Financial Stability
‘Moral suasion’ and yield-seeking intensified sovereign debt crisis – ECB paper
Researchers use information on 226 eurozone banks; publicly owned, recently bailed-out and less strongly capitalised banks engaged increased sovereign bond holdings during crisis
Special purpose vehicles make ‘very limited’ contribution to GDP – Irish central bank study
Study permits a better analysis of "shadow banking" sector, authors say; concentrates on non-securitisation vehicles
Esma says regulators should wait before imposing quantitative SFT haircut triggers
Decision on policy change should wait until 2018, authority says; chairman says “sheer size” of market makes transparency important
Low growth and low rates to hit financial stability, says IMF
Weak outlook is likely to feed into medium-term problems for financial stability, fund warns; Basel Committee may have to delay agreement on final framework
Fed task forces begin review of faster payments proposals
Payments firms have submitted plans for real-time payment systems and toughened payments security; merits of plans to be assessed over coming year
Nabiullina promises ‘profound’ structural change for Russian banking supervision
Current structure “insufficient” to solve Russia’s problems, governor says; first deputy governor Tulin to oversee regulation and supervision
Central Bank of Solomon Islands commits to promoting private sector credit growth
Levels of liquidity “more than adequate”, latest monetary policy review says; central bank to maintain levels of liquidity by continuing to issue bills
Banks leaving London for Dublin must be ‘run from here’ - senior Irish official
Central bank planning to recruit more regulators if necessary, Cross tells financiers; hints at possible need to boost salary packages for some staff
Book notes: Connectedness and contagion, by Hal Scott
Scott’s argument on the dangers of contagion has many appealing features, although he may be too eager to hand powers to unelected officials, writes Michael Reddell
EBA dashboard shows capital on the rise but NPLs remain a worry
Regulators’ quarterly risk assessment shows EU banks’ capital ratios have ‘slightly increased’, but loan portfolios remain an issue
IMF financing ‘constrained’ policy space in Ukraine, report finds
Earlier debt financing would have been useful for Ukraine, report says, while praising central bank efforts to stabilise the financial system
BoE paper examines how US banks lend after hurricane shock
Local banks may play an “important role” in a geographically integrated banking system, paper says, despite their greater vulnerability to financial constraints
Independence, liquidity and a level playing field – yet another impossible trinity?
Jesper Berg warns it will likely be impossible to balance the demands of monetary policy independence, liquidity standards and achieving fairness for all banks
BIS research tests leverage ratio with adjusted DSGE model
Authors design a model with both leverage ratio and variable risk-weighted capital requirements, finding a range of benefits to constraining leverage
Global sharia standards desirable, but impractical – Lebanon’s el Gemayel
Complete standardisation impractical, but other options are available, says Central Bank of Lebanon’s Joëlle el Gemayel; Islamic banking landscape is shifting
Time to focus on green finance as Paris Agreement set to enter into force
Central bankers meeting at the IMF next week will discuss mechanisms to unleash private capital for green finance ahead of a Paris climate deal that could enter into force before 2017
Don’t underestimate East Africa’s potential, says Sarb deputy
Eastern region of the continent benefitting from slower inflation and improved regulatory regime, Mminele says; “strict” fiscal discipline must be applied throughout the region
Central banks must do more on green finance – UN report
Current progress is not enough to deliver long-run stability; central banks should work with other stakeholders to align the financial system with climate change goals, UN report says
EBA default standards could prove ‘burdensome’, banks warn
Implementation likely to be costly, especially for IRB-based firms, authority admits; standardisation necessary in view of wide range of current practices
Fiscal policies the answer to commodity decline in Africa – BIS paper
Counter-cyclical policies have done all that they can, paper says, adding it is now time for exchange rate and fiscal policies to bear the burden and spur growth
PRA tightens standards for buy-to-let market
“Interest coverage ratio” and affordability stress tests to be implemented by January 2017, while remaining measures must be implemented by September 30
Decentralised tech will not become the new normal – SNB’s Jordan
There is a time and a place for distributed ledgers, says chairman of Switzerland’s SNB, but right now they cannot compete with existing FMIs
Questions need to be answered before DL technology becomes viable payments option – BoE’s Hauser
Challenges in the payments landscape could be overcome by new technology such as the distributed ledger, says Hauser, but too many “big questions” remain around such a scheme, relegating it to the realm of research
Central banks adopt Swift harmonisation charter
Three central banks join 18 other institutions in global rollout of messaging standard ISO 20022; separate taskforce working on publishing market practice guidelines