Central Banking
Draghi calls for action on non-performing loans
Eurozone countries need wide-ranging reform of their systems for dealing with non-performing loans to stimulate the supply of capital to business, Mario Draghi says
BIS paper finds close link between MBS and bond yields
Authors find ‘strong empirical evidence’ for feedback between mortgage-backed securities and bond yields, with the effects proving transient and ‘hump-shaped’
Bank of Israel challenges interim competition report
Governor Karnit Flug warns of ‘marked risk’ to economic stability from some proposed measures; central bank argues they may hinder competition, not promote it
Bank of Canada identifies ‘prolonged weakness’ in commodity prices as a key risk
Latest financial system review suggests the resulting stress would be ‘manageable’, although an additional ‘large and broad-based drop’ would pose a bigger problem
Pakistan central bank ‘implicitly’ introduced new policy framework ahead of time
State Bank of Pakistan reveals it ‘implicitly’ introduced a new framework for monetary policy before it was officially announced, to avoid ‘unnecessary volatility’ in money market
HBOS investigation reveals possible ‘loose rivet’ in UK regulation
Accounting standards and auditing may be a weak point that is only just starting to be addressed, according to MPs at a parliamentary committee hearing on the failure of HBOS
Italian deputy governor warns on hurdles to capital markets union
The senior deputy governor of the Bank of Italy says capital markets union is necessary for the European economy but faces considerable obstacles
Market survey suggests Bank of Lithuania is a transparent supervisor
A survey of Lithuania’s financial market participants conducted on behalf of the central bank has found large majorities of respondents approving of the bank’s transparency and clarity as supervisor
Brazil private growth expectations slide further
Brazilian economy will contract by 3.62% this year with inflation breaching the 10% barrier, private institutions say
New Zealand economists stress-test dairy sector
An article published by the Reserve Bank of New Zealand finds banking system losses would still be ‘manageable’ under the worst-case scenario for milk prices and farm values
Irish central bank to investigate fund manager fees
The Central Bank of Ireland intends to investigate the levels of fees charged by asset managers based in the country; review will be one of 12 ‘themed inspections’ of the finance industry
Bahraini central bank launches ‘almost real-time’ payments
Central Bank of Bahrain launches Electronic Fund Transfer System, comprising services for near real-time payments, deferred net settlement and bill aggregation
BoE paper explores monetary and macro-prudential policy interactions
Macroeconomic and financial frictions in an economy can require ‘intervention of opposite direction’ on the interest rate, which a second instrument can help mitigate, paper finds
BoE’s Shafik says wages key to rate hike
Deputy governor says economy has been difficult to read in recent years but stronger growth in wages would be a major factor in prompting her to vote for a rate hike
Global value chain key to realising growth potentials, says Sri Lanka governor
Mahendran says Sri Lanka has not integrated fully into the international value chain; former World Bank chief economist Lin discusses ‘new’ structural economics
BIS’s Shin highlights global liquidity dilemma for EMs
Head of research points to an uncomfortable balancing act among emerging markets exposed to foreign currency debt, which may be a factor behind the recent slowdown in their economies
Energy and food price rises have ‘strong’ second-round effects in South Africa, paper says
A new model of South African food and energy price rises allows the quantification of their second-round impact on wider inflation measures, a working paper argues
New renminbi index shows ‘relative’ strength of currency
Body run by the PBoC publishes index showing movement of renminbi against 13 other currencies; looks to steer market focus away from solely the dollar rate
Shocks to income have pushed Australian inequality higher, paper finds
Both income and consumption inequality have risen among Australian households due to the effect of short-term and long-term shocks to income, an RBA paper argues
UK banks must raise extra £27bn to meet resolution needs under BoE proposals
Large banks will have to issue additional subordinated debt to meet MREL requirement under proposals designed to ensure banks will continue to operate under resolution
People: Ukraine names new first deputy governor; EBA announces host of appointments
Ukrainian deputy governor promoted to first deputy governor role; EBA makes appointments and reappointments to supervisory and management boards; and more
Spanish paper finds issues with Basel III approach to calculating risk-weighted assets
The approach to calculating banks’ risk-weighted assets introduced by Basel III may create incentives for ‘regulatory arbitrage’, a Bank of Spain paper argues
Weidmann calls for ‘truly independent’ fiscal council
Jens Weidmann says there are shortcomings with existing proposals for the body, including the absence of a ‘comply-or-explain’ approach
Seacen Centre’s Genberg calls for research into effects of macro-prudential tools
Hans Genberg warns ‘we do not have much experience with the consequences’ of macro-prudential policies with respect to risk distribution and cross-border effects