Financial Stability
Stress test transparency can ‘persuade’ investors, says Bundesbank paper
Deutsche Bundesbank study says the disclosure of stress testing results and methodology can be designed to alter investor behaviour
Taming the finance monster
The best way to resolve global financial instability is for the owners of capital to assert themselves, with sovereign funds well positioned to take the lead, say Paul Woolley and Dimitri Vayanos
Euro periphery financial systems still ‘fragile’, reports show
Irish and Portuguese financial stability reports show financial systems have grown stronger in past year, but weaknesses persist
Regulators in Asia target shadow banking sector
Regulators in Asia are striving to strike balance between regulating the shadow banking sector and letting Asian financial intermediation develop
ECB paper models heterogeneous shock transmissions
Working paper examines macroeconomic and financial linkages between countries; finds significant but heterogeneous transmission of shocks
Iceland’s Guðmundsson identifies flaw in banking union plans
Már Guðmundsson warns lack of foreign currency lender-of-last-resort provisions is an important omission from economic and monetary union plans
IMF research highlights financial vulnerabilities in Latin American corporates
Working paper suggests booms may lead to over-leveraged non-financial firms, which could in turn transmit shocks into other sectors of the economy
Bank of Thailand: LCR horizon should be a maximum of seven days
Experience of the Asian financial crisis leads Bank of Thailand's deputy governor to question the LCR parameters
RBA takes action to cut interchange fees
Reserve Bank of Australia reduces interchange fee cap for Eftpos payments system by 30% to 12 cents; move follows swingeing cut in 2006
BoE warns UK banks on ‘overstated’ capital
Financial Stability Report says banks’ reported capital may fall short of actual buffer; FSA urged to ensure banks take action
National Bank of Hungary warns of tight lending conditions
Quarterly lending survey finds number of companies with access to credit is falling, with a further squeeze possible when the Hungarian transaction tax feeds through
Hong Kong regulator cautious about CoCos
The HKMA is unconvinced about banks issuing contingent convertible instruments, according its deputy chief executive, Arthur Yuen
Riksbank recommends interbank rate-setting reform
Central bank review finds no manipulation but identifies governance shortfalls; part of latest stability report that deems banks in Sweden ‘financially strong’
Canadian deputy fears ‘ugly’ outlook for global economy
Bank of Canada’s John Murray says policy slippages are endangering global recovery; hits out at surplus countries and says world is trapped in a ‘bad’ scenario
Estonian governor supports fast fiscal reform
Ardo Hansson discusses the merits of speedy reforms and budget balancing but warns mistakes can be made
ECB’s Cœuré wants structural co-ordination
Executive board member appeals for the cohesive implementation of Volcker, Vickers and Liikanen proposals
Korea paper considers spillover effects of currency hedging
Study considers the impact of creating an Exchange Stabilization Corporation designed to prevent short-term currency liabilities accumulating in hedging process
EC gives go-ahead for Spanish recapitalisation plans
European Commission says recapitalisation and resolution plans for four Spanish banks under Frob control do not violate state aid rules; paves way for capital injection in early December
Kenyan coin shortage is a public misperception, says central bank
Central Bank of Kenya says “perceived shortage” can be eradicated if members of the public raid their piggy banks
Eurogroup agrees on Greek aid package
Eurozone countries agree on measures to boost Greek debt sustainability alongside a €43.7 billion ($56.5 billion) disbursement from the European Financial Stability Facility
Ireland’s Elderfield sees tension between micro and macro objectives
Deputy governor of the Central Bank of Ireland says micro-prudential emphasis on ‘more and faster’ capital requirements could fuel pro-cyclicality and harm debt sustainability
Norges Bank urges banks to continue accumulating capital
Financial stability report says although financial market conditions have improved, banks should strengthen their capital positions; supports supplementary capital requirements for Norwegian banks
Korea to start mandatory clearing in October 2013
Legislative hold-up means Korea OTC derivatives clearing will be delayed
Low volatility driving forex turnover down, says Bank of England FX chief
Speaking at the FX Week Europe conference, Michael Cross explained why turnover in foreign exchange spot is declining for the first time in a decade