Central Banking
Capital outflows look manageable as Iceland moves to lift controls – central bank
A “stress test” of potential outflows implies the Icelandic financial system and central bank reserves will cope when capital controls are lifted; the government bill prepares to release funds
De La Rue boosts Africa presence with Kenya deal
Kenyan factory to be turned into production “centre for excellence”; printer hopes new equipment installed at site will increase banknote production by 50%
IMF working paper encourages Italian banks to clean up balance sheets
Italian banks are likely to become more profitable as economy recovers, authors say, though their capacity to lend is linked to capital buffers
Urjit Patel to take over from Rajan at RBI
Deputy governor led work on India’s new inflation-targeting framework; appointment seen as signal of government’s commitment to current policy
More work needed to make case for GDP-linked bonds – BoE paper
The design of GDP-linked bonds needs to align macroeconomic need with investor demand, according to a paper authored for the G20 summit; clearer guidelines and principles could aid adoption
US inflation target within ‘hailing distance’, says Fischer
The Fed is “close” to its targets says vice-chair; despite recent weak GDP figures, Fischer expects investment to recover in coming months
Nepal Rastra Bank broadens electronic payments oversight
Banks and financial institutions will have to re-register with the bank under new licensing law; central bank hopes reform will support more non-banking institutions and new payment transactions
Explicit communication from Sarb helped agents predict rate hikes – paper
Authors compare forecasts from 2013 and 2014 to identify whether specific terminology affected forecasting; “rising cycle” talk shaped expectations, paper shows
Borrowers’ characteristics are key to successful mortgage restructuring, paper argues
How mortgage was restructured is less important than distressed borrowers’ own characteristics in determining whether loan is repaid, Bank of Ireland paper says
CPMI-Iosco issues report on key data for future derivatives reporting
Report sets out working group’s proposals for how OTC derivatives products should be reported to trade repositories using unique identifiers
Fiscal stimulus works even in debt-driven recessions – Cleveland Fed paper
Study uses defence spending to estimate fiscal multiplier, finding it is higher in areas with larger debt burdens, contrary to the fears of some economists
Federal Reserve Board seeks comms boost with Facebook page
Fed adopts its fifth form of social media in an effort to reach a greater audience, joining many other central banks expanding their communications in a similar direction
CFTC charges Deutsche Bank with reporting code violations
US regulator files legal complaint against Deutsche Bank for swap reporting violations; complaint is latest blow to German giant’s US operations
MAS looks to overhaul payment systems
City state already has access to some of the world’s most advanced payment systems, but cash and cheque use remains high; MAS hoping to improve governance, regulation and technology
RBNZ better at forecasting growth and inflation than exchange rate, notes study
Economists compare judgement-based forecasts with benchmark set by suite of statistical models, finding judgement tends to work well, but both types of forecast struggle with exchange rates
National Bank of Denmark sells stake in cash-handler BKS
Central bank official says organisation succeeded in ending spate of violent robberies, so there is no longer a need for the National Bank to be involved
FOMC minutes show divisions on monetary policy
Kansas Fed president Esther George voted for an immediate rate rise at the FOMC meeting in July; other members were also hawkish but some preferred to keep monetary policy loose, minutes show
Regulations gave eurozone banks incentives to downplay credit risks, paper argues
Bank of Slovenia paper analyses whether banks correctly assessed corporate borrowers’ creditworthiness before the financial crisis, and what incentives they faced
Definitions matter when using DTI ratios – Riksbank paper
How regulators define debt and income can affect the outcome of financial stability analysis and the use of macro-prudential tools, authors say
Data gaps hamper work on emerging market vulnerabilities – BIS paper
Large debt stocks, particularly in foreign currencies, point to vulnerabilities in some emerging markets, but gaps in the data are hampering analysis, BIS economists say
Mongolia’s central bank raises rates 450bp in bid to stop currency slide
Rate hike was prompted by fall in currency’s value since late June; central bank says it continues to see encouraging trends in currency flows
FSB fleshes out guidance on resolution
Reports add detail on emergency funding needs for global banks and maintaining the continuity of critical services during resolution; most standard-setting work expected to be finished in 2017
RBI’s Mundra says banks must evolve or face extinction
Deputy describes “dismal future” for banks, saying they must embrace a socially responsible approach if they are to avoid the threat posed by fintech firms and other non-banks
Bullard backs new approach to forecasting
Idea of economy converging to a single steady state has “likely outlived its usefulness”, St Louis Fed president says; instead reserve bank will now focus on regime-based forecasts