Key takeaways Link: Statistical release: BIS international banking statistics and global liquidity indicators at end-December 2022
Banks’ ability to temporarily contract their balance sheets around reporting dates to report more favourable regulatory metrics – a regulatory arbitrage practice commonly referred to as window dressing – poses a risk to financial stability. In this paper, we investigate both the magnitude and the drivers of bank window dressing behaviour in euro-denominated repo markets.[…]
The European Central Bank (ECB) and the Single Resolution Board (SRB) welcome the European Commission’s proposed legislative changes to the European bank crisis management and deposit insurance framework. Link: ECB and SRB welcome European Commission’s legislative proposals for bank crisis management and deposit insurance framework
The European Commission has today adopted a proposal to adjust and further strengthen the EU’s existing bank crisis management and deposit insurance (CMDI) framework, with a focus on medium-sized and smaller banks. Link: Banking Union: Commission proposes reform of bank crisis management and deposit insurance framework
By Gaston Gelos, Maria Soledad Martinez Peria, Erlend Nier, Fabian Valencia While many emerging economies have been using macroprudential policy tools for some time, their use to safeguard financial stability was only embraced more widely in response to the global financial crisis. This column takes stock of what we have learned about macroprudential policy, and[…]
By Isabel Schnabel The ECB’s unconventional monetary policy measures have significantly expanded its balance sheet over the past eight years, including a significant growth of excess reserves on the liabilities side. In recent years, these excess reserves have been instrumental in steering short-term interest rates. Having started quantitative tightening (QT) on 1 March 2023, which[…]
By Naz Koont, Tano Santos, Luigi Zingales Bank regulators have always assumed that bank deposits are ‘sticky,’ but the advent of digital banking is changing that. New research focuses not on the danger of bank runs, but rather on the new dangers of ‘bank walks.’ Link: Destabilizing Digital “Bank Walks”
By Antonio Garcia Pascual, Fabio Natalucci, Thomas Piontek NBFIs have emerged as key players in the financial sector, and global financial stability could hinge on their resilience as policy is tightened to tackle high inflation Link: Nonbank Financial Sector Vulnerabilities Surface as Financial Conditions Tighten
By Pilar Castrillo, Martin Iseringhausen, Rolf Strauch Over the coming years, the current tightening of financial conditions could diminish the financial vulnerabilities coming from high asset prices that built up during the period of low interest rates. But there are short-term risks, as recently seen when some banks outside the euro area fell upon troubled[…]
By Jon Danielsson, Charles Goodhart The downfall of Silicon Valley Bank and Credit Suisse has exposed failures in how we regulate the financial system. This column argues that the problems we now see in the system have arisen because the financial authorities have been trying to do the impossible: maintain growth while keeping inflation under[…]