News
Economists still scrambling to adapt models to lower bound
Many traditional economic models perform poorly now major economies are near the effective lower bound, but economists at the RES annual conference offer a range of solutions
IMF urges Mauritius to form macro-prudential authority
Central bank would have “prominent” role in new authority; as a first step, IMF staff recommend establishing a technical group featuring representatives from multiple stakeholders
Negative rates one of many pressures on bank business models, Lautenschläger says
ECB supervisory board vice-chair says business models must cope with a range of challenges, of which low rates are just one; Nouy and Lautenschläger field questions following annual report
Villeroy de Galhau calls for eurozone finance minister
Banque de France governor calls for single eurozone finance minister to co-ordinate fiscal and structural policy; warns of dangers of “overburdening monetary policy”
Nakaso considers how policy-makers could respond to low bank profitability
Bank of Japan deputy notes financial stability risks from monetary easing are low at present; considers how to respond to overheating or low profitability if necessary
Low profitability and NPLs remain top of the eurozone supervisory agenda
European Central Bank presents annual report for supervision, with major concerns including profitability and non-performing loans; supervisors are working closely with the single resolution board
Government approves final stage of Thai development plan
Bank of Thailand will promote electronic payments in latest phase of financial sector master plan; all phases to be completed by 2020
RBNZ investigating possible leak
Central bank launches external investigation, after former RBNZ economist was told there would be an unexpected rate cut before the decision was made public
People: Georgian board approves new governor; T&T gets new board
Koba Gvenetadze clears penultimate hurdle to becoming National Bank of Georgia governor; six new directors join the Central Bank of Trinidad and Tobago; BIS names Alexandre Lamfalussy fellow
BoE’s Forbes outlines new thinking on current account imbalances
Breaking current account into trade and financial components allows more detailed analysis of when a large imbalance is dangerous and what shocks could cause trouble
IMF staff praise Colombian policy mix as central bank hikes by another 25bp
Co-ordinated policy action is supporting “orderly adjustment” in Colombia’s economy, IMF staff say, including good pass-through of rate hikes; central bank continues to tighten
Vítor Constâncio calls for macro-prudential tools to reach beyond banks
Authorities should be granted wider powers over alternative investment funds and shadow banking sector, including margins and haircuts on derivatives and securities financing, Constâncio says
Inflation expectations well-anchored, Richmond Fed president says
Lacker tells audience at Banque de France he believes expectations are anchored, despite drop in inflation compensation; Villeroy de Galhau notes drop in market-based measures in eurozone
Eurozone not at zero lower bound, Praet says
ECB chief economist Peter Praet has said the eurozone is not at its zero lower bound; remarks may not contradict earlier guidance by ECB president Draghi
Rosengren eyes balance between bank resilience and loans
Boston Fed president tells New York conference that supervisors should encourage banks to maintain lending when striving to meet capital-to-asset ratios, but stress the need for quick recapitalisation
BoJ establishes working groups to consider how to make best use of BOJ-NET
Working group to look at ways to make effective use of settlement system; BOJ-NET to process more transactions across time zones
IMF will ‘take stock’ of capital flow policies
IMF may undertake further work on capital flow management and foreign exchange interventions if analysis highlights need for it; fund will also re-examine global safety net
Progress on resolution frameworks has slowed, FSB warns
Few jurisdictions have all the rules in place and legislative progress is slowing, Financial Stability Board says in its latest peer review of resolution regimes
Sarb hikes rate despite split decision on MPC
Monetary policy committee decides to raise key rate by 25bp after an initial 3:3 split; concerns over inflation remain for some members
Bank of Israel establishes banking innovation division
New section of banking supervision department formed to help foster innovation but contain the accompanying risks; Dudi Bavli chosen to head division
Bank of Russia unveils framework for insurance industry regulation
Russia’s central bank will monitor insurance companies for compliance with financial ratios and other indicators; has set up institute for risk management in insurance industry
Guy Debelle reviews forex code progress ahead of first-phase release in May
Global code to be implemented as principles rather than rules; regulators may implement with element of variation depending on market participants, Debelle notes
Norges Bank willing to consider move into negative territory
Central bank cuts rates to 0.5% and signals further action likely to follow; executive board concerned by side-effects of negative rates, but willing to use them if necessary
Fed officials lower expectations of rate increases
Fed officials forecast rate increase of 50bp this year, compared with 100bp in December; Yellen “wary” of recent increase in headline inflation