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Central Bank of Hungary : Válogatás a nemzetközi intézmények és külföldi jegybankok publikációiból (2020.08.06-08.12.)

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08/13/2020 | 12:33pm EDT


Válogatás a nemzetközi intézmények és külföldi jegybankok publikációiból

2020. augusztus 6 - augusztus 12.



MONETÁRIS POLITIKA, INFLÁCIÓ ...........................................................................................



PÉNZÜGYI STABILITÁS, PÉNZÜGYI PIACOK .............................................................................



MIKROPRUDENCIÁLIS FELÜGYELET ÉS SZABÁLYOZÁS ...........................................................



PÉNZFORGALOM, FIZETÉSI RENDSZEREK..............................................................................



MAKROGAZDASÁG .............................................................................................................



ÁLTALÁNOS GAZDASÁGPOLITIKA ........................................................................................



KÖLTSÉGVETÉSI POLITIKA, ADÓZÁS .....................................................................................










Release of the Monetary Policy Report



Central Bankers'

Opening statement by Mr Tiff Macklem, Governor of the Bank of Canada, at the press conference


following the release of the Monetary Policy Report, Ottawa, Ontario, 15 July 2020.

Consolidated financial statement of the Eurosystem as at 7 August 2020, 11/08/2020



Press Release



The simpler the better: measuring financial conditions for monetary policy and financial stability,






In this paper the authors assess the merits of financial condition indices constructed using simple

averages versus a more sophisticated alternative that uses factor models with time varying parameters.

Their analysis is based on data for 18 advanced and emerging economies at a monthly frequency

covering about 70% of the world's GDP. They use four criteria to assess the performance of these

indicators, namely quantile regressions, Structural Vector Autoregressions, the ability of the indices to

predict banking crises and their response to US monetary policy shocks. It is found that averaging across

the indicators of interest, using judgemental but intuitive weights, produces financial condition indices

that are not inferior to, and actually perform better than, those constructed with more sophisticated

statistical methods.

Keywords: financial conditions; quantile regressions; banking crises; SVARs; spillovers.


Consolidation can secure safe and sound banks





Interview with Edouard Fernandez-Bollo, ECB representative to the Supervisory Board, Supervison

Newsletter, 12 August 2020

Macroprudential policy and the role of institutional investors in housing markets, 12/08/2020





Since the onset of the Global Financial Crisis, the presence of institutional investors in housing markets

has steadily increased over time. Real estate funds (REIFs) and other housing investment firms leverage

large-scalebuy-to-rent investments in real estate assets that enable them to set prices in rental housing

markets. A significant fraction of this funding is being provided in the form of non-bank lending (i.e.,

lending that is not subject to regulatory LTV limits). The author develops a quantitative two-sector DSGE

model that incorporates the main features of the real estate fund industry in the current context to

study the effectiveness of dynamic LTV ratios as a macroprudential tool. Despite the comparatively low

fraction of total property and debt held by REIFs, optimized LTV rules limiting the borrowing capacity of

such funds are more effective in smoothing property prices, credit and business cycles than those

affecting (indebted) households' borrowing limit. This finding is remarkably robust across alternative

calibrations (of key parameters) and specifications of the model. The underlying reason behind such an


important and unexpectedly robust finding relates to the strong interconnectedness of REIFs with

various sectors of the economy.

Keywords: rental housing; real estate funds; loan-to-value ratios; leverage.

Risk and return in international corporate bond markets, 11/08/2020





Corporate bond returns in the major developed economies increase with risk, as measured by maturity

and ratings. From a pricing perspective, we find little to no evidence against the World CAPM model,

where the market consists out of equity, sovereign and corporate bonds. However, from a factor model

perspective, local factors contribute substantially more to the variation of corporate bond returns than

global factors. The factor exposures show intuitive patterns: as ratings worsen, equity betas show a

hockey stick pattern, sovereign betas decline monotonically and corporate bond betas increase steeply.

Keywords: Corporate bond markets; CAPM; international market integration; asset class integration;

bond ratings; risk; return.

Norway: Financial System Stability Assessment-Press Release; and Statement by the Executive


Director for Norway, 12/08/2020

Country Report




Press Release

Much of the work of the Financial Sector Assessment Program (FSAP) was conducted prior to the COVID-

19 pandemic, with the missions ending on February 13, 2020. Given the FSAP's focus on medium-term

challenges and vulnerabilities, however, its findings and recommendations for strengthening policy and

institutional frameworks remain pertinent. The report was updated to reflect key developments and

policy changes since the mission work was completed. It also includes a risk analysis that quantifies the

possible impact of the COVID-19 crisis on bank solvency. Since the previous FSAP in 2015, the Norwegian

authorities have taken welcome steps to strengthen the financial system. Regulatory capital

requirements for banks were raised and actions were taken to bolster the weak capital position of

insurers. Alongside other macroprudential measures, temporary borrower-based measures for

residential mortgages were introduced, which seem to have had some moderating impact on segments

of the housing market. The resolution framework was also strengthened, with the implementation of

the Bank Recovery and Resolution Directive (BRRD) and the designation of Finanstilsynet (FSA) as the

resolution authority.

Related press release:



Norway: Financial Sector Assessment Program-TechnicalNote-Financial Safety Nets, 12/08/2020



Country Report


Norway has made substantial progress in strengthening its framework for financial crisis management

and bank safety nets since the 2015 FSAP. The Norwegian authorities have implemented the EU

framework. The Bank Recovery and Resolution Directive (BRRD) has been transposed into the

Norwegian legal framework mainly by amendments to the Financial Institutions and Financial Groups

Act and accompanying regulations. Finanstilsynet (the Financial Supervisory Authority of Norway, FSA)

has been designated as Norway's resolution authority. Resolution financing options were broadened by

establishing a resolution fund. While the Deposit Guarantee Scheme Directive (DGSD) has yet to be

brought into the European Economic Area (EEA) agreement, Norway has, in fact, already transposed it

into the Norwegian law. This provides the Norwegian authorities with a broadened and detailed

regulatory framework for dealing with weak banks.


