Central Banking
Experts advocate replacing OMTs with gold-backed bonds
Using gold as collateral for sovereign debt could circumvent concerns about fiscal transfers associated with ECB’s OMT programme, panellists say at World Gold Council briefing
EU leaders thrash out ECB bank supervision deal
European finance ministers reach agreement that gives the ECB supervisory powers over the largest banks; EBA rules adjusted to balance voting powers of states outside supervisory mechanism
Paper finds flimsy productivity base for banks in Spain
A Bank of Spain working paper says two-thirds of pre-crisis banking productivity growth was attributable to the expansion of mortgage lending, a reliance on short-term finance and leverage
SNB will not abandon minimum exchange rate, Jordan says
Thomas Jordan reaffirms the Swiss National Bank’s commitment to a minimum of 1.2 Swiss francs to the euro; inflation expected to remain negative next year
Fed to extend QE by $45bn per month
Federal Reserve gives equity markets a lift by unveiling an additional $45 billion of quantitative easing; adopts numerical thresholds
Cyprus may create ‘bad bank’ as part of reforms
Panicos Demetriades outlines plans to monitor undercapitalised banks and possibly create a ‘bad bank’; Irish chief economist says the burden of austerity measures must be shared
Dealers seek second business conduct reprieve from CFTC
Less than 1% of OTC derivatives counterparties are ready to trade under new business conduct regime. Non-compliant firms may be frozen out of the market, banks warn
Korea’s Kim calls for an end to currency reserves hoarding
Bank of Korea governor Choongsoo Kim says use of multi-layered financial safety nets would reduce the need for emerging economies to hoard foreign currency reserves; calls for a global effort
IMF paper studies SME financing as source of Japanese recovery
Research says restructuring small and medium-sized enterprises and deepening capital markets in Japan would better boost recovery than costly government support
Chile’s Vergara draws parallels between LatAm and eurozone crises
Governor of the Central Bank of Chile says Latin America’s sovereign debt crisis of the 1980s has similarities with current situation in eurozone; despite ‘lost decade’, better policies resulted
RBA’s Stevens addresses growing importance of policy spillovers
Australia’s Glenn Stevens says policy-makers are becoming increasingly aware of the need to consider the wider impact of domestic decisions, although discussion is in its infancy
Finland paper sizes up Chinese reforms
Research published by the Bank of Finland examines financial liberalisation in China and what it means for the country’s monetary policy framework
Carney and BoE chief economist clash on inflation targeting
Bank of England governor-elect Mark Carney suggests inflation target could be sacrificed for nominal GDP goal; Spencer Dale questions whether this would be effective or viable
FSB presses forward with legal entity identifiers
Latest Financial Stability Board report shows further progress towards implementing the global legal entity identifier system with March 2013 deadline fast approaching
QE ‘relief’ no substitute for deleveraging, says HKMA’s Chan
HKMA chief executive warns asset price growth must be supported by structural developments
Central Bank of Ireland to toughen penalties for financial crime
Irish central bank looks to harden sanctions for financial crime, including doubling maximum fines and the possibility of criminal prosecution for top managers
Belize paper evaluates value of currency peg
Research published by the Central Bank of Belize highlights export growth and steady domestic inflation aided by peg to the US dollar
Central Bank of West African States boosts growth estimates
Monetary policy committee praises member states’ investment in agriculture and infrastructure; holds benchmark interest rate
Bundesbank paper calls for inclusion of endogenous liquidity in accounts
Researchers suggest including endogenous liquidity in mark-to-market portfolio valuations as a method of mitigating risk
BIS research identifies ways to smooth the financial cycle
Bank for International Settlements working paper designs model of financial cycles and examines the difficulties of reducing the size of their peaks and troughs
New Zealand’s new capital standards at odds with Australia on ‘bail-in’
Reserve Bank of New Zealand’s new capital standards conform to Basel III requirements but concerns raised on how bail-in debt rules will tally with Australia
BoE and FDIC co-operate on bail-in plans
US deposit insurer and UK central bank release plans for resolution of global systemically important banks, focusing on a ‘top-down’ approach to maintain viability long enough for restructuring
Riksbank evaluates OTC derivatives market ahead of new rules
Members of the Riksbank’s financial stability department examine how participants in the OTC derivatives market are preparing for new European rules on risk management and transparency
Central bank policies fuel asset price rise, says BIS
BIS quarterly review says monetary easing is helping to push investors into riskier assets despite a weakening global outlook.