Financial Stability
US dealers wade into European CCP relocation debate
CFTC hearing warns of increased margining costs and a pre-Brexit client onboarding crunch
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
EC approves state aid for two Italian banks
Small regional banks will receive about €5 billion, having avoided resolution
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
Ukrainian central bank calls for $1.5 billion more capital for PrivatBank
National Bank of Ukraine says forensic auditor will report in September
FDIC’s Hoenig on restoring the structural integrity of banks
Commercial banks and payment operations should be ring-fenced within bank holding companies as insured entities with 10% equity. Then, market forces – rather than burdensome regulation – could determine capital for other activities
BIS urges policymakers to exploit ‘window of opportunity’
Financial cycles are getting close to turning in many economies and central banks and governments must make sure they are prepared, the BIS warns in its 2017 annual report
ECB requests powers to regulate CCPs
Brexit heightens concern over importance of central counterparties
Biggest US banks weather severe stress test
Fed report on stress tests applied to 34 bank holding companies indicates largest institutions would remain well capitalised even in a severe shock
Book notes: Can We Avoid Another Financial Crisis?, by Steve Keen
Steve Keen challenges “mainstream” economic thinking in this concise book, hoping to shift the political debate on debt
Fed’s Powell looks for ways to reduce ‘unnecessary burden’ of regulation
Fed governor tells senators he sees room in some aspects of post-crisis reforms to ease the burden on banks, though he stresses the need for “vigilance” against new risks
UK payments regulator unveils competition reforms
Reforms aim to open up UK payments infrastructure to competition, and include move to common messaging standards
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
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
Commission should have power to order CCPs to relocate to EU – Cœuré
The power would be one among many, says ECB executive board member
Europe must learn right lessons from crisis – Olli Rehn
Moral hazard should not dominate policymaking, Finnish board member says
Indonesian deputy Perry on revolutionising monetary and financial policy
Perry Warjiyo explains the central bank’s radical overhaul of monetary policy operations, market deepening and financial inclusion in Indonesia