Financial Stability
Long-term low interest rates risk financial instability, Geneva report argues
Long-run accommodative monetary policy could raise risks to financial instability, Charles Bean and other economists argue; issuance of leveraged loans in US corporate market on the rise
Eurozone prices to rise in the long term, survey of forecasters says
The eurozone’s long-term inflation rate will rise, and GDP will grow ‘gradually’, professional forecasters tell ECB survey; falling energy prices expected to push short-term inflation down
BoE’s Bailey considers how to foster competition
Bank of England deputy governor highlights the role of the PRA in fostering competition in the banking sector
China confirms launch of QDII2
Scheme allowing Shanghai-based individuals to invest overseas agreed in meeting chaired by Premier Li Keqiang this week
Liquidity issues demand further work, says BoE’s Cunliffe
Greater fragility of market liquidity requires reassessment of regulation, new stress tests and better data, BoE deputy says; private sector economists warn of distortionary effects from QE
UK’s Osborne defends ‘middle way’ struck by BoE bill
Finance minister tells MPs the decision to drop the reverse burden of proof avoids creating a two-tier regime; talks up value of BoE independence in response to concerns over NAO role
Regulators push back at complaints of fatigue
EBA chief and secretary-generals of Basel Committee and Iosco defend their work so far and stress the bulk of regulation will be completed in 2016 – though there is more on the horizon
RBA’s Edey explains cross-border treatment of CCPs
Australia will not insist on domestic incorporation for overseas CCPs; regulators favour a ‘graduated framework’ for imposing additional requirements on the most important CCPs if necessary
RBA’s Richards gauges sentiment on card payments regulation
Head of payments policy highlights areas of ‘common ground’ in response to issues paper on card payments regulation, but also some ‘real differences’ between stakeholders
Macro-prudential measures may restrict financial integration, ECB paper says
Macro-prudential policies may partly explain recent fall in European and global financial integration, paper argues
BoE unveils new systematic stress tests
Stress tests designed to move counter-cyclically with the financial cycle and inform decisions on capital buffers; BoE looking to improve modelling techniques to keep pace
Brainard mulls how to reduce ‘undue’ regulatory burden
Fed’s Lael Brainard discusses potential areas for reducing regulatory burden faced by banks; warns process may take longer where interagency agreement needed
‘Great moderation’ due to weaker recoveries, paper argues
The ‘great moderation’ in the US economy is still significant if analysed using a longer data set than previously, researchers argue; one of two significant falls in US volatility since 1875
BoE’s Bailey defends dropping reverse burden of proof
PRA chief says decision to backtrack on key element of senior managers regime makes the rules more robust; rejects suggestion he has been ‘cowed by the lawyers’
Sarb publishes first draft of forex code of conduct
New code of conduct proposed for South African foreign exchange over-the-counter market, though official review finds no evidence of malpractice
Repeat of Asian crisis ‘unlikely’, say Singapore bank chiefs
Policy-makers are responding more proactively to risks than in 1997, they say, while economies are seen as much stronger
EBA plots shift to new phase of work
As European banking legislation is finalised, the institution plans to concentrate more on harmonisation and less on standard-setting; expanding workload contrasts with shrinking budget
PRA plans to subject ‘other systemic institutions’ to tougher scrutiny
Institutions designated as O-Siis would face tighter scrutiny and be expected to produce resolution plans, with the potential for further measures in the future
Ireland’s Gerlach points to indirect impact of macro-prudential tools
Deputy governor says evidence suggests LTV and LTI tools are having the strongest effect via indirect channels, rather than their direct impact on credit, although the tools are still new
Sovereign debt holdings ‘significant’ driver of insurer risk, Bundesbank paper says
Insurance companies at risk from holdings of sovereign debt, and current regulation does not adequately deal with problem, paper argues
Outlook for emerging markets not as ‘gloomy’ as people think, BoE’s Forbes says
Bank of England MPC member Kristin Forbes warns pessimism may be ‘overshadowing important differences across countries’ and strengths in some economies
MAS's Menon hails local alternative to cash
MAS director says Singapore's electronic transfer system potentially 'safer and cheaper' than notes and coins; wants people to be able to make payments using social networks
More polymer banknotes in new Nicaraguan series
Nicaragua to use polymer substrate on two additional denominations in new series launched later this month; revamp costing over $17 million