Financial Stability
Bundesbank research says sovereign default can be the best option
Discussion paper finds it may be optimal to choose a costly default over legal repayment, but only when a country is facing disaster
French paper warns of banks precipitating crises through hoarding
Research develops new ‘domino effect’ model, examining how banks may bring about crises by attempting to protect themselves
BIS committee hails Basel III progress
In report to G-20, the Basel committee says member countries are making ‘considerable progress’ implementing Basel III, despite long delays; laments ‘excessive’ variation in RWAs
FSB review finds bank resolution regimes 'lack important powers'
Results of last year's peer review show many countries still need to pass legislation to empower supervisory agencies to resolve failed financial institutions effectively
ECB’s Cœuré outlines efforts to cushion impact of regulation on SME lending
Executive board member says the European Central Bank can only tackle funding constraints – other stakeholders must address credit risk and lack of capital
IMF annual report says asset bubbles among risks of ‘MP-plus'
IMF warns of risk associated with loose monetary policy in the world's biggest economies, but says stance should remain 'very accommodative until recovery is well established'
Zimbabwean governor attempts to stem panic as StanChart faces closure
Gideon Gono tells depositors not to withdraw their savings following a government announcement that Standard Chartered will be shut down for non-compliance with indigenisation laws
EU and OECD say weak supervision shares blame for Slovenia's impending bank crisis
European Commission follows OECD in highlighting Slovenia's 'excessive imbalances'; both bodies call for improved supervision from the central bank
FDIC vice-chair says Basel III capital requirements provide illusion of safety
Thomas Hoenig says capital ratios allow banks to leverage up while outwardly appearing safe; warns systemically important banks have much worse leverage ratios than smaller institutions
Emirates central bank to introduce direct debit system
Central Bank of UAE to bring in direct debit system to allow payment in instalments without the need for post-dated cheques
Norwegian authorities chase benchmark rate reform
Financial Supervisory Authority of Norway proposes new framework for Norwegian Interbank Offered Rate-setting process; central bank looks to push envelope further
Bernanke says Fed stress tests were a ‘critical turning point’ in crisis
Fed chair says stress tests offer macro-prudential dimension to supervision; US banks have more tier 1 common equity under a severe stress scenario than they did in reality in 2008
Sarb’s head of financial stability fears new powers may cause conflict
Hendrik Nel says the Reserve Bank was not given much choice but to accept new supervisory powers; warns of conflict with monetary policy and possible threat to independence
New model prescribes strongly counter-cyclical medicine for financial shocks
Working paper from the Bank of Canada suggests counter-cyclical bank capital rules can help steady the ship in the wake of financial shocks, in tandem with monetary policy measures
FSB to assess efforts to end ‘mechanistic reliance’ on credit ratings
Peer reviews aim to hasten a move away from rating agencies, with countries expected to eliminate references to credit ratings from laws and encourage better internal credit risk assessments
Payment pricing preventing electronic migration in Ireland
Article in central bank’s quarterly bulletin finds Ireland could save €1 billion by switching from cheques to a more efficient payment instrument
Chilean paper finds room to reduce risk by diversifying investment in Brics
Statistical analysis finds little co-integration of stock market vectors in Latin America and the Bric countries; says this gives investors a good opportunity to diversify, which would reduce risk
Fed tightens rules for retail forex banking
Federal Reserve publishes final rules for banks engaging in foreign exchange transactions with retail customers; includes requirements for risk disclosures, good conduct, capitalisation and margining
Bank of Spain reshapes supervisor to meet new demands
Banking supervision directorate restructured to meet the requirements of Spain’s memorandum of understanding and the move to European banking union
ECB on collision course with European Parliament over top supervisory appointments
Yves Mersch fears EP veto over supervisory board heads will 'institutionalise conflict' between the ECB and EP, and contravene the Maastricht Treaty
Czech research examines macroprudential policy in small economies
Policy note stresses the importance of considering cyclical systemic risk when setting macro-prudential policy in a small EU economy
IMF strikes €1 billion funding deal with Cyprus
Staff team agrees Fund’s contribution to overall bail-out package; Christine Lagarde praises Cyprus’s ‘ambitious’ programme of reforms
Haldane defends BoE's macro-prudential policy
Andrew Haldane says recent instruction to banks to increase levels of capital will stimulate lending to real economy; academics debate viability of macro-prudential policy
Bank of Lithuania chief urges banks to consider fee cuts as non-cash payments rise
Report shows sharp increase in volume of non-cash payments in Lithuania; governor Vitas Vasiliauskas says this gives banks room to consider cutting fees