The Euro project is also under attack from COVID-19 (Premium)
Strong arguments have emerged for why the Euro will not survive the COVID-19 crisis and if it does, why economic and fiscal policy in Europe would be changed for a…
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Decoding the ECB’s policy moves to combat coronavirus impacts (Premium)
The European Central Bank last week released a series of policy measures to combat economic and stock market declines as a result of the coronavirus. These were all good moves,…
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Central banks consider new growth tools amid coronavirus worries
The Fed may be looking at the end of its already broadened toolkit for boosting growth. The ECB is considering all of its policy options while expressing frustration with politicians.…
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Variable €STR volumes make us wonder about other European benchmarks (Premium)
Volumes in €STR, the European Central Bank reference rate launched in October 2019, have been variable since the launch. Although the initial expectation was that €STR would see 36,000 transactions…
Read More As Europe’s negative rates hurt bank revenues, the ECB looks at breaking the cycle
Although the European Central Bank (ECB) appears comfortable in their continuation of negative interest rates, a chorus is rising that this policy is causing long-term damage to the region’s banks.…
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The Fed and the ECB are getting backed into a corner on digital currencies (Premium)
Central banks are now forced to take stablecoins, or Central Bank Digital Currencies, seriously. The impetus for this is Facebook’s Libra project, but other initiatives are taking on lives of…
Read More ECB reports euro gaining ground on US dollar as a reserve currency
The European Central Bank (ECB) has released new research showing that the euro has gained momentum as a global reserve currency while the US dollar has shrunk. Issuers of reserve…
Read More The Eurosystem Collateral Management System (ECMS) and tri-party: good, bad or indifferent? (Premium)
The ECB recently took the next step in their Eurosystem Single Market Infrastructure Gateway (ESMIG) project, which itself progresses the aims of the Eurosystem Collateral Management System (ECMS). We look…
Read More The ECB finds risk in ETF securities lending and TRS – is this real or a rehash of old stories?
The European Central Bank released their Financial Stability Report last week, including a feature on counterparty risk in synthetic and physical ETFs. We find some valid points in the analysis…
Read More The ECB’s Cœuré walks through ESTER: time is short to solve some tricky problems
The ECB’s Benoit Cœuré recently spoke about ESTER, the ECB’s new overnight rate. Benchmark reform is all the rage, and Europe, while initially setting itself some tough deadlines, is now…
Read More How can central banks effectively monitor transmission of monetary policy?
A new paper from the European Central Bank looks at the transmission of monetary policy and the concept of fragmentation, which means that monetary policy goals are not getting through…
Read More The ECB swings a big stick on supervision of repo CCPs
We understand the impulse: if a CCP’s potential failure could cause severe damage to a region’s economy and monetary policy operations, then that region’s financial supervisors should want to have…
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Central bank digital currencies keep getting a lot of attention at central banks. What’s going on here?
For all the times central bankers have said that they don’t plan to launch digital currencies any time soon, their staffs sure are paying a lot of attention to the…
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No one is happy about US deregulation except these people (Premium)
As US deregulation moves into gear, international regulators are voicing their deep concern with the breakdown of the attempted finalization of Basel III. Meanwhile, the US Congress pushes ahead while…
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Man on a mission: the Bundesbank’s Andreas Dombret has a clear vision of Europe’s financial future
The Bundesbank’s Dr. Andreas Dombret, responsible for banking, financial supervision and risk control, is presenting a vision of Europe’s financial future that should be heeded. We track some of his…
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Finadium Survey: Better Regulation for Europe’s Securities Financing Transactions
European regulation of Securities Financing Transactions (SFTs) is having its desired effect, which is a near gold standard of risk management. Unfortunately, it’s at the cost of market vibrancy. A…
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How did US and European repo markets fare at the end of 2017? (Premium)
US and European repo markets got a bit tetchy last week as the year closed but not as bad as 2016. We review the data and offer some observations. Continue…
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Regulatory roundup: Powell confirmation, UK Financial Stability, BoJ on local bonds, ECB on unsecured rates and more (Premium)
It’s been a brisk week for interesting regulatory announcements and discussions. This edition of regulatory roundup highlights key points for collateralized trading, including thinking about the direction of the Federal…
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A strange situation in Slovenia shows a threat to Central Bank independence
There’s some logic to the legal case, and a clear unconstitutionality, that the Central Bank of Slovenia, Banka Slovenije, should be liable to shareholders of banks that it took over…
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CFTC Chief Giancarlo calls EU regulatory proposals “disruptive, expensive and detrimental” to the US
In the strongest words that we’ve seen used by a leading regulator in a long time, CFTC Chairman J. Christopher Giancarlo today roundly criticized EU plans to regulate non-EU financial…
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Is the European repo market in recovery? The latest ICMA survey suggests some direction
The headlines look good: based on the ICMA ERCC’s June 2017 data collection, the European repo market grew 6.4% since December 2016 and 12.4% since June 2016 based on a…
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An ECB Reverse Repo Facility is a painful idea, even if it may be necessary
ICMA’s Andy Hill was quoted by Global Investor as being in support of a Reverse Repo Facility (RRP) in Europe: “To the extent that regulation prevents banks from doing what…
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Major global banks look to digital currency to speed cross-currency settlement
Blockchain, ECB, Federal Reserve, Fintech, Market infrastructure, Operations, Settlements, Technology
Late in 2015, UBS announced it was working on a blockchain-based digital currency for capital markets, called the utility settlement coin (USC). The USC would be used to facilitate settlement…
Read More Finadium: Central Bank Tapering: Impacts for Liquidity and Collateral Markets
Bank of England, Bank of Japan, Collateral Management, ECB, Federal Reserve, Investments, Liquidity Management
Central bank tapering season is on the horizon: this means opportunities for price volatility, spread movements between products, and exchange rate fluctuations. It also means a potentially new set of…
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Who should be counterparties to central banks? (Premium)
Central banks have shown two models for interacting with counterparties. In the Federal Reserve’s primary dealer system, there are a limited number of participants. On the other hand, the European…
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Get ahead on key issues with Finadium research: an example from the BIS Annual Report
The Bank for International Settlements (BIS) released their 87th annual report on June 25th including an important section on risks in the US dollar funding market. The section outlines concerns…
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ECB calls for completion of bank regulations, but which version?
