Macro-prudential
Independence, liquidity and a level playing field – yet another impossible trinity?
Jesper Berg warns it will likely be impossible to balance the demands of monetary policy independence, liquidity standards and achieving fairness for all banks
BIS research tests leverage ratio with adjusted DSGE model
Authors design a model with both leverage ratio and variable risk-weighted capital requirements, finding a range of benefits to constraining leverage
Time to focus on green finance as Paris Agreement set to enter into force
Central bankers meeting at the IMF next week will discuss mechanisms to unleash private capital for green finance ahead of a Paris climate deal that could enter into force before 2017
Central banks must do more on green finance – UN report
Current progress is not enough to deliver long-run stability; central banks should work with other stakeholders to align the financial system with climate change goals, UN report says
PRA tightens standards for buy-to-let market
“Interest coverage ratio” and affordability stress tests to be implemented by January 2017, while remaining measures must be implemented by September 30
Better swap lines could support global co-operation – BIS’s da Silva
Improving the global network of swaps, particularly between advanced and emerging economies, could create a more stable system, deputy general manager says
BoE’s Salmon warns forex industry on adherence
Chris Salmon, the Bank of England's executive director for markets and lead on global code adherence, says regulation could be on the horizon as soon as 2020 if market participants don't adhere to the new Global Code
Fed’s Tarullo: stress testing needs to evolve
Fed is planning to toughen its stress-testing framework with better alignment with regulation and incorporation of dynamic “amplification” effects – though more research is needed
Stress tests should consider wider range of resilience metrics – BoE article
Metrics including liquidity and funding resilience should be considered as stress tests become an important part of a central bank’s regulatory toolkit; current liquidity and funding stress scenarios are “less advanced”
Markets back under central bank ‘sway’ – BIS quarterly review
Recent equity rally is “more stick than carrot”, says Claudio Borio, as latest report points to fresh signs of discomfort among banks and continued market distortions
Andrew Bailey warns of macro impact from pensions trouble
FCA chief says low interest rates and other factors shaping the pensions market are likely to have knock-on effects on the economy, though the area is not well understood
National Bank of Denmark warns of growing bubble in Copenhagen
Report says housing market in country as a whole looks relatively stable, but Copenhagen’s market is close to the danger zone, following first “statistical bubble test”
Bank of Slovenia introduces macro-prudential measures for housing market
Slovenia’s central bank has recommended lenders impose loan-to-value and debt service-to-income ratios on all new housing borrowers
Largest banks meet Basel III capital standards – BIS and EBA
Banks have improved capital and liquidity ratios, reports note, but methodology may differ from that used by industry
BIS’s Borio: leaning against the wind must be systematic
Claudio Borio says using monetary policy to stabilise the financial cycle is only likely to be effective if done all the time, not just when trouble is brewing
BIS paper flags spillovers from bank dividends
Dividend payments create a channel through which one bank’s capital policy can affect the equity value and risk of default of others, giving capital the attributes of a public good
Basel Committee hits turbulence on approach to year-end deadline
Central banks and supervisors offer support to its year-end goal, but industry players and EU countries show growing concern over higher capital levels
Recessions nearly tripled amount of Italian NPLs, paper argues
Italian bad debt levels would be almost one third of their current levels without the sub-prime and sovereign debt crises, a counterfactual analysis argues
Fed finalises rules for countercyclical capital buffer
US central bank promises it will only adjust the buffer gradually and will seek comment before doing so, after consultation flagged concerns
RBA’s Lowe: credit not enough to measure financial cycle
Deputy governor says the financial cycle’s “considerable intuitive appeal” needs to be backed up with better research on measuring cycles, with balance sheets likely to play a key role
Flug urges Israeli parliament to make haste in setting up financial stability committee
Bank of Israel governor says changes to banking competition increase the need for the new supervisory body, warning risks may be on the rise
RBNZ tweaks LVR rules following consultation
New rules to apply to investors nationwide, placing 5% “speed limit” for lending above LVRs of 60%; proposed new measures to come into force in October due to banks’ deadline concerns
More than AML fears driving correspondent banks away from Arab economies – report
AMF-IMF-World Bank survey of banks in Arab nations finds a broader de-risking to be behind pull-back of correspondent banking, though trend is uneven
FSB sees limited evidence of regulatory side-effects
Global financial reforms appear not to have had a significant impact on market liquidity or emerging markets, and have helped prevent the global system from fragmenting, authority says