Financial crisis
‘Unofficial dollarisation’ raises significant stability risks, ECB study finds
Emerging markets with large holdings of ‘hard’ currency assets and liabilities are exposed to substantial stability risks and policy failure, finds ECB study
IMF paper studies effects of macro-prudential policy
Working paper studies effectiveness of macro-prudential policy in an environment of financial innovation; identifies various factors determining policy outcomes
IMF paper studies reduced financial interconnectedness
Working paper examines impact of deleveraging by financial institutions through declines in collateral use; identifies issue that may cause unintended consequences
IMF paper models sovereign and bank feedback loops
Working paper develops model of interdependence of bank and fiscal solvency; finds relationship can lead to a ‘self-fulfilling crisis’
Bank of Thailand governor warns of ‘known unknowns’
Governor of Bank of Thailand, Prasarn Trairatvorakul, weighs impact of global economic and regulatory developments on Asia; says changes represent a ‘paradigm shift’
Regulators set out margining proposals for OTC derivatives
Consultative report details planned margining requirements for non-centrally cleared derivatives; presents seven principles for determining margins
ECB’s Asmussen stresses importance of central bank communication
ECB board member Jörg Asmussen underscores need for effective communication by central banks; says crisis has ‘shifted the goalposts’
IMF paper analyses US capital flows and debt
Fund working paper develops model of international capital flows and resulting impact on debt dynamics; finds equity and FDI returns allowed US to maintain high debt levels
Diamond clarifies note on conversation with BoE deputy
Former chief executive of Barclays explains note written after conversation with Paul Tucker; gives evidence on same day Tucker makes public request for hearing with Treasury Select Committee
IMF issues updates on German and US economies
International Monetary Fund notes Germany’s “remarkable” economic performance; warns US over “tepid” recovery
Noyer sets out eurozone financial union necessities
Governor of the Banque de France identifies three main powers needed to ensure eurozone financial union; “massive firepower” needed by bank emergency fund
IMF paper studies debt sustainability in low-income countries
Working paper considers effect of financial crisis on debt sustainability in low-income countries; finds short-term impact but a return to sustainable levels in the longer run
Euro group agrees on single banking supervisory mechanism
Umbrella supervision body 'run by ECB' to be established; exhausted EC president refuses to discuss details of plan to directly recapitalise European banks
Reserve Bank of New Zealand examines bank funding
Quarterly bulletin article considers relationship between official cash rate and cost of bank funding; finds funding costs relative to the OCR changed following financial crisis
IMF paper examines crisis indicators
Working paper assesses the effectiveness of various indicators in predicting financial crises; finds that leverage is ineffective and instead use of poor quality collateral is “critical link”
Central Bank of Cyprus supports bailout request
Central bank recognises need for European help to recapitalise Cypriot banks; commits to supporting efforts to finalise the bailout
EC staff to ‘step up’ work on Spanish banks assessment
Olli Rehn calls for staff to speed up assessment of Spanish banking sector; downgrade rumours swirl after official government request for financial assistance from the Eurogroup
IMF highlights problems with overreaction to financial crises
Working paper studies data on banking crises; finds that a strong macroeconomic response to a banking crisis may reduce incentive for banks to restructure
BoE paper studies impact of Lehman’s collapse on payments
Bank of England working paper studies the effect of the Lehman Brothers collapse on wholesale payment patterns; finds slower payments and increase in risk following the default
IMF paper assesses impact of financial sector size
Working paper examines the effect on growth of varying sizes of financial sectors; finds that above a certain threshold, financial sectors have a negative impact on growth
ECB paper models endogenous credit risk
Working paper discusses models of credit risk; authors argue that “feedback effects” have major implications for regulatory reform
Czech National Bank reports resilient financial system
Financial Stability Report finds Czech financial sector well prepared for unfavourable external developments; says growth likely to stagnate in 2012
UK ‘catching up’ on collateral eligibility, say CBP panellists
Central Banking ON AIR event sees discussion of central bank decisions to extend collateral eligibility; panellists stress diversification should be executed with care in non-crisis times
IMF paper builds dynamic model of systemic risk
Working paper develops dynamic model of risk based on combination of underlying risk factors; finds this provides better warning signals than models with non-dynamic thresholds