Central Banks
Rajan has left his mark but risk of fiscal dominance remains
Vishrut Kansal examines the legal framework Raghuram Rajan’s successor will face, arguing much of the outgoing RBI governor’s work will continue but more safeguards are needed
Bank of Israel sees ‘Brexit’ increasing risks to outlook
Monetary committee warns it is too early to tell whether short-term effect on financial markets has run its course; Flug stresses both central bank and finance ministry “keeping close watch”
BoJ paper models impact of guidance on expectations
Announcing forward guidance before reaching the effective lower bound can help to “positively influence” inflation and output growth, the author finds
Sri Lankan governor will not seek reappointment until inquiry passes
Arjuna Mahendran says he will not apply for reappointment until the parliamentary committee publishes the findings of a probe into bond issuance; his first term expires on June 30
Dombrovskis replaces Hill in leading work on Capital Markets Union
Britain’s European finance commissioner resigns following referendum to be replaced by former Latvian PM; political timetable likely to delay further integration moves, analyst says
Prepare to fail
Jesper Berg offers advice to those looking to build financial stability frameworks, and says failure has to be part of the package
BIS: Central banks playing for 'high stakes' as financial cycles turn
Central banks need to lean against financial cycles but fiscal policy should come to their aid, BIS says; cycles may be turning in opposite directions in advanced and emerging economies
Analysts see intervention challenge for central banks
Following the fallout of EU referendum result, central banks step in to stabilise currency movements; analysts expect volatility to continue, but see challenges to intervention
PBoC governor sets out challenges of pursuing multiple objectives
Zhou Xiaochuan discusses how the People’s Bank of China expresses its multiple objectives as a function that can be optimised, while noting challenges posed to modelling and communications
BoJ aiming to make better use of upgraded settlement system
New version of BoJ-Net carries various advantages and has seen growing settlement volume, but the central bank wants to push this further
BoE seen shifting into easing mode
Many economists view Bank of England as likely to shift towards an easing bias, but the central bank may find itself with limited room for manoeuvre
Sarb sets out five-year strategy in annual report
Central bank outlines objectives to be achieved by 2020, including around reserves, inflation and counterfeiting; while governor praises progress of financial stability bill
Europe’s regulatory challenges seen increasing in wake of ‘Brexit’
The UK’s possible departure from the European Union could intensify regulatory problems in region, one analyst says; Mifid and European Banking Authority may be key areas of concern
EU exit vote throws up financial stability risks
UK plunged into uncertainty and markets hit hard, with bank stocks some of the worst affected, but more serious problems seem to have been avoided for now
Central banks offer reassurance as UK votes to leave EU
Mark Carney stresses UK authorities are “well prepared” for the outcome, as central banks across globe pledge liquidity if needed; narrow vote to leave sees David Cameron announce resignation
ECB restores ‘waiver’ to let Greek banks access cheaper finance
ECB restores waiver to Greek government bonds, lowering the cost of finance for Greece's central bank; demands further adherence to conditionality, but holds out possibility of buying government bonds
News impacts stock prices through more than transient sentiment, paper finds
Working paper uses textual processing to examine more than 900,000 news stories; negative stories have a longer and more delayed reaction, authors find
Succession in doubt at Malta's central bank as deputy withdraws from consideration
Maltese deputy governor formally asks not to be considered as next governor following corruption allegations; prime minister’s office says current governor will step down by July 1
Kiuchi says BoJ must communicate better
Board member concerned monetary policy is becoming less predictable as observers expect ever more easing; warns against use of negative rates
SSM challenges eurozone banks to improve governance
Supervisor warns most significant banks in eurozone fall short of international best practices; presents lessons from assessment of management bodies and risk appetite frameworks
National Reserve Bank of Tonga considering short-term policy rate, IMF says
Fund staff encourage Tonga to reform its monetary policy framework; suggest introducing new policy rate and inflation target range more appropriate to historic and current levels
Governor: Philippines central bank to keep ‘steady hand’ on monetary policy
Philippines central bank to keep watchful eye on uncertainty surrounding advanced economies’ policy prospects; inflation environment remains ‘manageable’
Rajan urges completion of bank cleanup
Outgoing governor argues actions taken to address public sector bank balance sheets must be taken to their “logical conclusion”; encourages government to provide capital injection
SNB paper challenges idea that capital flows drive Swiss franc value
Empirical study finds no strong relationship between capital flows and the level of the franc, meshing with earlier literature showing asset prices can move sharply without major portfolio shifts