The role of credit-rating agencies from a central banker s perspective

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "The role of credit-rating agencies from a central banker s perspective"

Transcription

1 SPEECH DATE: SPEAKER: LOCALITY: HANTERINGSKLASS: Stefan Ingves Stockholm Centre for Commercial Law ÖPPEN SVERIGES RIKSBANK SE Stockholm (Brunkebergstorg 11) Tel Fax The role of credit-rating agencies from a central banker s perspective The combination of law and economics is particularly important to society. From an economist s point of view, legal texts are the packaging technology by which economic arguments can be turned into policy. One challenge is of course to create legally-sound texts that incite the desired behaviour of economic agents. The field of credit rating and credit-rating agencies constitutes a fascinating intersection between law and economics. Over the past few years, regulators worldwide have also worked hard to implement new legislation aimed at improving the quality of credit ratings and thus the efficiency of financial markets. Today, I would like to discuss the role of credit-rating agencies from a central banker s perspective. As you are all aware, we central bankers are concerned with financial stability and credit ratings are important from a financial-stability perspective. To begin with, I would like to discuss why credit-rating agencies are important to financial markets and to society as a whole. I would also like to discuss what we can expect from the various players on the credit-rating market; rating agencies, investors and regulators. Secondly, I will present some empirical examples of how credit-rating agencies have performed over time. Finally, I will give my opinion on some current issues related to credit-rating agencies. Credit-rating agencies are important for financial markets Many banks and other financial institutions are both large and complex. This makes it difficult and costly for lenders to evaluate the creditworthiness of a bank. This task is especially difficult for ordinary depositors. Credit-rating agencies therefore perform a service to society as a whole by providing credit opinions on financial institutions. In addition, the credit-rating industry is characterized by economies of scale which makes it more efficient that a smaller number of players specialize in performing credit-risk assessments. 1 [6]

2 Credit-rating agencies provide information How can we then define the role of credit-rating agencies on the financial markets? I would say that the role of rating agencies is to provide information to market participants. The information asymmetry surrounding the credit quality of an institution or asset is not much different from the market for lemons described in Akerlof s classic article from Borrowers know much more about their own credit quality than lenders. Unless investors can distinguish between borrowers with a high credit quality and those with a low credit quality, they may not be willing to provide funding on more favourable terms to the good borrowers. This could drive high-quality borrowers out of the market and lead to a lower equilibrium level of investment than if information on the credit quality of borrowers was known. When credit-rating agencies provide accurate information on the credit quality of borrowers, the price of credit can reflect that quality and overall market efficiency can improve. Especially for smaller market participants with a limited capacity to perform their own credit-risk assessment, external credit ratings can be an important source of information on counterparties and investments. For smaller issuers, acquiring a credit rating from a well-known rating agency can also be an important tool for signalling creditworthiness and for getting access to market funding. Investors remain responsible for the investment decision Irrespective of the usefulness of the credit opinion of rating agencies, investors should not rely exclusively or mechanically on credit-rating agencies. Ultimately, market participants remain responsible for the decision to invest in a certain asset or to lend to a certain institution. This also means that market participants must understand the credit quality of their investments and exposures. Although it is reasonable that credit-rating agencies can be held responsible for serious mistakes, this should never shift the responsibility for the investment decision from the investor to the rating agency. Only if the investor is fully responsible for the decision to lend money will he or she do it prudently enough and the problem of moral hazard can be avoided. Today, many large financial institutions rely significantly on their own internal models for assessing credit risk. There is currently a challenge, especially for small and medium-sized institutions, to find the right balance between relying on external credit ratings and performing one s own credit-risk assessment. Regulators ensure transparency and accountability Until recently, the regulation of the credit-rating market was almost nonexistent. However, in the aftermath of the recent global financial crisis, the importance of the supervision of financial institutions has come to the fore. The growing reliance on credit-rating agencies in global financial regulation also justifies a certain regulatory monitoring of the quality of their ratings. Therefore, regulators have a role to play in setting standards for the accountability and transparency of the rating process and the resulting ratings. In the EU, a 1 Akerlof, George A. (1970). The Market for Lemons : Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics (The MIT Press) 84(3): [6]

3 first regulation 2 of credit-rating agencies entered into force in 2009 and additional regulation is currently under negotiation. A potential conflict of interest One of the major issues that has called into question the credibility of creditrating agencies is their remuneration model. In the past, rating agencies were principally paid by investors, whereas today they are to a large extent paid by the rated institutions themselves. This raises the question of whether creditrating agencies act in the interests of those who invest the money or those who borrow the money? There is a potential conflict of interest here since the issuer has an incentive to choose the credit-rating agency that provides the highest rating. This may cause credit-rating agencies to issue higher ratings than warranted in order to win business. This in turn is not in the interests of investors who want the most accurate credit assessment. However, this potential conflict of interest is somewhat mitigated by the fact that credit-rating agencies depend on their reputation. Issuing credit ratings that do not reflect the underlying credit quality may not be a sustainable business model in the long run. Still, it is relevant to further clarify the question of on whose behalf creditrating agencies act. One method could be to require additional transparency regarding the relationship between the credit-rating agency and its clients. Increased transparency concerning the nature and size of the business relationship would allow market participants to make their own assessment of any potential conflict of interest. It is also important that credit-rating agencies are transparent with respect to the rating methodologies and information each credit rating is based on. This transparency will help market participants in assessing and comparing credit ratings. Empirical examples of credit-rating agency performance Obviously, there is a preference for credit-rating agencies to provide ratings that are not only accurate but also forward-looking. However, any agency that makes many credit judgements over time will sometimes make mistakes. The probability of misjudgements is particularly high in periods when the economy is moving from one state to another. Let us now discuss a few examples of the performance of credit-rating agencies over time. The Swedish economic policies of the 1980s laid the foundations for the problems that surfaced in the early 1990s. However, during the 1980s, Sweden s AAA credit rating did not suffer despite the growing fiscal deficit and falling competitiveness. Our credit rating was only revised downwards when the longrunning economic problems became acute in In 1995, the Swedish debtto-gdp ratio peaked at almost 80 per cent and our credit rating was three steps below AAA. But, I would say that by then we had already solved the major economic problems and laid the groundwork for the sound and competitive 2 Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit-rating agencies. 3 [6]

