Central Banks
Central Bank of Iceland changes course with 50bp cut
Reversal of tightening cycle reflects concern inflation is not rising as expected, in part because of the strength of the króna; growth still forecast to continue above trend
RBI’s Mundra hopes to boost credit to small businesses
Deputy governor outlines “ABCD” of issues affecting small businesses’ ability to access credit, including better access to information and new forms of collateral
Tightening policy during slowdown is not ideal, but necessary – Sarb governor
More fiscal or monetary stimulus will not generate growth in South Africa, says Kganyago, who instead stresses inflation outcomes need to be lowered
Gibraltar to launch polymer £100 note
New note will be the first polymer banknote for Gibraltar; De La Rue to use ‘Safeguard’ substrate for new banknote, which will be issued “soon”
Mervyn King on Brexit, crisis supervision, economic rebalancing and reforming the IMF
The former Bank of England governor discusses Brexit, radical regulatory reform, the difficulties rebalancing the European and global economies and an overhaul of the International Monetary Fund
Canadian working paper examines effect of downward nominal wage rigidity on wage growth
Average wage growth higher due to DNWR after recession, authors note; signs of heterogeneity in DNWR effects
People: Irish market supervisor quits; Emefiele appointed president of AACB
Gareth Murphy resigns as head of market supervision at the Central Bank of Ireland, Nigerian governor appointed president of African Association of Central Banks, and more
Economists add to theory and empirics of economy’s non-linear dynamics
Paper by Bank of England economists finds “strong evidence” of non-linearity in UK data, while Markus Brunnermeier and Yuliy Sannikov expand theory of financial amplification mechanisms
Overhaul of Federal Reserve structure is needed, paper says
Former adviser to Bernanke co-authors paper stressing need to end private control of 12 regional Fed banks; diversity and transparency need improvement, authors argue
RBNZ’s Wheeler stands by inflation targeting
Despite a host of challenges for central banks, flexible inflation targeting remains the “most appropriate” framework for New Zealand’s monetary policy, governor says
Capital outflows look manageable as Iceland moves to lift controls – central bank
A “stress test” of potential outflows implies the Icelandic financial system and central bank reserves will cope when capital controls are lifted; the government bill prepares to release funds
Book notes: The euro and the battle of ideas, by Markus K Brunnermeier, Harold James and Jean-Pierre Landau
The authors have produced a fascinating and informative book that offers suggestions on how differences in beliefs can be overcome
De La Rue boosts Africa presence with Kenya deal
Kenyan factory to be turned into production “centre for excellence”; printer hopes new equipment installed at site will increase banknote production by 50%
IMF working paper encourages Italian banks to clean up balance sheets
Italian banks are likely to become more profitable as economy recovers, authors say, though their capacity to lend is linked to capital buffers
Urjit Patel to take over from Rajan at RBI
Deputy governor led work on India’s new inflation-targeting framework; appointment seen as signal of government’s commitment to current policy
More work needed to make case for GDP-linked bonds – BoE paper
The design of GDP-linked bonds needs to align macroeconomic need with investor demand, according to a paper authored for the G20 summit; clearer guidelines and principles could aid adoption
US inflation target within ‘hailing distance’, says Fischer
The Fed is “close” to its targets says vice-chair; despite recent weak GDP figures, Fischer expects investment to recover in coming months
Nepal Rastra Bank broadens electronic payments oversight
Banks and financial institutions will have to re-register with the bank under new licensing law; central bank hopes reform will support more non-banking institutions and new payment transactions
Explicit communication from Sarb helped agents predict rate hikes – paper
Authors compare forecasts from 2013 and 2014 to identify whether specific terminology affected forecasting; “rising cycle” talk shaped expectations, paper shows
Borrowers’ characteristics are key to successful mortgage restructuring, paper argues
How mortgage was restructured is less important than distressed borrowers’ own characteristics in determining whether loan is repaid, Bank of Ireland paper says
CPMI-Iosco issues report on key data for future derivatives reporting
Report sets out working group’s proposals for how OTC derivatives products should be reported to trade repositories using unique identifiers