Assembly grants BOK supervisory capability

The National Assembly yesterday approved a bill aimed at beefing up the Bank of Korea’s role in coping with financial instability.

On the last day of the extra session, the Assembly passed a revised bill governing the BOK in a 147 to 55 vote, allowing the central bank to keep financial stability as its policy priority, together with price stability.

Gold reserves reflect positively on Lebanon's financial stability: Salameh

BEIRUT: Lebanon’s Central Bank Governor Riad Salameh says Lebanon holds the second biggest gold reserves in the region, resulting in a positive impact on the country's financial stability.

“Lebanon has the second largest gold reserves among countries in the Middle East and we consider this as a pillar of monetary stability in the absence of key natural resources and a safe haven in times of crises,” Salameh reportedly said during a meeting with students of various nationalities who came to Lebanon from Hatron University in the U.S.

Euro Nations To Pay For Collateral On Greek Loans - Source

BRUSSELS(Dow Jones)--Euro-zone governments are likely to require countries that seek collateral for a new round of lending to Greece to pay for it, a senior euro-zone official said Wednesday.

The idea is part of a proposal from the European Commission and the European Financial Stability Facility, the euro zone's sovereign rescue fund, to resolve a dispute sparked by demands from Finland for collateral to secure additional lending to Greece. The proposal also calls for countries that want collateral to receive Greek bank shares owned by the Greek government as collateral, the official said.

Greece Only Discussing Cash Collateral With Finland

ATHENS (Dow Jones)--Discussions between Greece and Finland over a deal to provide Helsinki with collateral in exchange for the Nordic country providing fresh aid are focused only on cash collateral and don't involve any property rights, Greece's finance minister said Wednesday.

"We are only speaking about guarantees of a financial nature...and guarantees that do not include claims on property," Evangelos Venizelos said in a radio interview.

Germany okays Europe's latest rescue fund

BERLIN — Angela Merkel's German cabinet on Wednesday approved changes to the latest European rescue fund which now goes to parliament for ratification, officials said.

Extending the European Financial Stability Facility's (EFSF) mandate was agreed on July 21 by European leaders to alleviate the eurozone debt crisis.

German coalition lawmakers to propose compromise on EFSF

The opposition Social Democrats (SPD) and Greens said they would vote for the measure so its passage is certain. But political analysts warn that if Merkel fails to pass the measure with lawmakers from her own coalition, it could trigger a crisis of confidence and political turmoil.

"If Chancellor Merkel does not manage to get a majority of her own in the euro issue, the logical answer would be new elections," said SPD secretary-general Andrea Nahles.

Schaeuble warns coalition MPs to back EFSF reforms

Schaeuble also said he was optimistic that the coalition would get its own majority for the EFSF measures and not have to rely on backing from the center-left opposition of Social Democrats (SPD) and Greens.

"I'm confident that we'll get a broad majority -- not only in parliament but also in the coalition," he said.

Schaeuble also acknowledged that it was sometimes hard to keep pace with the developments in the sovereign debt crisis and that the conditions made it difficult at times to always come up with the right remedies at the right time.

Turkey, Ukraine Most Exposed to Crisis Repeat, Goldman Says

Turkey and Ukraine are more vulnerable to a repeat of the 2008 credit crisis than other nations in central and eastern Europe, the Middle East and Africa on concern their balance of payments will hurt financial stability, Goldman Sachs Group Inc. (GS) said.

Turkey has “accumulated substantial external imbalances” and an International Monetary Fund program has been sidelined in Ukraine, economists including Clemens Grafe and Ahmet Akarli said in an e-mailed report today. Russia would also be exposed, though “a more resilient banking system and increased ruble flexibility” should limit the impact, they said.

Scottish public sector 'should focus on financial stability'

Leaders in the Scottish public sector have been called upon to prioritise long-term financial sustainability in order to guarantee effective services in future.

Audit Scotland has published a report noting that Scottish public sector bodies are seeing the first wave of major spending cuts at present, increasing the need for major savings and forward planning.

Derivatives ‘Data Gaps’ May Hide Threats to Stability of Financial Markets

Regulators said they might not have enough information to assess the threat over-the-counter derivatives pose to the financial system.

Shortfalls in available data may undermine attempts to use so-called trade repositories as a tool to improve market oversight, the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions said in a report published today.

Is Merkel Worried EFSF Vote May Go Wrong Way?

Throughout the European debt crisis, Germany Chancellor Angela Merkel has tended to stay calm; she has taken action only when market jitters threatened to get out of hand. But now she’s canceled her upcoming trip to Russia, a decision made at a time when markets are mostly rising.

