• Insurers urge global authorities to revamp rules, help fund infrastructure
    21 September 2018
    Insurers have called on global authorities to revamp capital and accounting rules to encourage investment in public works such as power grids and roads, joining banks in warning about post-crisis rules crimping funding for infrastructure.

    European and Japanese insurance associations urged standard-setters to reconsider the impact on project finance, in comment letters to authorities tallying the impact of regulatory measures since the financial crisis last decade. In another of the responses published this month, Swiss Re called for standardizing transparency rules to attract investors.

    Joining with banks, insurers are challenging the Financial Stability Board’s findings that capital standards and other post-crisis rules have not hurt the supply of funding for infrastructure. The asset class typically refers to networks for energy, transport, communication and civil services — the building blocks of economic development.

    The insurance representatives told the FSB they can put more money than banks into long-term projects, but face dissuasive costs from regulations including capital standards.

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  • Visa in talks to settle EU probe of international card fees
    21 September 2018
    Visa is in talks with the European Commission to end a probe into the fees charged when foreign cards are used inside the EU, MLex has learned.

    The card network appeared at a closed-door hearing in February to contest allegations of anticompetitive conduct, but both sides are now understood to be negotiating a resolution to the investigation.

    A spokesman for Visa declined to comment on “ongoing inquiries,” saying: “We continue to engage constructively with all regulators. Visa firmly believes that payment card transactions by international tourists are an important contributor to European economies.”

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  • Fed nominee Liang would oppose relaxing Dodd-Frank rules but back simplification
    20 September 2018
    US Federal Reserve nominee Nellie Liang, a registered Democrat, would likely resist Dodd-Frank rollbacks while honoring capital simplification plans outlined by Fed regulatory chief Randal Quarles.

    Liang has argued forcefully in recent Brookings Institution papers that stringent regulation and oversight are needed to prepare for a recession sure to be triggered by unforeseen shocks.

    Policymakers should prepare for sudden liquidity drops in normally deep markets and abrupt collapses of firms not considered threats to financial stability, she has said.

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  • Global stability threats posed by widespread debt, leveraged loans, BIS researcher says
    18 September 2018
    A top central-bank researcher flagged “new weaknesses” in international financial stability that echo concerns raised last week about the American economy by a senior US Federal Reserve official.

    Hyun Song Shin, Bank for International Settlements research chief, said total debt of companies, households and governments now tops levels before the Lehman Brothers crash a decade ago.

    Asset managers chasing yield amid persistent low interest rates have invested heavily in risky bonds such as “leveraged loans” to companies already holding considerable debt, he said.

    In addition, bonds from company and sovereign borrowers in emerging markets “boomed” after the financial crisis, though they are showing signs of a possible reversal, Shin said.

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  • FSB review of bank capital rules falls short on derivatives-clearing disincentives, banks say
    17 September 2018
    Banking groups said a rosy Financial Stability Board evaluation of post-crisis capital rules doesn’t adequately take into account their adverse impact on incentives to centrally clear derivatives.

    Banks’ client-clearing capacity has been “significantly” hindered by Basel III’s treatment of their clearing activity within risk-based capital requirements, the leverage ratio and the surcharge for systemically important banks, said the Global Financial Markets Association and other groups.

    “The current capital regime overstates the risks of client clearing, which are modest,” said the letter, whose signatories also include the Futures Industry Association and the Institute of International Finance.

    By increasing the cost of providing clearing services for customers, the recent letter said, rules limit “the amount and types of derivative positions that banks are willing to clear for clients and the types of clients for which banks will clear.”

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