Systemic risk
Leverage increasing among large shared loans in US, regulators warn
Fed, FDIC and OCC say lenders are relying on borrowers’ “savings and synergies”
Establishing the Fed worsened the Great Depression – St Louis Fed paper
Setting up lender of last resort reduced banks’ incentive to manage risk, paper argues
Individual bank diversification can increase systemic risk, researchers find
Banks that are not systemically important can be ‘systemic as a herd’, authors say
Yellen ‘greatly concerned’ over regulation reversals
Fed unveils proposal for relaxing stress test requirements
Book notes: Macroprudential policy and practice, edited by Paul Mizen, Margarita Rubio and Philip Turner
An important overview of the current state of thinking about macro-prudential policy, but uncertainties remain about the current allocation of financial stability responsibilities
Chinese authorities toughen rules on systemic firms
PBoC expands definition of systemically important firms and gains new powers
Agent-based models: a new frontier for macroeconomics?
Agent-based modelling is opening up new possibilities for economics, but the discipline is still struggling to move from the sidelines to the mainstream
FCA sets out stance on climate change
Firms may be asked to publicly disclose how they manage climate risk
Cyber security should become part of a firm’s culture – Irish deputy governor
Warnings must not get diluted as they pass up the chain, Sibley says
Insights from network analytics in suptech
With regulators leveraging technological innovations to move towards informed, data‑driven decision‑making and automation, supervisory technology is attracting enhanced interest. Kimmo Soramäki and Phillip Straley examine how regulators are gaining…
Fed paper presents method to better estimate systemic risk
Authors find their approach outperforms several commonly used systemic risk indicators
Next financial crisis “will be brewing” in shadow banking – Bullard
Silicon Valley disruption represents threat to financial stability; Fed has limited powers to counter it despite FSOC and tough new bank rules, says Eighth District president
Fed acts to limit largest banks’ mutual exposures
Largest banks in the US face limits on their exposures, but smaller banks are exempt for now
Book notes: Edge of chaos, by Dambisa Moyo
John Chown applauds Moyo’s analysis of how the current democratic framework is failing
Is this the beginning of a new era of credit risk management technology?
In the aftermath of the 2008 financial crisis, inadequate credit risk management systems have been widely held responsible by regulators for spreading the crisis’ germs all over the financial sector. As a result, a myriad of regulations affecting credit…
Regulatory efficiency or rollback?
Team USA’s new clarion call for regulatory “efficiency” comes with a worrying undertow, particularly related to regulatory rollback and ‘light-touch’ supervision of algorithms
Risk-based supervision focus report 2018
This first Central Banking journal focus report on risk-based supervision analyses how central banks, financial regulators and financial institutions can streamline efforts to meet onerous new regulatory and supervisory data requirements.
New risks and opportunities
Central Banking convened a panel of experts to discuss how central banks and other authorities are making use of new risk-based assessment techniques to remain ahead of the fintech curve.
The toxicology of post-crisis shadow banking
Mark Carney tempted fate in 2017 when he declared the most toxic forms of shadow banking “no longer represent a global stability risk”. Did he speak too soon?
IMF unveils first vintage of macro-prudential data
Database is the first global source of information on macro-prudential institutions, indicating an overall tightening in policy in 2016
The move to risk‑based supervision
Rapid regulatory change has led to a steep increase in data volumes and policies, and a new environment has opened up for discussions on effective regulatory supervision and a transition to risk-based supervision.
Andreas Dombret on ECB policy, deposit insurance and Basel III
The Deutsche Bundesbank executive board member speaks about exiting QE, the viability of European deposit insurance, the German banking system and doing a deal on Basel III
Reducing the regulatory burden
Former Federal Reserve Bank of New York senior vice-president Kenneth Lamar discusses risk‑based reporting, its challenges and whether fintech will help reduce the regulatory burden.
The Bank of Italy’s approach to risk-based budgeting
The financial crisis blurred the lines between Anglo-Saxon and continental European central bank models, presenting challenges when treating both the sources of risk and risk-bearing capacity using financial and accounting budgeting techniques