Norway: Financial Sector Assessment Program-TechnicalNote-Systemic Risk Oversight and


Macroprudential Policy Framework, 12/08/2020

Country Report



While Norway's institutional arrangement for macroprudential policy is uncommon, the authorities

have shown strong willingness to act. The Ministry of Finance (MoF) is the sole macroprudential

decision-maker in Norway, which is rare in international comparison. However, Norges Bank and the

Finanstilsynet (FSA) play important advisory roles. In recent years, the authorities have taken

substantive and wide-ranging macroprudential policy actions in response to growing systemic

vulnerabilities-and these seem to have been effective in slowing down some of the riskier trends. The

macroprudential policy toolkit is well stocked and actively used.

Norway: Financial Sector Assessment Program-TechnicalNote-Systemic Liquidity, 12/08/2020



Country Report


Norwegian banks and other financial institutions rely heavily on capital markets for liquidity and risk

management. Liquidity conditions in the Norwegian financial sector are affected by central bank

operations and the lending and funding activities of financial institutions, both domestically and abroad.

Nearly 40 percent of the funding of Norwegian banks is obtained from market sources, using commercial

paper, covered bonds, and senior unsecured bonds issued both domestically and abroad.

Correspondingly, money markets, foreign exchange (FX) swap markets and bond markets are crucial to

the credit intermediation process and a dislocation in these markets-the inability of financial

institutions to roll over, or obtain new, funding-could have significant consequences for financial

stability. Against this background, this note analyzes core funding markets for Norwegian banks and

assesses Norges Bank's capacity to manage systemic liquidity conditions and counteract liquidity shocks

in normal times and in times of stress.

Norway: Financial Sector Assessment Program-TechnicalNote-Cybersecurity Risk Supervision and


Oversight, 12/08/2020

Country Report



The Norwegian financial system has a long history of incorporating new technology. Norway is at the

forefront of digitization and has tight interdependencies within its financial system, making it

particularly vulnerable to evolving cyber threats. Norway is increasingly a cashless society, with surveys

and data collection suggesting that only 10 percent of point-of-sale and person-to-person transactions

in 2019 were made using cash.1 Most payments made in Norway are digital (e.g., 475 card transactions

per capita per annum)2 and there is an increase in new market entrants providing a broad range of

services. Thus, good cybersecurity is a prerequisite for financial stability in Norway.

Denmark: Financial System Stability Assessment-Press Release; and Statement by the Executive


Director for Denmark, 12/08/2020

Country Report




Press Release

Much of the work of the Financial Sector Assessment Program (FSAP) was conducted prior to the COVID-

19 pandemic. Given the FSAP's focus on medium-term challenges and vulnerabilities, however, many

of its findings and recommendations for strengthening policy and institutional frameworks remain

pertinent. This report reflects key developments and policy changes since the FSAP mission work was

completed, and includes illustrative scenarios to quantify the possible implications of the COVID-19

shock on the solvency of systemically important financial institutions (SIFIs). Prior to the COVID-19

pandemic, the Danish authorities had taken important steps to improve financial system resilience. The

authorities had actively used macroprudential tools to bolster the robustness of the financial system.

The supervision of the banking and insurance sectors had improved. Likewise, recent legislation has

strengthened anti-money laundering and combating the financing of terrorism (AML/CFT) supervision.


Major reforms such as a new bank resolution framework had also considerably improved Denmark's

financial safety net and crisis management frameworks.

Related press release:



Denmark: Financial Sector Assessment Program-TechnicalNote-Systemic Liquidity, 12/08/2020



Country Report


The functioning of money markets, FX swaps markets and in particular covered bond markets are crucial

for the Danish financial system. Liquidity conditions in the Danish financial sector are affected by central

bank operations and the lending and funding activities of financial institutions. Nearly 100 percent of

the mortgage funding is obtained from market sources, using mainly domestically issued covered bonds.

Correspondingly, money markets and foreign exchange (FX) swap markets are crucial to the credit

intermediation process and a dislocation in these markets-the inability of financial institutions to roll

over or obtain new funding or hedging positions-may have significant consequences for financial

stability. Against this background, this note analyzes core funding markets for Danish banks and assesses

Danmarks Nationalbank's (DN's) capacity to manage systemic liquidity conditions in normal times and

in times of stress.

Denmark: Financial Sector Assessment Program-TechnicalNote-Systemic Risk Oversight and


Macroprudential Policy Framework, 12/08/2020

Country Report



COVID-19 pandemic: The Financial Sector Assessment Program (FSAP) work was conducted prior to the

COVID-19 pandemic, so this Technical Note (TN) does not assess the impact of the crisis or the recent

crisis-related policy measures. Nonetheless, given the FSAP's focus on vulnerabilities and policy

frameworks, the findings and recommendations of the TN remain pertinent. While Denmark's

institutional arrangements are uncommon, the authorities have undertaken several macroprudential

measures since the last FSAP. The Minister for Industry, Business and Financial Affairs (MIBFA) has

decision-making power over most macroprudential tools in Denmark, which is rare in international

practice. However, the Systemic Risk Council (SRC), which includes members from the Danmarks

Nationalbank (DN) and Danish Financial Supervisory Authority (DFSA) plays an advisory role and has

powers to give recommendations with a comply or explain mechanism. In recent years, the authorities

have taken wide-ranging macroprudential policy actions in response to growing systemic vulnerabilities,

which have seemed to slow down some of the riskier trends. More recently, in response to the Covid-

19 crisis, countercyclical capital buffer (CCyB) has been fully released.

