Banks
Eurozone banks vulnerable to global risk repricing, ECB warns
US elections have “aggravated” risk of global repricing, which could trigger contagion in eurozone financial system, Vítor Constâncio says
Hong Kong proposes safeguards for contracts during resolution
Rules seek to protect some critical financial contracts during resolution without overly constraining resolution authorities
Financial markets should not write off uncertainty, says BoE’s Forbes
Bank of England deputy says the effects of uncertainty around Brexit could still materialise; uncertainty measures could “quickly shift”, says Forbes
Armenia saw turbulent H1 2016 – financial stability report
Geopolitical risks and growth slowdown led to a difficult environment for banks, although they still managed to boost capital and liquidity
FSB updates systemic institutions list
Citigroup and HSBC swap places at the top of the rankings; ECB's “significant” banks list now at 127
Auditors’ report notes staffing and governance issues at ECB arm
National supervisors provide insufficient staff for inspection teams, report says
Ringgit NDF market collapses after central bank curbs
“Implicit threat” to banks active onshore if they continue trading non-deliverable forwards
Paper examines relationship between monetary policy and bank funding crises
Current regulatory tools are not sufficient to contain bank runs, Canadian working paper suggests, underscoring the importance of policy measures such as reserve requirements
Lowe stresses the importance of financial buffers
“Skimping” on buffers is not worth the risk, says RBA governor, stressing stronger ones promote stability and prosperity
BIS’s Shin links dollar strength to global malaise
Head of research outlines how dollar strength affects leverage globally, causing deviations from covered interest parity and potentially impacting growth and trade
Carney faces grilling from parliament in wake of tenure decision
Regardless of Brexit timetable, BoE governor will leave on June 30, 2019; he warns firms could trigger plans to leave London in late 2017 if Brexit deal proves unsatisfactory
Kenya’s Imperial Bank saga continues with fresh court ruling
Sniping ensues as high court rules on Imperial Bank; central bank says it has acted within the law, while shareholders challenge its interpretation of the ruling
IMF paper seeks to quantify debt bias
Tax systems create “pervasive” debt bias, authors find, arguing for policy action before the problem worsens
Brexit unlikely to spell end of London as a financial centre – BoE’s Cunliffe
“Clustering effects” should ensure London remains a major financial centre, says BoE deputy, though fragmentation poses a risk to activity throughout the EU
Riksbank paper shows importance of modelling bank costs
Models should not assume financial intermediation is free, authors say, showing banks can reduce aggregate welfare in some cases
Ugandan governor emphasises banking system is sound
Tumusiime-Mutebile steps in to calm investors, dismissing negative reports following the acquisition of Crane Bank; banking system is “stable, sound and profitable”, he says
Banks not fully adapted to new prudential environment – BoE deputy
Firms need a “proper chance” to adapt to the “new world”, says Woods, warning that the banking system still looks fragile on some metrics, despite work by his predecessor, Andrew Bailey
Hedging demand can cause covered interest parity violations – BIS paper
US dollar forward hedging demand can cause covered interest parity to fail even when markets are calm, authors say, helping explain this post-2012 anomaly
Fed raising bar for BNY Mellon – Powell
Fed working with treasury to ensure “smooth transition” as BNY Mellon becomes sole provider of government securities; bank must remain “robust”, says Fed’s Powell
Andrew Bailey looks to reboot UK conduct regulator’s ‘mission’
New chief executive seeks to clarify approach after stumbles in past years, admitting global understanding of conduct regulation still at an early stage
Bank of Uganda takes control of large commercial bank
Ugandan central bank takes over the management of Crane Bank, the commercial bank; clarification issued over use of governor’s signature
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
Sri Lanka sets up enforcement unit after insolvency failures
Central Bank of Sri Lanka sets up new enforcement branch after unsuccessful attempt to restructure four failing financial institutions; legal action to be taken against Entrust Securities
Book notes: Achieving financial stability and growth in Africa, edited by Stephany Griffith-Jones and Ricardo Gottschalk
John Chown praises this comprehensive review that studies the possibility of achieving ‘the impossible’ in low-income Africa – both growth and financial stability