Financial Stability
UK financial regulators finalise plans to strengthen enforcement and transparency
PRA and FCA publish measures that will keep financial firms better informed about investigations; new framework will “command public confidence”
Basel capital floors are necessary – Riksbank’s af Jochnick
Internal models have led to doubts over true capital adequacy, Riksbank deputy says, so floors have an important role to play
Global financial safety net hits snag in regional finance
Jeromin Zettelmeyer warns moral hazard problems are now more serious with the rise of regional funds; central bank swap lines could be a partial solution
El Salvador governor highlights benefits of increasing minimum wage
New minimum wage legislation will improve the living standards of 19.9% of households, says El Salvador governor; raise will also have positive impact on total economic growth
Irish central bank to survey credit unions’ controls
Central bank has “concerns” over quality of some institutions’ systems, deputy registrar says
Esma calls for more powers over rating agencies and repositories
Agency head says he is not sure if European Commission will act on his recommendations
BIS authors design game of asset managers
Authors model effects of cash hoarding and investor runs, finding that “hoarding is the rule, rather than the exception”, with implications for stress testing
Italian governor calls for reform of NPL regulations
Bank of Italy paper sets out proposals for sterilising effects of NPL sales
Forex code working group liaising with regulators – Debelle
Many regulators are interested in understanding how the code could be used to monitor market activity, working group chairman says; both FCA and Asic are in talks
Sarb deputy says G20 is ‘running the risk’ of being seen as inactive
Mminele says international leaders should intensify their “communication”, to foster inclusive globalisation; protectionist policies will not work in the current landscape, he says
LCH platform to provide risk calculations for margin hub
SwapAgent will send standardised sensitivities for bilateral trades to AcadiaSoft to make IM calls
Protectionism will undermine global trade recovery – Greek deputy
Mourmouras warns Donald Trump against enforcing protectionist policies, highlighting the negative effects it could have on global trade
FSB: ‘no immediate case’ for aligning rehypothecation rules
No pressing need to harmonise rules, but better monitoring of global collateral reuse will give regulators a clearer understanding, FSB says
IMF faces funding challenges, Irish paper says
Current funding set up is “fragile” with “significant uncertainty”, paper argues
PMA stresses accord with Israel as banks threaten to pull out
Governor Azzam Shawwa says Palestinian banks conform to global standards, as the Israeli government steps in to offer assurances to its banks providing correspondent services
Weidmann urges central banks to promote economic and financial literacy
Financial literacy is crucial in underpinning trust in central banks, German governor stresses; advancements in technology will help to boost financial inclusion
‘Flash’ currency moves will continue to surprise markets – BoE’s Salmon
Bank of England executive director says there is “growing potential” for flash events to occur in core markets, despite markets now being able to identify risks
Russian central bank declares moratorium on bank's creditor payments
Peresvet Bank is 49.7% owned by Russian Orthodox Church; size of debts or political connections may make central bank’s task hard, analyst says
Bank of Russia closes more small banks
Institutions shuttered for liquidity shortages and AML/CFT breaches, central bank says
BoE paper maps contagion via CDS market
Economists identify mechanism whereby declining creditworthiness can spill from one bank to another via credit default swaps
EBA and Esma request clarification of CCP regulations
Agencies query areas of ambiguity for clearing houses’ derivatives transactions
Non-banks may amplify risks from policy divergence, Nakaso warns
Non-banks may be less constrained than banks in supplying dollar funding, but it could dry up at the first sign of trouble; the BoJ starts stress testing foreign currency liquidity
ECB paper compares financial inclusion in US and eurozone
Encouraging transfer payment recipients to open accounts has positive effect, study finds
Basel set to decide on capital relief for accounting changes
Phase-in to IFRS 9 and Cecl needed to avert "a dramatic overnight drop in regulatory capital", say auditors