Liquidity
Stress tests should consider wider range of resilience metrics – BoE article
Metrics including liquidity and funding resilience should be considered as stress tests become an important part of a central bank’s regulatory toolkit; current liquidity and funding stress scenarios are “less advanced”
Liquidity stress testing ‘essential’ – ECB supervisor
Supervisor warns conference that banks will need to shape up their internal liquidity adequacy assessment process responses for 2017
Post-crisis banking regulations increase large firms’ funding advantage – paper
Banque de France working paper presents a large-scale DGSE model with large and small firms to analyse the impact of new banking regulations
FSB sees limited evidence of regulatory side-effects
Global financial reforms appear not to have had a significant impact on market liquidity or emerging markets, and have helped prevent the global system from fragmenting, authority says
Bank of Zambia begins liquidating three financial institutions
Commercial Leasing Zambia, Cetzam Financial Services and Genesis Finance to close with immediate effect; those affected have 30 days to file objection to the courts
RBI launches bond market shake-up
Host of measures aim to develop markets, increase participation and improve liquidity in Indian capital markets, following review by former deputy governor Harun Khan
Danish research examines how central banks can impact market liquidity
Price of liquidity tends to change on days when central bank is operating in markets, with aggregate liquidity and payments activity also important, PhD thesis finds
BoE researchers outline risk of collateral collapse
In stress periods, collateral chains could break, paper in forthcoming Journal of Financial Market Infrastructure warns
Turkish central bank steps in to calm markets in wake of coup attempt
Central bank promises banks unlimited liquidity as failed coup sends shockwaves through markets; economists say banking sector is holding up so far but has some vulnerabilities
Nigerian regulator overhauls management of major local bank
Nigeria’s central bank enforced a change of management in a domestically systemically important bank due to liquidity and capital adequacy concerns; finance veterans appointed to top roles
Bank of England cuts CCB to 0% to support credit supply
In wake of Brexit uncertainty, concerns over supply of credit ‘taken off the table’ says Carney; new buffer rate to give confidence to UK economy that banks can lend in ‘challenging times’
BoE injects £3.1bn liquidity into UK banks
First post-referendum liquidity auction sees banks draw £3.1 billion in long-term repos, mostly against the weakest eligible collateral class
EU exit vote throws up financial stability risks
UK plunged into uncertainty and markets hit hard, with bank stocks some of the worst affected, but more serious problems seem to have been avoided for now
FSB unveils proposals to curb asset management risks
Consultation tackles liquidity mismatch, leverage, op risk and securities lending, with the aim of heading off potential trouble from the recent growth of asset management
Australian fixed-income markets continue to function ‘satisfactorily’, says Debelle
Regulatory change contributing to satisfactory performance, assistant governor notes; large share of activity in derivatives helping bond market to be successful
BoJ vigilant to bond market impact of QQE, Nakaso says
Central bank is monitoring effects of large-scale asset purchases and doing its best to maintain market stability, deputy governor says
Dollar strength behind breakdown in economic paradigm, says Shin
BIS head of research points to failure of covered interest parity post-2008, with the strength of the US dollar correlated with the size of market anomalies
IMF staff urge oil-reliant countries to strengthen liquidity frameworks
Low oil prices likely to harm liquidity, raising the need for improved facilities and forecasting; risk of delayed surge in non-performing loans
Optimising official reserve portfolios
Bank reserve managers require a modern, flexible approach to achieving the investment trinity of safety, liquidity and return. This strategy is typified by BlackRock’s model multi-asset portfolios, which use indexes as building blocks, maintain high…
Canadian banks could withstand shock from China, deputy governor suggests
Financial institutions have adequate capital liquidity to handle external pressures, Wilkins says; research suggests Canadian growth would decrease by 0.1% if Chinese growth fell by 1%
Reserve Bank of India modifies liquidity framework
Rajan spells out plans to “progressively lower” the liquidity deficit in the banking system as part of a broader shift in focus; RBI cuts policy rate by 25bp with inflation on track
IMF paper explores spillovers from conventional and Islamic finance
Research considers how monetary policy should adapt to the different stages of development of Islamic finance, and its interactions with conventional finance
Montenegro should create dedicated ELA ‘subaccount’ – IMF staff
Euroisation is hindering the Central Bank of Montenegro’s ability to act as lender of last resort; IMF staff call for a strengthening of ELA capacity through a “subaccount”
BoE sketches proposals for sharia-compliant facilities
Options for deposit facilities include wakalah or commodity murabahah, with the possibility of liquidity insurance to follow