Denmark: Financial Sector Assessment Program-TechnicalNote-Financial Sector Interconnectedness


and Contagion Risk Analysis, 12/08/2020

Country Report



The FSAP developed a novel multi-layer contagion model to analyze financial system

interconnectedness using a new and comprehensive database. This new infrastructure, based on

securities data and newly-released confidential credit register data, plays a pivotal role in the

development of an advanced contagion model that distinguishes the transmission of shocks between

eight different exposure types or layers (loans, deposits, reverse repos, covered bonds, other debt

securities, equities, unlisted shares, and other claims). The exercise focuses on the banking system

(banks and MCIs), and on interconnections through the covered bond market, as the cornerstones of

the overall financial system. However, it also includes exposures vis-a-visnon-bank financial institutions

(insurer, pension and investment funds) and non-financial sectors (households, corporates), both

domestically and abroad. The simulation exercise consists of a series of idiosyncratic shocks, where the

default of each node is triggered iteratively. The model introduces a repricing channel on traded

securities to capture cascade effects arising from market reactions to changes in an entity's solvency



Denmark: Financial Sector Assessment Program-TechnicalNote-Financial Safety Net and Crisis


Management Arrangements, 12/08/2020

Country Report



Since the 2014 FSAP, Denmark's financial safety net and crisis management frameworks, including bank

resolution, have improved significantly. In response to the FSAP and the transposition of the pertinent

European Union (EU) rules, Denmark has enacted major reforms including new legislation for resolution

and deposit insurance, introduced a resolution framework for banks and mortgage credit institutions

(MCIs), designated two national resolution authorities, established resolution colleges, changed the

governance of the deposit insurance system (DIS) and revived cross-border cooperation through the

Nordic-Baltic Stability Group (NBSG), including through revising an earlier memorandum of

understanding (MOU) and conducting a joint crisis simulation in 2019.

Denmark: Financial Sector Assessment Program-TechnicalNote-Financial Stability and Stress Testing


of the Banking, Insurance, and Non-financial Corporate Sectors, 12/08/2020

Country Report



The Financial Sector Assessment Program (FSAP) work was conducted prior to the COVID-19 pandemic.

This report, however, includes stability analysis and stress tests under updated illustrative scenarios to

quantify the possible implications of the COVID-19 shock on bank solvency. An unusually high degree of

caution must be exercised in interpreting the stress tests results and their implications or validity at the

current juncture, due to heightened uncertainty around post COVID central projections and downside

risks. Financial vulnerabilities were elevated on the eve of the COVID-19 pandemic. Key financial

vulnerabilities included high household leverage amid high real estate valuations following a long period

of loose financial conditions. There were also signs of risk taking in some sectors, such as commercial

real estate (CRE), and in addition, there were downside risks to bank profitability amid the low-interest-

rate environment.

United States: Financial System Stability Assessment, 10/08/2020



Country Report


Much of the Financial Sector Assessment Program (FSAP) work was conducted prior to the COVID-19

pandemic. The lockdown of the economy has led to a massive growth shock. Following the precipitous

fall, risk asset prices have rebounded, and financial conditions eased. The vulnerability analysis has been

updated and largely captures this shock. Recommendations on strengthening policy and institutional

frameworks remain pertinent. The approach to financial regulation and supervision was risk-focused

given the high degree of compliance against international standards assessed during the 2015 FSAP.

United States: Financial Sector Assessment Program-TechnicalNote-Securities-Fund Management;


Equity and Derivatives Trading; and Virtual Assets and Virtual Asset Service Providers, 10/08/2020

Country Report



This technical note considers the regulation and supervision of fund management and equity and

derivatives trading in the United States (U.S.). As one of the main destinations for household savings

and a key provider of funding to U.S. corporates, investment funds play a major role in the U.S. financial

system. Distortions to equity trading could cause significant loss of confidence in markets, while

international post-crisis reforms for OTC derivatives have underlined the importance of greater

transparency and the value of central clearing. U.S. companies have also traditionally raised more

finance through equity and other capital markets than through bank lending, and so capital markets are

of greater structural significance in the U.S. than in some other jurisdictions.


United States: Financial Sector Assessment Program-TechnicalNote-Financial Crisis Preparedness and


Deposit Insurance, 10/08/2020

Country Report



The U.S. authorities should preserve the considerable progress in the resiliency, recoverability, and

resolvability of financial companies and insured depository institutions (IDIs), and intensify financial

crisis preparedness efforts. After a decade of resolution planning, the development of the U.S.

resolution regime is more advanced than in other major economies. This regime, together with the

strong track record of the deposit insurance system (DIS) for banks and the federal banking agencies'

(FBAs) preparation for resolution, provide a strong foundation for crisis preparedness. Bank holding

companies (BHCs) have integrated recovery and resolution planning (RRP) into business-as-usual (BAU)

activities, increasing their resiliency; this process has deepened the FBAs' understanding of the BHCs'

business models and RRP capabilities. The FBAs should continue their own annual resolution planning

and mitigate the recent changes that reduced the BHCs' RRP. These efforts should be complemented

by further interagency crisis preparedness, including particularly with the U.S. Department of the

Treasury (UST), given its essential role in critical aspects of crisis responses. Finally, further refinements

relating to cross-border resolution also deserve attention.

United States: Financial Sector Assessment Program-TechnicalNote-Systemic Risk Oversight and


Systemic Liquidity, 10/08/2020

Country Report



The heterogeneity of the United States (U.S.) financial markets and complex regulatory and supervisory

institutional setup in the United States underscore the importance of enhancing systemic risk oversight

and building effective macroprudential tools. An effective framework would encompass identification

and prioritization of system-wide risks and vulnerabilities to spur timely policy action. Structures that

ensure interagency sharing of information, identify possible emerging regulatory gaps, obtain a good

overview of systemic risks, and develop a cooperative framework to address identified threats to

financial stability would be necessary components of such a framework. This Technical Note reviews

those processes in the United States, as well as examining the issues of systemic liquidity.

