Financial crisis
Central Bank of Iceland to offload Kaupthing bonds acquired in the crisis
The bank will sell $860 million worth of covered bonds issued by Kaupthing Bank before the financial crisis over the next five years
ECB working paper says sovereign spreads driven by fundamentals
Paper finds that before the crisis, eurozone sovereign spreads were somewhat decoupled from fundamentals, but since then, country-specific factors have played a bigger role than regional contagion
Credit ratings hit prices 'significantly' more in times of crisis, paper finds
Effects of rating actions on market prices not crucial during favourable market conditions but 'very significant' in times of crisis; analysis covers ratings and prices of 16,500 bonds over 12 years
FDIC's Hoenig says government backstops remain 'generous subsidy' for big banks
The competitive inequities that result from too big to fail remain mostly unaddressed, Hoenig says; calls for separation between commercial banks and broker-dealers
Government intervention shielded Korea from global credit crunch
Paper by Bank of Korea and IMF economists argues external buffers such as foreign reserves and swap agreements means the country is in good shape to weather global financial turmoil
Link between ECB liquidity ops and interbank repo breaks down in crisis
Researchers at the New York Fed find that the relationship between ECB monetary policy operations and interbank borrowing did not survive the collapse of Lehman Brothers and associated crisis
Financial crisis hit Australian inventories, paper finds
RBA researcher tests theory that tight credit conditions caused Australian companies to reduce their inventories, and includes a case study on the automotive industry supporting the hypothesis
National Bank of Denmark winds up emergency lending measures
Six-month loans against a broad range of collateral introduced during the financial crisis will be terminated next year as normality returns to financial sector, central bank says
NY Fed vice-president on the evolution of Fed monetary operations
Simon Potter says the Fed has 'developed and tested' many different monetary policy tools since the crisis, including term and overnight reverse repos 'diverting deposits from banks'
OECD’s William White fears global economic system is still highly unstable
William White tells Christopher Jeffery he is wary of placing too much reliance on the ‘science’ of monetary or regulatory policy. He also believes the world economic system is still out of balance
Riksbank policy-makers differ 'fundamentally' on role of central bank, says deputy governor
Sveriges Riksbank deputy says policy approach is marginally beneficial at best and risks undermining 'public confidence' in central bank's targeting of inflation
Crisis a 'classic panic' in novel institutional context, says Bernanke
Speaking at the IMF annual research conference in DC, Fed chair warns of moral hazard arising from actions to limit crisis early on; outlines US long-term measures aimed at curbing such externalities
UBS buys back ‘bad bank' from Swiss central bank
Switzerland's biggest bank is reacquiring vehicle set up by the Swiss National Bank in 2008 to relieve it of illiquid assets and save it from potential collapse; Deal earns SNB $3.8 billion in profit
RBI tries to persuade foreign banks to put down roots
Revamped framework unveiled by India's central bank yesterday will make it easier for foreign lenders currently operating through branches to set up wholly owned subsidiaries in the country
IMF's Lipton says Germany faces grave risks from global 'mismanagement'
Fund's first deputy managing director pleads with European powerhouse to 'lift its sights to the global horizon as well' as it carries on the work of the European project
Leading central banks make emergency swap lines permanent
Six leading central banks are leaving bilateral swap agreements introduced during the financial crisis in place until further notice; US dollar liquidity-providing operations will continue as normal
RBI paper finds Indian banks were not spared by financial crisis
Working paper says that despite the global financial crisis being concentrated in advanced economies, weaker Indian banks saw their margins ‘impaired significantly’
Danish central bank to cut workforce by 10%
National Bank of Denmark to lay off 55 employees as it adjusts to post-crisis environment and introduces new IT system that makes some jobs obsolete
External balance-sheet structure key in explaining the financial crisis
High gross external debt was indicator of subsequent vulnerability, according to BoE paper; finds ‘important interaction' between 'competing ‘savings glut' and ‘banking glut' hypotheses
Mix of micro and macro indicators improves chances of spotting bank distress early on
ECB working paper presents ‘early warning model' using bank and country-level data for predicting individual bank distress in Europe
Trust in financial sector shapes long-term consumption patterns
General economic indicators, ‘animal spirits', and trust all explain ‘consumer sentiment crisis' stoked by the Great Recession, according to DNB working paper