RD News 14March12

• BIS: Speech by Tiff Macklem, Senior Deputy Governor of the Bank of Canada: Promoting growth, mitigating cycles and inequality – the role of price and financial stability
• Markets work better than anything else at delivering opportunity and prosperity.
• An efficient and resilient financial system is an essential enabler to growth and inclusion.
• Markets only work well within sound policy frameworks. All markets – and financial markets in particular – need clear rules, diligent oversight, and consistent enforcement of the rules. Systemic crises are not the inescapable product of capitalism, and inequality is not the necessary by-product of growth.

• BoE: Speech by Andrew Haldane drawn from a paper written jointly with two Bank colleagues, Robleh Ali and Paul Nahai-Williamson: Towards a common financial language
• The recent financial crisis exposed failures in the information systems of many firms, with few having the means to aggregate quickly information on exposures and risks.
• There are no technological barriers to a transformation in finance similar to that of product supply chains and the World Wide Web, where the adoption of a common language has delivered huge improvements in system resilience and productivity. Four potential benefits:
• improvements in risk management in firms;
• improvements in risk management across firms;
• mapping the financial network could be comprehensively improved, both in terms of granularity but also timeliness;
• help lower barriers to market entry in banking and “…might even begin to erode the too-big-to-fail problem through market forces”.

• The Federal Reserve has announced summary results of the latest round of bank stress tests (the Comprehensive Capital Analysis and Review 2012).
• Methodology and Results for Stress Scenario Projections
• Press release:
• The tests show that the majority of the largest US banks would continue to meet supervisory expectations for capital adequacy despite large projected losses in an extremely adverse hypothetical economic scenario.
• This time around banks are not expected to be required to raise capital.
• According to the Fed banks that participated in both 2011 and 2012 stress testing have increased their capital to $759 billion in the fourth quarter of 2011 from $420 billion in the first quarter of 2009.

• ECB: Publication: The great financial crisis: Lessons for financial stability and monetary policy. An ECB colloquium held in honour of Lucas Papademos, 20-21 May 2010
• Comment by Paul Tucker on p22.