Liquidity
Will the dollar remain the world’s reserve currency?
Bank of Russia sanctions are unlikely to undermine the US dollar’s central role in reserve portfolios. But a relative decline in US economic weight and technological innovation are benefiting other currencies
Tensions flare between policy-makers over US Treasury reform
SEC’s proposed rule-changes have “ruffled feathers” at Treasury department
FedNow scheduled for mid-2023 launch
Bowman and Brainard see CBDC substitution and cloud technology advantages
Hungary raises interest rate to 11.75%
Central bank official cites inflation and dispute over rule of law
Chile renews IMF flexible credit line as risks grow
Months after ending the previous facility, Chile has reactivated it
Gontareva on Ukraine’s funding, NBU policy and reconstruction
Former NBU governor Valeria Gontareva speaks about donor funding shortfalls, NBU policy and financial stability challenges, Nabuillina and the seizing of Russian assets, and post-conflict rebuilding and modernisation
US Treasury market preps for reporting showdown
Sifma expected to attack transparency plans; prop traders brand objections “crazy”
Book notes: The Fed unbound, by Lev Menand
Instead of the Fed expanding its tasks to meet shadow banking needs, this book calls for charter-like oversight of NBFIs
Philippine central bank raises policy rates by 50bp
The BSP revises upwards average inflation for 2022 to 5.4% from 5%
Fed paper explores information problems in financial panics
Tight liquidity can cause investors’ beliefs to become “systematically divorced from fundamentals”
‘Very little support’ for a US Treasury clearing mandate – Isda
Dealers and clients prefer carrot to stick in efforts to improve Treasury market liquidity
PBoC vows not to flood economy with liquidity
Chinese central bank warns of rising structural inflation pressures
How central bank mistakes after 2019 led to inflation
Central banks must acknowledge their own mistakes and outline concrete steps to restore the public’s confidence in their ability to ensure price stability, write Graeme Wheeler and Bryce Wilkinson*
The case for restoring the role of monetary aggregates
Tim Congdon argues that a surge in money supply in response to Covid-19 sparked heightened inflation and central banks need to refocus their attention on monetary aggregates
PBoC vows to provide more support for faltering economy
The central bank has not commented on a reported large-scale bail-out plan for developers
Inflation offers route to unconventional policy exit
Asset purchases and negative rates can be reversed, but Fed/ECB policy divergence raises major risks
Monetary Policy Benchmarks 2022 report – executive summary
Benchmarking data sheds light on some of the key aspects of central bank operating frameworks
Bank of Ghana denies rationing FX
Bloomberg made claim in June article citing swelling fuel import bills
Why fears about quantitative tightening are overblown
The benefits of collateral availability may outweigh the monetary liquidity withdrawn by central banks
Rethinking regulation of the modern financial system
Bank of Italy’s Maurizio Trapanese writes that rules need to address uncertainty as well as measurable risks, entity types as well as activities, and should not be overly complex
BoE’s Saporta floats idea of countercyclical liquidity buffer
Design of Basel III rules may be causing banks to hoard capital and liquidity, official says
Knot says financial stability risks are growing
FSB chair says emerging economies are particularly vulnerable as financial conditions tighten
BoE flags global risks in ‘opaque’ commodities market
LME disruption reveals “highly leveraged” participants within financial system
Corridor system used by most central banks to set rates
But methods vary widely depending on policy target and tools such as quantitative easing