Debt Management
Mass walkout at RBI disrupts clearing and settlement
The majority of the RBI’s 17,000 staff took ‘mass casual leave’ today, interrupting some RBI operations, though normalcy was ‘largely’ restored after negotiations
IMF paper challenges idea of debt threshold effect
Countries with high levels of public debt can grow just as fast as their peers, provided the debt is on a downward trajectory, research finds
Argentine reserves spared as US court overturns ruling
Central bank will not have to pay creditors out of its reserves, US appeals court rules, although the decision is not meant to allow Argentina to ‘continue shirking’ its debts
RBI paper explores challenges in public debt management
Research identifies a ‘narrow investor base’ as one hurdle and considers how to encourage greater participation from retail investors in the market for government securities
Central banks cannot avoid fiscal impact, Bundesbank panellists warn
Academics and central bankers point to fiscal impact of monetary policy and lender of last resort function, raising the question of how much fiscal power central banks ought to wield
IMF senior counsel explores legal frameworks for public debt management
Senior counsel at IMF’s legal department discusses the many trade-offs involved in designing the legal frameworks underpinning public debt management
ECB’s Constâncio calls for eurozone to cut back on debt
ECB vice-president says deleveraging has proceeded slowly so far due to growth concerns; emphasises debt reduction ought to be done using diverse measures, but says primary surpluses are key
Chinese finance minister Lou Jiwei on local government debt and tax reform
Minister of finance Lou Jiwei talks about fiscal policy under China's 'new normal' and how the country plans to tackle spiraling local government debt
IMF researchers highlight high cost of unnecessary fiscal consolidation
For countries with very low borrowing costs, allowing debt ratios to fall ‘organically’ via growth is likely to be less damaging to the economy than harsh austerity, authors say
Second Hong Kong sukuk oversubscribed by 100%
Five-year Islamic bond hits home with investors, including central banks, pushing coupon below 2% – 35 basis points above US Treasuries with same maturity
IMF researchers explore central bank security issuance
Working paper finds low-income countries may struggle to issue central bank securities on account of the administrative costs and infrastructure demands
Vanoli says Argentina seeking alternatives on bonds
Argentina is looking for financial entities that are not affected by the New York judge rulings and can help the country issue new debt, central bank governor says
Are central banks the ‘Figaro’ of the financial markets?
Central banks continue to play a vital position in the functioning of markets. While this raises significant concerns about moral hazard it is not an unfamiliar role from an historical perspective
Book notes: Sovereign debt management, by Rosa María Lastra and Lee Buchheit
An immensely valuable compilation of contributions by lawyers and several economists on sovereign debt. This book is eminently readable, in spite of its difficult subject matter
Lagarde lauds new Mexican bonds with ‘strengthened' collective action clauses
Mexico issued $2 billion in 10-year bonds with new collective action clauses, which Lagarde says ‘will play a critical role in enhancing the architecture for sovereign debt markets’
BIS paper proposes defence against market panics
Proposal would see governments link level of borrowing to interest rates, breaking the vicious cycle of rising rates leading to increased default risk
IMF calls for ‘modified pari passu clauses’ in new international sovereign bonds
Executive board supports contractual reforms making process of sovereign debt restructuring ‘more orderly’; Staff paper outlines stronger collective action clauses
Bank of Lithuania invests $100 million into Chinese capital markets
Central bank becomes one of the first in Europe to invest in Chinese securities, as part of a new investment policy seeking higher returns
Balance sheet saw ‘substantial’ growth in past year, says RBA’s Stevens
Combined impact of replenished capital and new financial market operations has seen balance sheet swell, according to the Reserve Bank of Australia’s annual report for 2014
Summers calls on Fed and US Treasury to 'fully' coordinate debt management
Paper published today finds Treasury purchases of long-term bonds offset ‘about a third’ of QE benefits to US economy post-crisis; Fed governor dismisses controversial proposal
Supreme Court clears Central Bank of Sri Lanka over Greek investment
Sri Lankan governor and monetary board members cleared over investment in Greek government bonds; Supreme Court says investment decisions ‘best left to central bank’
EM East Asian bond success could be undermined by ‘tighter liquidity’
ADB says US interest rates, geopolitical tensions and a ‘slowing property market’ in China could undermine the performance of East Asian bonds
Bank rules and their impact on inequality
Banking regulation has a profound effect on levels of long-term financial inclusion around the world; US engaged in a failed ‘lottery ticket’ effort by the US to offer housing to the poor.
IMF paper says long-term debt creates ‘incentive to default’
Research examines relationship between maturity structure of sovereign debt portfolios and the probability of default; considers impact of uncertainty around future fundamentals