Central Banking
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
Riksbank paper finds ‘significant’ gains from faster trading
Faster trading systems have eliminated arbitrage opportunities, improving market efficiency and quality, authors say
NPLs ‘must’ rise during downturns – MAS’s Menon
If NPLs failed to rise during “difficult times”, that would be a sign banks are not doing their job right, MAS chief says
IMF’s Werner: Latin America must keep debt under control
Western hemisphere chief says there are some concerning signs on debt, although the risk of a systemic crisis is low; region well placed to weather Fed shock
Flexible exchange rate aids those hit by commodity shock, IMF report says
“Sacrifice ratio” is lower for those that allow local currency to depreciate; fixed exchange rates are becoming more expensive, IMF says
MAS concludes 1MDB review with fresh fines
Credit Suisse and UOB fined $1.6 million collectively, with further individuals receiving lifetime bans