November 2022: The Welfare Effects of Bank Liquidity and Capital Requirements

By Skander J. Van den Heuvel The stringency of bank liquidity and capital requirements should depend on their social costs and benefi…ts. This paper investigates their welfare effects and quantifies their welfare costs using sufficient statistics. The special role of banks as liquidity providers is embedded in an otherwise standard general equilibrium growth model. Capital[…]

January 2023: Foreign Banking Organizations in the United States and the Price of Dollar Liquidity

By Wenxin Du Foreign banking organizations (FBOs) in the United States play an important role in setting the price of short-term dollar liquidity. In this post, based on remarks given at the 2022 Jackson Hole Economic Policy Symposium, we highlight FBOs’ activities in money markets and discuss how the availability of reserve balances affects these[…]

January 2023: What does the rise in the inflation mean for financial stability?

By Kristina Bluwstein, Sudipto Karmakar, and David Aikman Inflation reached almost 9% in July 2022, its highest reading since the early 1990s. A large proportion of the working age population will never have experienced such price increases, or the prospect of higher interest rates to bring inflation back under control. In recent years, many commentators[…]

January 2023: SAFE White Paper: Is there a ‘retail challenge’ to banks’ resolvability?

By Beiträge von Redaktion What do we know about the holders of bail-inable securities in the Banking Union? Those questions and more is to be answered in this in-depth analysis by FMF cooperation partner Leibniz Institute for Financial Research SAFE. Link: SAFE White Paper: Is there a ‘retail challenge’ to banks’ resolvability?

December 2022: Global Monitoring Report on Non-Bank Financial Intermediation

By Financial Stability Board (FSB) This report presents the results of the FSB’s annual global monitoring exercise, covering 29 jurisdictions that account for around 80% of global GDP. The report mainly covers developments in 2021, during which most economies experienced a better-than-expected recovery from the COVID-19 shock, in many ways because of the extraordinary steps[…]

November 2022: Banking System Vulnerability: 2022 Update

By Matteo Crosignani, Thomas Eisenbach, and Fulvia Fringuellotti To assess the vulnerability of the U.S. financial system, it is important to monitor leverage and funding risks—both individually and in tandem. In this post, the authors provide an update of four analytical models aimed at capturing different aspects of banking system vulnerability with data through 2022:Q2,[…]