by Steven Maijoor

It is a pleasure to be back in London. Back at the Bank of England. Back at the ‘Old Lady of Threadneedle Street’. The Old Lady that battles inflation, safeguards financial stability and firmly protects… the gold in her vaults. Gold that lies right here, under our feet. 400 000 bars of gold, to be precise. Today, I was invited to talk about a new type of gold – or, at least, to some it is. I am referring to crypto-assets. Something the Financial Stability Board has consistently been monitoring since 2018. For a long time, crypto-assets were an experiment on the fringes of the financial system. No shop owner would accept bits and bytes instead of cash or card. But soon, certain illicit online marketplaces got wind of this new digital asset: selling illegal services or products online had never been this easy. So, regulators and law enforcement agencies sprang into action and took coordinated action to combat money laundering. Nonetheless, in those early days, chances were very slim that someone had heard of bitcoin or ether, let alone owned them. For a long time, crypto assets were an experiment on the fringes of the financial system. But they have gone through rapid and turbulent developments since then and now even pose a potential risk to financial stability. That is why all over the world, new regulation has been introduced at a national level to better supervise crypto markets and activities. To promote consistency in those regulations and supervisory practices, the Financial Stability Board has developed a global framework of recommendations. While reducing the likelihood of regulatory arbitrage, this framework offers national regulators sufficient flexibility to take more incisive action, for example if warranted by emerging risks to monetary stability. Continue reading…

Luis de Guindos

I will start by giving you an overview of the economic outlook for the euro area before going on to look at how the ECB has adjusted its monetary policy to this outlook. I will then discuss in more detail the transmission of our monetary policy in the current environment and the sources of uncertainty that appear particularly relevant at this stage. Continue reading…

The Prosecutors General and Directors of Public Prosecutions of EU Member States have extensively discussed how to enhance the role of judicial authorities in joint operations against major organised crime via the EMPACT platform. This would mean involving public prosecutors at an earlier stage in the planning and coordination of operational actions. During their 17th Consultative Forum, held on the 5th and 6th of October at Eurojust, they were also given an update on the state of play of the judicial response to the war in Ukraine and debated the challenges of protecting the environment through criminal law. Continue reading…

The Basel Committee on Banking Supervision has on 3 October issued its progress update on the adoption of the Basel Framework. The update summary and monitoring dashboard set out the jurisdictional adoption status of the Basel III standards as of end-September 2023. They cover the Basel III post-crisis reforms published by the Committee in December 2017 and the finalised minimum capital requirements for market risk of January 2019. The implementation date for these reforms was 1 January 2023, as announced by the Group of Central Bank Governors and Heads of Supervision (GHOS) in March 2020. Continue reading…

As financial firms maneuver the continued fallout of recent bank failures, analytics and AI leader SAS is expanding its partnership with Microsoft to help banks better manage looming liquidity and interest rate risks. SAS® Asset and Liability Management (ALM), powered by Kamakura Risk Manager on Microsoft Azure, supports multi-period, scenario-based, integrated simulation and valuation for risk management, capital allocation and balance sheet optimization. Continue reading…

by Klaas Knot

Despite strong buffers, despite supervision, banks can go bankrupt. That’s all part of a healthy, dynamic, competitive banking sector. And in fact, at the current juncture, with interest rates having gone up – while justified to keep inflation in check – the risk of accidents is increasing. As the Americans say ‘Whenever the Fed hits the brakes, someone goes through the windshield.’ The problem is of course that a bank failure may threaten financial stability. Because of contagion, because banks are interconnected, and because of the vital role banks play in the economy. So one of the lessons from the Global Financial Crisis is that we – that is central banks, supervisors and the banks themselves – should be thoroughly prepared for a failure, if one happens. So that the bank can be laid to rest in an orderly way, and essential public functions can continue. Continue reading…

The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have issued their Autumn 2023 Joint Committee Report on risks and vulnerabilities in the EU financial system. The Report underlines the continued high economic uncertainty. The ESAs warn national supervisors of the financial stability risks stemming from the heightened uncertainty, and call for vigilance from all financial market participants. Continue reading…

On 29 September, the Commission positively assessed the Netherlands’ modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €5.4 billion in grants and covers 22 reforms and 28 investments. The REPowerEU chapter includes a new reform and the scaling up of one investment to deliver on the REPowerEU Plan’s objectives to make Europe independent from Russian fossil fuels well before 2030, in light of Russia’s illegal invasion of Ukraine. In addition to this, the Netherlands has also proposed to modify nine measures included in the original plan and to introduce one new investment. Continue reading…

The Financial Stability Board (FSB) has recently published a consultation report on the financial resources and tools for central counterparty (CCP) resolution. The report presents the outcome of the FSB’s qualitative analysis of a set of financial resources and tools for resolution: (i) bail-in bonds; (ii) resolution funds; (iii) resolution-specific insurance; (iv) resolution-specific third-party contractual support; (v) resolution cash calls; (vi) statutory or contractual variation margin gains haircutting for resolution; and (vii) equity in a first-loss position. The resources and tools were assessed against the relevant considerations for financial resources set out in the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) and accompanying guidance on CCP resolution. Continue reading…