Financial Stability
Irish central bank announces new protections for mortgage borrowers
Variable-rate housing loan borrowers must be informed of cheaper alternative mortgages and have rate rises explained to them by lenders
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
ECB paper compares ability of indicators to predict bond risk premia
Researchers assemble 132 macroeconomic indicators and compare their performance against financial measures as predictors of eurozone countries’ bond risk premia
BoE prize-winning research favours CCB over leaning against the wind
Authors from Lancaster University find credit spread-augmented Taylor rule damages welfare, while a recent BIS paper takes a different analytical approach
Draghi raises possibility of ‘public backstop’ for NPLs
Eurozone recovery is continuing with credit conditions and volumes increasing because of quantitative easing, Draghi says; backstop would be “very useful”, but require Commission support
South Korean governor calls for international swap line expansion
Lee Juyeol welcomes improvements in financial safety nets at both global and regional levels, but suggests more co-operation is needed to ensure they expand further
MasterCard strikes deal to acquire UK’s VocaLink
Agreement to gain controlling stake in retail payments firm will end ownership by major UK banks; regulator to discuss developments
MAS announces ‘firm regulatory actions’ against multiple banks
Monetary Authority of Singapore finds “control failings” at DBS, Standard Chartered and UBS as part of probe into 1MDB funds; US Department of Justice seeking to recover $1bn in assets
RBI deputy praises Indian payment and settlement systems
R Gandhi notes the ever-increasing volume handled by state-of-the-art systems, but stresses the need to ensure they are safe and “result in overall efficiencies”
Andrew Bailey wants well understood FCA mission
The Financial Conduct Authority has statutory objectives and publishes an annual business plan, but there is “not a lot in between”, he says; new chief wants to run the institution “effectively and tightly”
Slovenian bail-in was legal, ECJ rules
Decision to wipe out some subordinated debt before recapitalising Slovenian banks in 2013 was challenged, but court finds it is compatible with EU law
Mortgage interest tax deduction can increase market volatility – DNB paper
Making interest payments on housing loans tax-deductible can raise the debt levels of households and their chances of default, and increase housing market volatility in response to outside shocks
FSB calls for more progress on risk-free reference rates
The FSB says authorities have made progress towards reforming reference rate methodologies, but says they must continue to develop alternatives to the existing main reference rates
Beyond banking: ESRB wants wider macro-prudential toolkit
European Systemic Risk Board argues for providing policy-makers with macro-prudential instruments extending to all forms of credit; lays out specific short- and long-term actions
Tighter mortgage lending rules proposed in New Zealand
Central bank looks to crack down on investor lending with high loan-to-value ratios, while tightening the rules for most loans to owner-occupiers; new tools also on the table
EBA proposes new templates for AT1 issues
EBA releases draft templates for future issuance of Additional Tier 1 capital instruments, highlighting provisions it ‘would recommend avoiding’
Nepal Rastra Bank pushing banks to focus on rural areas – governor
Inclusion is a key part of Nepal’s five-year financial development plan, Chiranjibi Nepal says, and the central bank has plans to encourage banks to spread from urban to rural areas
Turkish central bank steps in to calm markets in wake of coup attempt
Central bank promises banks unlimited liquidity as failed coup sends shockwaves through markets; economists say banking sector is holding up so far but has some vulnerabilities
Bank of Israel opens payment protocol to smaller players
Central bank removes obstacle to new firms looking to enter payments market; also working on ‘payment systems directive’ based on European model and new access standards
Rajan sees bright future on inclusion but stresses work to be done
Outgoing governor of the Reserve Bank of India discusses different approaches open to policy-makers and some common challenges; unified payment interface effective in a ‘few weeks’
Credit, liquidity and collateral versus more intermediation
Richard Heckinger examines the costs and benefits of complex financial market infrastructure regulations, including the impact of new layers of intermediation
Payments forum moots ‘layered’ architecture in UK
New layered strategy would help improve agility of payments infrastructure, consultation suggests; trade association says changes will need to be implemented in line with regulation
EBA says European banking supervision practices are converging but some areas lag
European banking supervisors achieved considerable cross-border convergence in some areas in 2015, but other fields retain differences, EBA report says
MAS’s Menon urges careful calibration of Basel III
Managing director warns against raising capital requirements further for fear of damaging growth; says final calibration must keep SME and trade finance in mind