#BIS

Home/Tag:#BIS
8 11, 2022

DAILY110822

2022-11-08T16:54:50-05:00November 8th, 2022|2- Daily Briefing|

EU Council Eases Basel End-Game Rules

Ahead of U.S. action on what is now being called the Basel “end-game,” the Council of the European Union today announced a set of compromises and delays to finalize the standard.  The output floors (see FSM Report CAPITAL220) will apply at both the parent banking group and subsidiary banks, but EU banks will have the discretion to consolidate capital at the highest parent level in each EU nation.  The Council release provides no details, indicating only “technical improvements” were made to the Basel credit-, market-, and operational- risk standards and small banks now have unspecified breaks, including with regard to disclosure.

BIS: CBDC Could Boost Deposit Rates, Small Banks

A new BIS staff paper differentiates its analysis of CBDC’s monetary-policy transmission impact by distinguishing between the extent to which large and small U.S. banks respond to different rates paid in interest on reserves (IOR).  Large banks are found to be unresponsive to IOR changes, making CBDC necessary to force them to increase rates on deposits via the competition channel rather than a traditional monetary-policy tool.  To the extent this reasoning takes hold, it could prove potent with Democrats who not only often favor CBDC, but are also increasingly angry about what they see as large-bank failures to raise deposit rates in lock-step with Fed hikes.

Daily110822.pdf

2 11, 2022

DAILY110222

2022-11-02T16:14:20-04:00November 2nd, 2022|2- Daily Briefing|

SEC Turns to Swing Pricing, Structural OEF Redesign

As anticipated, the SEC today voted 3-2 to advance swing pricing and other structural changes to open-end funds (OEFs).  Key to this proposal is to the Commission’s controversial MMF draft (see FSM Report MMF19) is swing pricing, with Chairman Gensler laying out how he believes swing pricing would end first-mover advantage and thus improve fund stability.  The proposal also imposes stiff new liquidity standards, with Commissioner Uyeda dissenting from this and the rest of the proposal on grounds that only bank-loan funds have proven to be demonstrably illiquid under stress.

BIS Announces DeFi Foreign Exchange Pilot for CBDCs

Continuing its CBDC pilots, the BIS today announced the launch of Project Mariana, a system seeking to use DeFi protocols to automate CBDC foreign-exchange settlements.  Project Mariana will operate in Switzerland, France, and Singapore, exchanging wholesale CBDCs.  The BIS is interested in exploring the application and design of automated market markers in wholesale CBDC exchanges, the effectiveness of a supra-regional network for cross-border settlement, and potential governance models of wholesale CBDCs.

Daily110222.pdf

26 10, 2022

DAILY102622

2022-10-26T17:02:07-04:00October 26th, 2022|2- Daily Briefing|

BIS Announces Successful Multi-CBDC Platform Pilot

Following their retail crypto pilot last week, the BIS announced a successful pilot blockchain ledger – dubbed the mBridge Ledger – connecting twenty commercial banks in China, Hong Kong, Thailand, and the UAE via a multi-CBDC common platform.  Both domestic and foreign commercial banks are permitted to directly hold and transact in CBDCs on the platform to ensure seamless cross-border payments.  To protect monetary sovereignty, the platform allows governments to flexibly control CBDC issuance and redemption, transaction currencies and amounts, and visibility into usage.

With President at His Side, Chopra Sanctions Overdraft, Deposit Fees

President Biden today took aim at junk fees, slamming them in general even as he praised the CFPB’s initiative today sharply to limit “surprise” overdraft and deposit fees.  The agency did so by issuing a circular on unanticipated overdraft fee assessment practices and a bulletin on Returned Deposited Item Fee Assessment Practices, again using its non-regulatory tools to enact new policy and set stringent enforcement standards.  We will shortly provide clients with in-depth analyses of each release.

Daily102622.pdf

21 10, 2022

DAILY102122

2022-10-21T16:31:13-04:00October 21st, 2022|2- Daily Briefing|

Ginnie Gives Ground on Controversial RBC Requirements

Following its long-delayed release of eligible seller-servicers standards with FHFA, Ginnie Mae announced today that it is extending by one year its mandatory compliance date for the new risk-based capital standards. The announcement cites stakeholder feedback and evolving market dynamics –doubtless the economic downturn and concerns about procyclicality – in the agency’s decision for this extension, which sets a new RBC implementation date of December 31, 2024.

BIS Unveils Two-Tier CBDC Prototype

Reflecting the BIS’ preferred two-tier CBDC structure (see Client Report CBDC6), the BIS today announced the launch of a prototype two-tier retail CBDC called Aurum comprised of a wholesale interbank system and a retail e-wallet.  The wholesale interbank system is designed to ensure that banks do not issue more retail CBDCs than the wholesale CBDCs that the bank owns or double issue the same wholesale CBDC asset as a retail CBDC asset.  This system also tracks unspent transaction output, allowing users to prove ownership even if an issuing bank has ceased operations.

Daily102122.pdf

27 09, 2022

DAILY092722

2022-09-28T11:29:09-04:00September 27th, 2022|2- Daily Briefing|

BIS Research Finds in Favor of Fintech Small-Business Finance

In sharp contrast to much earlier U.S. research, a new BIS study strongly supports alternative small business-lending fintech credit-scoring processes and market depth, concluding that fintechs expanded credit access to underserved small business owners.  The study compares U.S. proprietary loan-level data from two fintech SBL platforms with Federal Reserve data between 2016 and 2019, finding that fintechs better predicted loan performance than banks.  Fintechs served borrowers less likely to receive credit from banks, lending more in zip codes with higher unemployment rates and higher business bankruptcy filings.

Daily092722.pdf

15 09, 2022

DAILY091522

2022-10-13T11:49:04-04:00September 15th, 2022|2- Daily Briefing|

Financial Transactions to Get More Stringent CFIUS Scrutiny

The President today issued an executive order (EO) redefining key criteria used by the Committee on Foreign Investment in the U.S. (CFIUS).

BNPL Faces DOA Consumer Standards

In conjunction with issuing a lengthy report, CFPB Director Chopra today announced that he has directed staff to work on new interpretive rules or guidance for the BNPL sector.

Basel Battles On

Acting as anticipated following instructions from on-high, the Basel Committee today “exchanged views” on pending crypto regulation (see FSM Report CRYPTO29) – terminology suggesting the committee has yet to reach agreement on this controversial consultation despite a request by central bankers and supervisory heads to finalize standards by year end.

Fed Joins Agencies with CRE Workout Policy

After a delay doubtless reflecting the need to run policies by Michael Barr, the FRB today proposed the same CRE-workout policies released for comment in early August by the OCC, FDIC, and NCUA.

Waters Tries Late-Game CRA Tackle

Chairwoman Waters (D-CA) today announced that she has introduced legislation to update the CRA, making the standards tougher for banks but – as far as known so far – failing to extend the law’s reach to nonbanks as urged by CFPB Director Chopra and Sen. Warren (D-CA), among others.

Daily091522.pdf

Go to Top