The European Commission has set some more ambitious objectives: a new directive aims to improve access to payment accounts, boost transparency of account fees and make it easier to switch accounts in the EU. That sounds promising initially – however, as is so often the case, “well intentioned” is not the same as “well executed”. Fundamentally different market realities in the member states and several quite complex issues make it difficult to define appropriate rules at the EU level. [more]

This study reviews how Japanese banks have responded to the adverse macroeconomic environment during the past ten to twenty years. The experience of Japanese banks provides some valuable insights into the effect of a prolonged phase of low interest rates on bank balance sheets and profitability. Banks have adapted both the cost and income drivers of their business. Profitability and efficiency gains have been limited though. While Japanese banks have reduced their bad loan problem, they have also become increasingly exposed to their home sovereign. [more]

The development of bank funding before and during the crisis has highlighted its importance for financial intermediation and credit provision in an economy. Given its importance for banks and households, mortgage finance is of particular importance here, not least with an eye to financial stability issues. This paper provides an overview of banks’ funding of residential mortgages in Europe, taking a close look at the structure of funding instruments and their potential effects on financial stability. [more]

In the euro area, the five biggest clearing houses processed 84.8% of the total ACH transaction volume or 38.4% of all payments. Up to 2011, there was hardly any change in the ACH 'league table'. There is, however, recent evidence of growing cross-border competition between ACHs for transaction volumes. Consolidation of several national clearing volumes on one technical platform has started. Whether this will lead to a fully integrated Single Euro Payments Area is still to be seen, though. [more]

The political dynamics in Europe have shifted against universal banks in recent months. This is a dangerous development that threatens the key role such banks play in modern economies and risks eliminating many of the advantages universal banks have to offer: in a “one-stop shop”, they provide their customers with a broad range of tailor-made services, higher volumes of credit and lower funding costs than narrower “specialist banks”. In addition, thanks to the diversification of their operations and the potential to leverage revenue and cost synergies, universal banks tend to be more stable than specialist banks. They also provide for diversity in bank business models and are better positioned to monitor the financial health of specific clients as well as to spot unsustainable risk accumulation across financial markets. [more]