Debt
Kaplan to ‘closely monitor’ debt and ageing demographics in line with growth
Dallas Fed president will also look to other major economies throughout 2016 for patterns that may affect growth; the Federal Reserve will need to be patient, he says
Debt deal struck but ‘heated’ discussions await Argentine president in congress
Vulture funds satisfied but Argentine president faces an ‘uphill’ battle getting deal through congress; analysts ultimately expect it to be approved, but see other challenges on the horizon
Book notes: The end of alchemy, by Mervyn King
King’s book on how to fix everything that is wrong with the financial and economic system lays out radical proposals that deserve serious consideration
Mervyn King calls for radical banking reform
Former Bank of England governor wants to curtail banks’ use of maturity transformation, putting the central bank’s lender-of-last-resort role at the heart of his new banking system
Snapshot: IMF reveals staff views on Argentina
IMF releases informal briefings compiled 2013-2015 in absence of Article IV; staff highlighted adverse effects of central bank and banking sector financing of government
Paper looks at macro-prudential impact on mortgage affordability
Working paper assesses how macro-prudential policies influence the share of households that can “access and sustain” a mortgage at different loan-to-value ratios
Hong Kong activity should weather higher rates – paper
Research published by IMF argues consumption and investment will “remain robust”, despite increase in interest rates in tandem with the US
Argentina inches towards repaying debt
Montreux Partners LP and EM Ltd settle; four creditors yet to agree on removing injunction
Book notes: Between debt and the devil, by Adair Turner
Adair Turner offers a lively and well-structured account of his proposals to radically overhaul the financial sector
Book notes: Debtonator, by Andrew McNally
A lucid book questioning society’s bias towards debt and against equity
High debt tends to reduce consumption growth – Norges Bank memo
Research tries to capture diversity of household balance sheets, finding consumption tends to grow more slowly among those with high debt levels
Debt repayment problems have ‘severe consequences’ on consumption, paper finds
Quarterly consumption 30% lower when debt repayment problems arise, research suggests, while recovery after the arrears is smaller than the initial decline
Dudley says US households responding more cautiously to house price growth
New York Fed report finds housing debt has been relatively flat over past few years despite house prices rising steeply over the period; points to higher principal debt repayments
Research compares borrower-based macro-pru tools
Debt service-to-income caps generate ‘less pronounced macro feedback’ in the short term than loan-to-value limits, working paper finds
Bank recapitalisation is a ‘powerful’ policy instrument, paper suggests
Economy likely to remain in an ‘anaemic state’ until certain conditions met, research says; bank recapitalisation more effective than fiscal expansion in encouraging aggregate demand
Research considers impact of fiscal consolidation on debt-to-GDP ratio
Working paper published by ECB finds fiscal consolidation conducted through a revenue increase, rather than a spending cut, is ‘self-defeating austerity’
BoE’s Cunliffe: UK may be close to debt sustainability limit
Deputy governor says analysis of recent UK credit cycle suggests rises in debt may leave the economy vulnerable; Cunliffe would consider action if debt-to-GDP ratio rises
Riksbank pushes for FSA to gain stronger tools amid delays
Amortisation requirement looks set to enter force in June, but more powerful tools for Swedish FSA may be delayed; government says negotiations take time, and it fears triggering crisis
Low income households ‘highly’ vulnerable to changes in interest rates, paper shows
Banks and regulators require the use of ‘richer’ information to understand consumer debt, a Central Bank of Chile paper finds; new model would help evaluate economic policies
Jamaican officials point to management plans as debt falls
Jamaica set to reduce debt-to-GDP ratio to 125% in pursuit of 90% target; officials from central bank and debt management branch welcome changes in past year
Dutch paper explores price level dispersion
‘Idiosyncratic shocks’ have greater impact on price level dispersion within the eurozone than in the US, authors say
Bank of England's Vlieghe wants more nuanced approach to monetary policy
Bank of England policy-maker says high levels of debt, ageing population and distribution of income combine to make him ‘patient' about rate hike; questions modelling based on representative agents
Kaplan urges careful consideration of volatility
Federal Reserve Bank of Dallas president Robert Kaplan warns of the potential for further market volatility as normalisation continues
Czech Republic chooses not to set target date for euro adoption
Government decision follows central bank and ministry of finance advice; authorities cite need for greater real economic convergence as a ‘main barrier’ to adoption