Debt
Alan Greenspan says gold standard would have reined in debt
Former Fed chair says US would not be so indebted if it was on the gold standard; gold is the “primary global currency”, Greenspan says
BIS authors identify tipping point in household debt impact
Researchers trace the effects of household debt on the real economy, identifying thresholds beyond which the long-run impact on consumption and growth intensifies
Davos panellists highlight risks posed by strong dollar
At the World Economic Forum, experts underline the risks of a strengthening dollar on not only US monetary policy, but also on emerging markets’ economies
Leveraged markets not a financial stability risk – Powell
Powell examines state of highly leveraged markets with eye to financial stability, judging they are not yet a problem
Completing reform agenda may not be enough – Caruana
BIS chief urges continuous effort to finish reforms, but says they need to be backed by policies that raise earning and debt-repayment capacities
Sri Lankan government to restructure central bank
Central bank is to be restructured with amendments to the Banking Act, but disagreements remain between the finance minister and governor; inflation-targeting framework appears to be on track
BIS’s Caruana: fiscal space is ‘slippery’
Fiscal authorities should not overestimate the available room for manoeuvre, as less obvious factors may pose constraints, BIS chief says
Malawi governor announces plans for central depository system
New system will provide security for transactions taking place in the market, Chuka says; governor hopes project will increase market liquidity in the long run
MAS warns of risks surrounding households
Prudent financial and debt management is crucial, the regulator says, to entrench the gains made through macro-prudential measures implemented earlier
Bank of Zambia closes fourth bank this quarter
Commercial bank deemed insolvent by the regulator; Bank of Zambia takes over control of the institution to “safeguard” depositors
Central banks may be partly to blame for low real rates, says BIS’s Borio
Ever-bolder attempts to raise inflation could push down on real rates, generating little inflation but worsening the risk of instability, Claudio Borio says
Demands on central banks have created critical juncture – El-Erian
Economist says burden placed on central banks has created economic and political instability across the globe, and something must soon give
IMF paper seeks to quantify debt bias
Tax systems create “pervasive” debt bias, authors find, arguing for policy action before the problem worsens
Norges Bank deputy warns of vulnerabilities in financial system
“Sharp rise” in property prices and high household indebtedness are a concern, the latest financial stability report reveals; banking sector’s largest corporate exposure is to the real estate market
Public sector balance sheet poses risks for Dominican Republic – paper
IMF working paper analyses balance sheet developments in the South American nation’s economy; foreign currency exposure could amplify risks, authors say
China has room to regulate local government financing – IMF paper
Government can and should rein in fiscal risks posed by public-private partnerships, authors say, as they outline “four pillar” regulatory framework
Andrew Bailey warns of macro impact from pensions trouble
FCA chief says low interest rates and other factors shaping the pensions market are likely to have knock-on effects on the economy, though the area is not well understood
‘Absolutely urgent’ for Mexico to strengthen fiscal stance – Sánchez
Bank of Mexico deputy governor stresses need for fiscal revamp to bolster the Mexican economy as monetary policy can only carry so much weight
Recessions nearly tripled amount of Italian NPLs, paper argues
Italian bad debt levels would be almost one third of their current levels without the sub-prime and sovereign debt crises, a counterfactual analysis argues
More work needed to make case for GDP-linked bonds – BoE paper
The design of GDP-linked bonds needs to align macroeconomic need with investor demand, according to a paper authored for the G20 summit; clearer guidelines and principles could aid adoption
Borrowers’ characteristics are key to successful mortgage restructuring, paper argues
How mortgage was restructured is less important than distressed borrowers’ own characteristics in determining whether loan is repaid, Bank of Ireland paper says
Fiscal stimulus works even in debt-driven recessions – Cleveland Fed paper
Study uses defence spending to estimate fiscal multiplier, finding it is higher in areas with larger debt burdens, contrary to the fears of some economists
Definitions matter when using DTI ratios – Riksbank paper
How regulators define debt and income can affect the outcome of financial stability analysis and the use of macro-prudential tools, authors say
Data gaps hamper work on emerging market vulnerabilities – BIS paper
Large debt stocks, particularly in foreign currencies, point to vulnerabilities in some emerging markets, but gaps in the data are hampering analysis, BIS economists say