Author(s):Asli Demirguc-Kunt, Balint L. Horvath, Harry Huizinga Date:April 2023 Abstract: This paper examines the impact of international differences in capital regulation on multinationalbanks’ loan origination location decisions. International loan location decisions represent a keybanking margin that has previously not been examined in the literature on regulatory arbitrage bybanks. Our estimation relies on within-loan contribution variation[…]

Author(s):Sebastian Horn, Christoph Trebesch Date:March 2023 Abstract: This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A[…]

Author(s):Roland Beck, Antonio Coppola, Angus Lewis, Matteo Maggiori, Martin Schmitz, Jesse Schregger Date:March 2023 Abstract: We reassess the pattern of Euro Area financial integration adjusting for the role of “onshore offshore financial centers” (OOFCs) within the Euro Area. While the Euro Area records large levels of international investment both within and outside of the currency[…]

Author(s):Andrew Metrick, Paul Schmelzing Date:March 2023 Abstract: U.S. and European banking institutions were hit by a wave of distress in March 2023. Policymakers on both sides of the Atlantic reacted with an array of interventions, some targeting individual institutions, others designed to shore up the banking sector as a whole. This paper contextualizes events using[…]

Author(s):Michael Kumhof, Marco Pinchetti, Phurichai Rungcharoenkitkul, Andrej Sokol Date:March 2023 Abstract: We study the consequences for business cycles and welfare of introducing an interest-bearing retail CBDC, competing with bank deposits as medium of exchange, into an estimated 2-country DSGE environment. CBDC issuance of 30% of GDP increases output and welfare by around 6% and 2%,[…]

Author(s):Daniel Dimitrov, Sweder van Wijnbergen Date:March 2023 Abstract: We propose a credit portfolio approach for evaluating systemic risk and attributing it across institutions. We construct a model that can be estimated from high-frequency CDS data. This captures risks from publicly traded banks, privately held institutions, and cooperative banks, extending approaches that rely on information from[…]

Author(s):Javier Bianchi and César Sosa-Padilla Date:March 2023 Abstract: This paper surveys the recent empirical literature on historical banking crises, defined as events taking place before 1980. Advances in data collection and identification have provided new insights into the causes and consequences of crises both immediately and over the long run. We highlight three overarching threads[…]

Author(s):Javier Bianchi and César Sosa-Padilla Date:March 2023 Abstract: This paper investigates the implications of international financial sanctions for the reserve currency status of the US dollar. We propose a simple model of a reserve currency, demonstrate how the anticipation of financial sanctions can weaken the dollar’s status, and evaluate the welfare implications.

Author(s):Katharina Bergant, Gian Maria Milesi-Ferretti, and Martin Schmitz Date:February 2023 Abstract: We provide stylized facts on nonresident holdings of emerging market bonds and analyze the determinants of euro area investors’ purchases of such securities, using a comprehensive security-level dataset that tracks net transactions of individual bonds issued by emerging market economies. Euro area investors show[…]

Author(s):Maurice Obstfeld and Haonan Zhou Date:February 2023 Abstract: The U.S. dollar’s nominal effective exchange rate closely tracks global financial conditions, whichthemselves show a cyclical pattern. Over that cycle, world asset prices, leverage, and capital flowsmove in concert with global growth, especially influencing the fortunes of emerging and developingeconomies (EMDEs). This paper documents that dollar appreciation[…]