4 economy Sweden is today. Nevertheless, it took us more than 10 years, until 2002, to go through the cycle and regain our AAA status. In this period, I was myself working at the Swedish Ministry of Finance, which dealt with the credit-rating agencies. The rating downgrades came in spite of some attempts to convince rating agencies that the Swedish economy was in good shape. In retrospect, the assessment made by the rating agencies was in my view not unreasonable. The credit-rating events that we now see in southern Europe are somewhat similar to what happened in Sweden in the early 1990s. If we examine the credit ratings of the most severely-indebted countries in southern Europe, we can see that not much happened for quite a while despite growing external imbalances and fiscal deficits. Suddenly, over the past few years, there has been a significant downward shift in sovereign ratings. Of course, now there are more and larger countries involved, which provokes a more intense debate about the credit-rating process. The same pattern of rating developments can also be found for structured products during the most recent financial crisis. For a period of almost 30 years, there was only a very small number of credit-rating downgrades on the US structured finance market. Suddenly, as the subprime crisis hit the US economy in 2007, the number of rating downgrades skyrocketed 3. Meanwhile, the investment bank Lehman Brothers retained the relatively high credit rating A until its failure in September Of course, these dramatic shifts in credit ratings over the recent financial crisis have caused some tension among investors who buy the rating information on which they then base their investment decisions. We can without doubt say that credit-rating agencies bear some responsibility for not being fully as forward-looking and good at assessing risks as we would wish. This might also be because when the world has been stable for a long time, we tend to believe that it will continue to be stable. Long periods of stability also risk creating complacency and reduced alertness to signs of change. In reality the state of the economy can change rapidly and managing this transition is difficult. The sudden large revisions of credit ratings provide an example of the challenge of adjusting from one state of the economy to another. Current topics related to credit-rating agencies Different types of AAA Another more specific topic I would like to take up is the issue of the comparability of ratings across different asset classes. Credit-rating agencies provide ratings of many different entities such as sovereigns, financial companies and non-financial companies. Ratings can be long-term or short-term, and in domestic or foreign currency. In addition, there are specific ratings of complex products such as covered bonds and asset-backed securities (ABS). Obviously, credit-rating agencies use very different methodologies for rating the various issuers and products. For example, the methodology for rating a 3 See Benmelech, Efraim and Dlugosz, Jennifer (2010), The Credit Rating Crisis, NBER working paper. See also BIS Committee on the Global Financial System (2008), Ratings in structured finance: what went wrong and what can be done to address shortcomings? CGFS Papers No [6]

5 country is vastly different from the methodology for rating a structured product such as an ABS. Given that the credit rating of a country reflects very different qualities compared to the rating of an ABS, a relevant question is whether the AAA rating of a structured product can be compared with the AAA rating of the Kingdom of Sweden? In general, we must be careful in comparing ratings across market segments. There could also be some merits to using different rating scales for the various market segments to underline the fact that their credit quality may not be easily comparable. Reduced reliance on credit-rating agencies in the regulation Finally, let me comment on some of the recent regulatory initiatives concerning credit-rating agencies taken by the Basel Committee on Banking Supervision and the Financial Stability Board, both of which I am a member. Nowadays, credit ratings form part of many laws, standards and regulations. However, there is a risk that the regulatory endorsement of ratings as a standard measure of credit risk will lead market participants to rely too much on credit-rating agencies. In October 2010, the Financial Stability Board published a set of principles for reduced reliance on external credit ratings in standards, laws and regulations. The principles aim at improving financial stability by reducing the herding behaviour that can arise when investors act upon external credit ratings that are hard-wired into regulations and market practices. They also aim to create incentives for investors to perform more of their own credit-risk assessment. In the Basel Committee on Banking Supervision, we are also in the process of analysing how to reduce reliance on credit-rating agency ratings under Basel III, for example when assigning regulatory capital. External ratings have been an important component of the calculation of regulatory capital for credit risk, particularly in the case of small financial institutions that use the standardised approach. However, as pointed out by the Financial Stability Board, references to external ratings should only be removed from the regulation once alternative solutions have been found and can be safely implemented. The challenge of finding reliable and all-encompassing alternative measures of credit risk implies that we are likely to see references to external credit ratings in the regulation for some time to come. The continued reliance on external ratings makes it even more important for regulators to monitor the quality of credit ratings 4. Proposal for an EU rating agency A proposed solution for improved competition in the credit rating-industry, that has been discussed in Europe on several occasions, is the creation of an EU credit-rating agency. There are two main reasons why such an EU rating agency would fail to serve its purpose: First, any official-sector involvement in the rating process may create the illusion of government endorsement of the credit rating. This may cause market 4 Irrespective of the quality of credit ratings, the financial regulation itself has to adequately address credit risks. For example, the European Capital Requirements Directive, did not require any regulatory capital for holding domestic currency sovereign debt. This provision did not create the right incentives for euro area banks to manage sovereign credit risk. 5 [6]

6 participants to increase, rather than reduce, their reliance on external credit ratings. Second, although such a European credit-rating agency would be formally independent of any government, it is likely that it would be subject to political pressure that could come through funding or the appointment of board members. If this in practice would result in states rating other states, the ratings issued would not be credible. Concluding remarks Let me conclude by saying that this conference on credit-rating agencies comes at a very good time. We have recently seen changes in the economic and financial landscape, resulting in a major revision of credit ratings for many types of institutions and assets. We have responded to this shift by calling for improved regulation of the financial sector in general, including credit-rating agencies. A discussion of the effects of the new regulation of credit-ratingagencies can now begin and any required amendments can be defined. The time we have taken here to reflect further on the challenge of improving the quality of credit ratings and the possible way forward is therefore time well spent. 6 [6]

