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Sweden: Selected Issues
June 27, 2012--I. CAPITAL AND LIQUIDITY REGULATIONS: THE CASE OF SWEDEN1
1. Banks need capital and stable source of funding (liquidity) to absorb shocks and facilitate bank resolution, in the event of a bank failure. In light of global instability in recent
years, there is broad international agreement that both need to be strengthened.
However, there is a wide range of views about how much buffers would be adequate, including in the
context of EU Capital Requirements Directive (CRD) IV.
2. There are a number of approaches to assess the adequacy of capital and liquidity. One is a public finance perspective. The global financial crisis once again proved that a banking crisis could put severe pressures on public finances.
3. This note first recaps the recent debates on capital and liquidity buffers (Section A);
then discusses a way to consider appropriate levels of capital and liquidity buffers in the case
of Sweden (Section B), estimates the government’s contingent liabilities from banks by different capital and liquidity levels (Section C); and finally discusses options for Sweden in
case the authorities face constraints to set buffer at their desirable levels (Section D).
A. How Much Capital and Liquidity Should Banks Have?
There is no disagreement that more buffers will benefit financial stability and resolution
view the IMF Country report-Sweden: Selected Issues
Source: IMF
Modest Growth in EU11 Countries Foreseen in 2012
June 27, 2012--All EU11 countries* are projected to grow at a slower pace in 2012 compared to 2011 with their economies rebounding only in 2013, provided the economic problems in the Euro area do not worsen, highlights the World Bank's latest EU11 Regular Economic Report, launched today in Zagreb.
“A weak and uncertain economic outlook means that securing the recovery through strong three-pronged policy action is essential,” said Yvonne Tsikata, Sector Director for Poverty Reduction and Economic Management in the World Bank’s Europe and Central Asia region. “Overcoming the EU11’s policy challenges entails shoring up confidence in financial markets, sticking with fiscal consolidation plans and addressing the core structural issues which are barriers to growth and competitiveness,” highlighted Tsikata.
view the World Bank report-EU11 regular economic report:coping with external headwinds-special topic:drivers of convergence in EU11
Source: World Bank
The exchange traded exposures at risk of eurozone bank implosion
June 27, 2012--The genesis of concern about exchange traded funds (ETFs) stems from their rapid growth and, more significantly, the security of uncollateralised exchange traded notes (ETNs), which are coming to the fore as the eurozone crisis heats up.
Worries over ETNs emerged at the height of the credit crunch when the issuers and backers of these notes, principally investment banks and insurance giants, wobbled after the Lehman collapse.
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Source: CityWire
IMKB introduces the investor based measures system
June 27, 2012--By its Circular no. 395, IMKB clearly defines the orders and trades hindering the realization of trades on IMKB in an open, orderly and fair manner, and regulates the principles and rules regarding the measures to be taken by IMKB against the investors that have been found to be engaged in such orders or trades.
According to this Circular, issued based on the articles 14 and 25 of the Regulations Regarding the Establishment and Bodies of Securities Exchanges and article 24/A of İMKB Regulations, the orders and trades on İMKB Stock Market (excluding exchange traded funds and warrants) and İMKB Emerging Companies Market with the following features are considered to be orders and trades that prohibit the realization of trades on İMKB in an open, orderly and fair manner.
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Source: Istanbul Stock Exchange
Component Change made in STOXX Global Select Dividend 100 Index
June 27, 2012--STOXX Limited, the market-moving provider of innovative, tradable and global index concepts,today announced component changes in the STOXX Global Select Dividend 100 Index
which will become effective with the open of markets on July 2nd, 2012.
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Source: STOXX
Institutional Investors and Corporations Suggest that Inflation-Linked Corporate Bonds may Provide Solution to Both Parties and could Become an Interesting Substitute for Sovereign Debt
June 26, 2012--In a survey of institutional investors and members of corporate finance departments, EDHEC-Risk Institute sought reactions to the key conclusions of a study entitled "Optimal Design of Corporate Market Debt Programmes in the Presence of Interest-Rate and Inflation Risks", which was produced as part of the Rothschild & Cie research chair.
