The Financial System and Foreign Policy
A few years ago, I spent several very pleasant days in Kyiv. It was early summer and the city was bustling. I stayed with a friend in his apartment, close to the city’s main football stadium. He and his wife were proud to show me around; we visited the historic old town, took photos outside Saint Sophia Cathedral and ate lunch overlooking the river.
Early yesterday morning, the two of them jumped in their car and started driving west, towards the border.
I don’t talk much about geopolitics here in Net Interest; I’m much more comfortable analysing companies than countries. But banks are a special group, with a dual nature. At one level they behave just like other companies, focused on serving customers and maintaining competitive position. At another level, they act as agents of government policy.
Normally, it’s domestic policy they’re engaged in. Policymakers around the world have for years required banks under their jurisdiction to lend to certain sectors of the economy. In Brazil and …