Banks
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
Sri Lanka sets up enforcement unit after insolvency failures
Central Bank of Sri Lanka sets up new enforcement branch after unsuccessful attempt to restructure four failing financial institutions; legal action to be taken against Entrust Securities
Book notes: Achieving financial stability and growth in Africa, edited by Stephany Griffith-Jones and Ricardo Gottschalk
John Chown praises this comprehensive review that studies the possibility of achieving ‘the impossible’ in low-income Africa – both growth and financial stability
Bank of Russia records decrease in fraudulent transactions
Central bank says decrease in cyber crime is a result of new centre for Cyber-Attack Monitoring and Response in the Financial Centre; official says Bank of Russia supports initiative for harsher punishment of cyber crime
Coen seeks to quell European fears on Basel III
European parliament members accuse Basel Committee of favouring US over European banks; William Coen says “Basel process” is transparent and not dominated by any one interest
State Bank of Pakistan spends $1.2 million on department move
Banking subsidiary to move five of its operations to the northern and central provinces; move will help “streamline” operations, spokesperson says
BoE investigates 6% plunge in sterling
Bank of England to investigate a 'flash crash' in sterling during overnight trading; traders believe it was not a ‘fat finger’ error
European Commissioner cautions US on TLAC rules
Dombrovskis says foreign banks should not be mistreated by Fed internal TLAC proposal
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
IMF: Central Bank of Iran should ‘streamline’ committee membership
IMF assessment warns of committees “dominated” by government agencies; fund stresses the central bank should limit membership to its senior officials and independent experts
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
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
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
Fed’s Tarullo: stress testing needs to evolve
Fed is planning to toughen its stress-testing framework with better alignment with regulation and incorporation of dynamic “amplification” effects – though more research is needed
Fiji governor encourages wider use of stock market
Stock market an “excellent” platform for savers and businesses looking to expand, says Barry Whiteside, who expects the number of firms listed on the stock exchange to increase over time
RBNZ floats idea of bank regulatory dashboard
Bringing regulatory disclosures together in one place could impose market discipline and allow more straightforward comparison of risks, central bank says
Distributed ledgers ‘too much of a moving target’ to write business standards, says Swift
Paper addresses questions about how DLT automation can run smoothly in multi-party network environment; Swift recognises full-scale standardisation of distributed ledger use is premature
ECB paper examines use of eurozone bank lending survey
Changes in credit standards in the ECB’s bank lending survey serve as leading indicators for GDP and bank loan growth, researchers say
Markets back under central bank ‘sway’ – BIS quarterly review
Recent equity rally is “more stick than carrot”, says Claudio Borio, as latest report points to fresh signs of discomfort among banks and continued market distortions
BIS paper flags spillovers from bank dividends
Dividend payments create a channel through which one bank’s capital policy can affect the equity value and risk of default of others, giving capital the attributes of a public good
Basel Committee hits turbulence on approach to year-end deadline
Central banks and supervisors offer support to its year-end goal, but industry players and EU countries show growing concern over higher capital levels
Recessions nearly tripled amount of Italian NPLs, paper argues
Italian bad debt levels would be almost one third of their current levels without the sub-prime and sovereign debt crises, a counterfactual analysis argues
‘Neural network’ could help construct early warning systems – Colombian paper
Model can detect identity of bank by analysing features of its balance sheet, which the authors say can be coupled with other financial stress indicators to help classify banks by their fragility
Changes to central bank law mooted in the Philippines
Proposed changes include oversight of more financial institutions as well as the capacity for the central bank to place harsher sanctions on illegal transactions