Financial Regulatory Forum

SCENARIOS-ECB options to deal with liquidity-addicted banks

FRANKFURT, Sept 20 (Reuters) – European Central Bank policymakers are mulling ways to tackle the problem of lenders addicted to central bank liquidity, which is complicating its exit from extraordinary crisis lending measures.

Below are some of the options the ECB could consider to wean banks off the cheap and abundant funding which is pinning market interest rates for maturities of up to four months below the central bank’s benchmark interest rate.


SNAP ANALYSIS-ECB’s Wellink vulnerable after report on DSB bank failure

By Ben Berkowitz

AMSTERDAM, June 29 (Reuters) – A scathing report on the failure of Dutch bank DSB is likely to revive calls for European Central Bank governing council member Nout Wellink to step down early from some or all of his roles.

Wellink, who is also the president of the Dutch central bank (DNB) and chairman of the Basel Committee of global central bankers, is not criticised directly in the report.

But the report concludes that the central bank, which he leads, should not have licensed DSB, failed to supervise it properly and needs reform.

ANALYSIS-Central banks’ police job may cloud monetary tasks

  By Krista Hughes and Mark Felsenthal
   FRANKFURT/WASHINGTON, April 26 (Reuters) – Major central banks are taking on a new role of finance police in the wake of the global financial crisis but they could find their hands more tied as a result. (more…)

Euro zone holds intensive talks on Greek rescue

By Matthias Sobolewski and Renee Maltezou

BERLIN/ATHENS, Feb 10 (Reuters) – Euro zone countries held intensive talks on Wednesday on a possible rescue for Greece, whose debt crisis has shaken the entire currency union, as civil servants staged the first big strike against Athens’ austerity plans.

Financial markets gave Greece some respite as investors hoped that other European governments would help Athens to head off a possible default on its debt repayments.

Finance ministers of the 16 countries that share the common European currency scheduled a video conference for Wednesday to discuss the issue, a European Commission spokesman said.

European governments agree to help Greece – source

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By Matthias Sobolewski

BERLIN, Feb 9 (Reuters) – European governments have agreed in principle to help heavily indebted Greece, a senior German coalition source said on Tuesday, in what would be the first rescue of a euro zone member in the currency’s 11-year history.

“The decision on help for Greece has been taken in principle within the euro zone,” said a source in the German coalition government who has knowledge of the negotiations.

Various options were under consideration and no final decision had been taken but the most likely possibility was to offer “bilateral help,” the source said.

ECB says can’t bail out Greece, sees contagion risk

By Boris Groendahl and Terhi Kinnunen

VIENNA/HELSINKI, Feb 9 (Reuters) – Greece must get its own house in order itself as the European Central Bank cannot bail it out, two ECB policymakers reiterated on Tuesday.

“Greece, being a euro country, is under the regime of euro regulations, and so the main policy approach is of course that they have to solve the problems themselves,” ECB Governing Council member Ewald Nowotny said in an interview.

“The ECB have a clear mandate … we have a clear no-bailout clause,” Nowotny said in an interview with FT Alphaville, a blog published by the Financial Times newspaper.

Countries need timely exit from bank support – ECB’s Bini Smaghi

MILAN, Jan 29 (Reuters) – The support measures put in place by governments and central banks to help the banking system are becoming less necessary and their withdrawal must be timely, a top European Central Bank policymaker said on Friday.

In a speech on bank lending, Executive Board member Lorenzo Bini Smaghi also said banks were interpreting a global regulatory overhaul in ways that restricted lending, and that he was worried about criticism in the United States of the Federal Reserve.

“It is crucial to prevent the banking system making prolonged use of support measures, developing a sort of ‘dependence’,” he said, and added a premature withdrawal of support could sharply reduce financial gearing putting economic recovery at risk.

Major central banks to end emergency dollar lending

By Kristina Cooke and Marc Jones

NEW YORK/FRANKFURT, Jan 27 (Reuters) – Major central banks on Wednesday said they will stop the emergency U.S. dollar lending introduced during the financial crisis, a significant milestone indicating growing confidence that the financial system is returning to health.

The decision, announced in coordinated statements, marked the first unified retraction of central banks’ extraordinary support for financial markets.

The European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank, as well as the central banks of Canada, Australia, New Zealand, Mexico, Brazil and Sweden said they will let their dollar “swap” arrangements with the U.S. Federal Reserve expire on Feb. 1.

European Central Bank says E.Europe bank-asset risks remain

By Boris Groendahl

VIENNA, Dec 18 (Reuters) – Western European banks could still be hit by a further rise in bad debt in emerging Europe if the economic downturn is worse than expected or if currencies decline, the European Central Bank (ECB) warned on Friday.

The ECB said in its half-yearly financial stability report that vulnerabilities eased in the region, which includes the new EU member states as well as Ukraine and others in the former Soviet Union and Croatia or Serbia the former Yugoslavia.

The region suffered a sudden reversal of fortunes this year when a boom driven by western bank loans, exports, investment, and consumer spending slammed to a halt and caused steep contractions in almost every country.

European Central Bank welcomes new role in new European supervisory body

  FRANKFURT, Nov 4 (Reuters) – The European Central Bank welcomed plans to give it the key role in a new European supervisory body, saying it would neither distract it from ensuring price stability nor create a threat to its independence.