Financial Stability
Iceland governor denies 'playing politics' over plans for household debt relief
Mar Guðmundsson says government plans to reduce household debt burden will not involve 'printing money'; rejects reports that he was accused of ‘playing politics’ by prime minister
ECB prepares ground for new €10 banknote next year
New €10 note will be the second in the Europa series after the launch of the €5 note this May; Partnership Programme launched today will seek to smooth its introduction among stakeholders
Carney backs new leverage ratio powers
Bank of England announces review of its powers over bank leverage ratios; Mark Carney says that FPC control over the tool is ‘necessary to properly implement a robust capital framework’
Initial margin to significantly impact development of Asian derivatives markets: Asifma
Asifma head Austen wants exclusion of initial margin from Asian jurisdictions’ derivatives market regulation
Bundesbank’s Dombret defends Germany’s current account surplus
Andreas Dombret says the strength of German households, businesses and public sector is a stabilising factor for the eurozone as a whole; calls for acceptance of the structural differences between economies
Chan laments lessons left unlearned from financial crisis
Hong Kong Monetary Authority chief executive Norman Chan says he will continue warning against excess levels of debt, even though it is now widely seen as part of the solution to the crisis
CCPs face $161 billion liquidity shortfall to clear FX options, GFXD finds
Results of an industry study reveal the scale of the liquidity burden that would fall on CCPs clearing physically delivered FX options – but a net settlement mechanism could reduce the number by 73%
Fed’s George backs ‘diversity of views’ in supervisory process
Kansas City Fed president Esther George says it is important that the interests of all stakeholders are reflected in a country’s supervisory structure
Draghi wants European public backstop for stress tests
ECB president Mario Draghi says both national and European public funds should be in place ahead of the comprehensive assessment to ensure it is a ‘credible exercise’
Canadian paper calls for ‘simple and digestible’ communication on financial stability issues
The paper says central banks should use plain language and build a coherent narrative when communicating financial stability concerns or policies
OTC derivatives reform contains ‘real world challenges' says Fed governor
Jerome Powell says worldwide reform efforts will turn OTC derivatives market infrastructure into a ‘pillar of strength in the next crisis' if implementation challenges can be overcome
Israeli annual report for bank customers could be first step to reduce transparency 'knowledge gap'
Bank of Israel supervisor pushes for banks to provide customers with tailored yearly reports; UK consultancy says future lies in 'single online portal' for all financial products
OECD’s White says ECB supervision is back to front
William White says ECB should be managing the current crisis rather than trying to prevent the next one; warns that the global economy remains vulnerable, partly because of central bank actions
ECB gives Nouy the nod for SSM chair, but Mersch is no 'shoo-in' for deputy
ECB nominates top French regulator to head up SSM; responds to concerns that key decisions will be taken before chair is in place, but Sharon Bowles says questions remain for Draghi
Currency peg speculation can 'damage' balance sheets
Researchers find that questions over the credibility of a currency peg can have ‘damaging effects’ on bank balance sheets – consistent with monetary mismatch theory
ECB launches public consultation on mobile payments security recommendations
The governing council of the ECB asks market participants to comment on draft recommendations intended to make mobile payments more secure; interested parties have until January 31 to weigh in
BoE paper proposes new sovereign debt instruments
Economists from the UK and Canadian central banks says that sovereign cocos and GDP-linked bonds could help reduce the likelihood of liquidity and solvency crises
Caruana flags evidence of ‘manifold’ QE spillovers
BIS general manager presents evidence of varied spillovers from advanced economies' monetary policy; says policy-makers should do more to take them into account
Brazil’s Tombini says ‘we still do not fully understand’ macro-prudential tools
Governor of the Central Bank of Brazil warns that limited understanding of new policies presents ‘significant communication challenges’ for central banks
Malaysia central bank opens office in Beijing
BNM's newly established presence reflects growing trade and financial ties with China; governor also reveals new renminbi liquidity facility and MoU to establish cross-border collateral arrangements
Emerging markets will 'suffer' as QE ends, say panellists
Guillermo Calvo, Vittorio Corbo and Maurice Obstfeld say emerging markets face a bumpy landing when Fed winds down QE, and some are better prepared than others
Bank of England points to growing concern over low rates
Market participants say the risks surrounding low interest rates are now the third biggest cause for concern in the UK financial system, behind sovereign risk and the prospect of an economic downturn
Belgian paper warns central bank policies could worsen financial shocks
Working paper studies optimal monetary policy configurations for price and financial stability in Eastern Europe; finds central banks may worsen credit shocks by taking action against them
OECD’s William White fears global economic system is still highly unstable
William White tells Christopher Jeffery he is wary of placing too much reliance on the ‘science’ of monetary or regulatory policy. He also believes the world economic system is still out of balance