Risk
Big data sheds light on income risk – Minneapolis Fed research
Better sources of data have allowed economists to gain new insights into how income risk changes over the cycle, says researcher
PRA urges insurers to act on ‘silent cyber’ risks
Watchdog urges underwriters to embrace cross-policy stress-testing to identify exposure to claims from non-specified risks
Irish supervisor warns of return to light-touch regulation
Some banks’ handling of liquidity issues is concerning, says Sibley
Russian central bank slams ruling in €1bn Sberbank swaps case
Lawyers say shock court judgement in ruble options dispute “puts hundreds of contracts at risk”
FSB builds analytical framework to tackle fintech risks
Report defines “technology neutral” method of classifying fintech firms, helping to pin down potential costs and benefits
BoE ups capital buffers as consumer credit outstrips income
“Pockets of risk” including effects of Brexit negotiations and car finance warrant attention, BoE says, though it stresses overall stability threats are at “normal” levels
Bank of Israel warns banks are exposed to vehicle finance
Central bank warns exposures are “not negligible” and continue to grow, although they do not yet present a systemic risk
Exogenous constraints affected asset purchase programme, Irish paper says
Research letter looks at impact of extended scheme
BIS paper links debt service lag to impact on real economy
Authors find the lag between borrowing and peak debt service helps explain why debt booms reduce future output and increase the probability of a crisis
OCC warns on cyber risks from subpar patches at US banks
Regulator says banks have good track record overall, but exams reveal weaknesses
IMF urges ‘no favour, no obstacle’ approach to Islamic banking
Report urges countries to adopt more consistent prudential standards for Islamic banks and strengthen liquidity management frameworks
BoE paper tackles multidimensional tail risk forecasting
Researchers set out method that can capture the multiple sources of risk feeding into a tail event and help understand how risks interact
Irish paper examines why banks set collateral conditions
Ex-ante risk and loan size are key factors, researchers say
Risk weightings should reflect borrowing constraints, paper argues
Finnish paper criticises principle behind regulations on capital requirements
Growth of shadow banks led by risky investment vehicles – FSB
Shadow banks continue to gain ground, with those offering liquidity and maturity transformation showing some of the fastest growth
‘Ambitious’ capital markets union necessary – Constâncio
Better eurozone capital markets would smooth regional shocks, ECB vice-president says
Fed authors construct ‘financial stability sentiment’ index
Index derives sentiment from central bank financial stability reports, finding a drop in sentiment tends to precede a “significant deterioration” of financial indicators
Bank Negara Malaysia invites public to submit ‘fintech hacks'
Malaysia’s central bank extends research into fintech through public project; hopes regulatory sandbox will produce “game-changing results”
IMF Paris explosion leaves one injured
Letter bomb explodes at the IMF headquarters in Paris, less than a day after an explosive device was sent to the German finance minister; Lagarde condemns the “cowardly act”
Initiative of the year: Saudi Arabian Monetary Authority’s compliance standards activation project
Sama has made a strong start in its efforts to develop an enterprise-wide risk management culture
Reserve manager of the year: Bank of Israel
Israel’s central bank has made breakthroughs in its sensitivity analysis of near-optimal portfolios, as well as making notable gains from its diversification strategy
Vickers renews criticism of BoE systemic buffer
Blanket 3% buffer would better support ring-fencing, Vickers tells Tyrie
Hedging demand can cause covered interest parity violations – BIS paper
US dollar forward hedging demand can cause covered interest parity to fail even when markets are calm, authors say, helping explain this post-2012 anomaly
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