Financial Stability
Riksbank study tackles capital buffer challenges
Research by members of the Sveriges Riksbank’s financial department analyses the problems posed by Basel III’s counter-cyclical capital buffer
Central banks extend swap arrangements
Bank of Canada, Bank of England, European Central Bank, Swiss National Bank and US Federal Reserve extend temporary US dollar and bilateral swap agreements
French research says monetary policy can offset herding
Banque de France working paper says interest rate hikes can be used to eliminate asset price bubbles caused by investor herding behaviour
The ghost at the IMF’s Tokyo feast
Robert Pringle looks back at the main themes of the IMF’s annual meeting, which was held in October in Tokyo, and forward to prospects for 2013
Book notes: The Great Recession: Market Failure or Policy Failure?
This is a hugely important book that should be read by all central bankers, bank supervisors, politicians and newspaper editors
Book notes: Guardians of Finance
This is a book offering a useful contribution to the debate over the future of regulation. By James R Barth, Gerard Caprio Jr and Ross Levine
Book notes: First Principles: Five Keys to Restoring America's Prosperity
The author's premise is that the best way to understand the problems confronting the American economy is to go back to the first principles of economic freedom upon which the country was founded
Fiji governor unveils first polymer banknote
New five Fijian dollar note to incorporate polymer substrate for the first time; $2 note replaced with coin
Experts advocate replacing OMTs with gold-backed bonds
Using gold as collateral for sovereign debt could circumvent concerns about fiscal transfers associated with ECB’s OMT programme, panellists say at World Gold Council briefing
EU leaders thrash out ECB bank supervision deal
European finance ministers reach agreement that gives the ECB supervisory powers over the largest banks; EBA rules adjusted to balance voting powers of states outside supervisory mechanism
Paper finds flimsy productivity base for banks in Spain
A Bank of Spain working paper says two-thirds of pre-crisis banking productivity growth was attributable to the expansion of mortgage lending, a reliance on short-term finance and leverage
ECB in danger of being forged from fiscal fragility
Mario Draghi has made his mark at the helm of the European Central Bank. But Europe also needs a core set of values that must not be violated
Cyprus may create ‘bad bank’ as part of reforms
Panicos Demetriades outlines plans to monitor undercapitalised banks and possibly create a ‘bad bank’; Irish chief economist says the burden of austerity measures must be shared
Dealers seek second business conduct reprieve from CFTC
Less than 1% of OTC derivatives counterparties are ready to trade under new business conduct regime. Non-compliant firms may be frozen out of the market, banks warn
Korea’s Kim calls for an end to currency reserves hoarding
Bank of Korea governor Choongsoo Kim says use of multi-layered financial safety nets would reduce the need for emerging economies to hoard foreign currency reserves; calls for a global effort
Systemic risk in Europe heightened by Target trap
Huge Target liabilities may explain why Germany sanctioned proposals for ECB bond-buying and the formation of the ESM. But this will not solve Europe’s problems
FSB presses forward with legal entity identifiers
Latest Financial Stability Board report shows further progress towards implementing the global legal entity identifier system with March 2013 deadline fast approaching
BIS research identifies ways to smooth the financial cycle
Bank for International Settlements working paper designs model of financial cycles and examines the difficulties of reducing the size of their peaks and troughs
New Zealand’s new capital standards at odds with Australia on ‘bail-in’
Reserve Bank of New Zealand’s new capital standards conform to Basel III requirements but concerns raised on how bail-in debt rules will tally with Australia
BoE and FDIC co-operate on bail-in plans
US deposit insurer and UK central bank release plans for resolution of global systemically important banks, focusing on a ‘top-down’ approach to maintain viability long enough for restructuring
EBA finds distortion in e-money practices across EU
Electronic payments market in Europe distorted by differing interpretations of EU anti-money laundering and counter-terrorist financing directives by member states, according to new EBA report
RBI’s Sharma urges euro area rebalance
Reserve Bank of India executive director says current account imbalances are ‘inherently unsustainable’; periphery countries must pursue greater productivity and competitiveness
BoJ paper finds noisy reference rate can create volatility
Working paper studies effect of reference rates on stabilising or destabilising interbank markets; finds noise in rates reported by large banks can feed volatility and impair monetary policy
Bundesbank at odds with new IMF position on capital controls
Board member says capital controls should be last resort, if used at all; follows updated IMF guidance that capital controls can have ‘substantial benefits’ when used properly