Debt
BoE’s Cunliffe: UK may be close to debt sustainability limit
Deputy governor says analysis of recent UK credit cycle suggests rises in debt may leave the economy vulnerable; Cunliffe would consider action if debt-to-GDP ratio rises
Riksbank pushes for FSA to gain stronger tools amid delays
Amortisation requirement looks set to enter force in June, but more powerful tools for Swedish FSA may be delayed; government says negotiations take time, and it fears triggering crisis
Low income households ‘highly’ vulnerable to changes in interest rates, paper shows
Banks and regulators require the use of ‘richer’ information to understand consumer debt, a Central Bank of Chile paper finds; new model would help evaluate economic policies
Jamaican officials point to management plans as debt falls
Jamaica set to reduce debt-to-GDP ratio to 125% in pursuit of 90% target; officials from central bank and debt management branch welcome changes in past year
Dutch paper explores price level dispersion
‘Idiosyncratic shocks’ have greater impact on price level dispersion within the eurozone than in the US, authors say
Bank of England's Vlieghe wants more nuanced approach to monetary policy
Bank of England policy-maker says high levels of debt, ageing population and distribution of income combine to make him ‘patient' about rate hike; questions modelling based on representative agents
Kaplan urges careful consideration of volatility
Federal Reserve Bank of Dallas president Robert Kaplan warns of the potential for further market volatility as normalisation continues
Czech Republic chooses not to set target date for euro adoption
Government decision follows central bank and ministry of finance advice; authorities cite need for greater real economic convergence as a ‘main barrier’ to adoption
Riksbank steps up debt warnings in stability report
An absence of measures to address high asset prices and rising debt could result in a ‘serious’ shock with ‘great’ consequences for the economy, Swedish central bank warns
Short-term funding developments put Norwegian banks at risk, report finds
Parts of the Norwegian economy remain a source of vulnerability for banks, says deputy governor Nicolaisen at launch of latest financial stability report
Paper explores whether governments prefer under-capitalised banks in crises
Governments may prefer banks to be weakly capitalised as this increases the likelihood they will act as buyers of last resort for domestic debt; paper considers impact on regulation
Swedish economists add voices to criticism of leaning against the wind
Current and former Riksbank deputy governors Martin Flodén and Lars Svensson warn against the large rate hikes necessary to address financial stability concerns
BoE paper explores link between mortgage debt and consumption
Tighter credit conditions and concern over debt repayments may have led to a 2% drop in aggregate private consumption following the crisis, working paper says
FSB pushes for better tools to tackle high corporate debt
Report to G20 outlines some tools that could be used to tackle high and rising corporate debt, but the design process is still ongoing
Danish paper explores prevalence of interest-only mortgages
Interest-only loans lead some families ‘to save less and increase their leverage’ assets, which could pose a financial stability risk, research shows
Safe as houses: designing a more stable mortgage
A conference at the New York Fed earlier this year looked at some innovative mortgage designs that could boost financial stability. Central Banking approached some of the speakers to learn more
Finnish deputy: international competition will change mortgage lending
Bank of Finland deputy argues conditions for international competition in mortgage lending are ‘improving’ and there is the potential for a ‘substantial impact’ in the eurozone
Household debt had modest impact on US consumption, research finds
Household debt in the US accounted only slightly for the decline in household consumption nationally in the 2000s, research published by ECB finds
Falling real rates put US ‘at risk of financial instability’, says Kocherlakota
Minneapolis Fed president warns that long-run real interest rates are falling and risk causing financial instability and ineffectual monetary policy
Swedish regulators press government for clearer powers
Heads of Riksbank, FSA and National Debt Office call for government to speed up implementation of new legislation on macro-prudential powers, but minister says it could take until next year
IMF presses for Greek debt relief as Eurogroup meets
Fund official says decision must be taken on debt relief before IMF will consider providing new funds; leaked document suggests ECB and Commission are concerned about sustainability
RBA’s Lowe weighs impact of wealth redistribution
Growth in land and house prices has raised and redistributed wealth in Australia, with implications for monetary policy and financial stability
RBI paper explores challenges in public debt management
Research identifies a ‘narrow investor base’ as one hurdle and considers how to encourage greater participation from retail investors in the market for government securities
Bank of Canada paper flags risk of spillovers from emerging to developed economies
Researchers show how a search for safe assets could transmit instability to developed economies as capital flows out of emerging markets