United States: Financial Sector Assessment Program-TechnicalNote-Risk Analysis and Stress Testing


the Financial Sector, 10/08/2020

Country Report



The U.S. financial system is very large, well-diversified, and home to numerous financial institutions

which are significant at a global scale. Eight Global Systemically Important Banks (G-SIBs) are

incorporated in the U.S., as well as several other large financial institutions, such as asset managers,

insurers, and money market funds. Assets of the financial system amounted to about US$100 trillion at

end-2019 and accounted for 500 percent of GDP. While the eight G-SIBs dominate the U.S. banking

landscape, banking system assets represent only about 22 percent of total financial system assets. The

systemic risk assessment (including stress testing) of this FSAP reflect the highly diversified nature of

the U.S. financial system and focuses on banks, mutual and money market funds, insurance companies

as well as cross-institutional and cross-sectoral linkages and exposures.

United States: Financial Sector Assessment Program-TechnicalNote-Supervision of Financial Market


Infrastructures, Resilience of Central Counterparties and Innovative Technologies, 10/08/2020

Country Report



The Unites States financial system includes several systemically important financial market

infrastructures (FMIs); they are regulated, supervised, and overseen by multiple authorities. The U.S.

FMIs are crucial to U.S. dollar clearing, i.e. the payment systems Fedwire Funds Service and The Clearing

House Interbank Payments System (CHIPS), and for the clearing and settlement of U.S. Treasuries, i.e.,


the Fedwire Securities Service and the Fixed Income Clearing Corporation (FICC). Central counterparties

(CCPs) that clear exchange-traded or over-the-counter (OTC) corporate securities or derivatives are of

key importance to the safe and efficient functioning of these (global) markets. Disruption of critical

operations at one of the large U.S. FMIs may spread to its participants, other FMIs, markets, and

throughout the U.S. and global financial systems. The Financial Stability Oversight Council (FSOC)

designated eight financial market utilities (FMUs) to be systemically important.1 These designated

FMUs are regulated, supervised and overseen by the Federal Reserve Board (FRB), the Securities and

Exchange Commission (SEC), or the Commodity Futures Trading Commission (CFTC), depending on their

activities. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA)

authorized the FRB to promote uniform standards for the management of risks by systemically

important FMUs.

Which credit gap is better at predicting financial crises? A comparison of univariate filters, 12/08/2020



Working Paper

The credit gap, defined as the deviation of the credit-to-GDP ratio from a one-sidedHP-filtered trend, is

a useful indicator for predicting financial crises. Basel III therefore suggests that policymakers use it as

part of their countercyclical capital buffer frameworks. Hamilton (2018), however, argues that

you should never use an HP filter as it results in spurious dynamics, has end-point problems and its

typical implementation is at odds with its statistical foundations. Instead he proposes the use of

linear projections. Some have also criticised the normalisation by GDP, since gaps will be negatively

correlated with output. The authors agree with these criticisms.

Keywords: early warning indicators; credit gaps; HP filter; linear projection.

Export survival and foreign financing, 11/08/2020



Working Paper

Exporting is a finance-intensive activity. But credit markets are frequently underdeveloped and

domestic financing tends to be scarce in developing countries, for which a strong export sector is crucial

for economic development. Thus, this paper investigates whether foreign financing provides better

financing conditions than domestic financing and/or otherwise unavailable external finance, thus

increasing export survival rates in a developing country. To that end, it assembles a unique dataset,

rarely available for other countries, containing information on foreign credit obtained by Argentine

exporters. Based on the empirical models conventionally used in the export survival literature -

specifically the probit random effects and the clog-log setups - we provide evidence of a positive link

between foreign financing and export survival. This finding is confirmed using an instrumental variable


Keywords: international trade; credit; foreign financing; export survival.

The impact of credit risk mispricing on mortgage lending during the subprime boom, 11/08/2020



Working Paper

The authors provide new evidence that credit supply shifts contributed to the U.S. subprime mortgage

boom and bust. They collect original data on both government and private mortgage insurance

premiums from 1999-2016, and document that prior to 2008, premiums did not vary across loans with

widely different observable characteristics that the authors show were predictors of default risk. Then,

using a set of post-crisis insurance premiums to fit a model of default behavior, and allowing for time-

varying expectations about house price appreciation, they quantify the mispricing of default risk in

premiums prior to 2008.

Keywords: financial crisis; mortgage insurance; housing finance; default risk.


UK DMO chief on crisis borrowing, 12/08/2020




The UK's Debt Management Office has more than doubled its intended borrowing schedule since the

Covid crisis began. Where once they might not have done, markets have so far shrugged their shoulders,

with yields negative to 2027. DMO Chief Executive Officer Sir Robert Stheeman joins OMFIF to explore

the mechanics of the new issuance, the role of the Bank of England, and how to maintain an orderly

market in disorderly times.


List of supervised entities (as of 1 July 2020), 10/08/2020



Press Release


Letter from Andrea Enria, Chair of the Supervisory Board, to Mr Schirdewan, MEP, on banking


supervision, 06/08/2020




Coronavirus: Eight macro-financial assistance programmes agreed to support enlargement and


neighbourhood partners, 11/08/2020

Press Release


EBA consults on the use of RegTech solutions and ways to support the uptake of RegTech across the


EU, 12/08/2020

Press Release


EBA publishes guidance on impact of CRR adjustments in response to the COVID‐19 pandemic on


supervisory reporting and disclosure, 11/08/2020

Press Release



EBA provides clarity on the implementation of the reporting and disclosure framework in the context


of COVID-19 measures, 07/08/2020

Press Release



ESMA issues latest double volume cap data, 07/08/2020



Press Release

ESMA agrees position limits under MiFID II, 06/08/2020



Press Release

IOSCO examines the evolution of liquidity provision in equity securities markets, 11/08/2020



Press Release


ECB report on banks' ICAAP practices, 11/08/2020





The internal capital adequacy assessment process (ICAAP) has been and remains one of ECB Banking

Supervision's top supervisory priorities1 since they were first published in 2016. In this context, and to

clarify our expectations of the significant institutions (SIs) with regard to the ICAAP, the ECB published

in November 2018 the ECB Guide to the internal capital adequacy assessment process (ICAAP Guide)2 .

