Financial Stability
HKMA's Chan identifies inherent flaws in risk models
HKMA chief questions the use of financial models in risk management; argues the inability of models to account for irrationality is a major defect
BoJ’s Kuroda highlights 'increasing attention' on capital controls
Bank of Japan governor notes greater understanding of volatile capital flows as a channel for financial shock transmission; says banking union may be plagued by 'financial trilemma'
Belize annual report details financial stability measures
Central Bank of Belize publishes annual report for 2012; establishes financial stability unit to explore macro-prudential surveillance and introduces measures to reduce share of NPLs
RBA considers overhaul to card access regimes
Reserve Bank of Australia launches consultation on whether to change or revoke rules governing access to credit and debit card systems – which might allow the RBA itself to acquire cards
Danish governor rejects financial transaction tax
Per Callesen says tax will restrict market liquidity and banks are ‘right to complain’ about it; says the central bank’s experience with negative interest rates has been a success
Central bank operations push up Target2 turnover
ECB annual report says central banks helped push the value of payments in Target2 system to €634 trillion in 2012; balances diverged as German claims and Spanish liabilities increased
Danish paper uses three centuries of data to show tail risks underestimated
Research says severe stress cannot be properly understood with short time horizons; suggests results could be used to design tougher stress tests
BIS paper finds higher US bank taxes may have only moved stability risk
Research into higher taxes imposed on wholesale funding by US banks finds they did reduce reliance on short-term borrowing, but says risks may simply have been pushed into foreign banks
Central Bank of Ireland stresses importance of long-term bank profitability
Irish macro-financial review highlights need for banks to support the real economy with credit at sustainable rates; increases in bank profitability also necessary for long-term sustainability
German banks adopt Step2 for domestic payments
EBA Clearing reveals seven German banks will use the Step2 payments system to process and clear their domestic payments, converting in the second half of 2013
Riksbank risk survey reveals rate-rise fears
Participants in Sweden’s fixed-income and forex markets raise concerns over interest rates rising faster abroad than at home; unemployment data fuels call for a rate cut in the near term
RBI executive director sees emerging threats to Indian banking
Deepak Mohanty warns of problems on the horizon, including deteriorating asset quality, high interest margins and the need to build capital buffers
BNM's Zeti calls on Islamic finance to show leadership out of the crisis
The challenge of sustaining momentum of Islamic finance will hinge on its ability to keep raising the bar in effectiveness and soundness, says Malaysian governor
RBNZ releases blueprint for macro-prudential tools
Central bank outlines decision-making process behind macro-prudential intervention; says there is more room for policymaker judgement than in monetary policy
IMF paper proposes measure of tail-risk events
Study seeks to quantify what constitutes a systemic financial stress event, and tests the resulting metrics on 11 early-warning indicators in Europe and the US
National Bank of Denmark details FMI implementation progress
Central bank working with financial market infrastructure providers to ‘interpret and translate’ the CPSS-Iosco principles into a form applicable to Denmark
Italian deputy sees difficulties in macro-prudential policy implementation
Fabio Panetta discusses ways that macro-prudential policies may be circumvented or rendered ineffectual and suggests possibilities for solving these problems
Fed paper says macro-prudential policy is not a new idea
Research studies various macro-prudential policies employed in the past, seeking insights for contemporary policy-makers
Robert Pringle's Viewpoint: Watch what central bankers do, not what they say
Recent speeches by Ben Bernanke and Mark Carney signal a new phase in the development of central bank rhetoric. The big question is whether they preface a change in policy
Leaked document shows deep IMF concerns about Cyprus bail-out
IMF approves Cyprus support package but leaked 'internal document' exposes depth of reservations about the plan among the IMF's executive board
Caruana tells central banks to focus more on financial stability
BIS general manager calls for central banks to adopt a 'fully integrated macro-financial perspective' and lengthen policy horizons when financial stability concerns grow
Fed director says rest of world lagging behind on cross-border resolution
Michael Gibson says US has had its resolution authority in place for years, but slow progress in other jurisdictions is causing delays; FDIC chair says talks with G-Sib host countries are ongoing
BoE research examines links between channels of macro-prudential policy
Financial stability paper looks at the well-studied allocation channel and the less-studied signalling channel, finding the two to be closely linked
Central Bank of Kenya cracks down on crime
Report highlights ‘significant progress’ in strengthening defences against money laundering; optimistic about development of banking sector ‘despite 2013 being an election year’