Questions and answers

Questions and answers Questions and answers DATE: 25 November 2011 DEPARTMENT: Financial stability department SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se

More information

Financing of deposit insurance - a central banker's perspective

Financing of deposit insurance - a central banker's perspective SPEECH DATE: 15 September 2005 SPEAKER: Deputy Governor Lars Nyberg LOCATION: Sveriges Riksbank SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se

More information

Sveriges Riksbank's reponse to the EU consultation on responsible lending and borrowing in the EU

Sveriges Riksbank's reponse to the EU consultation on responsible lending and borrowing in the EU European Commission SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se DNR 2009-638-AFS ESTABLISHED 1668 Sveriges

More information

SPEECH. Norges Bank 200 years

SPEECH. Norges Bank 200 years SPEECH DATE: 16/6/2016 SPEAKER: Governor Stefan Ingves LOCALITY: Norges Bank, Oslo SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se

More information

Deputy Governor Barbro Wickman-Parak The Swedish property federation, Stockholm. The property market and the financial crisis

Deputy Governor Barbro Wickman-Parak The Swedish property federation, Stockholm. The property market and the financial crisis SPEECH DATE: 17 June 2009 SPEAKER: LOCALITY: Deputy Governor Barbro Wickman-Parak The Swedish property federation, Stockholm SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00

More information

Economic Commentaries

Economic Commentaries n Economic Commentaries In its Financial Stability Report 214:1, the Riksbank recommended that a requirement for the Liquidity Coverage Ratio (LCR) in Swedish kronor be introduced. The background to this

More information

The EMU and the debt crisis

The EMU and the debt crisis The EMU and the debt crisis MONETARY POLICY REPORT FEBRUARY 212 43 The debt crisis in Europe is not only of concern to the individual debt-ridden countries; it has also developed into a crisis for the

More information

Lars Heikensten: The krona, Sweden and EMU

Lars Heikensten: The krona, Sweden and EMU Lars Heikensten: The krona, Sweden and EMU Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at the Öhman Fondkommission, Stockholm, 13 November 2002. * * * During the past

More information

Mapping of Standard & Poor s Ratings Services credit assessments under the Standardised Approach

Mapping of Standard & Poor s Ratings Services credit assessments under the Standardised Approach 30 October 2014 Mapping of Standard & Poor s Ratings Services credit assessments under the Standardised Approach 1. Executive summary 1. This report describes the mapping exercise carried out by the Joint

More information

One year with the new macroprudential policy

One year with the new macroprudential policy S P E E C H Date: 19/02/2015 Speaker: Martin Andersson Meeting: Centre for Business and Policy Studies/Finance panel Finansinspektionen Box 7821 SE-103 97 Stockholm [Brunnsgatan 3] Tel +46 8 787 80 00

More information

Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central

Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central Mr Duisenberg discusses the role of capital markets and financing in the euro area Speech by Willem F Duisenberg, President of the European Central Bank, at the Waarborgfonds Sociale Woningbouw in Utrecht,

More information

Lars Heikensten: How to promote and measure central bank efficiency

Lars Heikensten: How to promote and measure central bank efficiency Lars Heikensten: How to promote and measure central bank efficiency Speech by Mr Lars Heikensten, Governor of Sveriges Riksbank, at the Sveriges Riksbank, Stockholm, 23 May 2003. * * * Let me begin by

More information

Datum 28 September 2005 Finansinspektionen Talare Hans Bäckström Möte Nordic Forum 2005, Grand Hotel, Stockholm

Datum 28 September 2005 Finansinspektionen Talare Hans Bäckström Möte Nordic Forum 2005, Grand Hotel, Stockholm ANFÖRANDE Datum 28 September 2005 Finansinspektionen Talare Hans Bäckström Möte Nordic Forum 2005, Grand Hotel, Stockholm P.O. Box 6750 SE-113 85 Stockholm [Sveavägen 167] Tel +46 8 787 80 00 Fax +46 8

More information

The Swedish Financial Market 2016

The Swedish Financial Market 2016 The Swedish Financial Market 2016 FOR INFORMATION about this publication, please contact Lisa Marklund, phone +46 8 787 07 93 or e-mail: lisa.marklund@riksbank.se Production: Sveriges Riksbank ISSN 2001-5054

More information

Response by Swedish authorities to the European Commission s public consultation on short selling

Response by Swedish authorities to the European Commission s public consultation on short selling Ministry of Finance Financial Institutions and Markets Fi2010/3634 10-5913 Financial Stability Department 2010-560-AFS European Commission Internal Markets and Services DG Financial Institutions markt-g3-consultations@ec.europa.eu

More information

WHITE PAPER NO. III. Why a Common Eurozone Bond Isn t Such a Good Idea

WHITE PAPER NO. III. Why a Common Eurozone Bond Isn t Such a Good Idea CENTER FOR FINANCIAL STUDIES WHITE PAPER NO. III JULY 2009 Why a Common Eurozone Bond Isn t Such a Good Idea Otmar Issing Europe s World, Brussels, Belgium Center for Financial Studies Goethe-Universität

More information

FAQ on Credit Rating. (Part 01) :00:36

FAQ on Credit Rating. (Part 01) :00:36 FAQ on Credit Rating (Part 01) 2016-03-21 00:00:36 What is a credit rating? It is a measure of the ability of an institution to meet its obligation in full in a timely manner. A debt security with a high

More information

Ten years with inflation-linked bonds - a new asset class has been established. Erik Thedéen

