Financial Stability
CFTC's O'Malia: No progress on Sef rules in past two weeks
Mid-April next window for vote, but no reason for optimism, says CFTC commissioner
Nalm 2013: Kotz stresses necessity of exceptional policy despite moral hazard
Former Bundesbank board member says exceptional response by major central banks to the financial crisis was unavoidable as cost of inaction would have been ‘massive’
MAS’s Menon says Singapore is ready for shifting financial ‘centre of gravity’
Managing director says Singapore is well prepared to take advantage of a shift in finance towards Asia, with strong regulation and close links to the rest of the region
BoE research warns of coming financing problems for private equity firms
Quarterly bulletin article highlights problems on the horizon for private equity firms that over-leveraged before the financial crisis, as their debt comes to maturity under much tighter conditions
IMF attempts to sculpt better stress tests
Stress tests are ‘more art than science’ but can be improved and expanded, according to IMF study; cannot be standardised across countries
ECB’s Cœuré says financial fragmentation ‘remains high’
Executive board member Benoît Cœuré highlights evidence of receding fragmentation in the eurozone but warns overall level still too high
Basel Committee will assess whether capital rules need simplifying
Stefan Ingves, chairman of the Basel Committee, says simplicity is "desirable" but it is too soon to judge whether capital rules are overly complex
Dutch central bank paper examines impact of capital controls on currency crises
Study finds lower capital controls reduce the probability of a currency crisis, particularly in advanced economies where there is greater institutional development
Bundesbank paper raises concerns over accuracy of systemic risk measures
Researchers find market-based systemic risk measures may give a façade of safety even as banks enter ‘major tail risks’
UK gears up to new era of prudential regulation
The UK will adopt ‘twin peaks’ supervision in April in a bid to restore integrity to its financial system. Chris Jeffery talks to the Bank of England’s Sarah Breeden about the challenges ahead
BoJ unveils policy for oversight of market infrastructure
The Bank of Japan reveals new policy for its oversight of payment and settlement systems and CCPs; mainly concerned with mitigating systemic risk
Riksbank’s payment system restored after technical failure
Sweden’s large-value payments system, RIX, restored to full functionality after failing to start yesterday afternoon. But cause of disruption still unknown
Italy’s Visco concerned by ‘blind backlash’ against financial firms
Bank of Italy governor issues reminder that finance does bring some benefits, but says pre-crisis ‘benign neglect’ by regulators was foolish
T2S programme hit by delays with costs set to soar
Europe’s new securities settlement system, Target2-Securities, faces tough implementation schedule, say Clearstream and Euroclear officials; ECB reaffirms commitment to price plan and timescale
Constâncio identifies benefits of banking union to non-members
ECB vice-president says European countries outside the new SSM will benefit from an enhanced banking union; stresses value of increased financing to real economies
ECB’s LTROs contribute to 12% drop in repo transactions
Icma report warns ‘abundant’ liquidity provided by ECB’s long-term refinancing operations is undermining the repo market in Europe; notes signs of increased risk appetite
UK Banking Commission urges higher leverage ratio
Parliamentary Commission on Banking Standards says 3% leverage ratio prescribed by Basel III and planned UK rules is insufficient for banks; also advocates power to impose full separation of banking sector
IMF paper advocates hybrid discretion and rules-based macro-prudential policy
Researchers say discretionary systems can be gamed but rules struggle to properly account for risk; combination of ‘strong baseline’ and time-varying component gives best results
RBA targeted by cyber attacks
Reserve Bank of Australia reveals it has been the victim of cyber crime; consults with government intelligence agencies over appropriate defence strategies
New York Fed demands better management of foreign exchange risks
Greater use of capital and collateral to mitigate all risks relating to foreign exchange trading is crucial, warns Jeanmarie Davis, head of financial market infrastructure at the NY Fed
Fed stress tests reveal potential for losses of $460 billion
Stress tests show banks would suffer heavy losses if another financial crisis hits, with some hovering very close to the US Federal Reserve’s minimum core capital requirements – and one falling below
ECB researcher views liquidity shocks through enhanced DGE lens
Model aims to more accurately capture equity premia, finding that this amplifies liquidity shocks and explains a ‘significant fraction’ of business cycle fluctuations
Bank of Portugal distances itself from anti-trust investigation
Portuguese central bank says investigation into banks' anti-competitive practices will not undermine the stability of the financial sector
De Larosière slams US protectionism and EU Solvency II rules
Former IMF and Banque de France chief Jacques de Larosière says the introduction of a swathe of new regulations in Europe – by contrast to the US – may jeopardise the continent’s growth