Could Ms. Merkel’s behavior be cause for alarm? She does seem worried that German lawmakers may thwart plans to give new powers to the European Financial Stability Facility, the euro-zone bailout fund.

Global Markets Move, but Merkel Won't

Never say that euro-zone countries can't agree on anything. A consensus is rapidly forming: Germany should transfer to its euroland partners more of its hard-earned money, either by lending its impeccable credit to an issue of euro bonds, or contributing more to a much-enlarged European Financial Stability Facility.

This weekend, Belgium's finance minister, Didier Reynders, added his voice to the crowd demanding access to Germany's wealth. No surprise there: Belgium ranks third, right behind Greece and Italy, in the size of its debt relative to the size of its economy. True, it has a way to go before its almost 100% debt: GDP ratio catches up to Greece's (about 150%) and Italy's (about 120%), but its 10-year bonds now yield approximately twice the premium over German bunds that investors extract from France, and Moody's Analytics steadily upgrades the probability of a Belgium default.

Lawyers Make Matters Worse for the Euro

If politicians have been bad news for the euro then the lawyers are going to be even worse.

At every juncture there appear to be legal blockages to Germany’s participation in the bailouts for the peripheral debtors of the euro zone.

No Progress This Week On EFSF Collateral - EU Source

BRUSSELS (Dow Jones)--Euro-zone policymakers haven't made any progress this week on resolving Finland's demand for collateral for contributing to Greece's second bailout, according to a person familiar with the situation.

Euro-zone governments are discussing alternative forms of collateral that could meet Finland's requirements for participating in the bailout after a bilateral deal reached earlier between Greece and Finland was rejected by key member states, including Germany and the Netherlands.

German FinMin - EFSF urgently needs bond-buy powers

Aug 25 (Reuters) - Europe's rescue fund urgently needs to be empowered to buy bonds on the secondary market, German Finance Minister Wolfgang Schaeuble said on Thursday.

Minister drags Berlin into euro crisis collateral row

(Reuters) - A minister in Angela Merkel's conservative party propelled Germany into a debate about guarantees on bailout payments to Greece, backing a demand from Finland for collateral, but Berlin distanced itself from her comments.

Labour Minister Ursula von der Leyen, also a deputy president of the chancellor's Christian Democrats (CDU), told German TV on Tuesday that future bailouts should only be made against guarantees.

South Africa ‘Vigilant’ on Financial Stability, Gordhan Says

Aug. 23 (Bloomberg) -- South Africa remains “vigilant” on maintaining financial stability to keep the country’s banking industry stable and well capitalized in the face of global uncertainty, Finance Minister Pravin Gordhan said.

Lenders still need to cut fees, improve access to credit and implement international principles on executive compensation, Gordhan told a conference in Johannesburg today. About 63 percent of the adult population has a bank account, a figure the industry wants to increase to 70 percent.

Nowotny worried about EFSF timeline delay: report

(Reuters) - European Central Bank Governing Council member Ewald Nowotny is concerned that euro zone countries will not push through parliamentary approval of changes to their EFSF bailout fund as quickly as planned, an Austrian magazine quoted him as saying.

"I fear the envisaged date of the end of October won't hold," Profil quoted him as saying in its August 22 edition.

Fears mount of cuts in EU bank lending

Rising funding costs for European banks are stoking fears that they could be forced to cut back lending and drag down the already struggling world economy.

The spreads for credit default swaps – essentially the price to insure five-year bonds – have hit all-time highs in the past two weeks for the big French and Italian banks, as well as Spain’s Banco Santander. The index of five-year bank CDS’s is now trading wider than during 2008, when the collapse of Lehman Brothers froze interbank lending and sparked a credit crunch.

Osborne Says Euro Nations Must Act ‘Swiftly’ to Ensure Financial Stability

U.K. Chancellor of the Exchequer George Osborne said euro countries must act “swiftly” to deliver on their promises and ensure financial stability.

“A global crisis cannot be solved by countries acting alone,” Osborne wrote in an article for today’s Daily Telegraph newspaper. “Euro-zone countries must now act swiftly to deliver on what they have promised. Euro-area institutions need to do whatever is necessary to ensure financial stability in the euro area, as I am sure they will.”

G7 pledge on stability gets cool reception

By Alan Beattie in Washington and Joe Leahy in São Paulo

The statement on Sunday by the Group of Seven rich countries pledging to “take all necessary measures” to support financial stability was largely dismissed by market participants and economists, who said it was a bland attempt at reassurance with little policy content.

Higher collateral demands needed for bank stability

By Philip Aldrick, Economics Editor

The Bank of England should be given the power to regulate lending by demanding banks increase the extra collateral they place against risky assets in times of rising prices to prevent another credit crunch, according to a top official at the central bank.