Financial Stability
HKMA to raise countercyclical buffer by maximum in 2017
Hong Kong Monetary Authority will raise banks’ counter-cyclical buffers by the maximum amount in January 2017; risks still present in credit and housing market, Norman Chan warns
BoE moves to close bonus clawback loophole
Under new proposals, banks will no longer be able to circumvent malus and clawback rules by buying out new employees’ bonuses
Europe needs ‘consistent’ policy on solvency issues, Lautenschläger argues
Decisions needed on whether the SSM has competence in solvency issues currently dealt with at national level, Lautenschläger argues; calls for reform to ‘routine’ decisions process
Monetary policy easing increases systemic risk-taking, paper finds
Brazilian domestic monetary policy is more statistically significant in this regard than foreign monetary policy, working paper suggests
Survey data offers chance to assess eurozone macro-prudential policies, paper argues
Data from the eurozone’s Bank Lending Survey can be used to analyse the effectiveness of different macro-prudential policies, an IMF working paper argues; subject is little known, researchers say
RBI, BIS gain access to China interbank foreign exchange market
Second batch of official investors receive permission to trade FX spot and derivatives onshore; MAS and BoK also among the seven institutions
New bank business models could undermine stability, panellists warn
Panel including Mark Carney and Agustín Carstens raises concerns over the way regulation and low rates are forcing banks to adapt in unpredictable ways
Lockhart to watch inflation closely over the coming year
‘Mildly not wildly’: Atlanta Fed president remains optimistic for 2016 outlook, adding rate hikes not likely to occur at every meeting
Financial market risk being pushed into ETFs, Noyer warns
Central bankers must develop oversight of ETFs and similar securities, Noyer tells farewell seminar; must also convince markets and public of opposition to low inflation and deflation
Kaplan urges careful consideration of volatility
Federal Reserve Bank of Dallas president Robert Kaplan warns of the potential for further market volatility as normalisation continues
Mexico to ‘persevere’ in strengthening macroeconomic framework, bank deputy says
Deputy governor says effect of further normalisation in US policy ‘unclear’; Mexico to continue strengthening financial system
Brazil will adopt ‘necessary measures’ to control inflation, says Tombini
Tombini tells finance minister he expects inflation to return to midpoint of target range by the end of 2017; Brazil inflation breaches 10% for 2015
IMF paper compares impact of monetary and macro-prudential policies
Research considers effects of measures in ‘systemic advanced economies’ on financial conditions both at home and abroad; monetary shocks in US can have ‘significant’ impact
Korean paper explores ‘divergent’ spillovers to EMs
Macro-prudential policies key to protecting emerging markets from spillovers, research says; normalisation in the US could lead to ‘renewed tensions’
Room for monetary policy stimulus has ‘narrowed’ in many EMs, World Bank report warns
Little room left to use monetary or fiscal stimulus in event of growth shock in some countries, report says, pointing to role for structural reform
Market preoccupation with divergence likely means ‘more variability’, Poloz says
Canadian governor believes such variability to be a ‘natural reaction’ to shocks; flexible exchange rate allows for adjustment
European markets may still view some banks as ‘too big to fail’, paper argues
European governments may be seen as supporting ‘national champions’ in banking, researchers say
BIS paper explores policy trade-offs in Asia-Pacific
Asia-Pacific central banks that have used macro-prudential policy to control credit growth may have faced a short-term trade-off between financial and price objectives, paper notes
PBoC cut in renminbi fix prompts market volatility
Central bank cuts fix by 0.51%, triggering second equities slump in a week and further divergence in onshore and offshore exchange rates
ECB should become lender of last resort to individual eurozone banks, academics argue
The ECB should take over the role of lender of last resort to troubled individual banks in the eurozone, two leading academic lawyers argue; move would ‘not require’ changes to treaties
Inertia an important factor in consumer banking market, paper argues
Inertia among consumers is an important factor in the market for personal banking, a study argues, stressing that policy-makers must improve their understanding of this factor
SSM sets out supervisory priorities for 2016
The SSM set out its supervisory priorities for 2016, with a wide-ranging list of ‘thematic reviews’ to be carried out; key areas include business model risk and high levels of non-performing loans
Colombian paper finds ‘negligible’ contagion effects
Contagion in the interbank market poses no real threat to the Colombian financial system, working paper notes; examines link between bank failure and liquidity
Irish central bank may help fund ‘comprehensive’ database of commercial real estate
Central Bank of Ireland may help fund the creation of a commercial property statistical system, which would be maintained by Central Statistics Office