Liquidity
BIS data sheds light on complex shift in global liquidity
There are signs global liquidity might be going into reverse for emerging markets; digging into the data shows situation is more complicated than aggregate figures imply
Caruana marks out dangerous nexus between debt, oil and the US dollar
BIS chief points to interactions of dollar borrowing by emerging markets, US rate hikes and the oil price, as latest data suggests world may be balanced on the edge of a drop in global liquidity
Illiquidity, concentrated bond holding raise volatility – paper
The volatility of financial market price shocks in the Bund and taper tantrums was aggravated by illiquidity and concentrated holdings of bonds, working paper finds
Distribution of liquidity can impact monetary policy transmission, paper finds
Research published by Norges Bank encourages central banks to pay attention to the distribution of liquidity in the interbank market, as well as its overall level
Kosovo’s ELA rules are ‘major improvement’, say IMF staff
Central Bank of the Republic of Kosovo adopts regulation setting out the conditions for emergency fund provision; staff at IMF welcome the additional ‘detail and rigour’
Weidmann says clearer liability would strengthen eurozone
Bundesbank chief says important element of fixing the eurozone’s ills is reinstating the ‘principle of liability’, instead of resorting to bailouts
Regulators need better grasp of electronic trading, BIS committee says
Rapid growth of electronic trading in fixed-income markets demands more sophisticated regulatory analysis, Markets Committee says; new risks may be developing
Paper finds positive impact from Dodd-Frank swap rules
Compulsory trading via swap execution facilities has boosted liquidity and cut trading costs in the market for interest rate swaps, working paper published by BoE finds
Colombian paper finds ‘negligible’ contagion effects
Contagion in the interbank market poses no real threat to the Colombian financial system, working paper notes; examines link between bank failure and liquidity
PBoC injects liquidity following market rout
Central bank intervenes with $20bn reverse repo operation as markets slump, restoring a semblance of calm
Norges Bank paper seeks to improve modelling of money
Researchers aim to capture the role of money as both a medium of exchange and a liquid asset, with the resulting equilibrium underscoring the need for a liquidity coverage ratio
Malawi stress test shows three banks fall below Tier 1 requirement under minor credit shock
Latest stress tests show improved resilience but credit shocks remain greatest risk, Malawi’s latest financial stability report reveals
Rohde says resolution offers ‘genuine alternative’ to granting emergency liquidity
With the ability to recover or resolve firms in an orderly fashion, the National Bank of Denmark finds itself with an alternative to granting emergency liquidity assistance, governor says
Pakistan central bank ‘implicitly’ introduced new policy framework ahead of time
State Bank of Pakistan reveals it ‘implicitly’ introduced a new framework for monetary policy before it was officially announced, to avoid ‘unnecessary volatility’ in money market
Ugandan social security fund’s outside investments performing well, CIO says
Gerald Kasaato says investments in Kenya are performing well; greater use of external managers could be ‘very beneficial’ if restriction to East Africa investment is expanded
Peer-monitoring can help identify ‘distressed’ financial institutions, paper says
Colombian working paper presents early warning system which looks at the liquidity price market participants charge one another
Review sees 'fault lines' emerging in global asset management ecosystem
Monetary Authority of Singapore review urges financial industry to remain ‘vigilant’ against emerging risks
PBoC and ECB announce ‘successful’ swap line tests
Tests in April and November provided ‘symbolic amounts’ of euro and renminbi liquidity, involving a ‘limited number’ of counterparties
ECB flags threat of ‘abrupt reversal’ in risk premia
Latest review identifies two ‘medium-level systemic risks’ to the eurozone's financial stability, weak profitability prospects for banks and a potential ‘sharp adjustment’ in risk premia
Changing funding patterns cut both ways for emerging markets, central bankers say
Emerging markets are moving towards greater use of capital market funding, but while this could bring benefits for monetary policy, it also throws up a host of stability risks
Decisions on ELA could be shifted to ECB
Mario Draghi says ‘intricate’ framework for providing emergency liquidity assistance could be reviewed in light of banking union; potential for decisions to become ‘more European’
Open Forum: Market maker of last resort presents host of issues for central banks
Axel Weber and Minouche Shafik point to perils for central banks looking to step into the role of market maker during a liquidity crisis
Jamaica will require banks to have recovery plans to access emergency liquidity
Banks must provide recovery plans under new emergency liquidity facility, Jamaican bank governor says
BoE paper maps UK bank response to 2008 liquidity shock
Authors contribute to international study of banking networks, finding UK banks that grew faster pre-crisis responded more sharply to the liquidity shock in 2008