Banks’ cross-border claims increased by $228 billion in the third quarter of 2021, pushing their year-on-year (yoy) growth rate to 3%. Claims on non-bank financial institutions accounted for more than half of the quarterly increase. Non-US banks increased their US dollar funding to their affiliates in the United States and, in turn, expanded their claims[…]

by Georgios Georgiadis, Gernot Müller, Ben Schumann In times of heightened global risk, investors flock to the dollar as their capacity or willingness to bear risk declines. As a result, the dollar appreciates. This column examines the effects of global risk shocks and the dollar’s role in the international adjustment to such shocks, finding that[…]

Blog entry by Thorsten Beck, January 26, 2022 Complexity of banks poses governance and regulatory challenges – the more complex, the harder to govern and monitor and the harder to supervise and resolve in case of failure. And especially global banks are mind-bogglingly complex, as first documented by Nicola Cetorelli and Linda Goldberg.  But what[…]

By Stephen Millard, Margarita Rubio and Alexandra Varadi We use a DSGE model with financial frictions, leverage limits on banks, loan to value (LTV) limits and debt‑service ratio (DSR) limits on mortgage borrowing to examine: i) the effects of different macroprudential policies on key macro aggregates; ii) their interaction with each other and with monetary[…]

by Benny Hartwig, Christoph Meinerding, and Yves S. Schüler In the aftermath of the global financial crisis, a consensus rapidly emerged that systemic risk – a central concept in financial stability – needed to be contained going forward. However, to this day experts cannot agree on how to measure systemic risk in the first place,[…]

By the US Federal Reserve System This paper examines the pros and cons of a potential U.S. central bank digital currency, or CBDC, and is the first step in a discussion of whether and how a CBDC could improve the safe and efficient domestic payments system. Money and Payments: The U.S. Dollar in the Age[…]

By Linda Goldberg, and Fabiola Ravazzolo Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. This blog post discusses the contributions to financial and economic stability of dollar liquidity facilities implemented by the Federal Reserve. At the outbreak of the pandemic, in March 2020,[…]

by the ESRB In a new report entitled “Will video kill the radio star?”, the ESRB’s Advisory Scientific Committee (ASC) takes stock of the many forces currently affecting Europe’s banking system (including climate change, the growth of non-banks, overbanking and the COVID-19 pandemic) and looks at how digitalisation could change the way that financial and[…]

By Jens Weidmann Ten years ago, almost to the day, I gave my first speech at the EBC. Back then, we were dealing with the aftermath of the global financial crisis, and the sovereign debt crisis was shaking the euro area to its very foundations. To prevent the situation from coming to a head, policymakers[…]

By Cyril Couaillier, Valerio Scalone This paper proposes a framework to jointly calibrate structural (constant) and cyclical (time varying) bank regulatory capital buffers. Its transparency helps to overcome the risk of omitting or double counting systemic risks when setting capital requirements. This approach consists in producing adverse macroeconomic scenarios whose severity is amplified under high cyclical[…]