Macro-prudential
BIS’s Borio: leaning against the wind must be systematic
Claudio Borio says using monetary policy to stabilise the financial cycle is only likely to be effective if done all the time, not just when trouble is brewing
BIS paper flags spillovers from bank dividends
Dividend payments create a channel through which one bank’s capital policy can affect the equity value and risk of default of others, giving capital the attributes of a public good
Basel Committee hits turbulence on approach to year-end deadline
Central banks and supervisors offer support to its year-end goal, but industry players and EU countries show growing concern over higher capital levels
Recessions nearly tripled amount of Italian NPLs, paper argues
Italian bad debt levels would be almost one third of their current levels without the sub-prime and sovereign debt crises, a counterfactual analysis argues
Fed finalises rules for countercyclical capital buffer
US central bank promises it will only adjust the buffer gradually and will seek comment before doing so, after consultation flagged concerns
RBA’s Lowe: credit not enough to measure financial cycle
Deputy governor says the financial cycle’s “considerable intuitive appeal” needs to be backed up with better research on measuring cycles, with balance sheets likely to play a key role
Flug urges Israeli parliament to make haste in setting up financial stability committee
Bank of Israel governor says changes to banking competition increase the need for the new supervisory body, warning risks may be on the rise
RBNZ tweaks LVR rules following consultation
New rules to apply to investors nationwide, placing 5% “speed limit” for lending above LVRs of 60%; proposed new measures to come into force in October due to banks’ deadline concerns
More than AML fears driving correspondent banks away from Arab economies – report
AMF-IMF-World Bank survey of banks in Arab nations finds a broader de-risking to be behind pull-back of correspondent banking, though trend is uneven
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
Basel Committee warns on potential missed deadlines
A “significant number” of Basel standards still need to be translated into domestic regulation as deadlines loom; problems with risk-weighted asset variability and inconsistency continue
Property prices closing in on pre-crisis levels – BIS statistics
Statistics for the first quarter show advanced economy prices approaching levels last seen before the financial crisis, but emerging markets see a dip; research links house prices to credit conditions
Frontier markets need framework to strengthen capital flow resilience – IMF paper
Frontier markets are affected by capital flows in similar ways to emerging markets, the paper argues, suggesting a change in the “landscape” of capital flows could have policy implications
IMF working paper encourages Italian banks to clean up balance sheets
Italian banks are likely to become more profitable as economy recovers, authors say, though their capacity to lend is linked to capital buffers
CPMI-Iosco issues report on key data for future derivatives reporting
Report sets out working group’s proposals for how OTC derivatives products should be reported to trade repositories using unique identifiers
Definitions matter when using DTI ratios – Riksbank paper
How regulators define debt and income can affect the outcome of financial stability analysis and the use of macro-prudential tools, authors say
Data gaps hamper work on emerging market vulnerabilities – BIS paper
Large debt stocks, particularly in foreign currencies, point to vulnerabilities in some emerging markets, but gaps in the data are hampering analysis, BIS economists say
FSB fleshes out guidance on resolution
Reports add detail on emergency funding needs for global banks and maintaining the continuity of critical services during resolution; most standard-setting work expected to be finished in 2017
RBI should improve link between analysis and macro-prudential policy – FSB review
The Reserve Bank of India should consider regular financial stability meetings to set policy, and it needs to support its decisions with deeper analysis, a peer review finds
Korea needs right kind of banking competition – quarterly bulletin
Competition can harm welfare if it is focused on gaining market share through a price war, authors say; Korean system may benefit from greater diversity
Irish central bank forms macroprudential committee
Governor Philip Lane announced internal advisory committee on design of macroprudential policy; featuring senior officials, the group will convene for the first time in “early September”
ESRB unveils methodology for mapping shadow banks
ESRB presents report on European shadow banking and identifies major risks in sector; says major gaps in data still exist
UK MPs urge separation of Financial Conduct Authority functions
Parliamentary committee suggests enforcement is separated from the FCA in a report on HBOS failure; the authority says this would inhibit its ability to act as a regulator
Irish central bankers take first look at effectiveness of macroprudential housing policies
Ireland’s central bank publishes examination of its first full year of operating macroprudential measures affecting the housing market; compares data on borrowers subject and free from limits