Week InReview
Weaker yuan and kinky ETFs in ICYMI | FSB plenary meets in China to prepare for G20 Leaders' Summit in September | FSB: Work remains on reforming major interest rate benchmarks | ESRB says macroprudential policy should tackle shadow bank risks | In Binge Reading Disorder: Online privacy, dodgy statistics, systemically risky code, & 'Nifty Fifty' history
Friday, July 22, 2016
Let's recap
In case you missed it . . .
FSB Plenary gathers in Chengdu, China
G20 FinMins to meet this weekend
(Jul 21) In preparation for the G20 Leaders' Summit in Hangzhou, China in September, the Financial Stability Board  Plenary met in Chengdu to discuss emerging vulnerabilities, their annual report on implementation and effects, macroprudential frameworks and tools, CCPs, effective resolution regimes, OTC derivatives trade reporting, the decline in correspondent banking, reducing misconduct, and accounting and audit issues. Group of 20 finance ministers and central bankers are set to meet this weekend. Their discussion agenda will once again be dominated by a well-worn topic: how to revive global growth.  They are  expected to reaffirm that countries shouldn't deliberately weaken currencies just to help their economies. The U.S. Treasury, for one, will reiterate the importance of avoiding exchange-rate manipulation or competitive devaluations and to consult closely on exchange markets.
Reform of the IBORs
FSB says work remains
(Jul 19) The Financial Stability Board issued a report on implementation of recommendations to reform major interest-rate benchmarks. According to the FSB,
  • Since the last progress report published in July 2015, administrators of key interbank offered rates have continued to take steps to implement the recommendations
  • The most progress has been made by the three major benchmarks of EURIBOR, LIBOR and TIBOR
  • While substantial progress has been made, the reforms of the IBORs have not been completed. Administrators should now focus on transition and decide how to anchor rates in transactions and objective market data as far as practicable
Tackling shadow-bank risks
ESRB recommends macroprudential policy
(Jul 19) The European Systemic Risk Board said in a paper published on their website that European strategy needs to be developed to deal with financial stability risks emerging beyond the traditional banking sector. Some highlights:
  • "Current macroprudential requirements mainly apply to bank credit, which is only one component of total credit. But all forms of credit can contribute to credit booms and busts. Hence, all forms of credit need to be within scope, i.e. bank loans, non-bank loans and debt securities"
  • The ESRB aims over medium- to long-term to "address risks of excessive credit growth at the level of end borrowers, independently of the type of credit"
  • the ESRB aims more urgently to "contribute to the development of new macroprudential instruments, such as instruments that address liquidity mismatches at investment funds and the procyclicality of initial margins or haircuts, especially in securities financing transactions and derivatives"
Binge reading disorder
Hand-curated, chosen with love
Your guide to online privacy: No foil hat or thermal-image-cloaking hoodie required

Our nine-point guide to spotting a dodgy statistic: Brexit is just the latest instance of politicians bending figures to match their agenda 

COBOL and legacy code as a systemic risk

C.E.O.s meet in secret over the sorry state of public companies

Read some history before screaming US stocks are in a bubble: The history of the 'Nifty Fifty' tempers fears that US stocks at record highs are in a bubble