Liquidity
Danish research examines how central banks can impact market liquidity
Price of liquidity tends to change on days when central bank is operating in markets, with aggregate liquidity and payments activity also important, PhD thesis finds
BoE researchers outline risk of collateral collapse
In stress periods, collateral chains could break, paper in forthcoming Journal of Financial Market Infrastructure warns
Turkish central bank steps in to calm markets in wake of coup attempt
Central bank promises banks unlimited liquidity as failed coup sends shockwaves through markets; economists say banking sector is holding up so far but has some vulnerabilities
Nigerian regulator overhauls management of major local bank
Nigeria’s central bank enforced a change of management in a domestically systemically important bank due to liquidity and capital adequacy concerns; finance veterans appointed to top roles
Bank of England cuts CCB to 0% to support credit supply
In wake of Brexit uncertainty, concerns over supply of credit ‘taken off the table’ says Carney; new buffer rate to give confidence to UK economy that banks can lend in ‘challenging times’
BoE injects £3.1bn liquidity into UK banks
First post-referendum liquidity auction sees banks draw £3.1 billion in long-term repos, mostly against the weakest eligible collateral class
EU exit vote throws up financial stability risks
UK plunged into uncertainty and markets hit hard, with bank stocks some of the worst affected, but more serious problems seem to have been avoided for now
FSB unveils proposals to curb asset management risks
Consultation tackles liquidity mismatch, leverage, op risk and securities lending, with the aim of heading off potential trouble from the recent growth of asset management
Australian fixed-income markets continue to function ‘satisfactorily’, says Debelle
Regulatory change contributing to satisfactory performance, assistant governor notes; large share of activity in derivatives helping bond market to be successful
BoJ vigilant to bond market impact of QQE, Nakaso says
Central bank is monitoring effects of large-scale asset purchases and doing its best to maintain market stability, deputy governor says
Dollar strength behind breakdown in economic paradigm, says Shin
BIS head of research points to failure of covered interest parity post-2008, with the strength of the US dollar correlated with the size of market anomalies
IMF staff urge oil-reliant countries to strengthen liquidity frameworks
Low oil prices likely to harm liquidity, raising the need for improved facilities and forecasting; risk of delayed surge in non-performing loans
Optimising official reserve portfolios
Bank reserve managers require a modern, flexible approach to achieving the investment trinity of safety, liquidity and return. This strategy is typified by BlackRock’s model multi-asset portfolios, which use indexes as building blocks, maintain high…
Canadian banks could withstand shock from China, deputy governor suggests
Financial institutions have adequate capital liquidity to handle external pressures, Wilkins says; research suggests Canadian growth would decrease by 0.1% if Chinese growth fell by 1%
Reserve Bank of India modifies liquidity framework
Rajan spells out plans to “progressively lower” the liquidity deficit in the banking system as part of a broader shift in focus; RBI cuts policy rate by 25bp with inflation on track
IMF paper explores spillovers from conventional and Islamic finance
Research considers how monetary policy should adapt to the different stages of development of Islamic finance, and its interactions with conventional finance
Montenegro should create dedicated ELA ‘subaccount’ – IMF staff
Euroisation is hindering the Central Bank of Montenegro’s ability to act as lender of last resort; IMF staff call for a strengthening of ELA capacity through a “subaccount”
BoE sketches proposals for sharia-compliant facilities
Options for deposit facilities include wakalah or commodity murabahah, with the possibility of liquidity insurance to follow
BoJ moves to ‘ease stress’ in JGB market
More generous limits applied to securities lending facility designed to alleviate strains in the market for government bonds, though liquidity indicators do not show clear signs of tightening
BIS data sheds light on complex shift in global liquidity
There are signs global liquidity might be going into reverse for emerging markets; digging into the data shows situation is more complicated than aggregate figures imply
Caruana marks out dangerous nexus between debt, oil and the US dollar
BIS chief points to interactions of dollar borrowing by emerging markets, US rate hikes and the oil price, as latest data suggests world may be balanced on the edge of a drop in global liquidity
Illiquidity, concentrated bond holding raise volatility – paper
The volatility of financial market price shocks in the Bund and taper tantrums was aggravated by illiquidity and concentrated holdings of bonds, working paper finds
Distribution of liquidity can impact monetary policy transmission, paper finds
Research published by Norges Bank encourages central banks to pay attention to the distribution of liquidity in the interbank market, as well as its overall level
Kosovo’s ELA rules are ‘major improvement’, say IMF staff
Central Bank of the Republic of Kosovo adopts regulation setting out the conditions for emergency fund provision; staff at IMF welcome the additional ‘detail and rigour’