Ten years with inflation-linked bonds - a new asset class has been established. Erik Thedéen Ten years with inflation-linked bonds - a new asset class has been established Erik Thedéen Deputy Director General Swedish National Debt Office Notes for a speech presented at a seminar organised by FIM

More information

Implications of the SSM for the Nordic banking sector. Stefan Ingves, June 5 2014

Implications of the SSM for the Nordic banking sector. Stefan Ingves, June 5 2014 Implications of the SSM for the Nordic banking sector Stefan Ingves, June 5 2014 Financial trilemma Financial stability Financial integration National supervision Arrangements for cross-border cooperation

More information

The Swedish Financial Market

The Swedish Financial Market The Swedish Financial Market 2015 S v e r i g e S r i k S b a n k The Swedish Financial Market 2015 FOR INFORMATION about this publication, please contact Lisa Marklund, phone +46 8 787 07 93 or e-mail:

More information

Tax planning may have contributed to high indebtedness among Swedish companies

Tax planning may have contributed to high indebtedness among Swedish companies Tax planning may have contributed to high indebtedness among Swedish companies Gunnar Blomberg, Jyry Hokkanen and Sofia Kåhre The European Commission has identified in a survey of potential imbalances

More information

Stefan Ingves: Coming stronger out of a crisis lessons from Sweden

Stefan Ingves: Coming stronger out of a crisis lessons from Sweden Stefan Ingves: Coming stronger out of a crisis lessons from Sweden Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Brussels Economic Forum, Brussels, 18 May 2011. * * * If in debt,

More information

Opinion of the European Banking Authority on Mortgage Lending Value (MLV)

Opinion of the European Banking Authority on Mortgage Lending Value (MLV) EBA/Op/2015/17 5 October 2015 Opinion of the European Banking Authority on Mortgage Lending Value (MLV) Introduction and legal basis According to Article 124(1) of Regulation (EU) No 575/2013 (CRR), the

More information

Three Challenges Facing Modern Macroeconomics. White paper submitted to the National Science Foundation

Three Challenges Facing Modern Macroeconomics. White paper submitted to the National Science Foundation Three Challenges Facing Modern Macroeconomics White paper submitted to the National Science Foundation Kenneth Rogoff, Professor of Economics, Harvard University, September 21, 2010 Abstract: Three Challenges

More information

Research. What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields?

Research. What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields? Research What Impact Will Ballooning Government Debt Levels Have on Government Bond Yields? The global economy appears to be on the road to recovery and the risk of a double dip recession is receding.

More information

GREENWICH ASSOCIATES. 2014 Greenwich Leaders: European Large Corporate Banking & Transaction Services

GREENWICH ASSOCIATES. 2014 Greenwich Leaders: European Large Corporate Banking & Transaction Services 0 Leaders: European Large Corporate ing & Transaction Services Q 0 Low interest rates and new capital requirements for banks combined have altered the way large European companies finance their businesses.

More information

EBA Discussion Paper on simple standard and transparent securitisations

EBA Discussion Paper on simple standard and transparent securitisations European Banking Authority One Canada Square (Floor 46) Canary Wharf London E14 5AA UK 14 January 2015 1 of 5 EBA Discussion Paper on simple standard and transparent securitisations Bundesverband der Deutschen

More information

Exchange Rate Arrangements: The Flexible and Fixed Exchange Rate Debate Revisited

Exchange Rate Arrangements: The Flexible and Fixed Exchange Rate Debate Revisited Exchange Rate Arrangements: The Flexible and Fixed Exchange Rate Debate Revisited Gang Yi China as an Optimal Currency Area China is a large country with tremendous differences across its land. The diversities

More information

THE IMPAIRED EU SECURITISATION MARKET: CAUSES, ROADBLOCKS AND HOW TO DEAL WITH THEM

THE IMPAIRED EU SECURITISATION MARKET: CAUSES, ROADBLOCKS AND HOW TO DEAL WITH THEM THE IMPAIRED EU SECURITISATION MARKET: CAUSES, ROADBLOCKS AND HOW TO DEAL WITH THEM Introduction The securitisation market in the EU continues to be impaired. Public issuance of Asset Backed Securities

More information

Economic Commentaries

Economic Commentaries n Economic Commentaries This Economic Commentary describes how the IMF lends money to its member countries as well as the terms and conditions for the loans. The IMF has a mandate to lend money to countries

More information

Strengthening of the farmers' position in the food supply chain

Strengthening of the farmers' position in the food supply chain Strengthening of the farmers' position in the food supply chain The food supply chain connects three important sectors of the economy: agriculture, food industry and trade. Its main task is to appropriately

More information

BANKS IN SWEDEN Crisis of the 1990's and the Situation 2003

BANKS IN SWEDEN Crisis of the 1990's and the Situation 2003 BANKS IN SWEDEN Crisis of the 1990's and the Situation 2003 I am very grateful to Nikko Asset Management for giving me this opportunity to share with you how Sweden successfully dealt with its banking

More information

Should banks be allowed to go into bankruptcy

Should banks be allowed to go into bankruptcy Should banks be allowed to go into bankruptcy Robert Kärrberg, Victor Sellman Abstract A report on what consequences bankruptcy s in financial institutes have on society. The group has been equally involved

More information

Cecilia Skingsley: Household debt under the microscope

Cecilia Skingsley: Household debt under the microscope Cecilia Skingsley: Household debt under the microscope Speech by Ms Cecilia Skingsley, Deputy Governor of the Sveriges Riksbank, at SABOs (the Swedish Association of Public Housing Companies) Finance Day,

More information

R A I S I N G F U N D S I N SWEDEN

R A I S I N G F U N D S I N SWEDEN R A I S I N G F U N D S I N SWEDEN Raising funds in Sweden Sweden can offer good opportunities and many ways to raise finance for businesses. The costs of establishing a Swedish limited company are low