Following the publication of these ICAAP expectations, ECB Banking Supervision's horizontal function

conducted a structured analysis of ICAAP practices based on the ICAAP packages which a representative

sample of SIs submitted in 2019. This report summarises the results of this analysis, describing the range

of ICAAP practices observed in a sample of 37 banks. Furthermore, the analysis underlines areas where

banks' practices appear to be further developed, as well as those where the ECB is of the opinion that

additional work is warranted across banks.

ESRB Secretariat staff's response to ESMA's consultation paper on technical standards on reporting,


data quality, data access and registration of trade repositories under EMIR Refit, 12/08/2020




The staff of the European Systemic Risk Board (ESRB) Secretariat welcome the consultation launched by

the European Securities and Markets Authority (ESMA) on technical standards on reporting, data

quality, data access and registration of trade repositories under EMIR Refit.

Norway: Financial Sector Assessment Program-TechnicalNote-Banking Regulation and Supervision,



Country Report



This note presents a targeted review of selected aspects in the regulation and supervision of banks in

Norway. The review is carried out as part of the 2020 Norway Financial Sector Assessment Program

(FSAP) and the findings and recommendations are based on the regulatory framework in place and the

supervisory practices employed at end-October 2019. The note focuses on the powers and

responsibilities, independence, and resourcing of Finanstilsynet (FSA); its supervisory approach and

enforcement powers and practices; key aspects of the prudential framework; and mechanisms to

prevent abuse of financial services.

Norway: Financial Sector Assessment Program-TechnicalNote-Insurance Sector Oversight,



Country Report



The Norwegian insurance sector is well-capitalized. In recent years, the authorities have taken steps to

recapitalize weak insurers and to boost capital for the overall industry. Risk-resilience has been

strengthened by stronger retention of profits leading to accumulation of reserves, better risk

management, and higher capital in the run-up to the implementation of the Solvency II regulatory


Denmark: Financial Sector Assessment Program-TechnicalNote-Insurance Regulation and


Supervision, 12/08/2020

Country Report



Denmark's insurance sector is highly developed with a particularly high penetration and density in the

life sector. Traditionally, work-related life insurance and pension savings are offered as a combined

package, and life insurance companies dominate the market for mandatory pension schemes for

employees. The high penetration explains the overall size of the insurance sector, which exceeds those


of peers from other Nordic countries and various other EU member states. Assets managed by the

insurance industry amounted to 146 percent of the GDP at end-2018, compared to 72 percent for the

EU average.

Denmark: Financial Sector Assessment Program-TechnicalNote-Banking Regulation and Supervision,



Country Report



COVID-19 pandemic: The Financial Sector Assessment Program (FSAP) work was conducted prior to the

COVID-19 pandemic, so this Technical Note (TN) does not assess the impact of the crisis or the recent

crisis-related policy measures. Nonetheless, given the FSAP's focus on vulnerabilities and policy

frameworks, the findings and recommendations of the TN remain pertinent. The Danish Financial

Supervisory Authority (DFSA) has improved standards in its oversight of banking and insurance sectors

since the last FSAP. Nevertheless, risks persist, both in traditional forms, and new areas, such as cyber

risk, AML, and innovative market entrants. This note, selects topics to meet evolving supervisory

challenges and the expectation that the international supervisory standards themselves will likewise

continue to rise.

Denmark: Financial Sector Assessment Program-TechnicalNote-Next Steps for Cross-border AML/CFT


Supervision, 12/08/2020

Country Report



The Danish authorities' efforts to strengthen cross-borderanti-money laundering and combating the

financing of terrorism (AML/CFT) supervision continue to gather momentum. Since the Fund's

publication of a Selected Issues Paper on this subject in June 20192, the Danish authorities have made

significant progress, including by conducting or participating in three multinational on-site inspections

of banks; developing a new institutional risk assessment model; issuing an AML/CFT on-site inspection

manual; and, via Act No. 1563 (2019), amending several pieces of legislation so as to bolster the

monitoring and enforcement powers of the Danish Financial Supervisory Authority (DFSA), establish

additional reporting requirements for the private sector, and stiffen the penalties for violations of

AML/CFT obligations.

United States: Financial Sector Assessment Program-TechnicalNote-Banking Supervision and


Regulation, 10/08/2020

Country Report



This technical note leverages on the 2015 FSAP which concluded that the United States (U.S.) had a high

degree of compliance with the Basel Core Principles (BCPs). The FSAP reviewed the progress achieved

in addressing the main weaknesses previously identified and the main supervisory and regulatory

developments since then. The key focus are the steps taken by the U.S. authorities in recent years to

recalibrate and further tailor the banking regulatory and supervisory framework and the role of stress

tests in the supervision process. The FSAP team has not covered the impact of COVID-19 outbreak on

banks supervision and has not discussed with authorities the related policy response. The FSAP

recommendations are meant to be considered once the impact of the pandemic on the economy and

the banking sector becomes clearer.

United States: Financial Sector Assessment Program-TechnicalNote-Insurance Supervision and


Regulation, 10/08/2020

Country Report



This Technical Note (TN) is a targeted review of cross-cutting themes building on the detailed

assessment of the Insurance Core Principles (ICPs) conducted in 2015. The targeted review was chosen,

in part, due to the performance of the U.S. insurance regulatory system in the 2015 detailed assessment


where it was assessed that the U.S. observed 8 ICPs, largely observed 13 ICPs and partly observed 5

ICPs. The analysis relied on a targeted self-assessment against a subset of ICPs covering valuation and

solvency, risk management, conduct, winding-up, corporate governance and enforcement, and the

objectives, powers and responsibility of supervisors. The choice of subjects covered in this review is

based on those aspects most significant to financial stability and a follow-up on key recommendations

from the 2015 detailed assessment. The focus of the analysis has been on the state-based system of

regulation and supervision, reflecting the existing institutional setup.

