Emerging markets
Emerging markets close in on Basel III completion
Latest Basel Committee progress report shows most jurisdictions have moved significantly closer to full Basel III implementation, with emerging markets making particularly rapid progress
Cross-border claims end upward rise, BIS data shows
Latest international banking statistics show global cross-border claims in slight decline after three consecutive quarters on the rise; claims on non-banks rise strongly however
Fed’s Claessens challenges banking Balkanisation theories
Theories emphasising the collapse in cross-border credit since the financial crisis fail to capture a ‘secular trend’ towards emerging markets, says Fed senior adviser
‘Unbanked’ numbers fall 20%, World Bank study finds
First update to the Global Findex database finds 700 million adults worldwide became new account holders since 2011, but two billion remain without access to basic financial services
Financial stability risks on the rise, IMF warns
Global financial stability report warns risks have increased and ‘rotated’ in the past six months, with emerging markets now more vulnerable
IMF paper proposes refinements to potential output estimation
Researchers use an adapted ‘multivariate filter’ that aims to improve upon other methods of estimating potential output, although they admit the result is probably only the ‘least worst’ option
IMF calls for demand boost to avoid 'new reality' of lower potential
IMF World Economic Outlook contains echoes of Larry Summers' view that the world's economies need shock therapy to avoid secular stagnation
FSB adds new emerging market members
Five new institutions join Financial Stability Board as part of efforts to improve emerging market representation; Glenn Stevens takes over as standing committee chair from Agustín Carstens
BIS paper weighs effectiveness of FX intervention strategies
Intervention to reduce volatility or to lean against exchange rate movements each come with distinct costs and benefits, working paper finds
CNB paper questions strength of ‘border effect’
Studies using outdated methodologies overestimate the impact of national borders on trade, authors say; effect is stronger in emerging markets
RBA research suggests options for IMF to overcome governance issues
Analysis of constraints on IMF actions suggests seeking backup from other international organisations could add to political clout, but quota reform remains a problem
Book notes: Emerging Africa, by Kingsley Moghalu
Sub-Saharan Africa is no basket case, but neither is it poised to follow China and India on their meteoric economic rise, Kingsley Moghalu argues in his forthright book
Ukrainian hryvnia drops 30% after central bank action
Currency in freefall after National Bank of Ukraine scraps subsidised forex auctions and simultaneously increases its key discount rate by 550bp
Basel Committee: Microfinance firms may far exceed supervisory capacity
Some banking supervisors may be struggling to cope with the vast number of small firms they are expected to oversee, finds a survey of the interaction between financial inclusion and regulation
Obstfeld warns emerging markets face dual trilemmas
BIS working paper dissects emerging markets’ ability to resist monetary policy spill-overs, finding the demands of monetary and financial trilemmas make self-defence difficult or impossible
Capital controls may do more harm than good: NBER paper
Working paper attempts to gauge the adverse effects of imposing capital controls, including segmented financial markets, more expensive capital, and reduced investment
World Bank research sees value in ‘acyclical’ remittances
Remittance flows show little correlation with the business cycle and therefore can play an important role in allowing consumption smoothing
BIS paper finds US spillovers impact through long-term rates
Researchers show US monetary policy spills over into Asian economies mainly through long-term interest rates and suggest policy options
Optimal policy changes as financial inclusion rises, BIS paper finds
Working paper presents evidence that both output volatility and inflation volatility fall as financial inclusion rises, but monetary policy will optimally lean more towards controlling prices
BIS paper spots correlations in capital control effects
Study of emerging market capital controls finds bonds flow into other regional countries if one loosens its controls, but the effect is weak when countries tighten
Bank for International Settlements sees danger lurking beneath exuberant markets
Recent rapid 'flip-flopping' by markets from risk-on to risk-off and back reveals fragility hidden beneath buoyant asset prices, and central bank interventions may make the problem worse
Bank of Russia vows to carry out ‘unlimited' interventions to defend ruble
Central bank returns to market less than a month after allowing currency to float; cuts interest rates on forex repos
Ruble's plunge sparks speculation of central bank's return to markets
Biggest daily drop since 1998 presages next week's rate hike, say analysts; ruble surpasses Argentine peso as worst performing emerging market currency of 2014
Central Bank of Nigeria raises stakes with rate hike
Bank loosens grip on falling naira but governor ‘committed to stable exchange rate'; warns drop in oil price is permanent and depreciation could continue