2026-08-27 Thursday

The Swiss National Bank separates monetary policy from financial stability: the policy rate is set solely for price stability, while vulnerabilities such as the mortgage market are addressed with macroprudential tools, chiefly the countercyclical capital buffer. That buffer is currently at its legal maximum of 2.5%, a Swiss peculiarity that limits the SNB's headroom. The document, a speech by Vice President Antoine Martin, argues that a resilient financial system is a precondition for effective monetary policy transmission, so the two objectives are complementary rather than conflicting.

The SNB's experience shows the cost of financial crises: five years after a crisis, GDP was around 4% lower than after a normal recession, with a maximum per-capita loss of 1.5%. This motivates the use of the buffer, which was reactivated in 2022 at its cap. However, the deactivation of the sectoral buffer during the pandemic reduced capital available for a potential real estate crisis, a trade-off the document acknowledges. The SNB does not currently recommend raising the buffer further, despite the lack of macroprudential headroom.

Concentration risk has risen: UBS's share of the domestic credit and deposit market reached about a quarter in 2024, up from 25% for credit and 25% for deposits in 2022. This concentration amplifies the importance of bank resilience for monetary policy. The SNB's policy rate was raised by 250bp within a year in 2022-2023, and the document suggests that a separate releasable capital buffer, based on international experience, could be beneficial. For investors, the binding cap on the buffer means that any future financial stability tightening would have to come from other tools or a legal change, while the policy rate remains free to target inflation alone.

AI use at work has doubled in two years, reaching 52% of euro area workers in 2026, up from 41% in 2025. The median user saves 3 hours per week, or 7.7% of working time, but the overall efficiency gain for the economy is only 3.8% because adoption is uneven — highly educated workers use AI at 61% versus 37% for lower educated. The ECB estimates AI could add 0.35% to annual productivity growth, a modest boost that may ease inflationary pressures over time. However, the drop in positive sentiment to 41% suggests growing skepticism, which could slow further adoption and limit the productivity gains that would support the ECB's policy normalization.

ECB Executive Board member Piero Cipollone outlined progress on Europe's tokenised financial market, noting that tokenised traditional assets on public blockchains grew 5 x between March 2025 and March 2026, and a US platform processed $354bn in daily tokenised repo transactions in March 2026. The EU's fragmented infrastructure — 31 CSDs, 14 CCPs, and 323 trading venues — with over 95% of transactions settled within the same CSD, underscores the need for interoperability. The Eurosystem's Pontes and Appia projects aim to integrate these markets with central bank money at the core, preventing fragmentation and external dependence. For bond markets, this signals a shift toward DLT-based settlement, potentially reducing costs and increasing efficiency, but also raising questions about the role of traditional intermediaries.

The steady core measure suggests the RBA's cautious stance is warranted, with the disinflation path uneven and services costs like meals out at 4.5% still elevated.

A BIS Bulletin suggests supervisors use large language models to screen prospectuses against capital rules, ranking divergences. The method was applied to Additional Tier 1 prospectuses from European global systemically important banks and validated on anonymised Credit Suisse and Yes Bank documents, recovering rule-prospectus differences that later mattered in disputes. The proposal is buried in a BIS Bulletin, not a formal standard, so its adoption hinges on whether supervisors integrate such tools into routine reviews; a concrete test would be a pilot by a national regulator, such as the PRA or BaFin, publishing results on AT1 prospectuses.

An additional 14 new projects have been announced. The data sits in the EIA's Liquids Pipeline Projects Database, which compiles information on more than 280 future, ongoing, and past projects; the next quarterly update will show whether announced projects reach final investment decisions, a signal for midstream capacity and crude differentials.

Inheritance tax alone rose by well over half to €13.3bn, while gift tax increased by roughly two-thirds to €8.1bn. Total transferred wealth reached €141.1bn, up by nearly a quarter, and tax-recognized wealth was €150.5bn. Relief under the hardship exemption totaled €3.7bn. The figures, from Destatis, signal rising fiscal revenue from wealth taxation, which could support German state finances; the next quarterly release will show whether the surge persists.

The Bank of Russia's weekly bulletin shows short-term interbank lending rates edged lower in the week of mid-August 2026, with the one-day MIACR slipping to 13.87% from a week earlier, a sign of easing liquidity conditions among Moscow banks. The corresponding rate for interbank credit with investment-grade borrowers fell to 13.86%, while the rate for the broader MIACR-B basket declined to 13.92%. These moves suggest that the transmission of the central bank's key rate to money-market rates is loosening, which could put downward pressure on short-term bond yields and flatten the yield curve.

The rouble strengthened notably against major currencies over the same period. The official USD/RUB rate fell to 82.9211 RUB/USD by August 22 from 85.0136 RUB/USD on August 18, and the EUR/RUB rate dropped to 96.8601 RUB/EUR from 98.3352 RUB/EUR. Precious metal fixing prices were mixed: gold eased to ₽11.95k from ₽3.56k a week earlier, while silver, platinum and palladium moved in different directions. The bulletin also publishes regulatory directives, including new requirements for non-state pension fund recovery plans and qualified investor criteria, which could affect the structure of the pension fund and retail investor base in Russian markets.

The data are compiled by the Bank of Russia from actual interbank deals, excluding the top and bottom tenth of rates, and exchange rates are set without any obligation to buy or sell at those levels. The easing in interbank rates, combined with rouble appreciation, may reduce the attractiveness of carry trades into the rouble and could lead to lower yields on short-term OFZ bonds as liquidity improves. However, the central bank's regulatory tightening on pension funds and investor qualifications may temper demand from these segments.

Reserves covered roughly nineteen and a half months of imports.

The reserve build-up and lower T-bill rates signal ample liquidity, which should keep government borrowing costs contained. Yet the fiscal deficit narrowing and rising debt-to-GDP suggest the government is borrowing less relative to GDP, potentially reducing supply pressure on bonds. The inflation spike at year-end, if sustained, could prompt the central bank to tighten, reversing the recent decline in short-term rates.