Financial Stability
BIS paper finds investors take simplistic approach to emerging market risks
Authors find investors seem to divide countries based not on fundamentals but on whether they are deemed an emerging market
BoE’s Woods says Solvency II not a revolution
Executive director at the Bank of England examines historical changes in insurance regulation, concluding the introduction of Solvency II is in line with existing philosophy
Parliamentary enquiry criticises Irish central bank
The Central Bank of Ireland failed to address issues in the country’s banking sector with its ‘light touch’ regulation, an Irish parliamentary report finds
Bank of England prepares to overhaul ageing RTGS system
Central bank will spend year outlining plans for replacement to high-value payments system, keeping an open mind at present as to what features it should have
Dutch paper explores price level dispersion
‘Idiosyncratic shocks’ have greater impact on price level dispersion within the eurozone than in the US, authors say
BoE’s Bailey sets sights on balance sheet clarity
Clear disclosure of creditor hierarchies will be ‘critical’ moving forward, says Andrew Bailey; clarity in bank balance sheets is a ‘good thing’
BoE’s Forbes weighs up varying policy paths in US and UK
Bank of England MPC member Kristin Forbes sees ‘striking’ similarities between the countries’ labour markets, but this does not necessarily mean the same policy is appropriate
Andrew Bailey agrees to lead FCA
PRA chief executive accepts top job at UK’s other financial regulator after being asked to take the role, but may not make the move for some months
Carney says supervisors must improve understanding of electronic trading
BoE officials say work is progressing on understanding the risks and impact on ‘system dynamics’ caused by rise of electronic trading, but emphasise it is not all bad
Research analyses Irish banks’ connections to global financial system
An article in the latest Central Bank of Ireland quarterly bulletin maps the networks formed by Irish banks’ connections to each other and to the global financial system
Kosovo’s ELA rules are ‘major improvement’, say IMF staff
Central Bank of the Republic of Kosovo adopts regulation setting out the conditions for emergency fund provision; staff at IMF welcome the additional ‘detail and rigour’
Cyprus on track to complete programme by March, finance minister tells MEPs
Cyprus will continue with fiscal discipline and market-orientated reforms once adjustment programme ends, finance minister tells European parliament; rejects ‘tax haven’ claims
Banque de France governor wants public reforms
France must cut its public debt and reform its labour market, says Francois Villeroy de Galhau; the governor also calls for new investment products
ECB’s Cœuré calls for new attitude to liquidity
Liquidity in the European banking system should not return to its pre-crisis levels, Benoît Cœuré tells a Davos audience; CMU offers chance to fix problems which caused crisis, he adds
Revised Basel III better reflects bank risk, research finds
Study says 2013 capital rules more in line with actual risk, but can be easily gamed
Weidmann says clearer liability would strengthen eurozone
Bundesbank chief says important element of fixing the eurozone’s ills is reinstating the ‘principle of liability’, instead of resorting to bailouts
Tobacco prices ‘insufficient’ to offset food and energy, says Tonga central bank
Headline inflation in Tonga rose to -1.2% in December, but in its inflation report for November, the central bank warns price increases will likely remain low
IMF staff back Moldovan central bank response to crisis
Staff report supports many actions taken by the Moldovan central bank in dealing with the crisis caused by banking fraud; calls for bank to gain more powers and independence
Regulators need better grasp of electronic trading, BIS committee says
Rapid growth of electronic trading in fixed-income markets demands more sophisticated regulatory analysis, Markets Committee says; new risks may be developing
Tonga central bank promotes ‘prudent lending’
National Reserve Bank of Tonga says bank lending rose by 12% in year to November, driven chiefly by lending to households
Market fears endanger Italian and Portuguese bank sell-offs
Recent measures by the Bank of Portugal, as well as market fears about the quality of Italian banks’ assets, may discourage investors from buying Italian and Portuguese bridge banks
Monetary policy less effective than structural reform, Davos panellists argue
Structural reform is more effective than monetary or fiscal policy in current conditions, Axel Weber and Raghuram Rajan agree; Weber foresees four Fed rate rises but thinks markets disagree
Observers cast doubt on first Venezuelan inflation figures in a year
Central bank report puts annual inflation at 141% at end of September, after a year without publishing the data; some consider the figure to be too conservative
Iranian banks may reconnect to Swift as sanctions lift
Reconnection ends four-year exclusion from the global payments messaging service and should make sending international payments considerably less costly