Blog
Where are the new private sector central banks?
Date: 21-9-2016 For the past 8 years banks have had it rough. Partly they had themselves to blame, partly this is the result of lax (or light touch, or ‘growth oriented’ stimulative) government legislation and action. Anti-banking public opinion and…
Renegotiate the EEA post Brexit
Date: 19-9-2016 A new post-Brexit trade arrangement between the UK and the EU will be complex to negotiate, and likely to be made more complex by rejection trauma. From the point of view of long term economic growth, stable financial…
Bail-in or bail-instability
Date: 5-1-2016 Banking supervisors and legislators have opted firmly for the bail-in tool as a key part of crisis management at banks. According to the FSB, the EU competition authorities and the EU banking regulators, bail-in is the critical element…
The definition of default under banking rules
Date: 23-11-2015 Defaulting on your obligations is a clear event. You did not pay when you should, you did not show up when you promised you would, you did not deliver the assets for which you were paid. In financial…
Designing an alternative prudential regime for simple banks
Date: 1-11-2015 There has been a race between banks and regulators to add size and complexity to banking groups on the one hand and to regulations that cover such businesses on the other. It is questionable that smaller and simpler…
If reinsurers are not systemic, who are?
Date: 21-10-2015 The debate on whether insurers can be systemically important has taken a strange turn. After focusing on non-traditional and non-insurance activities at large international insurance groups, the scrutiny is now on whether or not to include reinsurance groups…
Bank bail-in consequences for pension funds, insurers and the consumers dependent on them
Date 15-10-2015 A new component of the recovery and resolution framework for banks is the mandatory bail-in of shareholders and unsecured creditors that will become mandatory across the EU at the latest in 2016. The bail-in of creditors has been…
Lessons from Volkswagen testing software for IRB banks
Date 10-10-2015 The VW manipulation of its emissions testing results provides lessons for banks, insurers and their supervisors. Testlab results bear no similarity to real life survival or failure is a simple one. Bad governance structures can lead to bad…
Variable mortgage risk weighting – Procyclical or anticyclical timing?
Date: 5-10-15 Increasing mortgage loan risk weights in a depressed property market is likely to be procyclical, as would reducing risk weights in booming property market. Strangely, this procyclicality appears to be acceptable under the contemplated EBA standards on adjusting…
Mortgage loan risk weights go up (and down?)
Date: 4-10-15 Banks that provide mortgage loans can be subject to more or less risk depending on for instance developments in house prices and house shortages in countries or cities. This means they need to hold more financial buffers or…