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BoE Financial Stability Report

Bank of England Financial Stability Report, June 2013. Executive summary For much of the period since the previous Report, prices of risky assets rose and balance sheets across the financial system strengthened. More recently, however, asset prices have fallen and financial markets have been volatile, reflecting shifting expectations of the path of monetary policy in [...]

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  • 05 Jul. In Ireland, Dire Echoes of a Bailout Gone Awry. By FLOYD NORRIS The Irish bank bailout in the fall of 2008 was the first one to hit a euro zone country during the credit crisis, and it set some unfortunate precedents. It appears that the bank was in much worse shape that month than it told officials. Now we learn that it was based in no small part on manipulative lies by venal bankers. The leak of audiotapes of phone conversations between top officials of Anglo Irish Bank, which was by far the worst of a very bad lot, has stunned Ireland and damaged its relations with Germany. (more...) #
  • 24 Jun. S.E.C. Has a Message for Firms Not Used to Admitting Guilt. By JAMES B. STEWART The days of cop-out settlements in big securities cases may be waning. In a departure from long-established practice, the recently confirmed chairwoman of the Securities and Exchange Commission, Mary Jo White, said this week that defendants would no longer be allowed to settle some cases while “neither admitting nor denying” wrongdoing. “In the interest of public accountability, you need admissions” in some cases, Ms. White told me. “Defendants are going to have to own up to their conduct on the public record,” she said. “This will help with deterrence, and it’s a matter of strengthening our hand in terms of enforcement.” In a memo to the S.E.C. enforcement staff announcing the new policy on Monday, the agency’s co-leaders of enforcement, Andrew Ceresney and George Canellos, said there might be cases that “justify requiring the defendant’s admission of allegations in our complaint or other acknowledgment of the alleged misconduct as part of any settlement.” (more...) #
  • 20 Jun. Europe’s Finance Ministers Start Negotiating Guidelines on Failing Banks. By JAMES KANTER LUXEMBOURG — European Union finance ministers on Thursday began to negotiate rules for rescuing or closing failing banks, regulations considered crucial to promoting financial stability in the region. But the two-day meeting could be overshadowed by renewed concerns in Greece, where the crisis began. On Thursday, the International Monetary Fund and euro zone officials issued a thinly veiled warning that it could suspend aid to Greece by the end of July if the political turbulence prevented monitors from completing their review of the country’s finances. Olli Rehn, the European commissioner for economic and monetary affairs, expressed frustration that Greece was again undermining efforts in Europe to turn the page on its five-year crisis. (more...) #
  • 10 Jun. Quarterly Bulletin pre-release article: ‘Central counterparties – what are they, why do they matter and how does the Bank supervise them?’ Financial market infrastructures lie at the heart of the financial system. They settle transactions and, by stepping in between buyers and sellers, ensure that financial obligations are met. As such, they play a crucial role in helping the economy and financial markets to function. Central counterparties (CCPs) – also known as clearing houses – are one type of financial market infrastructure. Central counterparties: what are they, why do they matter and how does the Bank supervise them? sets out in simple terms the important role that CCPs play in the financial system. (more...) #
  • 07 Jun. Challenges of prudential regulation. Speech given by Andrew Bailey, Deputy Governor, Prudential Regulation and Chief Executive Office, Prudential Regulation Authority, At the Society of Business Economists Annual Dinner, June 2013. Thank you for inviting me this evening – it is a great pleasure to have this opportunity and particularly at a time when we are embarking on major reforms to policymaking in the area of financial regulation. The financial crisis has provided hard lessons on what happens when the stability of the financial system is found wanting. It has reminded us how much we depend upon the supply of critical services from banks, insurers, investment firms, asset managers and other parts of the financial sector. If you take the banks as Exhibit One, there is good reason to curse them, but at the same time recent experiences have only served to emphasise how much we depend upon them, like it or not. The new legislation on financial regulation in the UK emphasises the importance of the continuity of supply of critical financial services. This is a permanent public policy objective, and rightly so. I use the term “permanent” deliberately to distinguish this objective from the support provided by Too Big / Important to Fail, which should not be permanent. (more...) #
  • 24 May. Prudential Regulation Authority statement on bank capital. ​The Prudential Regulation Authority (PRA) is taking forward with the major UK banks the adjustments to capital positions identified by the Financial Policy Committee (FPC) relating to expected future losses, conduct costs and prudent risk-weighting. The PRA has set out the capital requirements for Lloyds Banking Group and Royal Bank of Scotland. The two banks have advanced their plans to a position where disclosure is appropriate. (more...) #
  • May 21. The City as Savior of E.U. Finance. By HUGO DIXON | REUTERS  It is perhaps too much to expect the Conservative-led government in Britain to lead any initiatives on Europe, given the orgy of self-destruction in the party over whether Britain should stay in the European Union .  But insofar as David Cameron manages to get some respite from the madness, he should introduce a strategy to enhance the City of London as Europe’s financial center. Britain has in recent years been playing a defensive game in response to the barrage of misguided financial rules from Brussels. It now needs to get on its front foot and sell the City as part of the solution to Europe’s problems. The opportunity is huge both for Britain and the rest of Europe. (more...) #
