Central Banking
African central banks have cut euro exposures, says Uganda’s Kavuma
Combination of negative interest rates and falling reserves hit euro holdings but most central banks still avoid investments within Africa
Lagarde guilty of negligence, court rules
IMF chief found guilty of negligence but is not punished; verdict may call into question her future at the fund
ECB bulletin emphasises importance of monitoring uncertainty
Increases in uncertainty adversely impact the economy, research says, encouraging policymakers to introduce measures to mitigate its impact
People: Slovenia gets new deputy; ECB appoints new member to financial stability council
Slovenian parliament appoints new deputy to central bank; ECB chooses Finnish deputy governor to sit on financial stability council
BIS’s Caruana: fiscal space is ‘slippery’
Fiscal authorities should not overestimate the available room for manoeuvre, as less obvious factors may pose constraints, BIS chief says
Adopting inflation target can create higher inflation – paper
Bank of Korea working paper finds positive relationship between inflation target and inflation, implying some central banks may be tempted to move the goalposts
SNB ups allocation to currency reserves
New rule allows for higher allocations to reserves provision even in periods of low nominal growth; foreign exchange intervention now a key monetary tool
BoE article sees benefits to agent-based modelling
“Bottom-up” approach is complementary to models that are already widely used; the Bank of England has created new models for both housing and corporate bond markets
US and EU outline final rules on loss-absorbency
Fed adopts final rule on loss-absorbency, while EBA makes final recommendations to European Commission; US rules include grandfathering and exceptions for foreign firms
2016 sees major change among central bank governors
Double the number of new governors were appointed in 2016 compared with 2015, latest Central Bank Directory shows; global staff numbers plateaued in 2015 and reversed this year
Sharper distinction in household vulnerabilities needed – Poloz
Latest financial stability review stresses importance of understanding difference in risk in housing sector; household indebtedness and housing market imbalances are key concerns
Sarb fines two major commercial banks for AML breaches
“Administrative sanctions” placed on Societe Generale Johannesburg branch and Absa Bank after staff found “weaknesses” in AML and terrorist-financing control measures
Czech Republic closer to euro adoption but still not ready – CNB
Economy is converging with Europe but costly accession to single supervisory mechanism means country is not ready to begin formal process, CNB says
IMF paper shows US monetary conditions impact EM leverage
Impact is more pronounced for firms that are dependent on external financing, authors find; sample shows financial conditions have the ability to influence borrowing constraints
Macedonian notes: world’s first security thread in long window
New designs entering circulation feature De La Rue’s Kinetic StarChrome; central bank also begins withdrawal of the D5,000 note
RBI paper unpacks India’s non-performing loan troubles
Authors find bank risk-taking is procyclical and the level of non-performing loans responds to the interest rate environment and the overall growth of the economy
SNB’s Jordan stresses commitment to exchange rate intervention
Central bank holds the policy rate, but the Swiss franc is still “significantly overvalued”, and the SNB will continue to intervene, chairman says
IMF delay forces National Bank of Ukraine to keep forex controls
Central bank to leave foreign exchange controls in place until political instability subsides and reforms are under way; IMF acknowledges progress, but says more is needed before the third review
BoJ and ECB collaborate on distributed ledger tech
The project will examine the possibility of running central bank infrastructure platforms in a DL environment; research will focus on payments and securities settlement
Inflation to reach 2% target in next six months, BoE says
MPC votes unanimously to leave rates unchanged at 0.25%; exchange rate appreciation suggests smaller overshoot of inflation target than previously forecast
Greek negotiations turn acrimonious amid debt relief freeze
ESM freezes debt relief measures for Greece, accusing government of breaking spending promises; European Commission’s Moscovici hits back at IMF criticism
People: Fed appoints head of financial stability; Russian deputy to gain new adviser
Lehnert gains financial stability role after proving influential in the department’s creation; former head of financial stability appointed to advisory role at Bank of Russia
FOMC signals hawkish outlook as it hikes
Dot plot shifts upward and projection implies members expect further hikes in 2017; Janet Yellen says fiscal stimulus “not obviously needed”
Non-linear shocks create asymmetric policy impacts – paper
Bank of England working paper shows a shock to mortgage spreads has more of an impact on the real economy during periods of recession, with implications for policy