Financial Stability
Polish central bank warns loan proposals could pose ‘significant risk’
Poland’s central bank criticises some elements of proposals for restructuring Swiss franc-denominated loans; also argues incoming banking tax will have ‘negative consequences’
No room for mediocrity, Kenya governor warns banks
Patrick Njoroge tells bankers there is ‘only the thinnest of margins’ for error; each customer should be treated as if they were ‘the only customer in the world’
ECB chooses SIA-Colt partnership for T2S connection
European Central Bank confirms it will use SIA and Colt's 'value-added network services' to connect to Target2-securities
Fischer raises concern over ‘stigma’ around Fed loans
Fed vice-chair Stanley Fischer warns new reporting requirements in the Dodd-Frank Act will “likely add to the challenge of reducing stigma” associated with borrowing from discount window
Lender of last resort function must be flexible to cope with crises, BoE’s Hauser says
Central banks should prepare in advance to open up lender of last resort frameworks to new counterparties and instruments, Bank of England executive director says
EBA raises concerns over Commission’s MREL changes
European Banking Authority challenges European Commission’s proposed changes to MREL criteria; opposes removal of reference to minimum burden-sharing standards
BoE’s Cunliffe wants more detailed timetable for European reforms
Bank of England deputy governor welcomes ambition and honesty of five president report, published in June; hopes to see more detail on dates in future
Danish economists test measure of systemic risk
National Bank of Denmark paper uses ‘SRISK’ measure to assess systemic risk in the Danish financial sector, finding it was a good predictor of banks that needed bailing out
Research compares borrower-based macro-pru tools
Debt service-to-income caps generate ‘less pronounced macro feedback’ in the short term than loan-to-value limits, working paper finds
Bank recapitalisation is a ‘powerful’ policy instrument, paper suggests
Economy likely to remain in an ‘anaemic state’ until certain conditions met, research says; bank recapitalisation more effective than fiscal expansion in encouraging aggregate demand
Canadian deputy warns limits to macro-prudential tools may impact monetary policy
Timothy Lane says fiscal policy may have to step into the breach and provide stimulus when using monetary policy would risk creating ‘vulnerabilities’ macro-prudential policy can’t offset
NZ has ample space to respond to risks – IMF staff
An International Monetary Fund staff report says there is room to ease monetary policy further if need be, while authorities should prepare more prudential measures
RBI report lays ground for trading new derivatives
Working group proposes allowing new interest rate options in India to improve financial institutions' ability to hedge interest rate risk
BoE’s Cunliffe: UK may be close to debt sustainability limit
Deputy governor says analysis of recent UK credit cycle suggests rises in debt may leave the economy vulnerable; Cunliffe would consider action if debt-to-GDP ratio rises
China relaxes QFII limits amid calls for capital controls
FX regulator shortens ‘lock-up’ period, during which foreign investors must wait before repatriating funds, from one year to three months
IMF staff call for clarity on Morocco macro-prudential body
Staff report calls on government to clarify powers of inter-agency committee chaired by central bank governor; separate assessment details work on toolkit
German and French central bank heads back creation of eurozone Treasury
Weidmann and Villeroy de Galhau issue joint call for more integrated eurozone, potentially including joint treasury; alternative would mean different approach to sovereign risk
Paper models complications to systemic financial shock responses
Different classes of illiquid asset and different types of banking network produce complicated responses to systemic financial shocks, Bank of Italy working paper argues
RBI’s Gandhi: are regulators ‘barking up the right trees’?
Deputy governor stresses effective regulation is not about ever more detailed rules but rather taking a broad view and spotting emerging risks early on
BIS data sheds light on complex shift in global liquidity
There are signs global liquidity might be going into reverse for emerging markets; digging into the data shows situation is more complicated than aggregate figures imply
Ukraine governor reveals move towards inflation targeting
Ukraine’s central bank is already setting policy with an eye on an inflation target while it awaits a formal mandate, its governor says; banking ‘cleanup’ is ‘near the finish line’