More information

(Legislative acts) REGULATIONS

(Legislative acts) REGULATIONS 31.5.2013 Official Journal of the European Union L 146/1 I (Legislative acts) REGULATIONS REGULATION (EU) No 462/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 May 2013 amending Regulation (EC)

More information

Net Stable Funding Ratio

Net Stable Funding Ratio Net Stable Funding Ratio Aims to establish a minimum acceptable amount of stable funding based on the liquidity characteristics of an institution s assets and activities over a one year horizon. The amount

More information

Netherlands Details Bank Tax Proposal

Netherlands Details Bank Tax Proposal Volume 65, Number 2 January 9, 2012 Details Bank Tax Proposal by Jean-Paul van den Berg and Johan Vrolijk Reprinted from Tax Notes Int l, January 9, 2012, p. 91 Reprinted from Tax Notes Int l, January

More information

China s exchange rate and monetary policies

China s exchange rate and monetary policies China s exchange rate and monetary policies Wang Xiaoyi 1 1. Chinese economic growth maintains good momentum and the exchange rate shows increasing flexibility In 2010, the global economy continued to

More information

THE FUTURE OF THE BELGIAN FINANCIAL SECTOR

THE FUTURE OF THE BELGIAN FINANCIAL SECTOR THE FUTURE OF THE BELGIAN FINANCIAL SECTOR REPORT OF THE HIGH LEVEL EXPERT GROUP ESTABLISHED ON THE INITIATIVE OF THE MINISTER OF FINANCE OF BELGIUM BRUSSELS, 13 JANUARY 2016 Executive summary REFORMS

More information

SPEECH. Household debt under the microscope*

SPEECH. Household debt under the microscope* SPEECH DATE: 8 May 2007 SPEAKER: Deputy Governor Cecilia Skingsley LOCATION: Sabos finansdag, Operaterrassen, Stockholm SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax

More information

Contents. General overview Key Economic figures Main Economic trends Financial services sector Economic Outlook...

Contents. General overview Key Economic figures Main Economic trends Financial services sector Economic Outlook... Contents General overview... 3 Key Economic figures... 5 Main Economic trends... 6 Financial services sector... 11 Economic Outlook... 15 General overview The financial and economic crisis called for the

More information

Hoist Finance announces its intention to launch an initial public offering and listing on Nasdaq Stockholm

Hoist Finance announces its intention to launch an initial public offering and listing on Nasdaq Stockholm Press release Stockholm 26 February 2015 Hoist Finance announces its intention to launch an initial public offering and listing on Nasdaq Stockholm Hoist Finance AB (publ) ( Hoist Finance or the Company

More information

Vulnerabilities in the modern payment system

Vulnerabilities in the modern payment system SPEECH DATE: 18 October 2006 SPEAKER: LOCALITY: First Deputy Governor Eva Srejber Swedish Risk Management Conference, Eskilstuna SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787

More information

Summary. Preventing and managing financial crises. The Financial Crisis Committee s work and the contents of its report

Summary. Preventing and managing financial crises. The Financial Crisis Committee s work and the contents of its report Summary Preventing and managing financial crises The Financial Crisis Committee s work and the contents of its report The Financial Crisis Committee s work aims to improve the government s ability to reduce

More information

THE INTERNATIONAL FEDERATION OF ACCOUNTANTS

THE INTERNATIONAL FEDERATION OF ACCOUNTANTS THE INTERNATIONAL FEDERATION OF ACCOUNTANTS Building Strong and Sustainable Organizations, Financial Markets, and Economies International Federation of Accountants WHAT IS IFAC? The International Federation

More information

African Bond Market Conference November 7 8, 2011 Nairobi, Kenya

African Bond Market Conference November 7 8, 2011 Nairobi, Kenya African Bond Market Conference November 7 8, 2011 Nairobi, Kenya Credit Ratings: Opportunities and Challenges The Nigerian Experience Vivien Shobo Chief Executive Officer, Agusto & Co Limited Agenda Introduction

More information

Why a Floating Exchange Rate Regime Makes Sense for Canada

Why a Floating Exchange Rate Regime Makes Sense for Canada Remarks by Gordon Thiessen Governor of the Bank of Canada to the Chambre de commerce du Montréal métropolitain Montreal, Quebec 4 December 2000 Why a Floating Exchange Rate Regime Makes Sense for Canada

More information

The Swedish Financial Market

The Swedish Financial Market The Swedish Financial Market 2014 S v e r i g e S r i k S b a n k The Swedish Financial Market 2014 FOR INFORMATION about this publication, please contact Emma Brattström, phone +46 8 787 06 71 or e-mail:

More information

Ministry of Finance Finansinspektionen Sveriges Riksbank

Ministry of Finance Finansinspektionen Sveriges Riksbank Ministry of Finance Financial Markets Department Dnr: Fi2015/04660/FMA/B Banking Dnr: 15-13707 Financial Stability Department Dnr: 2015-00579 European Commission DG Financial Stability Financial Services

More information

ECONOMIC AND SOCIAL COUNCIL

ECONOMIC AND SOCIAL COUNCIL ECONOMIC AND SOCIAL COUNCIL The Impact of Credit Rating Agencies on Financing for Sustainable Development (ECOSOC Chamber, 8 December 2014, 10 am to 1 pm) PROGRAMME Chair: H.E. Mr. Martin Sajdik (Austria),

More information

Current account deficit -10. Private sector Other public* Official reserve assets

Current account deficit -10. Private sector Other public* Official reserve assets Australian Capital Flows and the financial Crisis Introduction For many years, Australia s high level of investment relative to savings has been supported by net foreign capital inflow. This net capital

More information

Credit Rating Agencies Reducing reliance and strengthening oversight

Credit Rating Agencies Reducing reliance and strengthening oversight 29 August 2013 Credit Rating Agencies Reducing reliance and strengthening oversight Progress report to the St Petersburg G20 Summit Authorities need to accelerate work to end the mechanistic reliance of

