We talked about the subtle announcement yesterday that begins the move toward a U.S. central bank-backed digital currency (CBDC).
And just as the "build back better" and clean energy transformation is an agenda highly coordinated by major global economic powers, so is the concept of CBDCs. The BIS (Bank for International Settlements) consists of 63 global central banks, and nearly 90% of them are on this CBDC path.
What else is highly coordinated? Monetary policy.
Just as easy money policies were coordinated, so is the new tightening regime (with the exception of Japan).
With that, since Friday we've heard the same tough talk from all of the Western central banks that we heard from the Fed over the past few weeks. And it has come with some very familiar language.
It's all a variation of Jay Powell's remarks on Friday: "we will keep at it (raising rates) until the job is done."
This reminds me of the Mario Draghi moment back in 2012. Draghi, the President of the European Central Bank, was facing a speculative attack on the weak euro zone bond markets (specifically Italian and Spanish bonds). In a zero interest rate world, mired in the post-financial crisis economic gloom, yields on these government bond markets had soared to 7%+. These countries were effectively insolvent. And a blow up/default there would quickly spread and result in the end of the euro (the second most widely held currency in the world). Apocalypse.
What happened? Draghi vowed to do "whatever it takes" to save the euro, and to maintain stability and solvency in the euro zone. He vowed to buy unlimited Spanish and Italian debt.
Here's what happened to yields on Spanish bonds …