Solvency
Capital markets union a la Willie Sutton
When Sutton was asked why he robbed banks, he said: “That’s where the money is.” Europe has yet to address where the capital markets union funding should come from, but there is a solution
Competition strengthens banks close to insolvency – BoE paper
Competition policy’s impact on banks varies depending on the underlying health of the individual firms, BoE paper says
‘Low for long’ endangers stability, warns BIS committee
Some banks could face solvency issues if faced with a “snapback”, warns Philip Lowe
Short-selling behaviour can cause financial instability – Sarb report
Short-selling of Capitec Bank stock could have caused financial instability, Sarb says, but quick action stemmed crisis
Book notes: Respectable banking, by Anthony Hotson
The author’s sensible goal of “respectable banking” is admirable, but the recommendations would not all help to achieve this
Sovereign debt more ‘enforceable’ – ECB paper
Results show creditors have used courts to “pressure” foreign governments, resulting in restricted access to capital markets
PRA’s Sam Woods rebuts 'myths' about Solvency II
Directive has neither “crushed growth” nor driven up prices, Woods argues; regulator will form subcommittee to discuss challenges with participants
Post-crisis fiscal cuts boosted solvency without harming liquidity – DNB paper
Dutch paper uses yield spreads to analyse impact of consolidation announcements on investor perception of government solvency
Higher liquidity levels can reduce banks’ funding costs, research finds
Doubling the liquid asset ratio is found to reduce the costs of insurance against default by 24.4%
Too early to tell if eurozone NPL reforms are sufficient – ECB
Changes to legal systems are “not keeping pace” with new laws
IMF paper sheds light on solvency and liquidity interactions
Neglecting the “solvency-liquidity nexus” could lead to mistakes in stress-testing models, authors warn
Eiopa to revisit standard formula calibrations in ‘recurring exercise’
Authority considering periodical reviews to preserve Solvency II’s risk sensitivity
Technology provider of the year (supervision): Vizor Software
Vizor Software has transitioned from a niche consultancy to a technology provider of choice for central banks in 30 countries, including Canada, the UK and Saudi Arabia
Colombian central bank should examine transmission in greater detail – paper
Colombian banks with higher levels of solvency “less sensitive” to changes in policy rate authors say; central bank should go into “greater detail” when examining policy transmission
BoE concerned by broken long-term investment incentives
FPC continues work on procyclicality and short-termism among pension funds and insurers, but participants at event in London suggest others may now need to pick up the baton
Avinash Persaud calls on regulators to address ‘system-wide' risk mismatches; slams Solvency II
Forcing long-term institutions under Solvency II to behave like short-term ones will be the biggest contributor to systemic risk since Basel II, says Avinash Persaud in Central Banking journal
MAS's Menon says Basel rules could hit infrastructure finance
Basel III regulations could disincentivise long-term lending, particularly to private-sector projects, warns Monetary Authority of Singapore managing director Ravi Menon
Form of fractional reserve banking guarantees solvency for member banks
Research paper claims joint-liability bank coalition is a welfare-improving mechanism that allows members of society to achieve better allocation of resources, making it a ‘truly superior form of banking'
Early-warning indicators needed to address failings in Solvency II - PRA chief
Effective and prudent solution needed on Solvency II matching adjustment, says Bank of England deputy governor Andrew Bailey
Ireland’s Elderfield says ‘imperfect’ Solvency II should still go ahead
Deputy governor highlights many imperfections in the Solvency II framework but says it is better than the fragmentation and rising costs that are the alternative