Financial Stability
Basel Committee scales back risk weights in revised securitisation standard
Tighter definition of what counts as a “simple, transparent and comparable” securitisation gives room to allow “modest” reduction in capital requirements, committee says
Constâncio calls for ‘deep reflection’ on public support for banks
ECB vice-president Vítor Constâncio suggests European Union should consider relaxing its rules on state aid to banks; cites IMF concerns and example of US bail-out
Model-based regulation in Germany had unintended consequences, researchers say
The move to model-based banking regulation in Germany studied in working paper; loan default and loss rates rose for loans created under new regime
EBA survey: Most European banks did not see Brexit as risk
European banks anticipated increasing most kinds of loan activity, results of an EBA questionnaire show; few bankers saw ‘Brexit’ as a major source of risk
Sarb faces tough job amid ‘sobering’ outlook, IMF warns
Capital flows, sovereign rating and financial sector health form dangerous links, fund says, though South African authorities stress they have made preparations
RBNZ weighs tighter macroprudential policy and wider toolkit
Reserve Bank of New Zealand considers use of debt-to-income ratios to calm housing market, consultation with banks to occur before implementation
Sarb deputy sees tail risks from Brexit but expects storm to calm
Daniel Mminele sees tail risk coming from asset liquidation by UK corporates and investment funds, but if clear communication is given, the ‘storm is likely to calm’
European banks suffer as regulators ban Monte dei Paschi short-selling
Banks hit by further shockwaves from UK’s vote to leave EU, while European authorities scramble to shore up crumbling Italian bank Monte dei Paschi di Siena
Italian banking system sees first major test of European bail-in regime
Leaked letter from ECB triggers sell-off in major Italian commercial bank; European and Italian authorities still fail to reach agreement on resolving NPL problems
Colombian paper explores forex intervention announcements
In present of imperfect credibility it is not possible for central banks to achieve ‘desired’ exchange rate level without changing international reserve position, paper finds
Nigerian regulator overhauls management of major local bank
Nigeria’s central bank enforced a change of management in a domestically systemically important bank due to liquidity and capital adequacy concerns; finance veterans appointed to top roles
Report calls for co-operation in appraising macroprudential tools
Research led by Anne Le Lorier for Basel Committee on the Global Financial System says governance arrangements should promote “wider co-operation”
Swift paper warns not to transplant Kenya’s inclusion strategy
Harvard Kennedy School lecturer explores the factors behind M-Pesa’s success in Kenya, and warns against simply copying the country’s approach to inclusion elsewhere
Bank of England cuts CCB to 0% to support credit supply
In wake of Brexit uncertainty, concerns over supply of credit ‘taken off the table’ says Carney; new buffer rate to give confidence to UK economy that banks can lend in ‘challenging times’
European supervisors raise ‘strong concerns’ over Commission’s delay in derivatives regulation
Three European cross-border supervisory authorities challenge European Commission over implementation of standards; delay could have "significant negative impact"
Sarb deputy sees reasons for ‘cautious optimism’
‘Green shoots of recovery’ are starting to show, says Groepe; several and more fundamental patterns suggest the economy is on the mend
Two banks fail Fed’s annual stress tests
Most bank holding companies pass the Comprehensive Capital Analysis and Review, but Deutsche Bank Trust Corporation and Santander Holdings USA pulled up for “substantial weaknesses”
UK must ensure there is no Mark Carney exit
Calls for Bank of England governor to step down must be resisted – Mark Carney represents a vital source of stability at a time of heightened uncertainty for the UK
IMF paper examines factors affecting US wage growth
US labour market changing “more fundamentally” than before, author finds; wage growth expected to accelerate in near term
Central bank should consider sticky-price inflation as target variable – paper
South African working paper argues central bank should consider sticky price inflation as target variable; sticky prices more persistent and less volatile
EBA chair calls for ‘deep-rooted changes’ in bank culture
Andrea Enria, writing in the Directory of Financial Regulators 2016, says more must be done to confine episodes of misconduct to the past
State Bank of Pakistan sees financial sector ‘flourish’
Financial stability review highlights record after-tax profit and high capital adequacy ratio, as well as improvement in asset quality
Eastern Caribbean ACH enters second phase of implementation
ECCB annual report sets outs progress so far; electronic payments and US dollar cheques to be processed through the Eastern Caribbean Automated Clearing House
Sweden’s FI gauges impact of debt-to-income limit
Financial regulator tries to attach values to the growth and stability impact of DTI limits, one potential tool for tackling rising household indebtedness