Headlines

China’s central bank said it would reduce the amount of money banks are required to set aside as it moved to stimulate a slowing economy that has been weighed down by a slump in the property market, the Wall Street Journal reported. It was the second such move this year, after an earlier one in July, in an effort to inject liquidity into the financial system. The measure signals Beijing’s growing concerns about the growth outlook of the world’s second-largest economy, which has been battered in recent months by multiple headwinds.

Decentralised finance catering for cryptoassets could undermine financial stability if it gained traction and more safeguards are needed, the Bank for International Settlements said in its quarterly review on Monday, Reuters reported. So-called DeFi platforms allow users to lend, borrow and save, usually in cryptoassets and stablecoins, while bypassing traditional, centralised gatekeepers of finance such as banks.

Iceland is confronting the trouble that comes with having a pension system so successful in amassing savings for future retirees that it was recently rated the best in the world, Bloomberg News reported. With assets now at about double the size of the north Atlantic island’s economy, the government is considering allowing investment managers to diversify by buying up more securities abroad, prompting the central bank to urge caution. The rules currently limit the share of overseas holdings in pension assets at 50%.

Regulators should bolster lines of defense for open-ended bond funds to cut systemic risk in periods of market turmoil, according to a report by the Bank for International Settlements, Bloomberg News reported. As the coronavirus roiled markets last year, bond funds dumped assets in droves to keep up with investor redemptions, exacerbating already-poor liquidity and pricing pressure. Conditions were tense until authorities moved to backstop bond markets, raising questions over the efficacy of existing safeguards, said BIS, a Swiss oversight body for the world’s central banks.

Eurozone governments should continue to spend to support the COVID-19 economic recovery, though in an increasingly focused way, and consolidate public finances only when it is firmly under way, the International Monetary Fund said on Monday, Reuters reported. In a regular report on the euro zone economy presented to the group's finance ministers, the IMF noted, however, that while consolidation itself could wait, a credible way of how it would be done in the future should be announced already now.

Mexican automotive production and exports fell for the fifth month running in November, figures from the national statistics agency (INEGI) showed on Monday, as ongoing shortages of semiconductors put the brakes on the industry, Reuters reported. Mexican automotive production plunged by 20.25% from November 2020 to 248,960 vehicles, while auto exports declined by 16.46% to 240,341 units, the INEGI data showed. A global semiconductor shortage has prompted automakers in Mexico and the rest of North America to implement rolling shutdowns, curtailing production and hitting workers hard.

Petroleos Mexicanos, the world’s most indebted oil company, will get a $3.5 billion cash injection from the government as President Andres Manuel Lopez Obrador orders a new business plan for the struggling company, Bloomberg News reported. The state-owned producer will use the funds to pay down obligations and also embark on a series of bond buybacks and new issuance to reduce the cost to service its debt. As part of the initiative, Pemex will also overhaul its five-year business plan, according to a statement released by the company Monday.

A Chinese developer that is struggling under $310 billion in debt warned Friday it may run out of money to “perform its financial obligations” — sending regulators scrambling to reassure investors that China’s financial markets can be protected from a potential impact, the Associated Press reported. Evergrande Group’s struggle to comply with official pressure to reduce debt has fueled anxiety that a possible default might trigger a financial crisis. Economists say global markets are unlikely to be affected but banks and bondholders might suffer because Beijing wants to avoid a bailout.

U.K. households, already bracing for their energy bills to rise by “several hundred pounds,” will see a further jump following the collapse of Bulb Energy Ltd. and other suppliers, the regulator said, Bloomberg News reported. The U.K.’s energy crisis has led to the collapse of more than 24 suppliers and the first forced nationalization since 2008. That will cost the average household an extra 85 pounds ($112) next year. Ofgem said the collapse of Bulb Energy Ltd.

Mexican budget airline Interjet plans to resume flights in 2022 with 10 leased Airbus SE airplanes after shutting down a year ago when its already-suffering finances were hit by the COVID-19 pandemic, company representatives said on Friday, Reuters reported. The pandemic's toll on the global tourism industry had exacerbated operational and debt problems at Interjet, putting the company on the brink of bankruptcy.