Counter-cyclical
Interest rate risk could be seed of next crisis – economists
Financial markets may have underestimated the persistence of low rates, and regulations have amplified the threat, say Srichander Ramaswamy and Philip Turner
Lower growth follows credit booms with high-yield lending – paper
Lending standards in bond markets track banks’ credit standards
PBoC tightens bond trading rules, relaxes renminbi controls
China’s financial regulators continue their efforts to deleverage the economy and promote renminbi internationalisation
‘Decisive’ action needed to deflate China’s credit boom – IMF paper
Lack of reliance on foreign financing, low government debt, and state control help to mitigate effects of credit boom, but buffers should not be relied upon in the long run
Bank of Spain was one of toughest pre-crisis regulators, report argues
But counter-cyclical provisions were not high enough to cope with crises, Bank of Spain says
Irish governor calls for fiscal prudence
The government’s debt target may need to be revised, argues Lane
Bank of Colombia paper charts fiscal multipliers in developing countries
Stronger fiscal-monetary co-ordination in developing economies during periods of expansion would extract more value from stimulus; fiscal multipliers higher in fixed exchange rate regimes
Brexit drives a wedge between BoE and markets
Market expectations of future UK interest rates appear out of line with views expressed by the Bank of England’s Monetary Policy Committee. It comes at a time when Brexit ‘news’ often trumps economic data
BIS paper identifies spillovers from targeted macro-prudential policies
Applying tools narrowly to a sector may nevertheless affect other sections of the financial system, authors find
Macro-prudential rules must be reciprocated – Shafik
“Leakages” will reduce the effectiveness of macro-prudential policy if countries do not reciprocate changes in countercyclical buffers, BoE deputy warns
Fed finalises rules for countercyclical capital buffer
US central bank promises it will only adjust the buffer gradually and will seek comment before doing so, after consultation flagged concerns
Working paper examines interactions between credit defaults and monetary policy
Countercyclical capital buffers can lessen macroeconomic fluctuations but increase the length of slumps, author argues; bank recapitalisation “overcomes this trade-off”
Bank of England cuts CCB to 0% to support credit supply
In wake of Brexit uncertainty, concerns over supply of credit ‘taken off the table’ says Carney; new buffer rate to give confidence to UK economy that banks can lend in ‘challenging times’
Governor sees Chile progressing with macro-prudential framework
Working paper outlines importance of macro-prudential policy in maintaining financial stability; Vergara and Raddatz identify counter-cyclical capital buffer as a possible tool for the future
FPC members deny charges of 'groupthink'
Clara Furse and Richard Sharp argue debate is robust and give examples of where they have challenged the financial policy committee’s majority views; agree to consider issue further
IMF staff call for clarity on Morocco macro-prudential body
Staff report calls on government to clarify powers of inter-agency committee chaired by central bank governor; separate assessment details work on toolkit
HKMA to raise countercyclical buffer by maximum in 2017
Hong Kong Monetary Authority will raise banks’ counter-cyclical buffers by the maximum amount in January 2017; risks still present in credit and housing market, Norman Chan warns
Canadian paper sees costs to leaning against the wind
Research estimates difference in policy rates between ‘lean’ and ‘clean’ central banks, while identifying costs in terms of inflation and output deviations
BoE’s FPC must be sharp on risks as next phase of credit cycle emerges, Cunliffe says
Cunliffe examines different approaches to setting macro-prudential policy, noting the BoE’s work towards countercyclical stress testing of banks
BoE unveils new systematic stress tests
Stress tests designed to move counter-cyclically with the financial cycle and inform decisions on capital buffers; BoE looking to improve modelling techniques to keep pace
Norges Bank memo presents indicator of systemic stress
Staff memo outlines ‘composite indicator of systemic stress’ to help with decision on when to lower the countercyclical capital buffer
BIS paper studies impact of Swiss CCB on quality of credit
Working paper finds activation of countercyclical capital buffer affected the composition of mortgage lenders in two key ways
Norway moves policy tools in opposite directions
Norges Bank cuts rates to tackle economic slowdown but government imposes higher countercyclical capital buffer as financial stability indicators show signs of danger
BoE’s Kohn and Taylor foresee FPC divisions
Financial policy committee is likely to rely more heavily on voting in future, Donald Kohn and Martin Taylor tell MPs; Andrew Tyrie attacks accountability and calls for review