Risk
Japanese survey throws light on financial education problem
First large-scale study of financial literacy shows many people have poor understanding, contributing to higher loss aversion, herding behaviour and other problems
IMF: rise of non-banks is reshaping policy transmission
Pass-through of monetary policy grows as non-banks become more important, but changed transmission mechanism demands better data to understand risk-taking channel
IMF's systemic risk findings called into question
Financial connectedness measure “not usually sharply aligned with systemic risk”, says Darrell Duffie
Chinese financial spillovers to Asia-Pacific on the rise – BIS paper
Working paper finds Chinese equity markets now have almost as much of an impact on Asia-Pacific as the US, though the effects differ in stressed and placid times
Sarb governor stresses need for cooperative approach against cyber risk
New legislation will give central bank power over financial stability; now is the time for financial industry to become “proactive” in fostering “healthier” cyber culture, says Kganyago
Korea needs right kind of banking competition – quarterly bulletin
Competition can harm welfare if it is focused on gaining market share through a price war, authors say; Korean system may benefit from greater diversity
BoE researchers outline risk of collateral collapse
In stress periods, collateral chains could break, paper in forthcoming Journal of Financial Market Infrastructure warns
Proposal for calculating capital requirements for concentration risk
Working paper warns “inadequate reflection” on concentration risk can lead to banks holding too little capital; proposes technique for calculating appropriate levels
Bank of Israel aims to boost construction credit with new regulation
Banking supervision department proposes reclassifying credit risk in wake of financial institution’s efforts to insure against it; suggests it would free up $2.6bn of finance
MAS adds cloud computing to guidelines on outsourcing risk management
Cloud services officially acknowledged in latest outsourcing guidelines as more financial institutions adopt the practice; despite improved security, banks should still be aware of the risks
EBA publishes final draft of IRB assessment methodology
The EBA publishes the final draft standards by which European regulators will assess banks’ compliance with the rules on using internal models to judge capital adequacy
Riksbank survey flags concerns on market functioning
Market participants fear effect of low interest rates and high debt could create largest impact, although they view geopolitical and emerging market issues as the most likely to be realised
Embracing digital tech could reduce systemic importance of banks – RBNZ article
Bulletin discusses risks surrounding digital disruption in the banking sector; if unregulated entities provide "significant portion" of banking services, new risks may emerge
HKMA prepares cyber security ‘fortification’
Monetary authority seeks to build a framework for assessing cyber risks as well as providing training and building infrastructure for sharing “threat intelligence”
RBI moves to curb concentrated credit risk
Central bank hopes new prudential measures will reduce banks’ “very high” exposures to large corporations and encourage firms to turn to capital markets for funding
Optimising official reserve portfolios
Bank reserve managers require a modern, flexible approach to achieving the investment trinity of safety, liquidity and return. This strategy is typified by BlackRock’s model multi-asset portfolios, which use indexes as building blocks, maintain high…
Sarb reserve management policy sheds light on tranches
South African Reserve Bank publishes investment policy governing allocation of FX and gold; splits reserves into range of tranches and sub-tranches
Basel Committee opts for local discretion on rate risk
Committee abandons attempt to create common global standard for interest rate risk, opting instead to leave discretion with banks and supervisors in final standards
World needs ‘less and better’ finance, Bundesbank board member says
Regulators must resist political pressure to water down implementation of reforms; Basel III must increase capital requirements for high-risk portfolios, Bundesbank executive board member says
Skingsley sees turning point for Riksbank policy
Immediate threat is fading, enabling the central bank to focus more on longer-term risks, deputy governor says
FRTB data standards seen as threat to emerging markets
Need for "real" prices will limit use of models, increasing capital burden
Bank of Israel establishes banking innovation division
New section of banking supervision department formed to help foster innovation but contain the accompanying risks; Dudi Bavli chosen to head division
Bank capital matters for risk-taking channel of monetary policy, Norges Bank paper finds
Less capitalised Norwegian banks are more likely to extend credit to risky firms in response to a cut in the policy rate, author finds
RBNZ’s Gordon offers advice on building a sound risk management system
Former risk head at RBNZ offers advice on what should be the focus for central banks looking to build an enterprise risk management system