Financial Stability
Spanish ‘bad bank’ must revise valuations of half of remaining assets
The Bank of Spain says Sareb, the country’s ‘bad bank’, must publish revised valuations of half of its assets by the end of the year; publishes criteria for company to use
CCPs’ initial margins ‘significantly’ raise cost of repo funding, study argues
Initial margins charged by central clearing counterparties (CCPs) can increase the cost of funds raised in repo markets, a Bank of Italy paper argues
Chicago Fed official slams CFTC, SEC over HFT regulation
'You cannot have 80% of the market being just HFT,' says Rajeev Ranjan, a member of the reserve bank's economic research department
Boston Fed conference lays bare uncertainty over macro-prudential policy
Central bankers raise concerns over theoretical and practical barriers to exercise of macro-prudential policy in the US and the appropriate role for monetary policy
IMF working paper explores spillovers between United States and eurozone
Spillovers from the eurozone to the US have been ‘considerable’ since 2014, reflecting policy easing in Europe, IMF paper notes
BoE paper explores link between mortgage debt and consumption
Tighter credit conditions and concern over debt repayments may have led to a 2% drop in aggregate private consumption following the crisis, working paper says
Denmark’s Rohde concerned by lack of bail-in tool at mortgage banks
European standard for loss-absorbing capital does not apply to Danish mortgage banks, meaning resolution frameworks have to make do without bail-in
SNB’s Zurbrügg says negative rates painful but necessary
Vice-chair concerned by financial stability impact of negative interest rates, but says they make sense from a monetary policy perspective; talks with industry have been ‘very heated’
South Africa aims to launch electronic trading platform this year
A deputy governor of the South African Reserve Bank announces electronic trading platform could be launched in the coming months
BoE may impose extra liquidity charges, says regulator
BoE will impose Basel III add-ons if banks’ risks are not fully captured by LCR, says prudential policy head
Lagarde calls for ‘policy upgrade’ across the globe
Managing director of the IMF tells advanced economies to ‘fully incorporate’ spillovers in decision-making, and eurozone to tackle problem with non-performing loans
Regulators must move on shadow banking, says Bundesbank board member
Regulators must act on evidence of ‘significant movement’ towards shadow banking sector, says Deutsche Bundesbank’s Andreas Dombret
Basel Committee considers limiting bank modelling choices
Study of internal models of counterparty credit risk finds ‘considerable’ variation between banks, raising the possibility of the Basel Committee takings steps to increase consistency
BoE committee sees benefits of moving CCB in small steps
The Bank of England's Financial Policy Committee leaves the CCB at 0% but notes the system is ‘moving into a normal phase of the credit cycle’ and sees potential advantages in using smaller increments when the time comes
FSB report finds mixed progress on benchmark reforms
Report welcomes ‘good progress’ on many recommendations, particularly surrounding London fix, but identifies room for improvements
Fed’s Dudley: liquidity warnings a ploy to weaken regulation
'Most arbitrage trading has simply ceased,' while Treasury market depth has dropped from $500 million to $130 million, bankers say
European Commission unveils capital markets union ‘action plan’
European capital markets must be standardised and liberalised, commission says; specific areas of focus include infrastructure funding and securitisation markets
Credit growth has had significant impact on EM growth, IMF paper says
IMF paper explores relationship between the level and composition of credit growth and real GDP growth across 31 emerging market economies
Cyber attacks could represent systemic threat, warns Ireland’s Roux
A string of cyber attacks on financial institutions could start a ‘domino effect’ that triggers a financial crisis, so firms need to improve their defences, deputy governor says
Economists expected lower inflation under Yellen than Bernanke, SNB paper finds
Sample of economists from ‘reputable academic and policy institutions’ on aggregate expected slightly lower inflation under Yellen compared to if Bernanke had stayed on
Paraguayan central bank plans to expand new database
Central Bank of Paraguay aims to include wider range of data in new online platform, which was launched last week to ‘favourable reception’
Central banks should prepare to deal with sharp drops in liquidity, IMF says
Policy-makers need to take action to halt rising risks relating to liquidity, IMF says; central banks may be able to use collateral policies to deal with crises
BoE paper extracts inflation expectations from market rates
Market rates are an imperfect measure of expected future inflation, say economists, who break them down into constituent parts, stripping out risk premia and the ‘wedge’ between RPI and CPI
Botswana research weighs impact of various instruments on credit
While interest rates may be more effective at influencing credit than reserve requirements, more ‘direct’ macro-prudential measures could be even better, Botswana article finds