Financial crisis
Martin Wheatley resigns as FCA chief executive
FCA chief quits after it emerges the UK chancellor will not be renewing his term next year; worldwide search begins for successor
Iceland offers pension funds relief from capital controls
Pension funds will have access to a limited amount of foreign currency in an effort to smooth the transition as controls are lifted
Central banks cannot avoid fiscal impact, Bundesbank panellists warn
Academics and central bankers point to fiscal impact of monetary policy and lender of last resort function, raising the question of how much fiscal power central banks ought to wield
EBA calls for more risk-sensitive securitisation regulation
Opinion submitted to European Commission recommends end to ‘one-size-fits-all’ capital treatment of securitisations, with two-stage process to determine which should be subject to lighter touch
Iceland’s Guðmundsson plans post-capital controls monetary redesign
‘Inflation targeting plus plus’ would help the small, open economy to pursue independent monetary policy, insulated from violent capital flows, the Icelandic governor tells Central Banking
Haldane blames ‘dread risk’ for ultra-low rates
Exaggerated fear of catastrophic but rare events may be a factor behind stubbornly low interest rates, Bank of England chief economist says
Eurogroup calls emergency conference as Greece turns to ESM for help
Greece asks for two-year bailout programme from European Stability Mechanism, triggering yet another emergency Eurogroup meeting; ECB’s Cœuré admits exit from the euro is now possible
BIS calls for new paradigm in economic policy
Annual report argues broken international monetary system and low productivity reflects failure to ‘come to grips’ with how financial and real economies interact, domestically and globally
Chatham House paper tries to quantify Syrian economic breakdown
Devastation from war, displacement of millions and oil and gas production falling into the hands of Isis and Kurdish forces have combined to create economic disaster
Coats: Greece’s banking sector options
Warren Coats assesses the soundness of Greece’s banks and the future challenges for the banking system as a debt crisis looms; proposes an innovative solution to budget deficit
ECB paper tests systemic risk using ‘VAR for VaR’ model
Researchers use quantile regression in attempt to better account for outliers, which they say could have applications for stress testing
BoE report details ‘innovative’ liquidity insurance tool
Indexed long-term repos were introduced as part of liquidity facility upgrades after the global financial crisis, and are designed to automatically adjust to stress
Irish banks have returned to profitability but still need repairs, report finds
Central Bank of Ireland’s macro-financial review notes improvements in the banking sector, but high levels of non-performing loans are holding them back
Norges Bank research reverse-engineers model of US housing crashes
Researchers test a variety of models for their fit with evidence on US housing booms and busts, finding formation of household expectations by moving average performs best
Iceland launches plan to lift capital controls
Failed banks' estates must agree settlement with creditors within six months or face heavy one-off tax; either way this should pave way for controls to be lifted next year
Jacques de Larosière on the international monetary system and the euro
Christopher Jeffery speaks to former IMF managing director Jacques de Larosière about continuing efforts to restore the global financial system and where the future now lies for Europe
Andrew Sheng: The new politics of central banking
Extraordinary policy actions by the world’s leading central banks have left them politicised and entangled in an increasingly awkward operating environment
BoE paper questions dominance of Normal distribution
Using the t distribution and time-varying variance improves a vector autoregression’s fit with the data and forecasting performance, researchers find
BoE research warns failure to capture money creation distorts DSGE models
Working paper offers ‘essential ingredients’ of a DSGE model that recognises bank lending as the source of money creation, with significant implications for economic modelling
Assessing the value of financial stability reports
More than 90 central banks now produce financial stability reports. Emrah Uslu and Eyup Kahveci look at the various approaches they take as well as appraising their usefulness.
Book notes: Smart Money, by Andrew Palmer
An important attempt to show how financial innovation is “reshaping our world for the better” all the more important
Book notes: The media and financial crises, by Steve Schifferes and Richard Roberts
A fascinating book, which gives a very different perspective on the financial crisis and its predecessors
Book notes: Hall of mirrors, by Barry Eichengreen
A scholarly, but readable narrative that interleaves an account of the build-up to and course of the Great Depression with the similar course of events in the Global Financial Crisis
ECB paper highlights stability and growth benefits of market-based finance
Researchers suggest high bank leverage may be amplifying booms and busts, damaging both financial stability and economic growth, with one solution being more market-based finance