Financial risks will be dispersed throughout the eurozone as banks look to relocate operations after Britain's departure from the EU, says Bundesbank President Jens Weidmann. "The realistic view on all this will be that banks will relocate to some extent, and they will relocate throughout the whole euro area," he said.
Janet Yellen, head of the Federal Reserve, received a letter from Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, warning against issuing any regulation until the Trump administration nominates members for the central bank's board. The letter told Yellen that any new rulings, particularly on stress tests for banks, will be scrutinized in Congress and could be overturned.
Former CBA Chairman Richard Davis, who plans to retire in April as CEO of U.S. Bancorp but remain executive chairman, is among candidates considered by President Donald Trump for the Federal Reserve Board, sources say. Davis has said he expects policies from the Trump administration to help the banking industry by boosting consumer demand.
Panellists at an AFME conference agreed that bond liquidity has declined but say that reports have offered no concrete evidence to explain it. "All reports are failing to find the smoking gun because the regulators are looking in the wrong place. ... They are looking at market structure rather than taking it a step further," said Jon Mawby of GLG Partners.
Investments in European equity funds jumped to $1.1 billion last week, prompted by rising inflation figures and encouraging economic data, despite ongoing political concerns.
Morgan Stanley is considering moving around 300 UK staff to Frankfurt, Germany, or Dublin once the details of Britain's departure from the EU become clearer, sources said. Meanwhile, the Bruegel economic research group has said Brexit could entail the loss of as many as 30,000 UK jobs and relocation of around €1.8 trillion in assets.
Germany's budget surplus hit a record €23.7 billion in 2016, the National Statistics Office said. The surplus is the result of the country's strong economy and record-low unemployment.
Regulators in the US and Europe are softening enforcement of derivatives rules that will take effect Wednesday. Variation margin rules for noncleared derivatives will be enforced on a case-by-case basis to allow smaller firms more time to prepare for the changes.
Experts assembled by the European Commission are taking a close look at the potential effect of Europe's revised Markets in Financial Instruments Directive on bond markets. Delegates at an AFME market liquidity conference were told that the commission will take relevant action and make amendments if the experts identify unintended consequences in the new transparency rules.
Basel III banking regulations have been delayed due to a lack of consensus on output floors, which critics argue would encourage banks to move away from risk-sensitive systems if set too high, says Adam Farkas, the European Banking Authority's executive director. "That's why this debate on calibration is so heated because it represents a philosophical disagreement between some of the counterparts," he added.
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