Principles for operational resilience, 06/08/2020




Through the publication of this consultative document, the Committee seeks to promote a principles-

based approach to improving operational resilience. The principles aim to strengthen the ability of banks

to withstand operational risk-related events which could cause significant operational failures or wide-

scale disruptions in financial markets, such as pandemics, cyber incidents, technology failures or natural

disasters. The approach builds on updates to the Committee's Principles for the sound management of

operational risk, and draws from previously issued principles on corporate governance for banks, as well

as outsourcing-, business continuity- and relevant risk management-related guidance.

Revisions to the principles for the sound management of operational risk, 06/08/2020




The Committee introduced its Principles for the sound management of operational risk in 2003, and

subsequently revised them in 2011 to incorporate the lessons from the financial crisis. In 2014, the

Committee conducted a review of the implementation of the principles which indicated that several

principles had not been adequately implemented, and that the principles did not sufficiently capture

certain important sources of operational risk. The Committee is proposing a limited number of updates

to: (i) align the principles with the recently finalised Basel III operational risk framework; (ii) update the

guidance where needed in the areas of change management and information and communication

technologies; and (iii) enhance the overall clarity of the principles.

Corporate debt stress testing: A global analysis of nonfinancial corporations, 06/08/2020






High-yield corporate and leveraged loans have grown substantially over the past decade. However, the

COVID-19 pandemic means downside risks are rising alongside expectations of severe negative impacts

on corporate earnings and economic growth. The proportion of leveraged corporate debt exposed to

such downside risks has become a key concern. This paper assesses the magnitude of indebtedness of

leveraged non-financial companies and identifies the share of debt related to the riskiest firms. A stress

test analysis examines the sensitivity of corporate debt to potential macroeconomic and financial

shocks. The results show a sharp deterioration in the credit quality of firms, particularly in the United

States and Emerging Market Economies (EMEs). Under stressed conditions, all these countries, China

included, would experience a sharp rise in the number of firms considered at risk or distressed due to

deteriorating cash flows and the inability to make interest payments, thereby becoming more likely to




The future of retail payments in the United States



Central Bankers'

Speech (via webcast) by Ms Lael Brainard, Member of the Board of Governors of the Federal Reserve


System, at the FedNow Service Webinar, Washington DC, 6 August 2020.


Living with limits - household behaviour in Canada in the time of COVID-19



Central Bankers'

Remarks (by videoconference) by Mr Lawrence Schembri, Deputy Governor of the Bank of Canada, to


the Greater Saskatoon Chamber of Commerce, Saskatoon, Saskatchewan, 18 June 2020.

Nowcasting with large Bayesian vector autoregressions, 12/08/2020





Monitoring economic conditions in real time, or nowcasting, is among the key tasks routinely performed

by economists. Nowcasting entails some key challenges, which also characterise modern Big Data

analytics, often referred to as the three "Vs": the large number of time series continuously released

(Volume), the complexity of the data covering various sectors of the economy, published in an

asynchronous way and with different frequencies and precision (Variety), and the need to incorporate

new information within minutes of their release (Velocity). In this paper, we explore alternative routes

to bring Bayesian Vector Autoregressive (BVAR) models up to these challenges. We find that BVARs are

able to effectively handle the three Vs and produce, in real time, accurate probabilistic predictions of

US economic activity and, in addition, a meaningful narrative by means of scenario analysis.

Keywords: Big Data; Scenario Analysis; Mixed Frequencies; Real Time; Business Cycles; Forecasting.

Demographic Origins of the Decline in Labor's Share, 11/08/2020



Working Paper

Since 1980, the earnings share of older workers has risen in the United States, simultaneous with a

historic decline in labor's share of income. The authors hypothesize that an aging workforce has

contributed to the decline in labor's share. They formalize this hypothesis in an on-the-job search model,

in which employers of older workers may have substantial monopsony power due to the decline in labor

market dynamism that accompanies age.

Keywords: demographics; labor share; earnings distribution; income distribution.

A Structural Investigation of Quantitative Easing, 06/08/2020



Research Hub

Working Paper

Did the Federal Reserves' Quantitative Easing (QE) in the aftermath of the financial crisis have

macroeconomic effects? To answer this question, the authors estimate a large-scale DSGE model over

the sample from 1998 until 2020, including data of the Fed's balance sheet. They allow for QE to affect

the economy via multiple channels that arise from several financial frictions. Our nonlinear Bayesian

likelihood approach fully accounts for the zero lower bound on nominal interest rates.

Keywords: quantitative easing; liquidity facilities; zero lower bound; nonlinear Bayesian estimation.


GMV: Is the Dollar Entering a Secular Decline? 06/08/2020




Markets are debating whether the Dollar is entering a secular decline. We provide an overview of the main drivers of the Dollar in recent years. The Dollar has been stable against the G10 since its large rise in 2014/5, something likely to continue given that all major central banks are easing. In contrast, the Dollar has risen 10 percent versus EM in the past year, with lower commodity prices an adverse terms- of-trade shock for many. China's large 2009 stimulus lifted commodity prices, helping EM recover. That stimulus is now missing, limiting potential Dollar declines versus EM. The Dollar may one day face a secular decline, but not in the near term.


Same crisis, different responses to Covid-19,12/08/2020



Blog Post

Challenges for the Spanish economy in the face of the impact of the pandemic



Central Bankers'

Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee


on Banking Supervision, at the Webinar "Economy, work and society in Spain. The impact of COVID-19",

organized by the Spanish Economic and Social Council (CES), Madrid, 23 July 2020.

