Key takeaways Two powerful forces – the Covid-19 pandemic and the Russian invasion of Ukraine – shaped economic outcomes over the past year. Growth was resilient, at least until the outbreak of the Russia-Ukraine conflict. Inflation rose to multi-decade highs against a backdrop of persistently goods-intensive demand and constrained supply. Stagflation risks loom large, owing[…]
Key takeaways A burst of creative innovation is under way in money and payments, opening up vistas of a future digital monetary system that adapts continuously to serve the public interest. Structural flaws make the crypto universe unsuitable as the basis for a monetary system: it lacks a stable nominal anchor, while limits to its[…]
The creation of the Banking Union in 2014 was a powerful response to the financial crisis, with significant progress on an EU single rulebook, on the establishment of a new European architecture for supervision and resolution, and on reducing risks. This has contributed to making Europe’s banks more robust and businesses, investors and citizens more confident[…]
By Itai Agur, Xavier Lavayssière and Germán Villegas Bauer Environmentally conscious design can make a major difference in the energy efficiency of digital currencies. Most of the world’s central banks have already agreed they should help fight climate change, a critical challenge that necessitates reductions in both energy consumption, which is our focus here, and the carbon emissions associated with[…]
by Claudia Buch Speech by Prof Claudia Buch, Vice-President of the Deutsche Bundesbank, at the Centre for Economic Policy Research (CEPR) Symposium “Panel on systemic risk: Where is the next financial crisis coming from?” Link: Financial stability implications of the current geopolitical situation
By Serkan Arslanalp, Barry Eichengreen and Chima Simpson-Bell The US dollar has long played an outsized role in global markets. It continues to do so even as the American economy has been producing a shrinking share of global output over the last two decades. But although the currency’s presence in global trade, international debt, and non-bank borrowing still[…]
Key Takeaways: Basel Committee finalises principles for effective management and supervision of climate-related financial risks. Progresses work on specifying cryptoasset prudential treatment and issuing a second consultation paper. Finalises review of the treatment of cross-border exposures within the European Banking Union on the G-SIB methodology. Link: Basel Committee finalises principles on climate-related financial risks, progresses[…]
By Markus Behn, Jan Hannes Lang and Eugen Tereanu One important lesson learned from the use of capital-based macroprudential policies in recent years is that tightening such policies during boom phases is unlikely to have a notable impact on credit supply and the build-up of imbalances, while the accumulated resilience and the release of buffers[…]
By Levent Altinoglu and Joseph Stiglitz The interconnected structure of the financial system has been a focal point of debate among policymakers in the wake of recent financial crises. This column offers a theory to help explain the structure of the financial system and its consequences for risk-taking and systemic risk. The authors find that interconnectedness[…]
By Iñaki Aldasoro, John Caparusso, and Yingyuan Chen Global banks establish their international presence through host-country networks of subsidiaries and branches. These entities’ roles and behaviour are illuminated by their balance sheet positions, but these have not been systematically captured across countries. This brief introduces an attempt to redress that gap with initial findings from[…]