Macro-prudential policy
HKMA report tells investors to brace for volatile financial cycle
Financial stability report says risks from property market volatility have continued to mount; central bank says macro-prudential policy is doing its job but there could be a sudden price reversal
Nalm 2013: Kotz stresses necessity of exceptional policy despite moral hazard
Former Bundesbank board member says exceptional response by major central banks to the financial crisis was unavoidable as cost of inaction would have been ‘massive’
IMF attempts to sculpt better stress tests
Stress tests are ‘more art than science’ but can be improved and expanded, according to IMF study; cannot be standardised across countries
UK gears up to new era of prudential regulation
The UK will adopt ‘twin peaks’ supervision in April in a bid to restore integrity to its financial system. Chris Jeffery talks to the Bank of England’s Sarah Breeden about the challenges ahead
IMF paper advocates hybrid discretion and rules-based macro-prudential policy
Researchers say discretionary systems can be gamed but rules struggle to properly account for risk; combination of ‘strong baseline’ and time-varying component gives best results
Dutch paper suggests using loan-to-deposit ratio in macroprudential policy
Study says LTD ratio could be a useful tool for regulator to address liquidity risk; suggests counter-cyclical policy to encourage lending in tough times
Central banks need to be wary of ‘new’ monetary policy trends
Policy-makers are reappraising the role of independent central banks pursuing inflation targets. Bernd Braasch1 encourages them to use sound evidence to inform their judgements
Korean paper draws macro-prudential policy lessons from history of the 2000s
Working paper draws on Korea's experience of macro-prudential policies over the last decade, which failed to shield it from the impact of the global crisis
Chan blames QE as HKMA raises macro-prudential defences
HKMA tightens macro-prudential rules applied to mortgage lending in face of emerging property market risks; Norman Chan says quantitative easing has created ‘extremely unusual’ conditions
BoJ paper finds asymmetric macroprudential growth impacts
Research suggests macroprudential policy is good at cooling the economy but less effective at heating it, while the growth impact differs between tools
Dombret wary of conflicts between regulatory measures
Bundesbank executive board member Dombret urges the consistent and timely implementation of international regulation on a national level
South Africa moves toward UK-style ‘twin peaks’ regulators
Sarb issues consultative document on introduction of prudential and conduct regulators similar to plans in the UK; IMF study encounters problems in testing efficacy of macro-prudential policy
NZ deputy wary of using risk weights to shackle house prices
Grant Spencer says other macro-prudential tools may be more appropriate to address the build-up of asset bubbles
Swedish deputy insists on stronger macro-prudential framework
Kerstin af Jochnick wants clearer macro-prudential mandate and decision-making structure; says recent committee proposals are not the answer
Macro-prudential policy can prevent euro area imbalances, says Polish paper
National Bank of Poland study finds macro-prudential instruments can prevent periphery and core imbalances emerging in the euro area, but only if applied regionally
Macro-prudential policy needs cross-border co-ordination, says ECB paper
Legal working paper says co-ordination is a ‘daunting challenge’ for central banks and other national authorities involved in macro-prudential oversight
Bank of Spain executives hit back at negligence claims
Executive commission rebuts claims made in a leaked internal report that the central bank’s supervisory department tended to ‘look the other way’ when there were signs of criminal activity
Banque de France paper tests policy interactions
Researchers examine optimal configurations of monetary and macro-prudential policy under different conditions; find monetary policy cannot affect financial stability in some cases
CGFS report sets out framework for macro-prudential policy
Basel-based Committee on the Global Financial System (CGFS) report guides central banks on how macro-prudential instruments should be chosen, combined and employed
BoE warns UK banks on ‘overstated’ capital
Financial Stability Report says banks’ reported capital may fall short of actual buffer; FSA urged to ensure banks take action
Ireland’s Elderfield sees tension between micro and macro objectives
Deputy governor of the Central Bank of Ireland says micro-prudential emphasis on ‘more and faster’ capital requirements could fuel pro-cyclicality and harm debt sustainability
Norges Bank urges banks to continue accumulating capital
Financial stability report says although financial market conditions have improved, banks should strengthen their capital positions; supports supplementary capital requirements for Norwegian banks
ECB paper highlights locational importance of asset bubbles
Working paper finds asset bubbles have differing effects on the economy depending on whether they are located with banks or ordinary savers, with implications for macro-prudential policy
BIS’s Caruana warns of low interest rates risk
Jaime Caruana says low interest rates have created a ‘first-mover disadvantage’ that prevents rates rising and could fuel financial instability