Research
German investments would generate ‘beneficial' regional spillovers, finds IMF paper
The expansionary effect of higher public investment in Germany ‘substantially strengthened' when supported by an accommodative monetary policy stance, according to working paper
Banque de France paper says asset purchases may struggle to anchor rates
Working paper suggests asset purchases could be a way to anchor interbank rates, but the policy faces a number of difficulties; absorbing excess liquidity another option
Optimal policy changes as financial inclusion rises, BIS paper finds
Working paper presents evidence that both output volatility and inflation volatility fall as financial inclusion rises, but monetary policy will optimally lean more towards controlling prices
Research takes Bayesian approach to find early-warning indicators
Excessive credit growth and high returns of bank stocks are the ‘best’ early-warning indicators, researchers from Austrian and German central banks find
Chilean study identifies ‘delicate’ relationship between prudential policy and bailouts
Liquidity requirements and prudential taxes are examples of prudential policies that may backfire, since they can increase the risk taken by banks in expectation of a bailout, research finds
Credible fiscal plans reduce pressure on sovereign bond market, study finds
A credible macro-fiscal framework ‘can lead to stable expectations’ around a country’s sovereign bond market, reducing its expected risk premium, ECB paper finds
External imbalances predict exchange rate returns, finds SNB paper
Deviations from trends in Swiss net foreign assets and net exports indicated how nominal exchange rate will move in the future, according to a Swiss National Bank working paper
IMF paper suggests Peruvian forex interventions are asymmetric
The Central Bank of Peru has tended to react differently in the face of appreciation and depreciation pressures, research finds
Impact of flight to liquidity on bonds important for policy-makers, study finds
The effects of flight to liquidity episodes on bond markets ‘are important for policy-makers’, since they are associated with ‘lower macroeconomic confidence’, research finds
IMF paper: Costs of macro-pru policies still unclear
Policy-makers should ‘move carefully' in adopting macro-prudential tools as ‘knowledge is still limited', working paper argues
IMF praises Central Bank of Kuwait’s ‘proactive’ approach
Central bank is ‘proactive’ in its liquidity management and macro-prudential supervision, IMF report says; publishing more timely information on oil sector would be ‘useful’
Irish research finds macro-pru tools have ‘greater impact’ on first-time buyers
Economic letter published by Central Bank of Ireland explores impact of loan-to-value and loan-to-income ratios on different groups within residential property market
Healthy domestic variables can smooth rating downgrades, paper finds
Good domestic variables can help a country recover from a sovereign rating downgrade, but these fundamentals have little capacity to accelerate on an ‘upgrade cycle’, research finds
BIS paper spots correlations in capital control effects
Study of emerging market capital controls finds bonds flow into other regional countries if one loosens its controls, but the effect is weak when countries tighten
Central banks should consider financial stability when setting monetary policy, finds BoJ paper
Discussion paper published by the Bank of Japan argues the risk-taking channel of monetary policy has ‘become more important’ as financial intermediation has moved to markets
Cluster effect helps explain size of UK banking sector, BoE bulletin finds
Firms and people locating near one another means banks may be able to provide services more efficiently in the UK than other countries, researchers say
BIS quarterly review warns even high quality securitisations carry risks
Quarterly review article says even simple, transparent and high-quality securitisations create uncertainty, making estimating risks tricky, especially in mezzanine tranches
SNB working paper examines drivers of Swiss franc real exchange rate
Research finds terms of trade and relative government are ‘the most significant explanatory variables’, while Balassa-Samuelson effects are unimportant
Spanish working paper explores inflation dynamics
Research considers the impact of different industrial structures on the response of inflation to technology, interest rate and entry cost shocks
Resource costs of Australian payments system down as percentage of GDP
Consumers face similar cost for credit and debit card payments despite higher cost of credit cards to the economy, RBA paper finds
Liquidity surplus has minor effect on short-term interbank rates, Riksbank article finds
Larger liquidity surplus in Swedish banking system since 2007 linked to downward pressure on short-term interbank rates, but effect is minor as most is invested in Riksbank Certificates
Icelandic research proposes new measure of core inflation
‘Dynamic factor measure' outperforms current core measures in terms of matching the mean of CPI inflation while having lower volatility, argues author
BoE researchers posit dual model of interbank markets
Working paper separates exposures from funding to show the two parts of the interbank market have different structures; large ‘core’ banks present contagion risk
BoE paper says loan fair value techniques come with 'health warnings'
Researchers say it is unlikely that any one technique will capture all relevant aspects of valuation across all types of bank loans