By Tobias Adrian, Gita Gopinath, Pierre-Olivier Gourinchas, Ceyla Pazarbasioglu, and Rhoda Weeks-Brown Capital flows can help countries to grow and to share risks. But economies with large external debts can be vulnerable to financial crises and deep recessions when capital flows out. External liabilities are riskiest when they generate currency mismatches—when external debt is in[…]

By Pablo Hernández de Cos The term crypto-assets typically refers to a wide range of highly heterogeneous assets whose common trait is the fact that they are a digital representation of value or a set of contractual rights. Moreover, crypto-assets rely heavily on distributed ledger technology (DLT) for their transmission, trading and storage. However, unlike[…]

By Simon Gilchrist, Bin Wei, Vivian Yue, Egon Zakrajšek The interconnections between the balance sheet of a sovereign and those of global financial institutions can lead to a widening of sovereign spreads unrelated to country-specific fundamentals. This column explores this financial-sovereign risk nexus and documents that a substantial portion of the co-movement among sovereign spreads[…]

By Zsolt Darvas and Catarina Martins This briefing paper investigates the practice of close cooperation and examines the banking system performance in Bulgaria and Croatia. The factors that could pose risks to Bulgarian and Croatian banks are identified. This document was prepared by the Economic Governance Support Unit at the request of the ECON Committee.[…]