More information

CENTRAL BANK OF THE REPUBLIC OF TURKEY

CENTRAL BANK OF THE REPUBLIC OF TURKEY CENTRAL BANK OF THE REPUBLIC OF TURKEY Price Stability Erdem Başçı, Deputy Governor 2nd KPMG Turkey Financial Risk Management Conference May 2009 Distinguished Guests, Before I begin my presentation, I

More information

Lars Nyberg: The Riksbank's monetary policy strategy

Lars Nyberg: The Riksbank's monetary policy strategy Lars Nyberg: The Riksbank's monetary policy strategy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the Foreign Banker s Association, Stockholm, 14 September 2006. Introduction

More information

International Deposit Insurance Survey

International Deposit Insurance Survey International Deposit Insurance Survey Section 1: Background Information 1.1 Organization (deposit insurer) responsible for administering the deposit insurance system: 1.1.1 Organization Name: Swedish

More information

whether the original maturity of the commitment was greater than or up to one year.

whether the original maturity of the commitment was greater than or up to one year. 1 Remarks on Basel III and trade finance prepared for the session, Post-crisis financial regulations and their implications, of the UNCTAD Multi-Year Expert Meeting on Services, Development and Trade:

More information

Application concerning a merger between DnB Holding ASA and Gjensidige NOR ASA

Application concerning a merger between DnB Holding ASA and Gjensidige NOR ASA Norges Bank s submission of 27 August 2003 to Kredittilsynet (the Financial Supervisory Authority of Norway) Application concerning a merger between DnB Holding ASA and Gjensidige NOR ASA 166 We refer

More information

Subnational Borrowing Framework Lili Liu Lead Economist Economic Policy and Debt Department

Subnational Borrowing Framework Lili Liu Lead Economist Economic Policy and Debt Department International Seminar on Building New Countryside and Promoting Balanced Regional Development for a Harmonious Society Haikou, China 2006 年 8 月 21-26 日 Subnational Borrowing Framework Lili Liu Lead Economist

More information

The Economic Research Framework of the National Bank of Poland for

The Economic Research Framework of the National Bank of Poland for 1 The Economic Research Framework of the National Bank of Poland for 2013 2016 Introduction The principal objectives of modern central banks, including the National Bank of Poland, focus on ensuring macroeconomic

More information

SUMMARY Belfius Financing Company (LU) NOK Step Up 2 due 7 April 2020

SUMMARY Belfius Financing Company (LU) NOK Step Up 2 due 7 April 2020 SUMMARY Belfius Financing Company (LU) NOK Step Up 2 due 7 April 2020 The following summary is established in accordance with Articles 24 and 28 of the Belgian Law of 16 June 2006 on the public offer of

More information

Markets Dnr: 15-5795. Financial Services and Capital Markets Union Unit C1 Capital markets union

Markets Dnr: 15-5795. Financial Services and Capital Markets Union Unit C1 Capital markets union Ministry of Finance Financial Markets Department Dnr: Fi2015/1081/FMA/V Markets Dnr: 15-5795 Financial Stability Department Dnr: 2015-249-AFS European Commission DG Financial Stability Financial Services

More information

Director of Research of WisdomTree Europe

Director of Research of WisdomTree Europe Author Viktor Nossek Director of Research of WisdomTree Europe Viktor, who has over 13 years experience in research, joined WisdomTree from Renaissance Asset Managers where he was Head of Research. Viktor

More information

BVI s position on the Consultative Document of the Basel Committee on Banking Supervision: Capital requirements for banks equity investments in funds

BVI s position on the Consultative Document of the Basel Committee on Banking Supervision: Capital requirements for banks equity investments in funds Frankfurt am Main, 4 October 2014 BVI s position on the Consultative Document of the Basel Committee on Banking Supervision: Capital requirements for banks equity investments in funds BVI 1 gladly takes

More information

Liquidity Investment Challenges

Liquidity Investment Challenges k Global Liquidity Management December 2014 Liquidity Investment Challenges Executive summary The landscape for liquidity investors has changed dramatically in the years since the financial crisis. These

More information

IMPACTS OF THE BASEL II REGIME ON THE OPERATIONS OF FINANCIAL INSTITUTIONS WITH REGARD TO THE ELIGIBILITY CRITERIA OF COLLATERALS

IMPACTS OF THE BASEL II REGIME ON THE OPERATIONS OF FINANCIAL INSTITUTIONS WITH REGARD TO THE ELIGIBILITY CRITERIA OF COLLATERALS IMPACTS OF THE BASEL II REGIME ON THE OPERATIONS OF FINANCIAL INSTITUTIONS WITH REGARD TO THE ELIGIBILITY CRITERIA OF COLLATERALS Introduction The primary objective of the following publication is to give

More information

The AD-AS Model and Monetary Policy

The AD-AS Model and Monetary Policy Introduction The AD-AS Model and Monetary Policy Chapter 14 Monetary policy is one of the two main traditional macroeconomic tools to control the aggregate economy. While fiscal policy is controlled by

More information

House price developments in Sweden and abroad

House price developments in Sweden and abroad House price developments in Sweden and abroad HOUSE PRICE DEVELOPMENTS IN SWEDEN AND ABROAD In the past decade, house prices have risen rapidly in many countries, including Sweden. That has given rise

More information

Fixed income benchmarks Time to think again?

