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Sweden: Financial Sector Stability Assessment
July 13, 2011--EXECUTIVE SUMMARY, KEY FINDINGS, AND RECOMMENDATIONS
The Swedish economy has rebounded strongly. The impact of the financial crisis on Sweden’s economy and financial sector was substantial, resulting in a sharp output contraction, currency depreciation, and major banks faced liquidity strains, which, coupled with concerns about asset quality in banks’ operations in the Baltics, have lead to sharp
decline in banks’ share prices.
The authorities’ response was forceful, introducing a wide range of extraordinary measures that helped to contain the impact of the crisis, and restore market stability and confidence. Economic indicators improved markedly in 2010, and banks’
capital position and profitability strengthened, allowing the exit from crisis-response measures to begin in April 2010.
Financial stability analysis indicates that banks are resilient to credit risk, but could face difficulties with respect to liquidity risks. The stress testing results show that banks should be able to maintain adequate capital in the face of severe credit risk shocks, owing to high profits and capital buffers, and relatively high-quality loan portfolios. Liquidity stress tests suggest vulnerabilities due to the banks heavy reliance on short-term wholesale funding. The authorities’ intention to accelerate the implementation pace of Basel III capital requirement, impose higher than minimum capital requirements on the largest and systemically important banks, and tighten liquidity regulations are welcome steps, given the nature of banks’ exposures and prevailing risks.
view the Sweden: Financial Sector Stability Assessment
Italy: Selected Issues
July 13, 2011--I. STRUCTURAL REFORMS AND GROWTH: WHAT WORKS?1
Based on the economic literature and international experience, this annex identifies the policy measures and institutions in product and labor markets that boost growth and
employment. Evidence points to substantial long-term growth gains for structural reforms in Italy. Advancing structural reforms in key bottleneck areas can lift productivity, and
substantially enhance growth potential.
Measures could focus on pursuing further product market liberalization, reducing the labor tax burden- matched by expenditure cuts, promoting decentralized wage bargaining, and addressing labor market dualism. Labor and product market reforms are complementary.
A. Diagnosis
1. In the last decade, Italy has suffered from low economic growth, weak productivity, and declining competitiveness. Total factor productivity (TFP) has been sharply declining over the last decade, which has resulted in persistently rising unit labor costs, stagnating incomes, a widening competitiveness gap, and anemic growth.
view the Italy: Selected Issues report
Derivatives Rules to Help Swaps Market Grow $40.7 Trillion, Citigroup Says
July 13, 2011--The market for interest-rate and credit-default swaps will grow more than 10 percent to $435 trillion by 2013 as oversight of over-the-counter derivatives improves price transparency and cuts trading risk, according to Citigroup Inc. (C)
Banks, hedge funds and other investors are bracing for sweeping changes to the private derivatives market, including increased capital requirements and most trades being processed by clearinghouses, which require margin payments. The Dodd-Frank Act, passed in the U.S. last year, and rules being created now by the European Parliament will regulate swaps for the first time in their 30-year history.
EDHEC-Risk Institute Warns the European Commission of the Inadvisability of Imposing a Tobin Tax
July 13, 2011--In an open letter dated July 12, 2011 addressed to the European Internal Market and Services Commissioner, Michel Barnier, EDHEC-Risk Institute has warned of the inadvisability of imposing a “Tobin tax” on financial transactions in order to fund the future European budget.
On the basis of a position paper* by Raman Uppal, Professor of Finance at EDHEC Business School, EDHEC-Risk Institute’s recommendations are structured around the theoretical evidence on transaction taxes, the empirical evidence on transaction taxes, and implementation challenges:
The findings of theoretical models are mixed about the effectiveness of the Tobin tax to reduce volatility and improve welfare. The Tobin tax will obviously lead to a reduction in the trading of securities on which the tax is imposed. But, a reduction in the trading of financial securities also means that it is now more difficult to smooth consumption over time and across states of nature. The Tobin tax reduces speculative activity in financial markets; but, this tax also drives away investors who provide liquidity, stabilise prices, and help in the price discovery process. Thus, introducing a Tobin tax has both advantages and disadvantages, and the net effect on volatility is likely to be small.
