Debt
Growth in offshore funding is creating risks – RBNZ
Financial stability report notes growing reliance of banks on offshore funding sources could become a problem; housing market risks require new prudential tools
NPLs ‘must’ rise during downturns – MAS’s Menon
If NPLs failed to rise during “difficult times”, that would be a sign banks are not doing their job right, MAS chief says
IMF’s Werner: Latin America must keep debt under control
Western hemisphere chief says there are some concerning signs on debt, although the risk of a systemic crisis is low; region well placed to weather Fed shock
Tackling the ‘human agency’ problem
Central banks are readying their communication strategies to mitigate a populist backlash against their post-crisis policies
US household debt surpasses pre-crisis peak
Household debt exceeds 2008 level for first time, driven in part by auto loans and student debt
Croatia’s Vujčić on tackling NPLs and home-host supervision
Croatian National Bank governor Boris Vujčić explains why dealing firmly with NPLs via a ‘provisioning clock’ does not choke growth while detailing the benefits of ‘home-host’ dialogues, such as the Vienna Initiative
IMF urges new macro-pru tools for RBNZ to tackle housing market
Debt-to-income tools would complement existing macro-prudential toolkit and help rein in household credit, fund says; RBNZ in pursuit of such powers but decision must come from government
Zimbabwe central bank actions like ‘putting lipstick on a frog’
Economic crisis is reminiscent of meltdown preceding dollarisation in 2008, but authorities have fewer options this time
China’s NPL problem has ‘stabilised’ – PBoC’s Yi
Deputy governor says non-performing loans are “pretty much stabilised” and capital outflow pressures have declined
Reserve managers see politics shaping currency allocations
European political uncertainty weakens confidence in euro, with sterling pressured by Brexit; dollar’s popularity resurgent, despite Trump’s economic policies
Sarb will take ‘defensive posture’ to debt downgrade, says Ballim
South Africa’s central bank is unlikely to respond to country’s junk debt status unless rand volatility starts to affect prices; Fitch joins S&P in downgrading country’s sovereign debt
Paraguay’s Valdovinos: bond issuance ‘not all about the money’
$500 million issuance was six-times oversubscribed, but the Paraguayan governor says its success lies in the message it sends to investors overseas
Build-up of public debt causes longer recessions for EMs – paper
“Less supportive” fiscal policy makes emerging markets more prone to problems associated with accumulation of public debt; authors highlight the importance of fiscal buffers
Positive shock could still trip up advanced economies – Blanchard
Former IMF chief economist warns high debt levels could interact with positive shocks to cause problems; backs Rogoff’s plan for a cashless society
Denmark pays off all foreign debt for first time in 183 years
Government pays off its last foreign currency loan, leaving it free of foreign debt for the first time since at least 1834
New factors driving EM corporate leverage – RBI paper
Changed macroeconomic backdrop has taken over from firm-specific factors in driving the build-up of corporate leverage in emerging markets, RBI economist finds
IMF stays tough on debt relief as it prepares to return to Greece
Maurice Obstfeld and other top officials stress the fund’s demands on debt sustainability; mission to return to Greece next week
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