Fixed income benchmarks Time to think again? February 2013 Fixed income benchmarks Time to think again? There are a number of drawbacks to the use of traditional fixed income benchmarks. As a consequence, some fixed income managers are reappraising

More information

ECB-PUBLIC OPINION OF THE EUROPEAN CENTRAL BANK. of 24 July 2013. on the financial independence of Sveriges Riksbank (CON/2013/53)

ECB-PUBLIC OPINION OF THE EUROPEAN CENTRAL BANK. of 24 July 2013. on the financial independence of Sveriges Riksbank (CON/2013/53) EN ECB-PUBLIC OPINION OF THE EUROPEAN CENTRAL BANK of 24 July 2013 on the financial independence of Sveriges Riksbank (CON/2013/53) Introduction and legal basis On 22 April 2013, the European Central Bank

More information

The buck stops here: Vanguard money market funds

The buck stops here: Vanguard money market funds The buck stops here: Vanguard money market funds Vanguard commentary September Executive summary. Money market funds play an important role for Vanguard clients, providing a high-quality and liquid investment

More information

THE ROLE OF CENTRAL BANKS IN FINANCIAL SUPERVISION. THE EUROPEAN UNION PERSPECTIVE

THE ROLE OF CENTRAL BANKS IN FINANCIAL SUPERVISION. THE EUROPEAN UNION PERSPECTIVE THE ROLE OF CENTRAL BANKS IN FINANCIAL SUPERVISION. THE EUROPEAN UNION PERSPECTIVE ANNA JURKOWSKA-ZEIDLER Faculty of Law and Administration, University of Gdansk Abstract There are two main arguments for

More information

Credit Quality in the Australian Non-Government Bond Market 1

Credit Quality in the Australian Non-Government Bond Market 1 Financial Stability Review March 4 Credit Quality in the Australian Non-Government Bond Market 1 1. Introduction The average credit rating of bonds outstanding in the Australian non-government bond market

More information

The goal of monetary policy as conducted by Norges Bank is to maintain. Norway s Approach to Monetary Policy. Giovanni P. Olivei

The goal of monetary policy as conducted by Norges Bank is to maintain. Norway s Approach to Monetary Policy. Giovanni P. Olivei Norway s Approach to Monetary Policy Giovanni P. Olivei Economist, Federal Reserve Bank of Boston. giovanni.olivei@bos.frb.org The goal of monetary policy as conducted by Norges Bank is to maintain low

More information

Principles for Reducing Reliance on CRA Ratings

Principles for Reducing Reliance on CRA Ratings Principles for Reducing Reliance on CRA Ratings 27 October 2010 Table of Contents Principle I: Reducing reliance on CRA ratings in standards, laws and regulations... 1 Principle II: Reducing market reliance

More information

Locational Banking Statistics in Ireland: Introducing the Enhanced Quarterly Statistics

Locational Banking Statistics in Ireland: Introducing the Enhanced Quarterly Statistics 73 Introducing the Enhanced Quarterly Statistics Dermot Coates and Aoife Moloney 1 Abstract This article introduces the recently expanded Locational Banking Statistics published by the Central Bank of

More information

GOVERNMENT OF SAINT LUCIA DEBT MANAGEMENT STRATEGY

GOVERNMENT OF SAINT LUCIA DEBT MANAGEMENT STRATEGY Page 1 of 5 Introduction GOVERNMENT OF SAINT LUCIA DEBT MANAGEMENT STRATEGY Debt management is the process of establishing and executing a strategy for managing the government s debt in order to raise

More information

Challenges to Central Banking from Globalized Financial Systems. Discussant s comments by Michael Reddell Reserve Bank of New Zealand 1 On

Challenges to Central Banking from Globalized Financial Systems. Discussant s comments by Michael Reddell Reserve Bank of New Zealand 1 On Challenges to Central Banking from Globalized Financial Systems Conference at the IMF in Washington, D.C., September 16 17, 2002 Discussant s comments by Michael Reddell Reserve Bank of New Zealand 1 On

More information

OPINION OF THE EUROPEAN CENTRAL BANK. of 24 October 2008

OPINION OF THE EUROPEAN CENTRAL BANK. of 24 October 2008 EN OPINION OF THE EUROPEAN CENTRAL BANK of 24 October 2008 at the request of the Swedish Ministry of Finance on a draft proposal on stabilising measures for the Swedish financial system (CON/2008/59) Introduction

More information

Introductory remarks by Jean-Pierre Danthine

Introductory remarks by Jean-Pierre Danthine abcdefg News conference Berne, 15 December 2011 Introductory remarks by Jean-Pierre Danthine I would like to address three main issues today. These are the acute market volatility experienced this summer,

More information

Credit reporting: Towards better access to credit and protection for consumers Elina Pyykkö* ECRI Commentary No. 9 (March 2012)

Credit reporting: Towards better access to credit and protection for consumers Elina Pyykkö* ECRI Commentary No. 9 (March 2012) EU Credit reporting: Towards better access to credit and protection for consumers Elina Pyykkö* ECRI Commentary No. 9 (March 2012) Credit reporting addresses the fundamental problem of credit markets:

More information

Nationwide Building Society Treasury Division One Threadneedle Street London UK EC2R 8AW. Tel: +44 1604 853008 andy.townsend@nationwide.co.

Nationwide Building Society Treasury Division One Threadneedle Street London UK EC2R 8AW. Tel: +44 1604 853008 andy.townsend@nationwide.co. Nationwide Building Society Treasury Division One Threadneedle Street London UK EC2R 8AW Tel: +44 1604 853008 andy.townsend@nationwide.co.uk Uploaded via BCBS website 21 March 2014 Dear Sir or Madam BASEL

More information

Professor Axel A Weber President of the Deutsche Bundesbank. European Monetary Union and the Financial Crisis: Lessons for Economic Policy

Professor Axel A Weber President of the Deutsche Bundesbank. European Monetary Union and the Financial Crisis: Lessons for Economic Policy Professor Axel A Weber President of the Deutsche Bundesbank European Monetary Union and the Financial Crisis: Lessons for Economic Policy Speech at the Foreign Policy Association in New York Tuesday, 12

More information

Per Jansson: Some aspects of the economic situation

Per Jansson: Some aspects of the economic situation Per Jansson: Some aspects of the economic situation Speech by Mr Per Jansson, Deputy Governor of the Sveriges Riksbank, at Nordea, Stockholm, 3 March. * * * Today, I will talk about the assessment of the

