Central Banking
Danish research examines how central banks can impact market liquidity
Price of liquidity tends to change on days when central bank is operating in markets, with aggregate liquidity and payments activity also important, PhD thesis finds
BoE research finds support for Phillips curve in micro data
Authors turn to direct measures of firms’ expectations and employ new instrumental variables in search of empirical support for the Phillips curve
Blanchard sees reformed DSGE as ‘central’ to future of macroeconomics
Former IMF chief economist says DSGE models are “seriously flawed” but “eminently improvable”, and will have a leading role to play in the future
Asset prices can signal abnormal inflation rates, paper argues
Asset prices can provide warning of forthcoming high or low inflation, a Netherlands Bank working paper says, but transmission times can be “quite long”
EBA suggests anti-money laundering measures for virtual currencies
Major new legislation or amendments needed to regulate payments in virtual currency, EBA says; suggests changes to proposed extension of regulation and calls for deadline for implementation
Chinese authorities should introduce inflation target – IMF staff
Report by IMF staff sets out ‘key elements’ of transition to more market-based monetary framework; encourages explicit inflation goal and new intermediate target for policy
Chilean central bank changes guidance and keeps policy on hold
Central Bank of Chile removes reference to continued normalisation as inflation returns to target range; holds benchmark rate at 3.5%
Anti-corruption unit investigates Curaçao and Sint Maarten central bank president
Anti-corruption unit conducts raid on Emsley Tromp’s home, confiscating documents and data carriers; investigation launched by finance minister on the back of ‘rumours and innuendos’
Bundesbank paper models ‘information contagion’
A Deutsche Bundesbank working paper presents a model of how “information contagion” can cause bank runs and attempts to quantify it using data on Canada’s banking sector
RBNZ cuts rates and expects inflation to weaken further in short term
New Zealand central bank expresses concern over falling inflation in economy generally and rapidly rising prices in housing sector
Auditors ‘key’ in strengthening corporate governance, says Mauritian deputy
Deputy governor examines difference between supervision models; under ”four lines of defence” model, auditors provide ”autonomous assessment” of previous three lines
Indian train robbery sees nearly $1m in soiled banknotes snatched
Soiled banknotes destined for the RBI stolen from train on the way back from Salem; police investigating incident
Icelandic paper finds ‘striking’ ties between financial cycle and real economy
Authors identify strong financial cycle linked to global factors, which impacts macro variables including consumption and government spending; paper suggests range of policy responses
BoE researchers outline risk of collateral collapse
In stress periods, collateral chains could break, paper in forthcoming Journal of Financial Market Infrastructure warns
Riksbank paper looks to medieval Europe for ZLB solution
Idea of a “Gesell tax” on holdings of cash could help central bankers overcome the zero lower bound – an idea already tested by kings in medieval Europe
US enforcement actions stopped worse borrowing terms during subprime crisis, paper argues
Researchers compile database matching US enforcement actions to banks and their loans; price, duration and size of loans improved following enforcement actions, they argue
BoE bond purchases run into difficulties
Central bank fails to meet quota of long-dated government bond purchases despite offering a high price, pointing to an unusual failure of its bond-buying mechanism
Croatian National Bank sees inflation recovering this year and next
Annual CPI inflation fell to –1.8% in May, but the central bank expects it to pick up in the coming months, eventually rising to 1.2% in 2017
Bank of Italy to receive €1bn for liquidating holding in equity firm
Italy’s central bank will gain about €1bn for liquidating its shareholding in an equity firm partly owned by the Italian state; holding began after the firm transferred stake in insurer
IMF paper examines drivers of India’s disinflation
‘Backward-looking’ expectations and domestic institutional structures amplified shocks, paper says; only 15% of India’s deflation is attributed to a decline in oil price
Reserve Bank of Australia governor backs 2–3% target in final address
Reserve Bank of Australia governor supports inflation-targeting regime in last public address; moving the target could open the door to further changes down the line, warns Stevens
Swift CEO gives network top marks despite Bangladesh Bank theft
‘No room’ for complacency says Leibbrandt, noting it is now up to the banks to upscale their security infrastructure
US unconventional monetary policy most effective in financial crisis, paper argues
Conventional and unconventional monetary policies in the United States work through distinct channels, with different levels of effectiveness in crisis conditions, researchers argue
UK watchdog looks to new technology to ‘transform’ bank competition
Use of “open APIs” can enable easy data-sharing, which regulator hopes will give consumers clarity on bank charges and boost competition – though some see flaws in the plan