United States
First left-wing Mexican president in a generation unlikely to upend institutions
Andrés Manuel López Obrador has promised to respect the Bank of Mexico’s autonomy
Weak US productivity behind low wage growth – IMF
Declining labour share of income is another contributing factor
Competitive housing markets fostered risk taking before crisis – IMF research
In areas with higher price volatility institutions lowered lending standards
Book notes: Unfinished business, by Tamim Bayoumi
Anand Sinha praises Bayoumi’s analysis of how the euro crisis and US housing crash were, in fact, intertwined
‘Low for long’ endangers stability, warns BIS committee
Some banks could face solvency issues if faced with a “snapback”, warns Philip Lowe
Higher capital ratios trade growth for stability – Philadelphia Fed paper
Better capitalised banks reduce lending rates, researcher says
People: Kosovo appoints new deputy governor
Bank of Spain has a new director-general for economics; Atlanta Fed appoints senior vice-president
NY Fed paper: ‘replacement hiring’ affects productivity wage gap
Replacement hiring can explain much of the gap between wages and productivity, authors say
Book notes: China’s Great Wall of Debt, by Dinny McMahon
McMahon is too pessimistic about the chances of China managing to get its great wall of debt under control, writes Michael Taylor, but he is undoubtedly right about the scale of the challenge
NY Fed research ‘stress tests’ household balance sheets
Authors say it is “crucial” to track household leverage; vulnerability in the US “remains elevated”
Banks stumble in second round of Fed stress tests
Fed demands Deutsche Bank take remedial action; two others told not to increase dividends
Fed’s Quarles defends FSB from US critics
Supervision chief says FSB is not a threat to sovereignty and helps solve collective problems
Policy normalisation puts EMs in ‘perilous’ situation – Mexico’s Calafell
Deputy governor says monetary policy may tighten faster than markets expect
Businesses less willing to accept cash payments – Atlanta Fed
Increasing number of businesses are becoming reluctant to accept low-value cash payments
Money matters for macro fluctuations – Fed paper
Working paper says previous research by Schularick and Taylor may have been flawed
Employer-employee loans can cut credit risk - Minneapolis Fed article
Research looks at Minnesota scheme
BIS sees ‘narrow’ path to safety as global risks build
BIS softens message on tighter monetary policy, but calls for concerted action as global debt reaches fresh highs
Major banks pass Fed stress tests
All banks assessed reached minimum capital requirements in more adverse scenario
Richmond Fed economists design bank resolvability score
Score could help make complex living wills easier to interpret, authors argue
Fed policy’s global effects differ in booms and busts – BIS paper
Monetary policy appears to impact global bank lending differently depending on the “regime”
Leading governors analyse evolving inflation-employment relationship
Powell, Draghi, Lowe and Kuroda assess causes keeping wage growth low across the world
‘Living wills’ have reduced implicit subsidy – Fed paper
Higher cost of capital implies resolution measures have reduced ‘too big to fail’ subsidy, authors say
Fed paper questions value of debt as crisis indicator
Asset prices and current account balance more important, author finds
Economy allows Fed to continue policy normalisation – Atlanta’s Bostic
Business contacts report concerns about trade policy and tariffs