Central Banking
Inflation is preventing interest rates from rising faster, says Powell
Labour market progress points towards a faster pace of normalisation for the Fed, but below-target inflation is preventing rates from rising above the current “gradual pace”
Balance sheet weakness and falling investment to blame for productivity slowdown – paper
IMF paper rejects structural hypothesis for slowdown in productivity growth following crisis; firms with balance sheet issues and those hit harder by credit tightening cut back on investment
Venezuela’s central bank devalues bolivar as crisis continues
Bolivar devalued 64% in latest currency auction in an attempt to stem effects of financial crisis; Goldman Sachs comes under fire from opposition leader
People: Menon given fourth term; Irish chief economist retires
Singaporean governor awarded fourth consecutive term; Ireland’s chief economist retires, while the registrar of credit unions heads to the IMF; India appoints a new executive director; and more
Surprise RMB strengthening prompts unwinds
"A lot of long [US$] positions were unsustainable and had to be re-evaluated," says forex structuring head
Dombrovskis praises idea of bundling European sovereign bonds
European Commission is “closely following” work on designing new instruments
Financial integration will strengthen region – Thai governor
Santiprabhob says policies need to “converge” in order to create an integrated market; payment systems would be a good place to start with harmonised standards a proven solution, he says
EBA calls for reform of its funding and governance
Funding shortfalls are “unreasonable”, Enria says; some governance arrangements are “overly cumbersome”
BNM’s Ibrahim urges Asia to “re-engineer” global monetary system
Countries should reduce their reliance on the US dollar and promote a “multi-currency market” within Asean, says Muhammad bin Ibrahim
MAS’s DLT project posts successful results
Network issues digital Singapore dollars across a DLT network to settle interbank debts; problems with credit risk and liquidity will be addressed in future work, central bank says
Bank of England threatened with strike action over pay
Union members to be balloted on strike after being awarded a “derisory” 1% pay rise; UK inflation currently running at 2.7% and forecast to rise further
Model risk falls under the CCAR microscope
Fed using qualitative reviews to test the quality of model risk governance
Policy rate forecasts influence expectations – Riksbank paper
New data allows researcher to assess the “potency” of rate forecasts, which do appear to influence expectations
Pace of monetary easing may slow, says Central Bank of Brazil
Committee unanimously cut interest rates to 10.25%, but political uncertainty could slow the future pace of easing; economist praises approach to monetary policy communication
European institutions agree vote on securitisation programme
Council of ministers and lawmakers will vote in the coming weeks
Irish central bank gets new supervisory structure
Supervisory functions will be split into two “pillars"; Lane says increased mandate and greater European commitment means new structure is necessary
Growth in offshore funding is creating risks – RBNZ
Financial stability report notes growing reliance of banks on offshore funding sources could become a problem; housing market risks require new prudential tools
ECB and Riksbank present united front on reserves threat
Government proposals that could cut reserves in half may leave Sweden vulnerable to a crisis and would violate the central bank’s independence, institutions warn
Brainard turns cautious on inflation concerns
Lack of wage growth and lower than expected inflation data could slow further monetary easing, says Fed governor; interest rates are likely to rise “soon”
Sarb calls for comment on framework for deposit insurance scheme
Facility will provide cover of up to 100,000 rand in the event of a bank failure, with emergency liquidity from Sarb if necessary
Deutsche Bank fined further $41 million by Fed
US central bank finds fault with banking giant’s AML function, months after UK regulators imposed similar fines; Deutsche has two months to submit reform plans
Paper examines how sovereign debt losses hit real economy
Researcher presents unique database on eurozone sovereign debt crisis
Global institutions strike Mongolia bailout deal
Institutions including the IMF, World Bank and People’s Bank of China strike a deal to provide funding and other support to the slumping economy
Spanish draft law would undermine financial reform, ECB says
Proposals on housing loan settlement would weaken “key pillar” of reform