Financial Stability
BoE and ECB strike deal on CCP cooperation
Central banks agree to information exchange and provision of cross-border liquidity in a crisis as the UK government drops two outstanding cases against the ECB
Op risk analysis underrates human behaviour – Fed examiner
Next-generation operational risk should focus on behavioural dynamics in financial firms
BoE stress tests to gauge deflation impact
Stress-test scenario revamped for 2015 to take account of the effects of falling prices on the banking system, while adding a leverage ratio threshold and greater focus on global risks
Counterfeiting rate ‘extremely low’ for Canadian polymer notes
Bank of Canada’s polymer series now comprises 75% of the banknotes in circulation, and is subject to a counterfeiting rate of just 0.56 parts per million
Haldane studies finance through lens of ‘complexity theory’
BoE chief economist sets out thesis in favour of viewing finance as a layered ‘system of systems’, with implications for the way risks are identified and managed
Risks in commercial property have fallen, RBNZ research finds
Article in latest RBNZ bulletin finds less leverage is being used to fund new purchases and developments, while market is showing signs of a ‘robust’ recovery
Fischer sets sights on shadow banks
Fed vice-chair says US regulators must do more to regulate non-banks, including improvements to wholesale funding, better data and regulation that evolves at the same pace as the industry
UK’s Tyrie says ‘wider problems’ need fixing at FCA
Damning report by UK’s Treasury Committee says financial watchdog must do more to correct failures brought to light during a communications debacle in March 2014
Carney: BoE ‘nowhere near’ exhausting macropru tools
Governor says Bank of England has ‘some way to run’ in terms of both the number of tools and options for calibration; debates debt levels on panel at Bundesbank conference
NY Fed wants ‘enhanced communication’ around cyber threats
Sarah Dahlgren says the New York Fed is interested in learning from breaches in security elsewhere and using the intelligence to ‘get ahead of the game’
BIS paper finds macro-prudential impact varies during cycle
Working paper finds evidence tightening policy is more effective than loosening it, and has a greater impact when credit has been expanding quickly
BoE calls for investigation into market liquidity risks
Financial policy committee concerned that investors assume liquidity will be available when they need it, despite recent fragility; BIS research highlights paradox in liquidity buffers
UK payments regulator set for launch
PSR outlines its approach ready for start of regulation on April 1, including plans to work more closely with the industry, increase transparency and boost competition
Investigation unearths flaws in BoE’s RTGS system
Combination of elderly and complex RTGS system, inadequate testing and poor contingency planning led to nine-hour outage last October; BoE adopting review’s recommendations in full
Irish deputy encouraged by NPL progress
Cyril Roux says banks have improved their distressed debt operations but warns it will take several years to work though the stock of commercial NPLs still outstanding
Colombian paper considers reaction functions in payments
Working paper examines how different entities within a large-value payment system react to failures within that system, finding that a range of factors are in play
RBA alert to ongoing housing risks
Financial stability review shows the Reserve Bank of Australia is still concerned about investor demand in the market; says it is ‘too early’ to judge impact of APRA measures
India to become netting friendly on bankruptcy law reform
Different treatment of public and private banks stymied netting - but this could now change
Visual interfaces ‘hold promise’ for policy-makers
Working paper published by ECB finds ‘analytical visualisations and interactive interfaces’ can help with the communication of risks; presents macro-prudential data cube
ECB closely watching impact of QE on financial stability
Mario Draghi tells Econ committee the central bank is aware of the potential for QE to inflate asset prices and invite excessive risk taking, but risks are ‘contained’ at present
Central banks told to handle financial inclusion with care
Greater inclusion benefits the poor but could damage monetary policy or financial stability if it is not kept under control, BIS research and IMF officials warn
Lockhart backs ‘selective’ regulation of shadow banks
Atlanta Fed president argues for US authorities to ‘variably monitor and supervise’ all institutions with implications for financial stability, regardless of whether they are shadow banks
RBA research suggests options for IMF to overcome governance issues
Analysis of constraints on IMF actions suggests seeking backup from other international organisations could add to political clout, but quota reform remains a problem
EBA proposes curbs on shadow bank exposures
Financial institutions will be expected to set their own limits, except in cases where information or internal processes are lacking; ‘fallback’ option may need adjusting, EBA admits