Financial crisis
Changing funding patterns cut both ways for emerging markets, central bankers say
Emerging markets are moving towards greater use of capital market funding, but while this could bring benefits for monetary policy, it also throws up a host of stability risks
BIS’s Borio challenges monetary orthodoxies
Claudio Borio questions current concepts of equilibrium, monetary neutrality and deflation, calling for a rethink of monetary policy frameworks – and potentially mandate changes
Shawwa succeeds Al-Wazir as Palestine governor
Azzam Shawwa set to take over as Palestine Monetary Authority chief as Jihad Al Wazir’s eight years at the helm draw to a close
BIS paper models non-linear eurozone crisis impact
Researchers attempt to capture endogenous amplification mechanisms in causing widened lending spreads during eurozone crises
Decisions on ELA could be shifted to ECB
Mario Draghi says ‘intricate’ framework for providing emergency liquidity assistance could be reviewed in light of banking union; potential for decisions to become ‘more European’
Christopher Pissarides on QE, the eurozone and economics
The Nobel economist tells Chris Jeffery why events in Europe have undermined neoclassical beliefs, QE is an optimal policy tool and Cyprus should not have joined the euro
Book notes: The challenge of economic rebalancing in Europe, perspectives for CESEE countries, edited by Ewald Nowotny et al
A useful book on the failure of the European economy to recover from the 2008 recession, and the slowing down of the convergence of central and eastern European economies with the core of the EU
Open Forum: Market maker of last resort presents host of issues for central banks
Axel Weber and Minouche Shafik point to perils for central banks looking to step into the role of market maker during a liquidity crisis
BoE paper maps UK bank response to 2008 liquidity shock
Authors contribute to international study of banking networks, finding UK banks that grew faster pre-crisis responded more sharply to the liquidity shock in 2008
Central Bank of Iceland under scrutiny on crisis response
Supervisory board to investigate complaints over the handling of breaches in capital controls and legal uncertainty surrounding the holding company established by the central bank
‘Closed’ nature of eurozone banks increases vulnerability, Portuguese paper says
Commercial banks in the eurozone are more likely to be hit by country-specific shocks compared to US given fewer foreign branches; greater use of asset-backed securities may be a solution
Ireland: Former financial stability chief and ex-governor clash over crisis
John Hurley firmly rejects an accusation from the former financial stability head of the Irish central bank that senior management suppressed research in the lead-up to the crisis
FSB finalises elements of global bank resolution framework
The raft of documents includes final principles for effective cross-border resolution actions; latest list of globally systemic banks also published
Central Bank of Iceland approves failed bank plans
Central Bank of Iceland approves ‘composition agreements’ by failed banks, offering them the opportunity to duck a heavy stability tax
Emerging markets risk ‘quantitative tightening’, Caruana says
Problems now affecting emerging markets are a continuation of global problems, head of BIS says; response by policy-makers is too reactive and based on domestic circumstances
Bernanke offers insight into Fed’s political balancing act
Former Fed chair tells of navigating both political and economic pitfalls in crisis response, and says the US central bank’s independence is still under threat
Tightening bank loans explains much of ‘Great Recession’ in eurozone
Tightening bank loans and increases in bond premia explain much of the recent contraction in the eurozone, paper argues
Asymmetric credit growth drove pre-crisis eurozone imbalances, paper argues
Credit growth and competitiveness major causes of current account deficits, researcher says
External debt is Greece’s perennial Achilles heel, economists warn
Cycles of external debt and dependence are ‘perennial themes’ for Greek crises since 1829, and other countries may be similarly vulnerable, Carmen Reinhart and Christoph Trebesch argue
BoJ lifts lid on new approach to macro stress testing
Tests designed to measure system-wide impact of a ‘tail event’ on financial and economic stability, allowing comparisons over time; BoJ reveals underlying variables for first time
Repeat of Asian crisis ‘unlikely’, say Singapore bank chiefs
Policy-makers are responding more proactively to risks than in 1997, they say, while economies are seen as much stronger
Iosco, Asifma officials urge early global co-operation on future rules
Joining forces early on would improve regulatory cohesion between countries, but post-crisis pressure on national rule-makers to legislate poses problems, it is suggested at Hong Kong conference
Swap line availability not assured, warns Bill Allen
It is ‘not certain’ the Federal Reserve will be able to provide liquidity in the same manner in the future, Allen tells Central Banking
BIS paper offers method of overcoming time inconsistency in macro-prudential policies
Macro-prudential policies are necessary to prevent finance amplifying imbalances, but regulators struggle to credibly commit to policies, authors warn