Financial Stability
UK payments have room for improvement, report finds
Report identifies priorities for better payments among consumers, businesses and government, finding desire for faster, more flexible payments with less room for error
RBI designates two banks ‘systemically important’
Reserve Bank of India lists State Bank of India and ICICI Bank as ‘domestic systemically important banks’ and details additional capital requirements
Ukraine central bank awaits wider regulatory powers
Ukraine’s central bank has achieved significant reforms of the banking sector, but needs a draft law to pass to gain the power necessary to regulate the non-bank sector, World Bank analyst says
Finnish deputy: international competition will change mortgage lending
Bank of Finland deputy argues conditions for international competition in mortgage lending are ‘improving’ and there is the potential for a ‘substantial impact’ in the eurozone
Household debt had modest impact on US consumption, research finds
Household debt in the US accounted only slightly for the decline in household consumption nationally in the 2000s, research published by ECB finds
BIS paper finds emerging market corporations exploiting carry trade
Study of emerging market foreign currency-denominated bond issuance by Bruno and Shin finds corporations appear to be issuing bonds as part of a carry trade, rather than financing investment
IMF paper explores capital inflows and credit growth
Working paper finds an increase in capital inflows can fuel credit growth, but it depends on their composition; no ‘significant’ connection with foreign direct investment
Ukraine strikes debt restructuring deal with main creditors
Agreement would see creditors accept 20% nominal haircut on $18bn worth of debt; finance minister and IMF head hail agreement and stress need for support among bondholders
Eurozone QE has ‘significantly increased inequality’, Bundesbank paper argues
Asset price changes following the introduction of eurozone quantitative easing have largely benefited the wealthiest households, a Bundesbank working paper says
Hungary aims to implement LCR ahead of schedule
Announced timetable is quicker than the minimum outlined in Basel III and the accelerated timetable agreed under the capital requirements directive
China's premier says renminbi at ‘equilibrium’
Li Keqiang plays down the risk of further renminbi depreciation, suggesting it will be ‘kept basically stable' at the prevailing rate in a move that may offer relief to hard-hit emerging market currencies
RBI looks to ‘disruptive innovation’ to boost inclusion
Granting licences to 11 payment banks is the next step in a ‘payments revolution’ in India that should increase financial inclusion, deputy governor says, although not all technologies are benign
Canadian deputy says LTV and DTI limits ‘most effective’ macro-pru tools
Lawrence Schembri examines demand and supply factors underpinning rise in house prices; evaluates macro-prudential tools used in Canada and elsewhere
Equity price growth rate ‘leading indicator’ of bank loans, French paper argues
Comparing two models of domestic credit dynamics to recent French data shows the importance of equity price growth rates, according to a Banque de France working paper
South African central bank open to currency intervention
Chinese devaluation stokes fears of further currency falls in economy vulnerable to exchange rate shifts
East African governors say structural measures needed to stabilise currencies
Senior central bank officials from Burundi, Kenya, Rwanda, Tanzania and Uganda identify measures necessary to ensure long-term stability of their currencies
Kazakh central bank moves to stabilise banking sector
Central bank launches plan to compensate depositors hit by collapse in value of tenge, as banks reliant on external funding run into problems
Limited liability distorts incentives for disaster planning, paper argues
Consequences of recent events with catastrophic financial ramifications have been greatly aggravated by policy-makers’ failure to prepare, says ECB working paper
Rajan warns banks there will be no more ‘extend and pretend’ on NPLs
Banks need to face the fact that large chunks of their assets are non-performing, and the RBI will no longer prop them up via a policy of forbearance, governor says
Strategic default helps explain crises in advanced economies, ECB paper finds
Sovereign debt and financial re-allocation are linked by the use of government bonds as collateral on the interbank lending market, paper notes
BIS researchers dissect emerging market fire sales
Working paper picks apart the channels through which asset management impacts on emerging bond markets, finding evidence of procyclical behaviour
RBNZ deputy defends change in mortgage ‘speed limit'
Concession allowing 5% of new mortgages to exceed LTV ratios will not add fuel to market rally that has seen Auckland house prices rise by 24% in past year, deputy governor says
Venezuelan inflation still running at over 700%, expert says
Venezuela’s central bank appears to be unable to make any impact on soaring inflation levels and has not reported an inflation number this year, says Steve Hanke
Leverage is key factor in threat posed by bubbles, study finds
A San Francisco Fed study of 17 bubbles over the past 140 years provides empirical support for the idea that leveraged bubbles have most potential for damage