More information

Toward Further Development of the Tokyo Financial Market: Issues on Repo Market Reform

Toward Further Development of the Tokyo Financial Market: Issues on Repo Market Reform May 13, 2015 Bank of Japan Toward Further Development of the Tokyo Financial Market: Issues on Repo Market Reform Keynote Speech at the Futures Industry Association Japan (FIA Japan) Financial Market Conference

More information

Explanatory note on the ECB Regulation on the collection of granular credit and credit risk data

Explanatory note on the ECB Regulation on the collection of granular credit and credit risk data Explanatory note on the ECB Regulation on the collection of granular credit and credit risk data On 18 May 2016 the Governing Council of the ECB adopted the Regulation on the collection of granular credit

More information

Pentti Hakkarainen: Bank of Finland and its activities and the Finnish economic outlook

Pentti Hakkarainen: Bank of Finland and its activities and the Finnish economic outlook Pentti Hakkarainen: Bank of Finland and its activities and the Finnish economic outlook Speech by Mr Pentti Hakkarainen, Deputy Governor of the Bank of Finland, at the Honorary Consulars meeting, Helsinki,

More information

ESBG response to the public consultation on Credit Rating Agencies

ESBG response to the public consultation on Credit Rating Agencies ESBG response to the public consultation on Credit Rating Agencies European Savings Banks Group Register ID 8765978796-80 January 2011 DOC 1446/10 UKO/LWH/JAY The European Savings Banks Group (ESBG) appreciates

More information

Press release. LCQ19: Regulation of credit rating agencies in Hong Kong Wednesday, December 7, 2011

Press release. LCQ19: Regulation of credit rating agencies in Hong Kong Wednesday, December 7, 2011 Press release LCQ19: Regulation of credit rating agencies in Hong Kong Wednesday, December 7, 2011 Following is a question by the Hon Frederick Fung and a written reply by the Secretary for Financial Services

More information

Guidelines. Guidelines on certain aspects of the MiFID suitability requirements. 21 August 2012 ESMA/2012/387

Guidelines. Guidelines on certain aspects of the MiFID suitability requirements. 21 August 2012 ESMA/2012/387 Guidelines Guidelines on certain aspects of the MiFID suitability requirements 21 August 2012 ESMA/2012/387 Date: 21 August 2012 ESMA/2012/387 Contents I. Scope 3 II. Definitions 3 III. Purpose 4 IV. Compliance

More information

Diane Delelis 21.10.2011. Securitization. Finance (Basics) Luděk Benada

Diane Delelis 21.10.2011. Securitization. Finance (Basics) Luděk Benada Diane Delelis 21.10.2011 Securitization Finance (Basics) Luděk Benada Index Introduction... 3 I. Detailed presentation...3 II. Vocabulary of securitization...4 III. An example...5 IV. Advantages...6 1.

More information

Mapping of Creditreform Rating AG s credit assessments under the Standardised Approach

Mapping of Creditreform Rating AG s credit assessments under the Standardised Approach 30 October 2014 Mapping of Creditreform Rating AG s credit assessments under the Standardised Approach 1. Executive summary 1. This report describes the mapping exercise carried out by the Joint Committee

More information

The Liquidity Coverage Ratio and Potential Implications for (Small) Business Financing in an Austrian Context Executive Summary (July 2012)

The Liquidity Coverage Ratio and Potential Implications for (Small) Business Financing in an Austrian Context Executive Summary (July 2012) The Liquidity Coverage Ratio and Potential Implications for (Small) Business Financing in an Austrian Context Executive Summary (July 2012) A study by IHS (Bernhard Felderer, Ines Fortin) and LBMS (Luise

More information

LONG-TERM FINANCING. Investor Perspectives in Europe

LONG-TERM FINANCING. Investor Perspectives in Europe LONG-TERM FINANCING Investor Perspectives in Europe LONG-TERM FINANCING Investor Perspectives in Europe Overview In the aftermath of the global financial crisis, a more diversified set of intermediaries

More information

RISK FACTORS AND RISK MANAGEMENT

RISK FACTORS AND RISK MANAGEMENT Bangkok Bank Public Company Limited 044 RISK FACTORS AND RISK MANAGEMENT Bangkok Bank recognizes that effective risk management is fundamental to good banking practice. Accordingly, the Bank has established

More information

Significant investment in Slovenia and bond issuance

Significant investment in Slovenia and bond issuance DDM DEBT AB (publ) Corporate Registration Number: 559053-6230 Interim Report Q3 1 July 30 September Significant investment in Slovenia and bond issuance Highlights third quarter Net collections of EUR

More information

Aegon sells majority of UK annuity portfolio to Rothesay Life

Aegon sells majority of UK annuity portfolio to Rothesay Life Aegon sells majority of UK annuity portfolio to Rothesay Life Helping people achieve a lifetime of financial security April 11, 2016 Important step in executing UK strategy Sale of two thirds of UK annuity

More information

Basel III: The Net Stable Funding Ratio

Basel III: The Net Stable Funding Ratio POSITION PAPER Our reference: 2014/00010 1 (10) 11/04/2014 Basel Committee on Banking Supervision Consultative Document Basel III: The Net Stable Funding Ratio Key suggestions to the current NSFR proposal

More information

Sovereign risk methodology

Sovereign risk methodology Sovereign risk methodology 15 Jan 2014 - IHS Economics and Country Risk IHS provides unique, data-supported Sovereign Risk Credit Ratings for 205 countries. This document explains the purpose of the ratings

More information

Economic commentaries

Economic commentaries No. 8 2012 Economic commentaries The Basel I floor transitional arrangement and backstop to the capital adequacy framework Henrik Borchgrevink, Norges Bank Financial Stability* *The views expressed in

More information