Central Banks
Cunliffe: UK housing risks back on the rise
BoE deputy governor says household balance sheets are “stretched” and some risks are growing; suggests dominance of debt as housing finance is undesirable, but unlikely to change
Lautenschläger says some leveraged finance practices need watching
ECB’s head of supervision notes increase in ‘covenant-lite’ deals
Dutch pension funds show signs of herding, paper says
Regulatory price of risk for different asset classes 'should be balanced', warns Dutch working paper, in light of herding behaviour
Turkish MPC eyes volatility as it prepares move to standardised framework
Decline in volatility will be key factor in move to a narrower interest rate corridor, minutes say; central bank expects disinflation in February after headline figure hit 9.6% in January
Economists mull how to improve Fed communications
Paper presented at US Monetary Policy Forum encourages Fed to move away from ‘time-based’ forward guidance; considers what kind of new information would be useful to markets
Australian central bank adds S Korean won to reserve portfolio
Australian central bank slashes euro holdings by 20% as diversification into alternative currencies continues
Debt deal struck but ‘heated’ discussions await Argentine president in congress
Vulture funds satisfied but Argentine president faces an ‘uphill’ battle getting deal through congress; analysts ultimately expect it to be approved, but see other challenges on the horizon
Book notes: The end of alchemy, by Mervyn King
King’s book on how to fix everything that is wrong with the financial and economic system lays out radical proposals that deserve serious consideration
Mervyn King calls for radical banking reform
Former Bank of England governor wants to curtail banks’ use of maturity transformation, putting the central bank’s lender-of-last-resort role at the heart of his new banking system
Research calls for better understanding of ML/TF risks in Islamic finance
Working paper published by International Monetary Fund warns there is ‘no common understanding’; some risks may be the same as in conventional finance, but some may not
Snapshot: IMF reveals staff views on Argentina
IMF releases informal briefings compiled 2013-2015 in absence of Article IV; staff highlighted adverse effects of central bank and banking sector financing of government
Bank of Russia proposes regular stress tests for private sector pension funds
Russian central bank proposes making all private sector pension funds implement formal risk management plans, including monthly assessments and quarterly stress tests
Singapore mulls increasing central bank’s regulatory powers
Singapore’s parliament is considering a draft law that would expand the central bank’s regulatory powers over domestic and foreign-owned banks
Colombian inflation measures might be ‘overstating’ true level – research
Some core inflation measures are failing to filter the impact of exchange rate on prices; policy-makers must be aware of the risk of expectations losing their anchor
Zeti considers central bank role in future Asian challenges
Malaysian governor encourages Asian policy-makers to look to future challenges; notes central banks may help address many issues on the horizon and ‘careful boundary management’ is needed
Dudley flags inflation uncertainty and expectations concern
New York Fed president says uncertainties around his assessment of the inflation outlook have increased; warns of slide in household expectations and stresses need for ‘close scrutiny’
PBoC eases despite continued depreciation fears
China's central bank cuts reserve requirements amid intricate balancing act between arresting slowdown in growth, maintaining financial stability, and safeguarding currency
Central Bank of Malta revamps main structural model
Version three of the ‘Stream’ model captures the interlinked nature of the fiscal and financial sectors, with extra detail added to the financial block and new data used for estimation
EBA does not object to further macro-prudential measures for Belgian banks
The European Banking Authority clears the way for Belgium’s central bank to tighten macro-prudential measures affecting housing exposures; calls for changes in regulatory framework
Mexico’s stress tests reveal some institutions remain ‘vulnerable’ in extreme scenarios
Stress tests indicate that even in adverse scenarios banking sector remains sound; some banks and investment funds are vulnerable to extreme scenarios, including interest rate adjustments
UK regulators refuse to comply with part of EU bonus cap
FCA and PRA say they will not be imposing European bonus cap rules on small firms, arguing CRD IV’s proportionality principle has not been properly applied
Indian government unveils final MPC design
Bill has been amended to cut committee size to six and give governor a casting vote in the event of a tie; government also pressing ahead with plans to clean up banking sector
Paper looks at macro-prudential impact on mortgage affordability
Working paper assesses how macro-prudential policies influence the share of households that can “access and sustain” a mortgage at different loan-to-value ratios
Central American central banks move to upgrade regional payment system
Central bank governors from Central America draw up action plan, detailing faster payment times; Costa Rica to be fully integrated in ‘short space of time’