Financial Stability
EU faces tough call on sovereign scenarios for stress tests
European Union officials split on whether to run sovereign debt scenarios on stress tests; plans afoot to extend number of banks tested
Canada’s Carney named CGFS chair
Bank of Canada governor Mark Carney to step into Federal Reserve vice-chairman Donald Kohn’s shoes and head Basel-based Committee on the Global Financial System; follows Kohn’s retirement
Fed’s Warsh: market panic a signpost, not source of global economic woes
Market volatility merely a signal of how far we are away from the new normal; warns against expecting monetary and fiscal policy to do too much
Interview: Gill Marcus
The governor of the South African Reserve Bank tells CentralBanking.com why reforms can’t be rushed and discusses the role of central banks within society
IMF: reserve managers’ ‘procyclical’ strategies exacerbated crisis
IMF says behaviour of reserve managers compounded pressures on financial stability; highlights potential conflict between investment strategies and stability mandates
EXCLUSIVE: Finger-pointing masks officials’ failures, says Sarb’s Marcus
South African Reserve Bank governor Gill Marcus says knee-jerk reforms ignore failure of policymakers to raise standards before crisis; sober, measured approach to reform only credible way forward
Money and liquidity in financial markets
Connection between interbank market for liquidity and broader financial markets exists
Caruana’s three policy challenges
Bank for International Settlements’ general manager outlines the key problems with which policymakers must grapple
BIS sceptical on reserves role for SDR
Trying to create global currency from accounting unit would not solve problems highlighted by the crisis
UK officials must consider cultural factors in regulatory overhaul
Navigating the transition to Britain’s new regulatory regime is fraught with cultural challenges, writes Michael Foot
SNB: Quarterly Bulletin – June 2010
Swiss National Bank estimates export driven growth of 2% in 2010, despite renewed tensions in Europe
US lawmakers seal deal on reform bill
Members of the House of Representatives and Senate conclude the conference process; text includes part of the Volcker rule, surprise bank levy, and stronger-than-expected Fed audit clause
Old Lady: banks must reduce reliance on rating agencies
Bank of England calls for capital incentives for firms that rely less on external ratings; urges Basel Committee to go slow on introducing Basel III
Philly Fed: freedom of databases may improve market oversight
Philadelphia Federal Reserve study on macro-micro databases shows that had information been made readily available, the crisis may have been less pronounced
Russian FX regime change ties rates closer to Europe: Bank of Finland
Bank of Finland study shows Russian interest rates moved more in line with Europe than the United States, following overhaul of exchange rate basket
Iceland poised to lift all capital controls
Central Bank of Iceland says full liberalisation could begin at the end of July, as króna continues to soar and inflation falls closer to target; draws on bilateral credit lines to boost reserves
Bank of Italy: location, not size instrumental to debt restructuring
Bank of Italy study finds debt restructuring of firms is more likely when located closer to borrowers
Demand and supply forces restriced credit: Bank of Italy
Bank of Italy study finds declines in demand and supply of credit dampened lending growth in Italian banks during financial crisis
ECB meet signals Gulf’s common currency intent despite euro woes
Governors of Saudi Arabian Monetary Agency, the Central Bank of Kuwait and Qatar Central Bank to meet with Jean-Claude Trichet and Mario Draghi next week to discuss how best to adopt a single currency
Eurozone crisis threatens Canadian financial stability
Bank of Canada links deterioration of risks surrounding global imbalances and the growth outlook to single currency zone’s sovereign debt crisis
BIS: Crisis response lacks rigour compared to Nordic countries in 90s
Bank for International Settlements study into the recent financial crisis says policy response may slowdown recovery
Fed calls on banks to step up pay reform
A Federal Reserve review on executive compensation says firms need a more comprehensive review of risks relating to misaligned pay incentives
Bank of Spain proposes more efficient stress test method
Bank of Spain study explores new methods of stress testing that identifies more harmful risks to previously unscreened institutions
Sovereign bonds lost safe haven status in crisis: Bundesbank
Bundesbank study on sovereign bond spreads finds marked change in perceived risk of holding government debt following the bailout of Bear Stearns