, regulations and carry trade. The survey results showed:
Quantitative Easing - There will not be a third round of quantitative easing (QE3), said nearly two-thirds (65 percent) of those polled; while 29 percent said there would be a QE3, possibly implying that sustained growth in most economies makes this unnecessary
Reserve Currency - Highlighting the potential size and scope of the Chinese economy, over two-thirds or 68 percent of those polled agreed that the Chinese Renminbi will be a reserve currency of the future vs. 31 percent, who said no. Respondents, however, differed on when the Renminbi would become a reserve currency with 32 percent saying in 5 to 10 years, 26 percent saying in more than 10 years and 10 percent saying in less than 5 years
Regulation - Regulation can never effectively manage how territories and domiciles are governed in their FX market interaction, according to 66 percent of the executives polled; only 14 percent disagreed and 20 percent said they didn’t know. When asked if the cost of increased regulation would be greater than the benefits, the majority or 46 percent of respondents said yes, indicating uncertainty about the benefits of more regulation
The Bloomberg FX11 Survey’s respondents also said that compliance with central counterparty clearing and reporting would be more likely to fragment risk to a greater extent. They added that global policy makers will have a difficult time managing a slow growth environment amid inflationary pressure.
“These survey responses paint an accurate picture of how the global FX community sees the market today,” Van Name added. “Bloomberg FX works with our customers to address these market challenges by offering all the analytics, modeling and execution capabilities they need to run their foreign exchange business in a single, integrated desktop. We are also the only complete commission-free execution service available in the global FX marketplace today.”
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Media Contacts: *Pam Snook, Bloomberg LP, pamsnook@bloomberg.net,+212-617-7652 *Sophie Fischman,Bloomberg@cognitomedia.com, +1-646-395-6300 *Charlie Morrow, BloombergEMEA@cognitomedia.com,+44-20-7438-1100 *Anne Karumo,BloombergAsia@cognitomedia.com,+65-81-12-64-09
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