The nation’s largest bank holding companies are strongly capitalized and would be able to lend to households and businesses during a severe global recession, according to the results of supervisory stress tests. The most severe hypothetical scenario projects $578 billion in total losses for the 35 participating bank holding companies during the nine quarters tested. The “severely adverse” scenario, the most stringent scenario yet used in the Board’s stress tests, features a severe global recession with the U.S. unemployment rate rising by almost 6 percentage points to 10 percent, accompanied by a steepening Treasury yield curve.
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The Financial Stability Board (FSB) published two guidance documents to assist authorities in implementing its Key Attributes of Effective Resolution Regimes for global systemically important banks (G-SIBs). The guidance documents were issued for public consultation in November 2017 and have been revised in light of the comments received during the consultation. The guidance will support the application of the overall policy framework to end “too-big-to-fail”. Together with the final guidance the FSB published feedback notes setting out how responses to the November public consultations have been incorporated into the final guidance.
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The Financial Conduct Authority (FCA) has published the latest analysis from its Financial Lives survey. Today’s report puts the spotlight on the financial situation of people across the UK and highlights where in the UK people may be more vulnerable. This report finds notable differences between urban and rural areas. In rural areas, where there is greater reliance on bank branches, a higher proportion of people have difficulty getting to a bank and tend not to be able to use online banking. However, people in rural areas are more likely to be satisfied with their overall financial circumstances. By contrast, people living in urban areas are less likely to be satisfied with their overall financial position, are more likely to use high-cost loans and on average have higher levels of unsecured debt.

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The Law Commission made recommendations to Government and the Financial Conduct Authorities (FCA) on Pension Funds and Social Investment. A final joint response to this has now been published. he Law Commission made several recommendations for us in relation to Independent Governance Committees (IGCs), which we have considered carefully.
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In his speech, Fernando Restoy, Chairman, Financial Stability Institute, Bank for International Settlements, on the institutional organisation of financial supervision. “I will focus on how supervisory models have changed since the financial crisis and, in particular, how the role of central banks has evolved in that regard. For that purpose I will draw on a recent publication by the Financial Stability Institute (Calvo et al (2018)) in which we analyse the changes observed in the organisation of financial sector supervision during the last decade across a broad sample of jurisdictions.”

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The Federal Reserve Board on Thursday approved a rule to prevent concentrations of risk between large banking organizations and their counterparties from undermining financial stability. As demonstrated during the financial crisis, excessive exposure between the largest financial institutions spread contagion and eroded confidence in these institutions.

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In his opening speech at the DNB housing market seminar, Klaas Knot shares his view on how housing prices can become a problem for broader economic wellbeing, and thus form an area of interest to central bankers. A more balanced and suitable supply of housing is needed. The new Dutch housing agenda is a promising example of the leading role our government should play on the Dutch housing market.

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Switzerland’s federal government appears poised to crack down on money laundering in the wake of banking scandals and investigations linked to FIFA chiefs and Vladimir Putin’s favorite cellist among others. After the International Consortium of Investigative Journalists 2016 Panama Papers investigation, the inter-governmental Financial Action Task Force (FATF) called on the Swiss, known for bank secrecy, to do more to thwart financial crime.

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The study ‘Recent RMB policy and currency co-movements’ investigates how variation in the determinants of the renminbi’s daily fixing since the August 2015 exchange rate reform maps on to variation in the co-movement of the renminbi with regional and other emerging market currencies. We first identify three post-reform periods of RMB management: transition, basket management and countercyclical management. The co-movement with regional and Latin American currencies peaked in the basket period, when the daily fixing was most predictable and multilateral. By contrast, the decline in co-movement in the countercyclical management period between May and July 2017 leaves it premature to speak of a renminbi zone. The dependence of the co-movements on renminbi management has important implications for renminbi internationalisation.

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