Debt
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
Parliament keeps door open to monetary financing in Ghana
Parliament approves bill that removes government representative from central bank board, but government would still be able to borrow from central bank to finance deficit; IMF to discuss implications
European banks’ structure helps drive dollar-denominated debt issuance – paper
Bank of Spain paper examines the most prolific dollar-denominated debt issuers among European banks, finding issuance is driven by range of factors, including desire to hedge
RBNZ weighs tighter macroprudential policy and wider toolkit
Reserve Bank of New Zealand considers use of debt-to-income ratios to calm housing market, consultation with banks to occur before implementation
Lagarde encouraged Paris Club to broaden membership as South Korea joins
South Korea becomes 21st member of creditor country group; speaking at its 60th anniversary Lagarde stresses the value of expanding further
Asian central banks shift bond funds towards local currency debt
Eleven East Asia-Pacific central banks agree to close fund for buying US dollar debt issued in the region and invest the money in local currency debt instead
DMO will not change course after Brexit vote
Head of the UK Debt Management Office stresses principles of predictability and transparency ahead of gilt auctions next week; market reaction to S&P’s downgrade was “extremely muted”
Sweden’s FI gauges impact of debt-to-income limit
Financial regulator tries to attach values to the growth and stability impact of DTI limits, one potential tool for tackling rising household indebtedness