Statement by IMF Managing Director Kristalina Georgieva on the International Conference on Support


to Beirut and the Lebanese People, 09/08/2020

Press Release



Statement by IMF Managing Director Kristalina Georgieva on Lebanon, 06/08/2020



Press Release


COVID-19 Response in Emerging Market Economies: Conventional Policies and Beyond, 06/08/2020



Blog Post


Blog post by Martin Mühleisen (Director of the Strategy, Policy, and Review Department of the IMF),

Tryggvi Gudmundsson (Economist in the Strategy, Policy, and Review Department of the IMF) and

Hélène Poirson Ward (Deputy Division Chief in the Strategy, Policy and Review Department of the IMF)

United States: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the


Executive Director for United States, 10/08/2020

Country Report




Press Release

The U.S. is in the midst of an unprecedented social and economic shock. The longest expansion in U.S.

history has been derailed by the unanticipated advent of COVID-19. To preserve lives and support public

health, it was necessary to put in place a broad-based shutdown of the U.S. economy in March. Despite

the gradual easing of state lockdown restrictions and lifting of stay-at-home orders starting in late April,

the collateral economic damage has been enormous. First, and foremost, as of July 16, more than

136,000 Americans have tragically lost their lives and many more have become seriously ill. Almost

fifteen million Americans have lost their jobs, many small and large businesses are under financial stress,

and future prospects are highly uncertain. Reopening decisions will have to be handled carefully to

mitigate the economic costs while containing the ongoing rise in COVID-19 infection rates. It will likely

take a prolonged period to repair the economy and to return activity to pre-pandemic levels. All in all,


globally there will be difficult months and years ahead and it is of particular concern that the number of

COVID-19 cases in the U.S. is still rising.

Related press release:



Annual Report on Exchange Arrangements and Exchange Restrictions 2019, 10/08/2020






The Annual Report on Exchange Arrangements and Exchange Restrictions has been published by the

IMF since 1950. It draws on information available to the IMF from a number of sources, including that

provided in the course of official staff visits to member countries, and has been prepared in close

consultation with national authorities.

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and


High-Risk Areas, 06/08/2020

Press Release


The Slovak labour market during the pandemic - who is at risk and how to protect all workers?



Blog Post



Governance responses to disinformation - How open government principles can inform policy


options, 11/08/2020





This paper provides a holistic policy approach to the challenge of disinformation by exploring a range of

governance responses that rest on the open government principles of transparency, integrity,

accountability and stakeholder participation. It offers an analysis of the significant changes that are

affecting media and information ecosystems, chief among them the growth of digital platforms.

Drawing on the implications of this changing landscape, the paper focuses on four policy areas of

intervention: public communication for a better dialogue between government and citizens; direct

responses to identify and combat disinformation; legal and regulatory policy; and media and civic

responses that support better information ecosystems. The paper concludes with proposed steps the

OECD can take to build evidence and support policy in this space.

Identifying and addressing employment barriers in Belgium, Korea and Norway - Implementing the


OECD Jobs Strategy, 11/08/2020





This paper documents joblessness in OECD countries, provides a detailed diagnosis of structural

employment barriers in Belgium, Korea and Norway by applying the OECD Faces of Joblessness

methodology to the situation just before the COVID-19 crisis and discusses the policy implications. It

shows that individuals experiencing major employment difficulties often face a combination of barriers

related to work availability, readiness and incentives. It suggests a number of avenues for enhancing

the effectiveness of public support: i) make greater use of statistical profiling tools to adapt programmes

to the needs of the jobless and target resources to those at the highest risk of long-term joblessness; ii)

better coordinate support provided by employment, health and education services; iii) place a greater

emphasis on preventive policies (equal opportunities, life-long learning).


OECD Economic Surveys: Korea 2020, 11/08/2020






Press Release

Economic activity has contracted less in Korea than in other OECD countries, thanks to the prompt and


Blog Post

effective reaction of the authorities to contain the spread of the COVID-19 virus and to the wide-ranging

government support to households and businesses. Nevertheless, the pandemic generates strong




Related press release:

Korea: Keep supporting people and the economy until recovery fully under way



Related blog post:

Korea: Roadmap to narrow digital gaps


The 2018-2021 working time reform in Korea: A preliminary assessment, 11/08/2020






To reduce the incidence of very long working hours, Korea is gradually implementing a major working-

time reform, which lowers the statutory limit on total weekly working hours from 68 to 52 between

2018-2021. This paper provides a preliminary assessment of the reform with three key insights. First,

the ongoing reform will bring Korea's working time regulation in line with the dominant OECD practice.

Second, the implementation of the 52-hour limit among large firms reduced the incidence of working

more than 52 hours by 5 percentage points or about a fifth of its pre-reform level among employees

working overtime. While these results are encouraging, they also suggest that working very long hours

remains common, even among large firms that are subject to the new 52-hour limit. Third, two in five

workers will remain exempt from the 52-hour limit once it is fully implemented in 2021. The main

conclusion is that the reform represents an important step in the right direction, but that further efforts

are needed to effectively change Korea's long working-hour culture.

Fealty versus ability, 11/08/2020




Joe Biden has a dilemma. He wants a running mate who is loyal but able to step in as president if Biden

is incapacitated. Thus, that person must be ambitious. There is speculation that, given his age, he would

be a one-term president. The vice-president would have a head start in launching a campaign to succeed

him. How can a vice-president do for Biden what he did for Barack Obama, when she is campaigning for


Reasons to worry about US election, 11/08/2020





The outcome of the US election is still wide open, with plenty of room for mistakes by President Donald

Trump and challenger Joe Biden. The contest will not be decided by traditional election dynamics or the

economy. The winner will be the candidate who best comes to terms with the deep anger and bitterness

which has resulted from dramatic social and economic change in America. But a bigger danger looms:

Trump's potential to undermine the elections and throw the entire American system into chaos.