In a speech this week, a senior ECB official called for completion of bank regulations, citing both Basel III and European rules in process. This was a good speech and…
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A new proposal for getting non-performing loans at European banks off of balance sheets
The ECB’s Vice President Vítor Constâncio made a lucid, coherent and altogether applaudable speech on the critical need to get non-performing loans (NPLs) off of European bank balance sheets. This…
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European news roundup: Basel III, FTTs and Brexit (Premium)
We were pleased to see two points of sanity emerge from Europe this week. Both had the themes of scaling back regulatory overreach and seeking to strike a realistic balance between a…
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Brexit reaction by Bank of England brings UK in closer alignment to Europe but not in a good way
On August 4th, the Bank of England (BoE) cut its key overnight rate by half to a new record low of 0.25%, lower even than directly in the wake of…
Read More Bad debt at European banks a blink test of capital rules and the resolve of governments (Premium)
Rising bad debt at European banks – particularly those in Portugal, Spain and Italy – has taken a prominent position in the spotlight in the wake of the Brexit vote. While…
Read More ECB report shows more market instability as central bank policy is uncertain
On January 13th, the European Central Bank (ECB) released its summary of their December 2-3rd debate over stimulus and rate direction. There remain calls for stronger and increasing stimulus by…
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Rate games adding to the complexity in collateralized funding markets (Premium)
Now that the US Fed has uncorked the bottle with their first rate hike in several years, central banks around the world are starting to react in interesting ways. As…
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Why the Leverage Ratio doesn’t reduce risk, it just moves it around (Premium Content)
The value of the Leverage Ratio has been proclaimed as a non-risk based measure that is supposed to capture all on and off-balance sheet liabilities of a bank. Together with…
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A European regional perspective on market reform and growth
In 2008, a global de-regulation super trend came to a grinding halt and gave rise to an era of financial repression. However, while financial innovation and financial repression are global…
Read More Securities Finance Monitor Magazine Edition 1 is now online
We are pleased to announce the launch of Securities Finance Monitor Magazine. Hard copies were distributed at ISLA and to subscribers who completed their registration information. Download your free copy…
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T2S launches today: our podcast series on T2S, collateral and liquidity with Clearstream
Finadium and Clearstream have produced a series of podcasts on T2S, collateral and liquidity. Need to get smart about today’s launch of T2S and what it means for your collateral…
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Event recaps: T2S, collateral and liquidity in Frankfurt, London and Paris (Premium Content)
We’ve just returned from three European road shows with Clearstream discussing T2S, collateral and liquidity. These were extremely interesting – our synopsis and lessons learned are below. The meeting participants…
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T2S, the ECB and Quantitative Easing
The European Central Bank’s recent Quantitative Easing (QE) program is putting a squeeze on European repo markets. QE takes securities out of the market. T2S will help repo by aggregating…
Read More T2S, Equities and Collateral
T2S opens many doors in the world of collateral and liquidity. At its simplest, financial intermediaries will soon be able to open up one account for settlement purposes and one…
Read More T2S, Collateral and Business Model Change
Despite a common currency, Eurozone securities do not have a single settlement system. That will soon be changing. TARGET2-Securities (T2S), the European Central Bank’s (ECB) settlement initiative, tackles the fragmented…
Read More Finadium: T2S, Collateral and Liquidity: Building a Strategy for Growth
Collateral and liquidity management under TARGET2-Securities (T2S) is an emerging work stream that requires attention from market participants. Settlement mechanisms under T2S are now generally understood, including how settlement will…
Read More The European repo market is singing the QE blues.
Some recent articles have highlighted illiquidity in the European repo markets, a result of the ECB’s QE program.Continue reading
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A new LCR-compliant basket for European repo trading
The European repo market is seeing the emergence of an LCR-compliant trading basket that takes the work out of conducting credit analysis on individual bonds, especially in light of national…
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The ECB’s stress tests: what got stressed and what do the results mean?
You’ve seen the headlines by now: the European Central Bank’s stress tests showed 25 banks out of 130 with insufficient capital, and 12 of those have already raised further assets. The…
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European rules on investment managers reporting securities financing to trade repositories — will they scare away lenders?
An excellent post in COO Connect “Regulation of repo and securities loan in Europe will increase the burden of reporting” (October 6, 2014) by Dominic Hobson caught our eye. He…
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BIS calls for “Intense Review” of data on European deflation
In the opening remarks from a Sept 4th and 5th Bank for International Settlements conference, “Indicators to Support Monetary and Financial Stability Analysis: Data Sources and Statistical Methodologies”, BIS Deputy…
Read More Two papers from the ECB on liquidity crunches and stress indices
The European Central Bank released two working papers yesterday, each of which has something interesting to say about understanding financial markets. These papers add to the conversation of how regulators…
Read More Qualifying Securitisations: a kinder, better SIV?
A new discussion paper from the European Central Bank and the Bank of England, “The case for a better functioning securitisation market in the European Union,” has introduced the idea…
Read More Some things we heard at the Finadium Conference
Thank you to everyone at the Finadium Conference on Tuesday, March 25th. It was a great success with a record-breaking turnout. We would like to do a post on a…
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