January 2023: Annual quantitative monitoring report on minimum requirement for own funds and eligible liabilities

By European Banking Authority The European Banking Authority (EBA) published today its annual quantitative Report on minimum requirement for own funds and eligible liabilities (MREL) with data as of December 2021. The Report is complemented by an analysis looking into the impact of the MREL framework on a number of relevant dimensions. As of 31[…]

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[…]

November 2022: Is globalisation really doomed?

By André Sapir There is a view that globalisation is in retreat. It has produced immense wealth, but has also generated huge inequality, leading to an economic and political backlash. Not everyone agrees with this view, though globalisation is seen as under geopolitical threat, in particular because of the rivalry between China and the United[…]

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[…]

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,[…]

December 2022: Basel Committee evaluation shows that the implemented Basel III reforms contributed to increase bank resilience

By Bank for International Settlements (BIS) The Basel Committee on Banking Supervision today issued a third report on its evaluation of the impact and effectiveness of implemented Basel reforms. Evaluation of the impact and efficacy of Basel III reforms sets out the Committee’s first holistic evaluation of how the reforms have affected bank resilience and systemic[…]

December 2022: Climate risks are real and need to become part of bank capital regulation

By Rens van Tilburg, Seraina Grünewald, Dirk Schoenmaker, and Arnoud Boo Climate risks are building up on banks’ balance sheets. Supervisory reviews show that banks are not well prepared. Yet, supervisors have been slow to include climate risks in minimum capital requirements. This column argues that doing so would speed up the transition to a[…]