Financial Stability
IMF highlights problems with overreaction to financial crises
Working paper studies data on banking crises; finds that a strong macroeconomic response to a banking crisis may reduce incentive for banks to restructure
Iceland central bank governor discusses policy challenges
Már Guðmundsson reflects on difficulties that remain in removing capital controls and tackling high inflation; suggests that others could learn from the Icelandic model
BoE paper studies impact of Lehman’s collapse on payments
Bank of England working paper studies the effect of the Lehman Brothers collapse on wholesale payment patterns; finds slower payments and increase in risk following the default
BIS calls for European banking union and urgent fiscal reform in developed nations
Urgent fiscal reform and genuine efforts to create a banking union in Europe are vital to breaking the viscous linkage between banking and sovereign stress, says BIS
ECB relaxes collateral eligibility rules
Broader range of lower quality assets now acceptable under ECB collateral rules; move should help Spanish banks after results of stress test reveal a potential €62 billion capital shortfall
Brazil and China agree currency swap and deepen cooperation
Central Bank of Brazil announces agreement with China Banking Regulatory Commission to enhance exchange of information; governments agree to currency swap
Canada may withdraw monetary stimulus if growth remains on track, says Carney
Mark Carney lauds Canadian economy, says Europe must create a common banking union and believes global recovery relies on moving to an open, multi-polar international economy
Bank of Finland paper assesses impact of eurozone crisis response
Discussion paper considers the effect of initiatives in response to the eurozone crisis on countries’ sovereign debt; finds some policy decisions had 'significant' short-term effect on bond markets
Bank of England to post collateral in OTC derivatives trades
BoE thought to be the first major central bank to change policy on collateralisation as it seeks to reduce dealer funding charges
Bank boards have little time to focus on business risk, says Scotiabank chief
Canadian bank chief believes pressing need to meet raft of new regulations means top bankers have little time to focus on business risks; says ‘small’ and ‘uncomplicated’ banks fail too
Hungary proposes amendments to troublesome central bank law
Hungarian government puts forward amendments to widely criticised central bank law; discussions with concerned international bodies including the ECB and IMF are 'ongoing'
ESRB encourages cooperation to fight market deterioration
European Systemic Risk Board sets out areas authorities must focus on; Ewald Nowotny announced as newest steering committee member
Sri Lankan central bank blasts rating agency assessment
Central bank expresses 'grave concern' over statement from Standard & Poor's regarding state of banking sector in the country; rating agency noted 'very high risk' in institutional framework
Central Bank of Kuwait revamps bank governance rules
New rules make improvements to regulations in light of global financial crisis and recent issuances from Basel Committee and Financial Stability Board; effective date set for next year
IMF paper assesses impact of financial sector size
Working paper examines the effect on growth of varying sizes of financial sectors; finds that above a certain threshold, financial sectors have a negative impact on growth
BoE’s Jenkins discusses threats to financial system
Financial Policy Committee member considers dangers facing the global financial system; says future interventions to stabilise cross-border capital flows are likely
Lagarde welcomes additional IMF funding
Christine Lagarde praises countries pledging additional $456 billion to the IMF; says funds will only be used as a “second line of defence”
ECB paper models endogenous credit risk
Working paper discusses models of credit risk; authors argue that “feedback effects” have major implications for regulatory reform
Czech National Bank reports resilient financial system
Financial Stability Report finds Czech financial sector well prepared for unfavourable external developments; says growth likely to stagnate in 2012
Role of FSB ramped up as Carney updates G-20 on progress
Financial Stability Board to gain legal footing under Swiss law; Carney reports “good” progress on implementation of financial reforms but says more to be done
UK ‘catching up’ on collateral eligibility, say CBP panellists
Central Banking ON AIR event sees discussion of central bank decisions to extend collateral eligibility; panellists stress diversification should be executed with care in non-crisis times
JP Morgan losses will be considered in Volcker rule finalisation, says Fed official
General counsel of the Federal Reserve says new comments have been received regarding the Volcker rule since JP Morgan losses were revealed; views will be considered as rule is finalised
UK inflation unexpectedly drops again
Office for National Statistics reveals CPI annual inflation fell this month; leads to renewed QE expectations and predictions of on-target inflation figure by the end of the year
Papua New Guinea welcomes mobile banking advances
Governor of the Bank of Papua New Guinea has 'no objection' to use of mobile banking product in the country; hopes system will improve financial services for unbanked population