The results indicate that the research topic is perceived as highly relevant to current investor concerns and issuers of corporate debt. Respondents suggest that the issuance of inflation-linked bonds may provide a solution to both parties. For investors, inflation-linked corporate debt could be an ideal instrument for hedging their liabilities at a time when sovereign debt is no longer considered the default asset for pension funds’ asset-liability management.
For corporations, issuing inflation-linked debt would ultimately limit the firm’s risk and increase the value of its shares.
< href="http://www.edhec-risk.com/about_us/Press%20Releases/RISKArticle1048860368688218576/attachments/Press_release_Investor_Reactions_Inflation-Linked_Debt.pdf" TARGET="_top">read more
db X-trackers lists Pakistan and Bangladesh equity ETFs in London
June 26, 2012--Deutsche Bank's exchange-traded funds (ETF) platform,db X-trackers, has re-affirmed its position as a leader in emerging markets ETFs with the cross-listing in London of ETFs that provide exposure to the Pakistan and Bangladesh equity markets.
The db x-trackers Pakistan IM TRN Index ETF tracks the performance of large, mid
and small capitalization companies listed on stock exchanges in Pakistan.
The index currently has 25 constituents. The db x-trackers MSCI Bangladesh IM TRN Index ETF currently tracks the performance of 64 companies, again across the large, mid and small-cap range.
“With the largest number of emerging markets ETFs in Europe, db X-trackers is coming to be regarded as the ‘go to’ ETF provider for emerging markets exposure.
These London listings also demonstrate once again how ETFs are making difficult to- access markets more investable, with db X-trackers playing a key role in developing the market,” said Manooj Mistry, head of db X-trackers for the UK.
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Source: db X-trackers
'Financial diplomacy' new channel for global deals
June 26, 2012--An intense brand of "financial diplomacy" has taken root in global politics as economic crises worsen, with the United States a key player, the US Treasury's hard-nosed global envoy said Monday.
Lael Brainard, US Treasury under secretary for international affairs, said a parallel world to the traditional political diplomacy has developed with equally intense negotiations and tough market-driven deadlines.
"Diplomacy is the stuff of legend and lore," she told the Women's Foreign Policy group in Washington.
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Source: EUbusiness
STOXX launches EURO iSTOXX 50 Equal Risk Index
New index initiated by and licensed to Lyxor to underlie exchange-traded fund
June 26, 2012-- STOXX Limited, the market-moving provider of innovative, tradable and global index concepts, today announced the launch of the EURO iSTOXX 50 Equal Risk Index.
The new strategy index applies an equal risk contribution (ERC) concept to the EURO STOXX 50 Index in order to spread the overall risk of the portfolio equally between the 50 index components. The new index, which is based on the Modern Portfolio Theory, aims to achieve maximum risk diversification.
The EURO iSTOXX 50 Equal Risk Index has been initiated by and licensed to Lyxor to underlie an exchange-traded fund, which will be listed on NYSE Euronext Paris today.
"The new EURO iSTOXX 50 Equal Risk Index applies a sophisticated and innovative equal risk contribution concept to the leading blue-chip index for the Euro-zone," said Hartmut Graf, chief executive officer, STOXX Limited. "Equal risk contribution concepts combine elements of minimum variance and equal-weight strategies, and offer market participants an alternative to those regarding overall portfolio risk, risk budgeting and diversification."
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Source: STOXX
ESMA proposes rules on derivatives, central counterparties and trade repositories
June 25, 2012--The European Securities and Markets Authority (ESMA) has launched a consultation on its technical standards under the Regulation on OTC derivatives, central counterparties and trade repositories (EMIR), which is aimed at improving the functioning of OTC derivatives markets in the European Union (EU).
EMIR aims to achieve this by reducing risks via the use of central clearing and risk mitigation techniques, increasing transparency via trade repositories (TR) and ensuring sound and resilient central counterparties (CCPs).
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