Balance sheet
Cocos lower banks’ funding costs – BIS paper
Mechanical triggers and equity conversion strengthen cocos’ impact, paper finds
Fed’s Harker ‘pencils in’ rate hike for December
Philadelphia Fed governor expects rates to rise 25bps before 2018, adding balance sheet normalisation is likely to “take some time”
BIS paper studies how weak banks beget zombie firms
Weak banks have a tendency to misallocate capital, authors find, though the effect is only important in the long run, in contrast to earlier studies
Central banks and securities lending: A lever for monetary policy and liquidity management
Securities lending is often considered an alternative mechanism for generating revenue by asset owners, fund managers and others who invest with profit in mind. Central banks, however, do not share this viewpoint. Rather, their securities lending…
The optimal size for central bank balance sheets
As the Fed seeks to reduce the assets on its balance sheets, Charles Goodhart examines the role between monetary and fiscal policy, central bank and debt office, and the optimal size of a central bank’s balance sheet
Bahamian central bank proposes law change to cap government debt holdings
New legal framework for Bahamas central bank would enforce “comprehensive” limits on government debt; holdings of long-term government debt stand at 12.52%
ECB taper unlikely to upset major European equity investors
Norway’s sovereign wealth fund is boosted by its €200 billion investment in European stocks
RBI eyes unwelcome turnaround in India’s economy
Central bank on hold as growth slows and inflation ticks up sharply; Urjit Patel notes heightened volatility and geopolitical tensions
Don’t underestimate the Fed’s balance sheet unwind – Fischer
Stanley Fischer offers advice to colleagues in his final scheduled speech before leaving in October: “never say never”
John Williams on the neutral rate of interest and mandate change
The president of the Federal Reserve Bank of San Francisco speaks about the plunge in the natural rate of interest, and why it means central banks should work together to review their price stability targets
Leading asset manager warns policy normalisation ‘may never occur’
Northern Trust believes monetary policy is unlikely to revert to pre-crisis levels; observers say central banks are broadly taking the right approach
The Treasury could make QE exit faster and smoother
Swapping longer-term bonds for Treasury bills or floating-rate bonds would expedite the process of reducing bloated central bank balance sheets
Big banks’ share prices more sensitive to rate moves – paper
Lower capital ratios diminish exposure to changes in the yield curve, says research
St Louis Fed explains Fed’s plans to unwind balance sheet
Fed expected to stop replacing maturing securities to reduce $4.5 trillion balance sheet
RBI closes in on ‘endgame’ in bank clean-up
Governor Urjit Patel says the central bank’s new powers have allowed it to overcome “severe” moral hazard problems; state-owned banks will need recapitalisation, he says
Ghanaian central bank closes two commercial banks
IMF staff called for action in February over problems at some commercial banks
San Francisco’s Williams: monetary policy has reached ‘limit’
Monetary policy has done all that it can to foster growth, says San Fran president, calling on fiscal policy to now “step up”
The changing composition of central bank balance sheets
Quantitative easing may have been necessary, but it has created worrying distortions and has probably discouraged structural change, while deflecting attention away from ever-greater levels of debt leverage
Fed can no longer ‘wait and see’, says Williams
Waiting to unwind the balance sheet could “overheat the economy”, says San Fran president, who believes the US has “fully recovered” from the recession
Evolution of monetary policy in advanced economies spells trouble for emerging markets – paper
Research explores the impact future monetary policy will have on emerging markets, concluding many will be forced to implement defensive measures
The BoJ’s exit policy and balance sheet risks
The Bank of Japan will need to follow a meticulous sequencing of events as its ‘normalises’ monetary policy, making current concerns about negative equity appear premature
Fed paper: portfolio holdings have ‘statistically significant’ effect on rates
Research studies composition of Fed’s Treasury portfolio and impact on yields from 1985-2016
Brainard cautious over further hikes in interest rates
Fed governor says she will be watching inflation “carefully” over the coming months, stating the unwinding of the balance sheet will begin ”soon”
Inflation data causes rift in FOMC
Fed officials discuss whether incoming low inflation data is “transitory” or is a sign of worrying things to come; minutes outline balance sheet unwinding but date remains unknown