JOST A MON

The idle ramblings of a Jack of some trades, Master of none

What happens if you take a basket of currencies, allow both long and short positions against the Euro, compute the weightings on the portfolio on a monthly basis to target an expected return corresponding to an interest rate of 0% and minimise its volatility? Why, you end up with an Ebu!

Move over, Emu and Ecu and SDR and such-like funding animals. An article in today's Financial Times presents Barclays Capital's new world view: we need a new funding currency because the traditional ones such as the Yen and the Swiss Franc are too prone to exchange rate risk to act as a truly low cost unit of borrowing. So, being quick to seize a market opportunity and helpful to boot, Barclays Capital introduces the European Borrowing Unit.

Gone are the days of carry trades unwinding! Up are the days of triumph for Barclays! Perhaps they'll fund themselves with this newfangled unit and manage to gather enough moolah to finally acquire ABN Amro.

All in all, rather neatly putsched, I think.

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