Systemic risk
Fed’s Yellen sizes up challenges in derivatives reforms
Federal Reserve vice-chair says initial margin requirements for bilateral derivatives trades are necessary but could place a heavy burden on the industry
Robert Pringle’s Viewpoint: Can banking recover its lost reputation?
The UK’s Parliamentary Commission on Banking Standards issued a thoughtful paper in December offering clarity on some of the flaws present in current banking reform
Dealers seek second business conduct reprieve from CFTC
Less than 1% of OTC derivatives counterparties are ready to trade under new business conduct regime. Non-compliant firms may be frozen out of the market, banks warn
Systemic risk in Europe heightened by Target trap
Huge Target liabilities may explain why Germany sanctioned proposals for ECB bond-buying and the formation of the ESM. But this will not solve Europe’s problems
BoE survey shows record-level concern about sovereign risk
Record 94% of respondents cite sovereign risk as a concern in the Bank of England’s latest systemic risk survey, but confidence in the UK financial system and funding markets rises
CCP structure increases systemic risk, says IMF economist
The likely increase in the number of central counterparties will create more 'pockets of risk', says senior economist
RBNZ’s new governor rejects QE and capital controls
Reserve Bank of New Zealand’s Graeme Wheeler sees no need to introduce a ‘desperate’ measure such as quantitative easing in the country; rules out use of capital controls to limit kiwi dollar appreciation
Robert Pringle’s Viewpoint: Fixing banks and regulation
Central bank balance sheets are ballooning due to the failure of banking systems and new rules are unlikely to address the issue. Only a full legal separation of banking activities will do.
Europeans round on IMF as rescue plan takes shape
European policy-makers take on critics at the IMF saying the Fund’s view that matters now are worse in Europe compared with six months ago is flawed; set out a roadmap to eurozone stability
Final rules for D-Sibs published as FSB holds plenary meeting
Financial Stability Board meeting in Tokyo endorses publication of final framework for regulating D-Sibs; principles focus on assessment methodology and higher loss-absorbency requirements
Iosco calls for tighter regulation of money market funds
Recommendations aimed at reducing systemic risk posed by money market funds; report published despite opposition from the US Securities and Exchange Commission
G-Sibs facing ‘a tall order’ in meeting 2016 data deadline, UK regulator warns
The FSA’s Gerald Sampson says large, complex banks may struggle to meet a 2016 deadline for risk data aggregation and reporting standards
Spain’s Restoy highlights ‘demanding’ timetable for single-supervision mechanism
Deputy governor of the Bank of Spain applauds 'well founded' eurozone-wide banking oversight plan; but says schedule for implementing the changes will be tough
RBA paper addresses systemic risk in payments system
Research paper from Reserve Bank of Australia analyses systemic risk in RTGS payment system; evaluates Australia’s liquidity-saving algorithms
MAS chairman calls for shift away from structural reform
The Monetary Authority of Singapore’s Tharman Shanmugaratnam believes there is too much emphasis on structural reform when dealing with systemic risk; calls for a change in culture and supervision
China is entering crisis “danger zone”, says BoJ’s Nishimura
High real estate prices and an aging demographic profile in China are reaching a stage where they could trigger a financial crisis, says Bank of Japan deputy governor Kiyohiko Nishimura
Central Bank of Brazil paper develops systemic risk indicators
Working paper suggests quantitative measures of systemic risk in Brazil that could be used by prudential regulators to determine when to intervene
Banque de France paper highlights risks of financial markets opacity
Researchers find imperfect information on financial intermediaries’ exposures encourages risk-taking; suggest low interest rates and ‘gambling for resurrection’ raise systemic risk
IMF paper estimates social costs imposed by systemic liquidity risk
Working paper develops systemic liquidity risk index to evaluate social cost created by liquidity assistance to financial sector; suggests premium could be imposed on banks to cover cost
FMI resolution report published for consultation
CPSS and Iosco seek comments on new standards for recovery and resolution of financial market infrastructures; discuss how FSB’s work on resolution regimes will be taken into account
BIS calls for European banking union and urgent fiscal reform in developed nations
Urgent fiscal reform and genuine efforts to create a banking union in Europe are vital to breaking the viscous linkage between banking and sovereign stress, says BIS
ESRB encourages cooperation to fight market deterioration
European Systemic Risk Board sets out areas authorities must focus on; Ewald Nowotny announced as newest steering committee member
BoE’s Haldane criticises financial models
Andrew Haldane argues that use of normal distributions in many financial models seriously underestimates risk
BoE paper assesses contingent capital risk
Financial Stability Paper examines contingent capital’s risk to stability when used to fulfil banks’ equity requirements; warns that such capital may cause wider problems