Banks
Basel Committee flags further issues with bank modelling
Second study of variation in credit risk modelling using internal ratings-based approach sheds further light on what is causing banks to calculate significantly different capital requirements
Policy-makers could use fraud patterns as economic indicator – paper
Positive relationship exists between bank fraud and the macroeconomy, Chicago Fed risk specialist finds, suggesting fraud could offer an early warning sign of crisis
FSB intrigued by potential uses of distributed ledgers
Mark Carney says FSB members see ‘exciting opportunities’ in financial technology, including the potential for distributed ledgers to bring security and efficiency
BoE moves to tighten buy-to-let standards as risks rise
Review of buy-to-let lending finds some firms may be relying on weaker underwriting standards than others; FPC warns UK financial stability outlook has worsened since last meeting
BoE toughens 2016 stress tests
GDP growth to hit a trough at -1.9%, unemployment to rise 4.5 percentage points and the level of GDP to fall by 4.3% in latest BoE stress tests; higher capital hurdles also mandated
Basel Committee restricts bank options for internal modelling
Banks will no longer be able to use the internal ratings-based approach for certain portfolios, and will face restrictions in other areas, under proposed rules
BoE’s Breeden plots route to ‘third phase’ of global banking regulation
Regulators have moved from fragmentation to “balkanisation”, and now must work to establish full co-operation, executive director says
IMF urges Mauritius to form macro-prudential authority
Central bank would have “prominent” role in new authority; as a first step, IMF staff recommend establishing a technical group featuring representatives from multiple stakeholders
Progress on resolution frameworks has slowed, FSB warns
Few jurisdictions have all the rules in place and legislative progress is slowing, Financial Stability Board says in its latest peer review of resolution regimes
Bank of Israel establishes banking innovation division
New section of banking supervision department formed to help foster innovation but contain the accompanying risks; Dudi Bavli chosen to head division
San Marino’s new central bank chief faces NPL challenge
Staff at IMF stress need for “comprehensive strategy” to clean up balance sheets in the banking sector; Wafik Grais takes office as chairman of the central bank after prolonged vacancy
Zimbabwe central bank calls for flexibility on SME credit
Number of areas still at risk from financial exclusion; only 14% of MSME owners were banked, and only 1% of the adult population used capital market services in 2014
Basel disclosure proposals add ‘dashboard’ of risk metrics
Fresh proposals on Basel III disclosure aim to simplify comparison of banks’ prudential positions; banks will also have to disclose “benchmark” risk weights based on standardised approach
BoE’s Bailey dismisses ideas for radical banking overhaul
PRA chief stands by the current design of banking regulation, rejecting more radical options involving higher levels of equity as “just not practical”
Central banks running out of room amid turbulence, BIS warns
Confidence in central banks is “faltering” as policies prove impotent, while negative rates erode bank profitability and debt levels weigh on global growth
Broadbent weighs pros and cons of digital currency
Issuing central bank digital currencies could make commercial banks safer but might also ‘impair’ their ability to make loans, BoE deputy says
Book notes: The end of alchemy, by Mervyn King
King’s book on how to fix everything that is wrong with the financial and economic system lays out radical proposals that deserve serious consideration
Mervyn King calls for radical banking reform
Former Bank of England governor wants to curtail banks’ use of maturity transformation, putting the central bank’s lender-of-last-resort role at the heart of his new banking system
Mexico’s stress tests reveal some institutions remain ‘vulnerable’ in extreme scenarios
Stress tests indicate that even in adverse scenarios banking sector remains sound; some banks and investment funds are vulnerable to extreme scenarios, including interest rate adjustments
Lenders should reward low-risk customers – Kenyan governor
Banks should praise those performing well regarding credit management, and offer low-risk customers better terms as a result, governor says
Kenya sees a reduction in use of bank services
Mobile payments preferred, with 47.8% of the population using mobile services on a daily basis; banks now mainly used for salary payments
Book notes: Stabilising capitalism: a greater role for central banks, by Pierluigi Ciocca
Pierluigi Ciocca offers an excellent, brief and crisp account of the main issues facing central banks today
End of sanctions offers chance to fix Iran’s banking sector
Iranian banks struggling with high levels of non-performing loans may see their situation improve, but deep reforms are needed and the political situation remains complex
Book notes: Between debt and the devil, by Adair Turner
Adair Turner offers a lively and well-structured account of his proposals to radically overhaul the financial sector