Financial Stability
Avinash Persaud calls on regulators to address ‘system-wide' risk mismatches; slams Solvency II
Forcing long-term institutions under Solvency II to behave like short-term ones will be the biggest contributor to systemic risk since Basel II, says Avinash Persaud in Central Banking journal
Central banks need significant discretion to make swap lines work, says ECB
The pricing, size and maturity of standing currency swap lines when activated need to be left to central bank discretion, ECB says in latest Monthly Bulletin; language is 'intentionally unspecific’
Bulgaria tells Brussels it can't guarantee failed bank deposits
Enforcing bank contributions to a deposit guarantee fund would destabilise the country's banking sector, Bulgarian governor and finance minister tell European Commission
New York Fed president suggests Dodd-Frank has made investors ‘more skittish'
William Dudley notes ‘extraordinary interventions' will be more difficult to undertake, potentially destabilising the financial system by unnerving investors
Lithuania takes delivery of first euro coins
1,740 tonnes of coins must be minted ahead of currency switchover on January 1; delivery is supervised by police under special agreement signed in May
ECB publishes ‘manual' explaining eurozone banks' comprehensive assessment
Publication of the manual ‘demonstrates ECB's commitment to transparency' on how it is conducting the ‘rigorous' assessment of the eurozone's biggest banks
The challenges for central banks
Demands are being made for central banks to consider financial stability alongside price stability, as a key component of their monetary policy. But that is nothing new for central banks
Can central bankers live up to their role as the guardians of finance?
Central bankers need to be the risk managers of the financial system to help mitigate the fallout from future crises. Those that engaged in the latest bouts of QE have not made a good start
Payments achitecture fit for the 21st century
Globalisation, changes in FMIs and the emergence of new payment schemes will require ever closer co-operation to ensure the safety and efficiency of the underpinnings of the financial markets
The evolving role of the Eurosystem and its national central banks
Anne Le Lorier pinpoints the challenges Eurosystem central banks will have to address in the aftermath of the global financial crisis.
Book notes: The Dollar Trap, by Eswar S Prasad
A lively and compelling analysis on currency wars in the wake of the financial crisis – and the likely persistence of the US dollar as the world’s pre-eminent currency
Renminbi as a reserve currency
China’s renminbi is gaining traction as a global currency, which will pave the way for a multiple global reserve currency system. Discussed here by John Zhu, economist, Greater China, HSBC
Emerging market governors favour Fed policy normalisation, says MAS’ Menon
MAS head Ravi Menon says most emerging market central banks want to see the Fed normalise policy, China is at an inflection point and Singapore could lose out from new OTC derivatives rules
Time for clock synchronisation – regulators
Global regulators assess the need for a central reference clock to aid investigations into alleged abuse of financial markets
Agustín Carstens on Fed policy, shadow banking and Mexico's economic strengths
Agustín Carstens, governor of the Bank of Mexico, speaks about the work of the IMF, tackling shadow banking and how Mexico has kept a strong economic position in the midst of the financial crisis.
Malaysian deputy targets 'distortions’ in payments market
Muhammad bin Ibrahim says ‘more needs to be done’ to correct price distortions that he believes are holding back electronic payments in the country
(Too) great expectations for macro-prudential?
Macro-prudential policies are a welcome response to the financial crisis, but not necessarily in their current incarnation. BIS economics head Claudio Borio highlights their limitations
Macro-prudential policies could ‘become part of the problem’, says BIS’ Borio
Weight of expectation on macro-prudential policies to address financial system stresses may be too great, says BIS economics head Claudio Borio; stress tests ‘woefully deficient’ in predicting crises
UK government to 'explore potential of virtual currencies'
Major study will look into whether regulation is required for businesses to set up in the UK, says chancellor George Osborne, who adds virtual currencies can ‘transform lives’
Fed blasts big banks over ‘unrealistic' living wills
Eleven firms, including Goldman Sachs and JP Morgan, must take ‘immediate action to improve their resolvability', US central bank says
Raghuram Rajan on the dangers of asset prices, policy spillovers and finance in India
Raghuram Rajan, governor of the Reserve Bank of India, speaks about the challenges facing emerging market central banks, spillovers and getting to know India’s new prime minister Narendra Modi.
RBI’s Rajan warns of possible asset price collapse; euro ‘too strong’
Financial sector imbalances could cause sudden price reversals and sharp spikes in volatility, risks many macroeconomists are still blind to, says Reserve Bank of India governor Raghuram Rajan
BoE’s Haldane sees greater role for central banks as risks shift
Central banks may have to address different episodes of financial instability as risks shift from the banking sector to other financial players, says BoE chief economist Andrew Haldane
Two future paths for central banking
Andrew Haldane identifies two future worlds for central banks along with their implications for monetary policy, macro-prudential regulation, operations and transparency.