Policy and Technical insight – February 2016

Bank resolution is being tested before ‘bail in’ implemented A week where old fashioned means of resolving €200bn of Italian bad loans came to the fore: they are to be sold with a market price government credit guarantee. The government felt pressed to stop a loss of faith in banks when it never had the UK option of borrowing to recapitalise them. Market making – thin end of the regulatory wedge Reuters bring attention to withdrawal of market makers from government bonds. Are we witnessing waning interest as MiFID II transparency rules loom over the horizon, and CRDIV requirements make

Wholesale bank deposits made hot money

If treasurers did not know before, corporate (wholesale) bank deposits have become of much higher risk, with subordination to secured and preferred creditors of banks.

Here is what I wrote in the April edition of Financial World (www.financialworld.co.uk) – since when we can add “bail-in” to hazards facing wholesale deposits. Financial World, April 2013, Page 22: John Grout describes why moves to make banks more resilient could cut funding to the real economy and stoke the problem of hot money in shadow banking.