  • 17 May. The euro zone’s financial set-up doesn’t look very democratic. Almost six years have elapsed since the start of the financial crisis. Yet the tensions between economic (and financial) efficiency and democratic accountability are still unresolved. These tensions first appeared in the autumn of 2008 when the plan to bail out American banks via the TARP (Troubled Asset Relief Programme) caused a visceral public reaction, prompting Congress initially to reject the bill. Although the plan limited the severity of the recession, opponents still attack those congressmen who eventually supported the bill for being in hock to Wall Street. (more...) #
  • 17 May. Keeping one step ahead of the cyber criminals. One of the biggest issues facing companies globally is security - not of their physical assets, but of their computer networks and data centres. Hacking has been "industrialised", says security expert Tom McDonough, with criminals even selling hacking kits - with a promise of refunds if they do not work. So how do you protect yourself against cyber attacks? Mr McDonough, president of Nasdaq-listed Sourcefire, a cyber security intelligence company, shares his thoughts. (more...) #
  • 14 May. Regional Economic Outlook: Sub-Saharan Africa. Building Momentum in a Multi-Speed World. May 2013 Growth remained strong in the region in 2012, with regional GDP rates increasing in most countries (excluding Nigeria and South Africa). Projections point to a moderate, broad-based acceleration in growth to around 5½ percent in 2013¬14, reflecting a gradually strengthening global economy and robust domestic demand. Investment in export-oriented sectors remains an important economic driver, and an agriculture rebound in drought-affected areas will also help growth. Uncertainties in the global economy are the main risk to the region’s outlook, but plausible adverse shocks would likely not have a large effect on the region’s overall performance. (more...) #
  • 14 May. The jury’s out on whether Dodd-Frank will save capitalism. By Robert J. Samuelson. It’s been five years since the onset of the financial crisis — the rescue of Bear Stearns in March 2008 — and we still don’t know whether the financial system is safe. In a recent speech, Daniel Tarullo, the Federal Reserve’s point man on regulation, contended that substantial, though incomplete, progress has been made. As an example, he cited the doubling of equity capital for the 18 largest bank holding companies from $393 billion in late 2008 to $792 billion at the end of 2012. Equity capital is shareholders’ money; it acts as a buffer against losses. Interestingly, JPMorgan Chase’s well-publicized $6 billion loss by the trader nicknamed the “London Whale” confirms the point. Despite the loss’s size, it never threatened a panic or overall financial stability. (more...) #
  • May 13. Bank rules ‘restrict Africa growth. By Ann Crotty. Global banking rules such as Basel 3 were making it difficult for banks in Africa to provide services to the public and were consequently restricting the continent’s potential to develop, delegates attending the World Economic Forum on Africa were told last week. V Shankar, the group executive director and chief executive of Europe, Middle East, Africa and the Americas at Standard Chartered, said that Africa had huge potential and was “hot on people’s agenda”. (more...) #
  • May 13. New regulation poses a threat to investment banks, and more is on the way. “THE MOOD AMONG investment banks that I talk to…is such that they expect that the regulation is over, they expect that they will be able to keep growing their balance-sheets, that they will be growing bigger than ever,” says Axel Weber, chairman of UBS, Switzerland’s biggest bank. As a former president of Germany’s central bank, he is well placed to take the temperature of both bankers and their overseers. “The mood among the regulators I talk with is more like ‘we haven’t even started’.” (more...) #
  • May 12. Can We End Too Big to Fail? Presented by Charles I. Plosser, President and Chief Executive Officer, Federal Reserve Bank of Philadelphia.. 4th Annual Simon New York City Conference. Reform at a Crossroads: Economic Transformation in the Year Ahead. Introduction It has been nearly three years since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which called for significant reforms of financial system regulation and supervision. As regulators continue to write thousands of pages of rules to implement the various provisions of the act, it seems like a good time to ask if we are adequately addressing the issues in most urgent need of reform. Today, I want to focus on one of the most significant issues: too big to fail. (more...) #
  • 08 May. Libor scandal: Can we ever trust bankers again? As Britain awaits a major report by the Parliamentary Commission on Banking Standards, the BBC's Business Production team, in partnership with the Open University, asks what went wrong with the system and can we ever trust bankers again? About £132bn of British taxpayers' money has been spent bailing out the banks since the credit crunch in 2008 turned into an economic crisis. But the crisis has exposed deeper problems with the banking industry. (more...) #

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The purpose of the Financial Regulation Forum is to provide topical briefings, articles and education programmes to give you knowledge and keep you abreast of advances in the financial sector and financial regulation, and the associated areas of central banking, financial stability, banking and payment systems.

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Topical financial term: LIBOR (London Interbank Borrowing Rate): LIBOR, is the standard rate of computing an interest rate in all the major currencies and in many different maturities. It is set in about 10 currencies, and for each one there is one, three, six, and 12 month maturity with many in between. It's daily and very convenient. The rate affects about $800 trillion dollars of contracts and all sorts if financial instruments globally. That's more than half of the whole derivatives market.

Go to the Foreign currency converter

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