Financial Stability
IMF paper examines crisis indicators
Working paper assesses the effectiveness of various indicators in predicting financial crises; finds that leverage is ineffective and instead use of poor quality collateral is “critical link”
Bank of Canada paper models repo market collapse
Working paper develops model of repo markets to explain causes of collapse; finds that central bank intervention can help prevent problems
Central Bank of Cyprus supports bailout request
Central bank recognises need for European help to recapitalise Cypriot banks; commits to supporting efforts to finalise the bailout
Basel Committee reveals final rules on capital disclosure
Final rules published on disclosure of banks’ capital composition as well as consultative document on risk reporting; committee aims to reduce financial stability risks from international banks
Bank of Japan concerned about wrong-way risk on banks’ cross-holdings
Helping banks by purchasing stock will create moral hazard, says Bank of Japan director-general
RBI paper develops systemic liquidity index
Working paper designs a 'systemic liquidity index' of financial markets in India; says index would be useful in monitoring financial system trends
BIS’s Cecchetti discusses financial globalisation
Stephen Cecchetti considers whether financial systems can grow too big and assesses how far countries should go in outsourcing financial services
Singapore and Thailand sign cross-border collateral MoU
Monetary Authority of Singapore and Bank of Thailand sign agreement to establish cross-border collateral arrangement; aims to promote financial stability in both countries
EC staff to ‘step up’ work on Spanish banks assessment
Olli Rehn calls for staff to speed up assessment of Spanish banking sector; downgrade rumours swirl after official government request for financial assistance from the Eurogroup
New $50 note released in Trinidad and Tobago
Central bank issues new note as part of independence celebrations; limited number of new $50 banknotes carry commemorative message
IMF highlights problems with overreaction to financial crises
Working paper studies data on banking crises; finds that a strong macroeconomic response to a banking crisis may reduce incentive for banks to restructure
Iceland central bank governor discusses policy challenges
Már Guðmundsson reflects on difficulties that remain in removing capital controls and tackling high inflation; suggests that others could learn from the Icelandic model
BoE paper studies impact of Lehman’s collapse on payments
Bank of England working paper studies the effect of the Lehman Brothers collapse on wholesale payment patterns; finds slower payments and increase in risk following the default
BIS calls for European banking union and urgent fiscal reform in developed nations
Urgent fiscal reform and genuine efforts to create a banking union in Europe are vital to breaking the viscous linkage between banking and sovereign stress, says BIS
ECB relaxes collateral eligibility rules
Broader range of lower quality assets now acceptable under ECB collateral rules; move should help Spanish banks after results of stress test reveal a potential €62 billion capital shortfall
Brazil and China agree currency swap and deepen cooperation
Central Bank of Brazil announces agreement with China Banking Regulatory Commission to enhance exchange of information; governments agree to currency swap
Canada may withdraw monetary stimulus if growth remains on track, says Carney
Mark Carney lauds Canadian economy, says Europe must create a common banking union and believes global recovery relies on moving to an open, multi-polar international economy
Bank of Finland paper assesses impact of eurozone crisis response
Discussion paper considers the effect of initiatives in response to the eurozone crisis on countries’ sovereign debt; finds some policy decisions had 'significant' short-term effect on bond markets
Bank of England to post collateral in OTC derivatives trades
BoE thought to be the first major central bank to change policy on collateralisation as it seeks to reduce dealer funding charges
Bank boards have little time to focus on business risk, says Scotiabank chief
Canadian bank chief believes pressing need to meet raft of new regulations means top bankers have little time to focus on business risks; says ‘small’ and ‘uncomplicated’ banks fail too
Hungary proposes amendments to troublesome central bank law
Hungarian government puts forward amendments to widely criticised central bank law; discussions with concerned international bodies including the ECB and IMF are 'ongoing'
ESRB encourages cooperation to fight market deterioration
European Systemic Risk Board sets out areas authorities must focus on; Ewald Nowotny announced as newest steering committee member
Sri Lankan central bank blasts rating agency assessment
Central bank expresses 'grave concern' over statement from Standard & Poor's regarding state of banking sector in the country; rating agency noted 'very high risk' in institutional framework
Central Bank of Kuwait revamps bank governance rules
New rules make improvements to regulations in light of global financial crisis and recent issuances from Basel Committee and Financial Stability Board; effective date set for next year