Bank of International Settlement

BIS Working Papers  |  No 715  |  17 April 2018 by  Benjamin K Johannsen and Elmar Mertens PDF full text (1,668kb)  |  55 pages Summary Focus Over the last decade, nominal interest rates have fallen to very low levels in many countries. Thus, central banks have seen their choices for the...

by Pierre-Richard Agénor and Luiz Awazu Pereira da Silva This paper discusses the scope for international macroprudential policy coordination in a financially integrated world economy. It first reviews the transmission channels associated with, and the empirical evidence on, financial spillovers and spillbacks - which have both increased in magnitude since the global financial crisis. Then it proceeds with...

In April 2015, the G20 finance ministers and central bank governors asked the Financial Stability Board to work with the CPMI, IOSCO, and the Basel Committee on Banking Supervision to develop and report back on a workplan for identifying and addressing any gaps and potential financial stability risks relating to CCPs that are systemic across multiple jurisdictions and for helping to enhance their resolvability. This report, Framework for...

by Patrizia Baudino, Jacopo Orlandi and Raihan Zamil The prompt identification and accurate measurement of non-performing assets (NPAs) provide confidence to market participants and supervisors in banks' reported asset quality metrics, earnings performance and regulatory capital ratios - all of which are critical to fostering financial stability. Yet NPA identification and measurement practices...

G20 Leaders agreed in 2009 that all over-the-counter (OTC) derivatives contracts should be reported to trade repositories (TRs) as part of their commitment to reforming OTC derivatives markets with the aim of improving transparency, mitigating systemic risk and preventing market abuse. Aggregation of the data reported across TRs will help ensure that authorities can obtain a comprehensive view of the OTC derivatives market and its activity....

by Güneş Kamber and Madhusudan Mohanty Summary Focus Understanding how monetary policy works in China is important in the context of its growing weight in the global economy. We examine whether China's gradual transition to a market economy in the past decade and recent monetary policy reforms have made any difference to the role of interest rates in the transmission of monetary policy. Contribution...

by Elmar Mertens and James M. Nason Summary Focus Inflation-targeting central banks regularly point to surveys of inflation expectations as indicators of future price pressures, and a guide for the direction of policy. Indeed, previous research has shown that surveys predict inflation well.  However, even professional forecasters have been shown to make predictable errors. In particular, prior research...

by Jean-Philippe Svoronos Supervisors conduct early interventions with the aim of prompting banks to address their weaknesses. Interventions are normally based on discretionary powers and supervisory judgment. But some jurisdictions have introduced more formal intervention regimes which include sets of actions to be implemented when specific triggers are hit. Formal regimes vary significantly, particularly in how...

The Basel Committee on Banking Supervision today published Frameworks for early supervisory intervention, which presents a range-of-practice study on how supervisors around the world have adopted frameworks, processes, and tools to support early supervisory intervention. Since the global financial crisis, supervisory authorities have increasingly focused their attention on how early supervisory intervention can promote financial stability by...

by Ramon Moreno and José María Serena Garralda Summary Focus We ask which firms borrow in international bond markets when global investors favour risky debt. Previous research suggests that international bond issuance increases when investors' risk appetite is high. We believe this effect could be stronger for firms that benefit more from the search for yield. In addition, we seek to understand what the...