Financial Stability
ECB paper explores capital-based macroprudential measures
Dampened credit and asset price growth can have a “sizable” impact on predicted crisis probabilities, authors note; they present an early warning global autoregressive model
NPLs down overall but progress is uneven – Kuwaiti report
Kuwaiti banks’ non-performing loans fell in aggregate in 2015 though they are on the rise in the household sector; banks well capitalised but asset growth slowing, financial stability report finds
CPMI digs into data on correspondent banking pull-back
Study based on Swift data and banking interviews sheds light on uneven pace of decline in correspondent banking; CPMI offers recommendations to help reverse direction of travel
Norges Bank questions contingency plans for cash distribution
Report warns Norwegian banks’ back-up plans “may prove inadequate” in a crisis; both the central bank and financial supervisory authority in communication with the finance ministry
ECB paper presents ‘news’ and ‘noise’ model of US housing market
A new model of the US property market differentiates between “news and noise shocks”; latter can have significant effects and policy-makers should consider pro-cyclical property taxes, author says
Swift brings in external firms to support security work
UK firm BAE Systems and Dutch company Fox-IT will be part of effort to strengthen cyber security; Swift says information-sharing initiative has “grown significantly” since launch
Slowdown in Brics increasingly down to domestic factors – Mminele
Sarb deputy says structural reform needed to foster global growth; sees role of domestic factors affecting Brics growth increasing since 2013
IMF staff propose additional reforms to Italian banking sector
Directors at the fund “commend” the Italian authorities for reforms so far, while staff suggest a range of additional measures to tackle issues around resolution and NPLs
Ukraine hands more regulatory powers to central bank
Ukraine’s central bank welcomes a belated vote for key financial reform; the National Bank of Ukraine will now have powers over the country's insurance sector, which observers say is in a “questionable” state
EBA says number of women in senior positions at European banks is ‘very low’
EBA says most European banks lack diversity policies for senior management despite legal requirements; senior managers are more diverse by age but not by “geographical provenance”
Banks coping with tougher environment – Omani stress tests
Central bank’s latest financial stability report says banks are well placed to weather shocks, as it builds regulatory capabilities and early warning indicators
Basel Committee scales back risk weights in revised securitisation standard
Tighter definition of what counts as a “simple, transparent and comparable” securitisation gives room to allow “modest” reduction in capital requirements, committee says
Constâncio calls for ‘deep reflection’ on public support for banks
ECB vice-president Vítor Constâncio suggests European Union should consider relaxing its rules on state aid to banks; cites IMF concerns and example of US bail-out
Model-based regulation in Germany had unintended consequences, researchers say
The move to model-based banking regulation in Germany studied in working paper; loan default and loss rates rose for loans created under new regime
EBA survey: Most European banks did not see Brexit as risk
European banks anticipated increasing most kinds of loan activity, results of an EBA questionnaire show; few bankers saw ‘Brexit’ as a major source of risk
Sarb faces tough job amid ‘sobering’ outlook, IMF warns
Capital flows, sovereign rating and financial sector health form dangerous links, fund says, though South African authorities stress they have made preparations
RBNZ weighs tighter macroprudential policy and wider toolkit
Reserve Bank of New Zealand considers use of debt-to-income ratios to calm housing market, consultation with banks to occur before implementation
Sarb deputy sees tail risks from Brexit but expects storm to calm
Daniel Mminele sees tail risk coming from asset liquidation by UK corporates and investment funds, but if clear communication is given, the ‘storm is likely to calm’
European banks suffer as regulators ban Monte dei Paschi short-selling
Banks hit by further shockwaves from UK’s vote to leave EU, while European authorities scramble to shore up crumbling Italian bank Monte dei Paschi di Siena
Italian banking system sees first major test of European bail-in regime
Leaked letter from ECB triggers sell-off in major Italian commercial bank; European and Italian authorities still fail to reach agreement on resolving NPL problems
Colombian paper explores forex intervention announcements
In present of imperfect credibility it is not possible for central banks to achieve ‘desired’ exchange rate level without changing international reserve position, paper finds
Nigerian regulator overhauls management of major local bank
Nigeria’s central bank enforced a change of management in a domestically systemically important bank due to liquidity and capital adequacy concerns; finance veterans appointed to top roles
Report calls for co-operation in appraising macroprudential tools
Research led by Anne Le Lorier for Basel Committee on the Global Financial System says governance arrangements should promote “wider co-operation”
Swift paper warns not to transplant Kenya’s inclusion strategy
Harvard Kennedy School lecturer explores the factors behind M-Pesa’s success in Kenya, and warns against simply copying the country’s approach to inclusion elsewhere