view EDHEC-Risk Institute Letter to European Internal Market and Services Commissioner, July 12, 2011 Börse Berlin-Stable Development In The First Six Months Of 2011 ESMA seeks views on future rules for alternative investment fund managers Moody’s cuts Ireland to junk, warns of 2nd bailout European fund bond buy back 'possible': Germany Belgium: Action needed on public finances, greener growth and access to job market view the OECD Economic Survey of Belgium 2011
London Stock Exchange Group Welcomes New ETF Issuer
To mark the occasion Bruno Poulin, Chief Executive of Ossiam, was joined by Xavier Rolet, Chief Executive of London Stock Exchange Group, to open trading at the London Stock Exchange today. Pietro Poletto, Head of ETFs at London Stock Exchange Group, said:
“Our ETF markets continue to go from strength to strength. Not only do our markets see more ETF volume traded than any other exchange in Europe, but we are host to more ETF issuers than any other exchange in Europe too.
“Through Ossiam’s new ETFs, investors will have the opportunity to gain exposure to high quality products on an established, liquid platform.”
July 13, 2011--In the first half year of 2011 Börse Berlin gained a plus in turnover of 29 per cent in its broker aided specialist trade compared to the same period in 2010. Equiduct stabilizes its turnover at 8.2 bn Euro in the second quarter 2011.
Despite an increasingly difficult market, Börse Berlin is content with the result of the first half year of 2011. Due to a successful first quarter in broker aided trading, turnover increased by 29 per cent to 4.9 bn Euro compared to the first six months of 2010. Number of trades declined slightly by 2.5 per cent and reached a total of 120.826.
July 13, 2011--ESMA publishes today a consultation paper (ESMA/2011/209) setting out its proposals for the detailed rules underlying the Alternative Investment Fund Managers Directive (AIFMD). This is in response to the request for assistance which the European Commission sent to ESMA’s predecessor, CESR, in December 2010. ESMA has to deliver its final advice to the Commission by 16 November 2011.
July 13, 2011--Moody’s cut Ireland’s credit rating to junk on Tuesday, warning that the debt-laden country would likely need a second bailout -- just the latest move amid heightening concerns about Europe’s ability to address its debt crisis and prevent it from spreading.
Moody’s move comes a week after it slashed Portugal to junk status with a similar warning about the need for a second round of rescue funds. It reflects the credit rating agency’s view that any further financial assistance from Brussels will require private investors to share part of the pain, possibly through a debt rollover or swap. European finance ministers have acknowledged for the first time that some form of Greek default may be needed to cut Athens’ debts, and if that materializes, Ireland’s rating, never before in junk territory, could be set for a further round of cuts.
July 13, 2011-- Germany suggested on Wednesday it was "possible" for the European Financial Stability Fund (EFSF) to buy back the bonds of a country in financial trouble.
"It is already now theoretically possible for a state to receive financial aid and then to use some of this to buy back its debt," finance ministry spokesman Martin Kotthaus told a news conference.
July 12, 2011--Belgium has come out of the global financial crisis faster than the euro area as a whole, but high public debt and the need to anticipate the cost of its ageing population require urgent fiscal consolidation, according to the OECD’s latest Economic Survey of Belgium.
Reinforcing economic dynamism by improving access to the labour market, particularly for young people and immigrants, is also a priority, says the report. At the same time economic growth needs to become greener. Belgium’s relatively weak environmental taxes should be developed to improve growth prospects and living standards.
Ossiam launches first products in London; opens market
LSEG largest ETF
July 12, 2011--
London Stock Exchange Group today welcomes Ossiam as a new issuer of exchange traded funds (ETFs) on its UK markets. The company is the twentieth to list such products on the Group’s markets across London and Milan. There are now more issuers with ETFs listed across the Group than on any other exchange in Europe.
Ossiam has listed 4 products, offering exposure to European and US equity indices. They are:
OSSIAM ETF iSTOXX Europe Minimum Variance NR
OSSIAM ETF US Minimum Variance NR
OSSIAM ETF EURO STOXX 50 Equal Weight NR
OSSIAM ETF STOXX 600 Equal Weight NR
