July 2020: New VoxEU Column – The COVID-19 threat to financial stability in Europe

By Henk Jan Reinders, Dirk Schoenmaker, and Mathijs van Dijk The severe economic impact of the COVID-19 pandemic could threaten financial stability. Since accounting-based methods report loan losses with a delay, this column adopts a real-time, market-based assessment of the impact on corporate loan portfolios. Using European stock market data, it estimates that the market-implied[…]

June 2020: EBA launches discussion on further enhancing supervisory powers of competent authorities

The European Banking Authority (EBA) published today a discussion paper exploring ways on how to enhance the Bank Recovery and Resolution Directive (BRRD) framework on early intervention measures. The objective is to further enhance crisis management tools available for competent authorities in addition to well-established and widely used supervisory powers laid down in the Capital[…]

June 2020: BIS Annual Economic Report 2020

This year’s BIS Annual Economic Report is (naturally) centered around the topic of Covid-19 and its impact on the economy, including the chapters “A global sudden stop”, “A monetary lifeline: central banks” crisis response, and “Central Banks and Payments in the Digital Era”. Link: BIS 2020 Annual Economic Report

June 2020: New VoxEU Column – Preserving capital in the financial sector to weather the storm

By Thorsten Beck, Francesco Mazzaferro, Richard Portes, Jean Quin, and Christian Schett On 27 May, the ESRB General Board adopted a wide-ranging recommendation to suspend pay-outs across different segments of the European financial system until the end of 2020. This column discusses why arguments for such restrictions weigh stronger than ownership and management rights during[…]

Exchange Rates and Asset Prices in a Global Demand System

Author(s): Ralph S. J. Koijen and Motohiro Yogo Date: June 2020 Abstract: Using international holdings data, we estimate a demand system for financial assets across 36 countries. The demand system provides a unified framework for decomposing variation in exchange rates, long-term yields, and stock prices; interpreting major economic events such as the European sovereign debt[…]

NBER Working Paper: Coping with Disasters: Two Centuries of International Official Lending

Author(s): Sebastian Horn, Carmen M. Reinhart, Christoph Trebesch Date: June 2020 Abstract: Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We assemble the first comprehensive long-run dataset of official international lending, covering 230,000 loans, grants and[…]

June 2020: New BIS Quarterly Review

This Quarterly Review draws on several BIS data sets to examine emerging market corporates’ external and foreign currency debt on the eve of the Covid-19 outbreak.  It also assesses whether emerging market government debt is a cause for concern. Link: BIS Quarterly Review