Financial Stability
Emerging markets appear less susceptible to global contagion than advanced economies – BIS paper
Working paper explores whether central banks can still manage domestic financial conditions despite globalisation; isolates ‘contagion’ component in bond yield dynamics
Bundesbank paper explores why banks may lend too much
A limited number of banks may engage in excessive lending, and those that do are more likely to rely upon capital support, says Bundesbank paper
DNB director targets better measurement of inclusion
Frank Elderson emphasises the benefits of financial inclusion and says central bank will put forward proposals for financial inclusion index later this week
Failed normalisation could hold back growth, IMF warns
Flagship report presents different scenarios based on whether the normalisation of monetary and financial conditions progresses smoothly or not; process could stall if risks crystallise
IMF sees divergent risks in new outlook
IMF revises growth outlook for this year and next, while noting transformation in risks; Maurice Obstfeld discussed emerging market policy in anticipation of Fed hike
Increases in securitisation may lead to under-pricing of risk, study argues
Increased asset securitisation reduces premia on bonds and equities, Bank of Spain working paper says; decrease in cost of risk may not be related to an actual fall in risk
CPMI launches plan to halt correspondent banking decline
Consultation begins on measures designed to resist the decline of correspondent banking, which is threatening to fragment international payments and damage financial inclusion
RBI deputy urges banks to address asset quality challenges
SS Mundra discusses challenges facing India’s otherwise ‘vibrant’ banking system; asset quality poses challenges to banks and supervisors
Multi-polar system ‘likely’, says ECB executive
Benoît Cœuré considers evolution of global financial system; sees rise of emerging economies leading to greater multi-polarity
Value of capital controls still up for debate
Research published by BIS and IMF points to potential benefits from capital flow measures and macro-prudential tools, but other economists question the results
Spanish ‘bad bank’ must revise valuations of half of remaining assets
The Bank of Spain says Sareb, the country’s ‘bad bank’, must publish revised valuations of half of its assets by the end of the year; publishes criteria for company to use
CCPs’ initial margins ‘significantly’ raise cost of repo funding, study argues
Initial margins charged by central clearing counterparties (CCPs) can increase the cost of funds raised in repo markets, a Bank of Italy paper argues
Chicago Fed official slams CFTC, SEC over HFT regulation
'You cannot have 80% of the market being just HFT,' says Rajeev Ranjan, a member of the reserve bank's economic research department
Boston Fed conference lays bare uncertainty over macro-prudential policy
Central bankers raise concerns over theoretical and practical barriers to exercise of macro-prudential policy in the US and the appropriate role for monetary policy
IMF working paper explores spillovers between United States and eurozone
Spillovers from the eurozone to the US have been ‘considerable’ since 2014, reflecting policy easing in Europe, IMF paper notes
BoE paper explores link between mortgage debt and consumption
Tighter credit conditions and concern over debt repayments may have led to a 2% drop in aggregate private consumption following the crisis, working paper says
Denmark’s Rohde concerned by lack of bail-in tool at mortgage banks
European standard for loss-absorbing capital does not apply to Danish mortgage banks, meaning resolution frameworks have to make do without bail-in
SNB’s Zurbrügg says negative rates painful but necessary
Vice-chair concerned by financial stability impact of negative interest rates, but says they make sense from a monetary policy perspective; talks with industry have been ‘very heated’
South Africa aims to launch electronic trading platform this year
A deputy governor of the South African Reserve Bank announces electronic trading platform could be launched in the coming months
BoE may impose extra liquidity charges, says regulator
BoE will impose Basel III add-ons if banks’ risks are not fully captured by LCR, says prudential policy head
Lagarde calls for ‘policy upgrade’ across the globe
Managing director of the IMF tells advanced economies to ‘fully incorporate’ spillovers in decision-making, and eurozone to tackle problem with non-performing loans
Regulators must move on shadow banking, says Bundesbank board member
Regulators must act on evidence of ‘significant movement’ towards shadow banking sector, says Deutsche Bundesbank’s Andreas Dombret
Basel Committee considers limiting bank modelling choices
Study of internal models of counterparty credit risk finds ‘considerable’ variation between banks, raising the possibility of the Basel Committee takings steps to increase consistency
BoE committee sees benefits of moving CCB in small steps
The Bank of England's Financial Policy Committee leaves the CCB at 0% but notes the system is ‘moving into a normal phase of the credit cycle’ and sees potential advantages in using smaller increments when the time comes