Is FED Threaten The Global Financial System?

Economic readings may be important before taking the Fed’s decision to raise interest rates this December in particular the developments and the high level of inflation the labor market. But, it seems, took the Fed’s decision in this direction, and appeared after a meeting yesterday that he is trying to sober to guide the market in this direction.


Will be a time-lapse date for raising the interest rate on the dollar, a chance to Federal Reserve President Janet Yellin to monitor international developments, in particular the results of quantitative easing in Europe, monetary and other policies currently used in Japan and China.
Knowing that easy money abroad pushes the dollar to rise to the detriment of US exporters and makes it difficult for the Fed to get the desired rates of inflation (2 percent).
The letter sent by the Federal Reserve to a unified market with the exception of one member of the Federal Open Market Committee Jeffrey lacker which objected to the decision, giving softens some freedom in dealing with things and read events until December next first date, knowing that during this period will issued statements of jobs may help to determine the course of the coming period, and whether it was appropriate to raise the level set in the interest rate. Pat and many economists expect an increase of interest rates in December if jobs reports in October and November came to some improvement compared with September, which saw some slowdown.

And it seemed to volatile markets in the period before and after the Federal Reserve’s decision, and the euro’s lowest since early August, which fell by 1% to 1.08 percent after the announcement.

The index, which measures the dollar against a basket of major currencies losses have been reversed, for up to 97.77 after it fell by 35.0 per cent in ten minutes prior to the announcement.
These indicators may be useful in the near future, especially as the markets will remain volatile, waiting for what will happen in December, knowing that the unrelenting will speak twice in this period, and each time will be the economic situation in the interface.

The fact remains that the Fed raise interest rates to affect the global economy, especially as US interest rates could have global implications greater than it was in the past, especially in emerging markets, China has become more integrated into the global economy.
The biggest Secret To Success impact of the move will be on the capital markets than on trade so and absolutely, the evidence suggests that the indirect effects will be greater than local effects in the United States.
Moreover, the rise in US interest rates could lead to a global debt crisis, especially as the debt ratio has reached alarming levels in all major regions in the global economy, which means that the financial system exposed to shocks, which may be affected to a large extent followed in US fiscal policy United especially raise interest rates.
Dollar loans has doubled in the emerging markets (ER) since the crisis «Lehman Brothers» to reach the limits of $ 3 trillion, which means that these funds, with the increase in interest rates, will have to raise the debt service, which is a major impediment in terms of payment of debt and debt Secret To Success service, economic security and growth as threatening.
It may be the BIS (Bank of International settlements) if we want a central bank called the Bank of the only global body that sound lifted aloft after the Lehman crisis and said that the financial system is threatened and unstable to a dangerous extent.
The BIS report also said that the rich countries have failed to settle things over the past seven years or take advantage of the benefits of low prices, as did the North European countries after the occurrence of banking crises since a quarter-century, but on the contrary, they seem to have fallen into the Japanese trap. It is a matter of concern is what will happen when the Fed decides to raise interest rates for the first time since 2006.
On a side study BIS’s stated that the global financial system than what is based on the ratio of borrowing rates in the United States and only slightly affected by other aspects such as currencies and trade links prices and also must say, and always according to the studies, said the US benefits increase of 100 rate point moves the emerging markets and developed economies by 43 points.

Add to all this an important obstacle, which is that central banks have experience in raising interest rates is not available after a long period in which interest rates were nearly zero. And may not know how the economies in developed and emerging countries will respond, knowing that the financial markets may be more flexible began preparing to become so high that, according to soften about to get at the end of this year.
These things are all calling for more of the concern of the health of the global financial system and its ability to respond to so high, especially as the debt of emerging countries are many, many countries became owes euros to finance commercial and other activities.

This situation means that the European Central Bank is in a competition with the US Fed, leading to increased demand for the euro, where interest rates are still far away from any possibility of moving the central fact that the EU continues to quantitative easing process which, according to some analysts began to give effect though a bit.
In absolute terms, the global financial system has been moving positively or negatively with the movement of US interest rates, which was and still is the main engine of this system without any other considerations remember.

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