Macro-prudential
Lowe stresses the importance of financial buffers
“Skimping” on buffers is not worth the risk, says RBA governor, stressing stronger ones promote stability and prosperity
Bond price shaped by more than just low growth – BIS’s Caruana
Market participants may leave themselves vulnerable if they fail to recognise the importance of central bank asset purchases and market dynamics, general manager says
Sarb offers insight into its macro-prudential toolkit
Central bank begins to outline macro-prudential tools needed to enforce financial stability mandate, seeking comment on appropriate instruments
BoE sets final rules for bank loss-absorbency
Final rules for bail-inable debt adjusted for longer transition and lighter load on smaller banks
Vickers renews criticism of BoE systemic buffer
Blanket 3% buffer would better support ring-fencing, Vickers tells Tyrie
Norges Bank deputy warns of vulnerabilities in financial system
“Sharp rise” in property prices and high household indebtedness are a concern, the latest financial stability report reveals; banking sector’s largest corporate exposure is to the real estate market
Banks not fully adapted to new prudential environment – BoE deputy
Firms need a “proper chance” to adapt to the “new world”, says Woods, warning that the banking system still looks fragile on some metrics, despite work by his predecessor, Andrew Bailey
ECB issues latest macro-prudential bulletin
Papers look at second order effects of financial shock, de-risking and high-frequency trades
Macro-prudential policy can guard against global volatility – BoE paper
Tighter macro-prudential policies appear to reduce the sensitivity of capital flows to global volatility, paper finds
Macro-prudential rules must be reciprocated – Shafik
“Leakages” will reduce the effectiveness of macro-prudential policy if countries do not reciprocate changes in countercyclical buffers, BoE deputy warns
BIS paper adds evidence on macro-prudential spillovers
Tighter macro-prudential measures in one country tend to increase international lending, authors find
Public sector balance sheet poses risks for Dominican Republic – paper
IMF working paper analyses balance sheet developments in the South American nation’s economy; foreign currency exposure could amplify risks, authors say
Central Bank of Iceland gains new powers as more controls lift
Central bank given new powers over information gathering as legislation establishes next phase of capital control liberalisation
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
Book notes: Achieving financial stability and growth in Africa, edited by Stephany Griffith-Jones and Ricardo Gottschalk
John Chown praises this comprehensive review that studies the possibility of achieving ‘the impossible’ in low-income Africa – both growth and financial stability
RBA seeks to gain ‘additional’ insight into wages – Lowe
Central bank teams up with statistical agency to gain insight into declining wage patterns; frequency of wage increases is decreasing, says RBA governor
Foreign investment ‘restored’ exchange rates after policy shocks – paper
Data from Colombian central bank shows foreign exchange intervention have “short-lived effects” on prices; over the medium term, foreign capital flows push exchange rate back to original level
Basel Committee outlines plans for ‘fundamental change’ of IFRS 9
Task force to consider impact of expected credit loss approach on regulatory capital, while consultation lays out interim plans
Coen seeks to quell European fears on Basel III
European parliament members accuse Basel Committee of favouring US over European banks; William Coen says “Basel process” is transparent and not dominated by any one interest
Top US and EU officials hold resolution war game
US, UK and eurozone central bankers, regulators and politicians participate in an exercise designed to improve the co-ordination of cross-border resolution
European Commissioner cautions US on TLAC rules
Dombrovskis says foreign banks should not be mistreated by Fed internal TLAC proposal
Low growth and low rates to hit financial stability, says IMF
Weak outlook is likely to feed into medium-term problems for financial stability, fund warns; Basel Committee may have to delay agreement on final framework
Book notes: Connectedness and contagion, by Hal Scott
Scott’s argument on the dangers of contagion has many appealing features, although he may be too eager to hand powers to unelected officials, writes Michael Reddell
BoE paper examines how US banks lend after hurricane shock
Local banks may play an “important role” in a geographically integrated banking system, paper says, despite their greater vulnerability to financial constraints