BIS: Banning Capital Distributions Proved Good for Banks, Borrowers

If macroeconomic or market conditions worsen, it seems likely that anxious regulators will look to preserve bank capital and turn to the ban on capital distributions briefly in place at the height of the Covid crisis.  A new BIS study of the impact these restrictions had on the EU at the time is thus a timely guide to regulatory thinking under new leadership at the White House, Fed, OCC, and FDIC.

CFPB Loads Its UDAAP Bazooka

The CFPB today released what to our initial review appears an explosive new policy statement even though the agency asserts that it sets no new policy.

BIS Study Finds Retail CBDCs May Counter Financial Shocks

Supporting its overall goal of two-tier CBDC, the BIS released a model-based working paper today finding that the introduction of a retail CBDC that is perfectly substitutable with bank deposits in an open, large economy (i.e., the U.S.) could lower real interest rates and be an effective tool for countering financial shocks.

Why MMFs Beat Bank Deposits

new FRB-NY post uses recent evidence to confirm an earlier study that MMFs are more responsive than bank deposits to monetary-policy tightening.  Indeed, the data are striking, with MMF rates since March of 22 matching fed funds moves by 97 percent versus an only eight percent match for three-month CDs.