Protecting the economy beyond Covid-19,10/08/2020





A key role for central banks is to ensure that policies support a sustainable contribution from the

financial system so that it can absorb, and not amplify, the shock of Covid-19. We have only seen the

initial economic effects of the pandemic materialise and there is significant uncertainty over the path

of the virus, the duration of the shock and the economic implications.

Arbitrage and reflation in gold market, 06/08/2020





The global gold market is recording record levels of activity. Gold's surge is not an inflation worry

indicator as some think; bond markets suggest inflationary anxiety is misplaced. Rather, market

disruption, US fiscal policy, and the low-rate environment have been driving its performance.

What's on the sovereign investor's mind? - Five key themes from the launch of Global Public Investor


2020, 06/08/2020



The global economy is enduring a particularly forceful downturn while governments borrow

extravagantly to step into the gap, as central banks wade into markets to buy a wide range of assets.

Against this backdrop, OMFIF last week hosted two virtual meetings to present the findings of Global

Public Investor 2020. The discussions highlighted changes in risk appetite, and recognition of good initial

policy responses to the crisis.

China Spotlight: What Is Driving The Recovery? 12/08/2020




China's economic recovery in 2Q2020 was mainly driven by manufacturing and construction.

Investments in industrial sectors remained weak, likely due to thin profits. Increases in household

income and consumption are needed to make the recovery more sustainable. The monetary and fiscal

stimulus of 2Q should continue to help the recovery in 2H2020. We expect China's economy to grow by

about 5.5% in 2H2020 and 2.2% for the whole year.

Economic Views: Argentina's Funding Post-Restructuring,11/08/2020




Argentina faced periodic funding gaps under the IMF program. The external funding outlook improves

with debt restructuring, as long as the IMF rolls over its exposure into a new program. Now the challenge

shifts to fiscal deficits and their financing. Ending monetization upfront would require tough fiscal cuts.

Spanish regions in Global Value Chains: How important? How different? 05/08/2020



Research Hub


Working Paper

The recent release of EUREGIO, a novel global input-output database with regional detail for EU

countries, allows to analyze the participation of EU regions in Global Value Chains and their implications

for the propagation of sector-specifi c shocks. The authors focus on Spanish regions to exploit the

granular information embedded in this database. They first characterize foreign and domestic trade

  • Az IIF weboldalán található elemzések csak az IIF-tagok számára elérhető előzetes regisztrációt követően. Igény esetén az elemzést továbbítjuk az érdeklődők részére.


inter-linkages of Spanish regions and sectors. Using an extended version of the Leontief scheme, they compute upstream output and value added multipliers.

Keywords: global value chains; input-output structure; networks; EUREGIO.


Aging Economies May Benefit Less from Fiscal Stimulus, 07/08/2020



Blog Post

Blog post by Jiro Honda (Deputy Division Chief in the Fiscal Affairs Department of the IMF) and Hiroaki

Miyamoto (Professor of Economics and Business Administration at Tokyo Metropolitan University)

Reassessing the regressivity of the VAT, 10/08/2020



Working Paper



This paper reassesses the often-made conclusion that the VAT is regressive, drawing on tax

microsimulation models constructed for an unprecedented 27 OECD countries. The paper first assesses

the competing methodological approaches used in previous distributional studies, highlighting the

distorting impact of savings patterns on cross-sectional analysis when VAT burdens are measured

relative to income. As argued by IFS (2011), measuring VAT burdens relative to expenditure - thereby

removing the influence of savings - is likely to provide a more meaningful picture of the distributional

impact of the VAT. On this basis, the VAT is found to be either roughly proportional or slightly

progressive in most of the 27 OECD countries examined. Nevertheless, results for a small number of

countries highlight that broad-based VAT systems that have few reduced VAT rates or exemptions can

produce a small degree of regressivity. Results also show that even a roughly proportional VAT can still

have significant equity implications for the poor - potentially pushing some households into poverty.

This emphasises the importance of ensuring the progressivity of the tax-benefit system as a whole in

orderto compensate poor households for the loss in purchasing power from paying VAT. In the broader

context of the COVID-19 crisis, the findings of the paper suggest there may be scope in many countries

for VAT reform to help address revenue needs, as this revenue may be generated with less significant

distributional effects than previously thought. While standard VAT rates are high in many countries,

OECD evidence shows that scope exists to broaden VAT bases. Nevertheless, any VAT increases,

including VAT base broadening measures that impact the poor, should be accompanied by

compensation measures for poorer households, such as targeted tax credits or benefit payments.


Public responses to consultation on Guidance on financial resources to support CCP resolution and on


the treatment of CCP equity in resolution, 10/08/2020




On 4 May 2020, the FSB published a consultation document on Guidance on financial resources to

support CCP resolution and on the treatment of CCP equity in resolution. Interested parties were invited

to provide written comments by 31 July 2020. The public comments received are available.



Euro area securities issues statistics: June 2020, 12/08/2020



Press Release

Euro money market statistics: fourth maintenance period 2020, 11/08/2020



Press Release


Industrial production up by 9.1% in both euro area and EU, 12/08/2020



Press Release


Effective exchange rate indices, 12/08/2020



Press Release

Central bank policy rates, 12/08/2020



Press Release

US dollar exchange rates, 12/08/2020



Press Release

OECD CLIs continue to strengthen from crisis-low in all major economies - Composite Leading


Indicators (CLI), OECD, August 2020, 10/08/2020

Press Release


Government support measures for households buffer the economic impacts of COVID-19 - Growth


and economic well-being: first quarter 2020, OECD, 06/08/2020

Press Release





Central Bank of Hungary published this content on 13 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 August 2020 15:32:03 UTC

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