Central Banks
Fed changes forward guidance
Janet Yellen says FOMC ‘can be patient' in normalising monetary policy, but says new language does not signal change in outlook; Fisher, Plosser and Kocherlakota dissent
Bank of South Sudan keen for exchange rate reform
IMF report finds authorities keen to create a single exchange rate, launch two-way fixed rate auctions and establish an interbank market for foreign exchange
Banque de France paper says asset purchases may struggle to anchor rates
Working paper suggests asset purchases could be a way to anchor interbank rates, but the policy faces a number of difficulties; absorbing excess liquidity another option
Optimal policy changes as financial inclusion rises, BIS paper finds
Working paper presents evidence that both output volatility and inflation volatility fall as financial inclusion rises, but monetary policy will optimally lean more towards controlling prices
Research takes Bayesian approach to find early-warning indicators
Excessive credit growth and high returns of bank stocks are the ‘best’ early-warning indicators, researchers from Austrian and German central banks find
ECB to publish unattributed ‘accounts’ of policy discussions
European Central Bank will publish ‘accounts’ four weeks after every meeting; they are designed to improve the general public’s understanding of the governing council’s thought process
Swiss National Bank introduces negative rates
In the face of growing pressure on the Swiss franc, the SNB imposes an interest rate of -0.25% on sight deposits held at the central bank
Central Bank of Paraguay reduces inflation target to 4.5%
After keeping inflation around 5% for the past three years, the central bank will now aim to shackle it at 4.5% in 2015 and 2016
Russian central bank 'prepares' to recapitalise banks
Central bank announces package of measures to safeguard credit institutions from currency crisis fallout; finance ministry reportedly sells own foreign exchange
Chilean study identifies ‘delicate’ relationship between prudential policy and bailouts
Liquidity requirements and prudential taxes are examples of prudential policies that may backfire, since they can increase the risk taken by banks in expectation of a bailout, research finds
Bosnia central bank suspends nine after $380,000 theft from vaults
Prosecutor’s Office detains a central bank ‘clerk’ in connection with offence; money was supposedly taken in three chunks between 2012 and 2014
Bank of Israel researchers propose exchange rate-based forward guidance
Researchers say forward guidance has a mixed track record, especially in small open economies, but linking guidance to external factors would help improve credibility
Caruana sees leverage ‘evolving’ at global level
BIS general manager highlights risks beyond the banking sector, including an increase in corporate leverage in the wake of the financial crisis
Bank of England MPC still split 7-2 on rates
Minutes from the December meeting show Ian McCafferty and Martin Weale voted for a 25bp hike for the fifth consecutive month; they argue wage growth could ‘pick up sharply’
Robert Pringle's Viewpoint: The global finance system is in bad need of repair
Muddling through is not enough: neglect of global money can trigger political earthquakes that sweep away any chance of reasonable debate and compromise
Australian banks look to stable deposits to meet LCR, says Debelle
Interest rates on more stable deposit products are rising as banks prepare for liquidity coverage ratio’s January deadline, says Reserve Bank of Australia assistant governor
Ingves: Riksbank prepared to launch currency interventions
Swedish governor says central bank prepared to take unconventional measures, including negative interest rates and asset purchases, in light of falling oil prices
Czech National Bank advises against joining ERM II in 2015
Central bank says the government should not set a target date for entry into the eurozone; raises concern over pace of economic convergence and costs of joining
Credible fiscal plans reduce pressure on sovereign bond market, study finds
A credible macro-fiscal framework ‘can lead to stable expectations’ around a country’s sovereign bond market, reducing its expected risk premium, ECB paper finds
Ruble plummets despite 650bp hike by Bank of Russia
Second interest rate increase in four days does little to stem currency's precipitous decline; analyst calls central bank's apparent reluctance to intervene in forex markets a ‘game changer'
First BoE stress test uncovers capital shortfall
One UK bank failed the Bank of England's stress test scenario and two more have had to raise additional capital; Carney says future tests may be less forgiving
Bonnici disappointed by TLTRO take-up in Malta
Central Bank of Malta governor Josef Bonnici says it "would be a pity" if the country’s banks did not take advantage of the cheap funding on offer