By Viral Acharya, Rahul Chauhan, Raghuram Rajan, Sascha Steffen The last round of quantitative tightening caused two episodes of significant liquidity stress in US financial markets. This column asks whether the prior expansion and then shrinkage of the Fed’s balance sheet had left the private financial sector more vulnerable to such disruptions. The authors find[…]
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing US dollar liquidity swap line arrangements. To improve the swap lines’ effectiveness in providing US dollar[…]
By Stephan Luck and Sergio Correia Call reports—regulatory filings in which commercial banks report their assets, liabilities, income, and other information—are one of the most-used data sources in banking and finance. Though call reports were collected as far back as 1867, the underlying data are only easily accessible for the recent past: the mid-1980s onward[…]
By Financial Stability Board (FSB) The Financial Stability Board (FSB) today published a report on the financial stability risks of Decentralised Finance (DeFi). DeFi is commonly used to describe services in crypto-asset markets that aim to replicate some functions of the traditional financial system in a supposedly decentralised manner – though the actual level of[…]
By European Central Bank ECB Banking Supervision aims to keep banks sound and healthy. This requires ongoing supervision of their activities today, as well as making sure they are fit for tomorrow. Especially in uncertain times, effectively adapting business models to changes in the macroeconomic environment is crucial for managing risk. This is why banks’[…]
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[…]
By Shekhar Aiyar and Anna Ilyina Trade openness increased after the Second World War, but has slowed following the global financial crisis. Link: Charting Globalization’s Turn to Slowbalization After Global Financial Crisis
By European Banking Authority The European Banking Authority (EBA) published today its final Guidelines addressed to resolution authorities for the publication of their approach to the bail-in tool implementation. Transparency and predictability are key both to the credibility of the resolution framework and to the safeguard of investors’ protection. These Guidelines aim at ensuring that[…]
By Gabriel Jiménez, Dmitry Kuvshinov, José-Luis Peydró, and Björn Richter Central banks have been raising interest rates to fight inflation, after a period when rates were first cut and then kept low. This column uses data for 17 developed countries over 150 years to show that policy rate hikes substantially increase crisis risk, if rates[…]
By Daniel Hinge Keeping monetary policy too loose for too long can lead to a “big” increase in the risk of a financial crisis, new research into a controversial area of policy finds. Maximilian Grimm, Òscar Jordà, Moritz Schularick and Alan Taylor say they are “the first to show that, as a causal matter, a[…]