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FILE PHOTO: A general view of the skyline from the Makati City Hall in Manila, Philippines, May 11, 2010. To match Special Report CYBER-HEIST/FEDERAL REUTERS/Nicky Loh - 

Asia's emerging economies should improve oversight of foreign exchange liquidity risks and make currency hedging more flexible as growing dollar investments make the region more vulnerable to currency swings, the Bank for International Settlements said.

Increasing wealth and ageing populations have led to growing holdings of dollar-denominated portfolios of institutional investors and asset managers in Asia's emerging economies, the BIS said in a quarterly report released Monday.

Vulnerabilities in Asia were seen in March 2020 when the onset of the pandemic led to a surge in dollar hedging demand, creating new stresses for financial markets, the BIS, which holds regular meetings for the world's central banks, said.

"You have this juxtaposition that demand for hedging is long-term, but the supply of hedging services is short-term," said Hyun Song Shin, economic adviser and head of research at BIS.

"Unless you can secure long-term hedging... there is always this maturity mismatch between this supply of hedging services and the demand for hedging services."

The issue has raised new challenges for Asia's emerging economies. During the Asian financial crisis in the late 1990s, emerging nations' problems centred around massive debt burdens made worse by a capital outflows and sharply falling currencies.

Trading in derivative contracts referencing the currencies of one of six Asian emerging economies - including South Korea, Malaysia and Thailand - against the U.S. dollar has risen to nearly US$9.4 billion in 2019, more than double 2013 levels, the report said.

That has brought greater demand for hedging services with it, which can create new risks in times of financial stress, when demand for short-term dollar funding increases, it said.

Financial authorities should aim to increase oversight of foreign exchange funding liquidity risks created by non-bank investors, such as pension funds, insurers and asset managers, the report said.

The BIS called on Asian emerging economies to tweak foreign exchange hedging rules to offset demand for short-term dollars, such as during the start of the COVID-19 pandemic last year.

Economies could do so by allowing flexible hedging of currency risk and encourage longer-term foreign exchange hedging to address such needs among insurers and other institutions, the report said//CNA

Designated Chancellor of Austria and designated leader of the Austrian People's Party (OVP) Karl Nehammer attends a news conference in Vienna on Dec 3, 2021. (File photo: Reuters/Lisi Niesner) - 

Austria's third conservative chancellor in two months, Karl Nehammer, takes office on Monday (Dec 6) seeking to bring the coalition government out of months of scandal-tainted turmoil and guide the country out of its current COVID-19 lockdown.

Nehammer, 49, was due to be sworn in by President Alexander Van der Bellen at 1pm local time (8pm Singapore time). As interior minister since last year, he was the enforcer of former Chancellor Sebastian Kurz's hard line on immigration. He will now be the first head of government of the post-Kurz era.

Conservative star Kurz, 35, stunned much of the country by announcing on Thursday that he was quitting as leader of the People's Party (OVP) and leaving politics, saying he had lost interest since the birth of his son last month. The party picked Nehammer to succeed him as its leader on Friday.

Kurz quit as chancellor in October at the behest of his coalition partner, the left-wing Greens, because he has been placed under criminal investigation on suspicion of corruption offences. Kurz's supporters had hoped he would quickly clear his name and return as chancellor. He denies all wrongdoing.

Prosecutors suspect that allies of Kurz's used public funds to secretly commission manipulated polling that was published in a newspaper with a view to helping him gain power in 2017, the year in which he became OVP leader and then chancellor, forming a coalition with the far-right Freedom Party.

Nehammer takes over a party in turmoil that, since 2017, has been largely built around Kurz.

Nehammer indicated on Friday that he plans to keep the law-and-order agenda that was central to Kurz's appeal but also a point of friction with the Greens. His top priority will be the coronavirus pandemic, he said, as Austria tries to keep infections falling while coming out of lockdown next week.

He must also repair the OVP's damaged image as it has lost what most polls showed to be a lead of at least 10 percentage points over its nearest rival, the Social Democrats, since Kurz was placed under investigation.

Neither the OVP nor the Greens say they want a snap election for now, but most analysts expect that the coalition will not last until the end of this parliament in 2023. In newspaper interviews at the weekend, Greens leader Werner Kogler did not rule out a snap election next year//CNA

Olaf Scholz will take over from Angela Merkel as chancellor after twice serving in her governments. (File photo: AFP/Michael Kappeler, Pool) - 

Germany's parliament will officially elect Olaf Scholz as the country's next chancellor on Wednesday (Dec 8), bringing the curtain down on Angela Merkel's 16-year reign and ushering in a new political era with the centre-left in charge.

Scholz led his Social Democrats to victory against Merkel's conservative CDU-CSU bloc in an epochal election in September, as the veteran chancellor prepared to leave politics after four consecutive terms in office.

Together with the Greens and the liberal Free Democrats, Scholz's SPD managed in a far shorter time than expected to forge a coalition that aspires to make Germany greener and fairer.

