Central Banking
Banks are de-risking due to lack of regulatory direction
Banks are struggling to balance growing compliance costs with the need for a risk-based approach to individual client accounts. Regulatory guidance isn’t helping, a London conference hears
Menon praises Asian strides in face of new bank regulation
Ravi Menon and San Francisco Fed's John Williams discussed banking reforms at one of three events hosted by Monetary Authority of Singapore last week
Boston Fed president preaches patience
Eric Rosengren says it is too soon to know whether weaker economic activity at start of year is down to temporary factors or ‘broader changes in the economy’
IMF pushes Belarus to adopt new policy framework
International Monetary Fund tells National Bank of Belarus to adopt monetary targeting framework ‘without further delay’; staff and national authorities disagree over exchange rate
St. Louis Fed’s Bullard makes case for NGDP target
Working paper questions appropriate monetary policy response at zero lower bound and explores the mechanics of a ‘special upward adjustment’ in the price level on credit market
Basel considers U-turn on fourth trading book QIS
Industry lobbying prompts regulator to revive plans for a further impact study
BoE research warns failure to capture money creation distorts DSGE models
Working paper offers ‘essential ingredients’ of a DSGE model that recognises bank lending as the source of money creation, with significant implications for economic modelling
FCA’s Wheatley highlights complexity of banking cultural reform
As banks are hit with yet more record-breaking fines, the head of the UK’s financial watchdog argues they are trying to change their ways, but the job is not a straightforward one
IMF paper argues technological slowdown not main driver of weak productivity
Working paper finds slower US productivity growth is more due to reduced efficiency in combining factors of production than a declining pace of technological progress
IMF sees limits to Norway ‘leaning against the wind’
Article IV conclusion says macro-prudential policy should be first line of defence, but governor Øystein Olsen still sees role for monetary policy
Austria to repatriate third of gold reserves
Central bank plans to move gold out of the UK and into Austria and Switzerland after court of audit raises concern over ‘high concentration risk’
Kocherlakota sets out path back to maximum employment
Minneapolis Fed president says the FOMC should set policy in a way that allows for at least three more years ‘as good as 2014’ if the labour market is to achieve highs last seen in 2006
Swiss National Bank open to buying foreign assets
IMF article IV report suggests buying foreign assets to address deflationary pressures; Swiss National Bank says it is an option but wants to see how outlook develops before easing further
Riksbank launches streamlined financial stability report
Shorter, more focused report aims to send clearer message to readers; follows close on the heels of a redesigned monetary policy report
ECB paper highlights stability and growth benefits of market-based finance
Researchers suggest high bank leverage may be amplifying booms and busts, damaging both financial stability and economic growth, with one solution being more market-based finance
ECB article calls for ‘consistent’ macro-prudential policies
Article in latest financial stability review says policies should be applied consistently across the eurozone to avoid spillovers
Micro-prudential policy ‘bulwark’ against systemic risks, says San Fran Fed’s Williams
President says prevalence of shadow banks limits use of conventional macro-prudential tools, but there are other ways to integrate the perspective into the regulatory framework
Central Bank of Iceland prepares for ‘substantial’ interest rate increases
Minutes show MPC grappling with uncertainty around pay increases but board members agree interest rates will soon have to move upwards sharply; one member dissented from rate hold
Dutch committee recommends 90% LTV limit on mortgages
Netherlands financial stability committee advises government to gradually reduce loan-to-value limit to 90%, despite IMF recommending cut to 80%
Second Hong Kong sukuk oversubscribed by 100%
Five-year Islamic bond hits home with investors, including central banks, pushing coupon below 2% – 35 basis points above US Treasuries with same maturity
Solomon Islands governor shifts financial inclusion focus
Denton Rarawa tells Central Banking the Solomon Islands will meet its target for access to financial services early, and work on improving usage and quality should come next
BoE’s Taylor dismisses calls for ring-fence to be dismantled
FPC member warns of damage that could be done if ‘increasingly shrill’ voices calling for regulation to be rolled back are heeded
Banks find huge capital jump in study of new standardised approach to market risk
Impact study shows five-times increase under revised standardised approach to market risk
BoE concerned by broken long-term investment incentives
FPC continues work on procyclicality and short-termism among pension funds and insurers, but participants at event in London suggest others may now need to pick up the baton