"I want the 20s to be a time of new beginnings," Scholz told Die Zeit weekly, declaring an ambition to push forward "the biggest industrial modernisation which will be capable of stopping climate change caused by mankind".

Putting equality rhetoric into practice, he unveiled the country's first gender-balanced Cabinet on Monday, with women in key security portfolios.

"That corresponds to the society we live in - half of the power belongs to women," said Scholz, who describes himself as a "feminist".

The centre-left's return to power in Europe's biggest economy could shift the balance on a continent still reeling from Brexit, and with the other major player, France, heading into presidential elections in 2022.

But even before it took office, Scholz's "traffic light" coalition - named after the three parties' colours - was already given a baptism of fire in the form of a fierce fourth wave of the COVID-19 pandemic.

With intensive care beds running out in some regions and a rampant rise in infection numbers showing no signs of abating, Scholz and his new team have been pressed - including by Merkel - to agree new curbs even before they are sworn in by parliament.

After Austria set the example, and with Germany struggling to boost stagnating vaccination numbers, the parties also came under pressure to make an about-turn on a pledge made earlier in the pandemic not to make vaccinations compulsory.

Scholz has since spoken out in favour of mandatory vaccination, saying he wanted MPs to vote on the issue before year's end with a view of implementing it in February.

"For my government, there are no red lines on what must be done. We're ruling nothing out," he told Die Zeit.

Dubbed "the discreet" by left-leaning daily TAZ, Scholz, 63, is often described as austere or robotic.

But he also has a reputation for being a meticulous workhorse.

An experienced hand in government, Scholz was labour minister in Merkel's first coalition from 2007 to 2009 before taking over as vice-chancellor and finance minister in 2015.

Yet his three-party-alliance is the first such mix at the federal level, as the FDP is not a natural partner for the SPD or the Greens.

Keeping the trio together will require a delicate balancing act taking into account the FDP's business-friendly leanings, the SPD's social equality instincts and the Greens' demands for sustainability.

Under their coalition deal, the parties have agreed to secure Germany's path to carbon neutrality, including through huge investments in sustainable energy.

They also aim to return to a constitutional no-new-debt rule - suspended during the pandemic - by 2023.

Incoming foreign minister Annalena Baerbock of the Greens has vowed to put human rights at the centre of German diplomacy.

She has signalled a more assertive stance towards authoritarian regimes like China and Russia after the commerce-driven pragmatism of Merkel's 16 years in power.

Critics have accused Merkel of putting Germany's export-dependent economy first in international dealings.

Nevertheless, she is still so popular at home that she would probably have won a fifth term had she sought one.

The veteran politician is also widely admired abroad for her steady hand guiding Germany through a myriad of crises//CNA

An employee has her certification checked as Italy's new "Green Pass" vaccination requirement for employees to enter their offices became mandatory, at the Trenitalia, Italian train company offices, in Rome on Oct 15, 2021. (Photo: AP/Andrew Medichini) - 

People in Italy unvaccinated against COVID-19 can no longer go to the theatre, cinemas, live music venues or major sporting events under new rules that came into force on Monday (Dec 6).

Only those who have recently recovered from COVID-19 are exempt from the rules, which represent a significant tightening of restrictions in the face of rising infections.

New measures are also being enforced on public transport, with a so-called Green Pass showing proof of vaccination, recent recovery or a negative COVID-19 test now required even on local services.

A man in his 50s was fined €400 for not having his pass on Monday morning as he got off a bus near Piazza del Popolo in Rome, according to the Corriere della Sera newspaper.

"I don't have it because I wanted to get vaccinated in the next few days," he was reported as saying.

A record 1.3 million Green Passes were downloaded on Sunday ahead of the change.

Meanwhile in Rome at the weekend, new rules requiring face masks to be worn outdoors in the busiest shopping streets came into effect.

Italy was the first European country to be hit by coronavirus in early 2020 and has one of the highest death tolls, at more than 134,000.

However, it is currently faring better than many of its neighbours, with 15,000 cases out of a population of 60 million reported on Sunday.

Almost 85 per cent of those older than 12 have been vaccinated, a booster campaign is in full swing and jabs will soon be available for younger children.

The Green Pass was introduced in August for access to theatres and cinemas, museums and indoor dining, and extended to workplaces in October - a move that sparked widespread protests.

From now until Jan 15, a new "Super Green Pass", which can only be obtained through vaccination or recent recovery, will be required for cultural activities - although not museums - and inside restaurants.

However, having a coffee at the bar of a cafe and eating outside is allowed without a Green Pass.

The restrictions will be further tightened in regions at higher risk of coronavirus.

Currently most of Italy is classed as the lowest of four levels, which range from white to yellow, orange and red.

Two regions are yellow - Friuli Venezia Giulia and Bolzano, which both border Austria, a country in partial lockdown over the number of cases there//CNA