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 …
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 …
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 …
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 …
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 …
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 …
By Anneke Kosse and Ilaria Mattei Most central banks are exploring central bank digital currencies (CBDCs), and more than a quarter of them are now developing or running concrete pilots. This BIS paper updates earlier surveys that asked central banks …
By Financial Stability Board (FSB) The growth in external USD financing from non-bank financial institutions following the 2008 global financial crisis has created new financial stability challenges for emerging market economies. Link: US Dollar Funding and Emerging Market Economy Vulnerabilities
By Mairead McGuinness Cryptocurrency is going mainstream. Just think back to the Super Bowl ads. More and more investors – including many young people – are dabbling in the crypto marketplace, lured in by social media, promises of high returns and the …
By Maurizio Trapanese The non-bank financial intermediation (NBFI) sector has grown considerably over the past decade to represent almost half of global financial assets, compared with 42% in 2008.1 It plays a key role in the financing of the real …
By Iñaki Aldasoro, Sebastian Doerr, Haonan Zhou In this box, we investigate the flight home effect (FHE) among non-banks. The FHE refers to the finding in Giannetti and Laeven (2012) that, during financial crises in their home country, lead arranger …
By Isabel Argimón, María Rodríguez-Moreno In recent decades, we have witnessed the expansion of complex institutions, which are organised in different legal entities and conduct different business in different locations. The diversification benefits that may arise because of the different …
By Jean-Charles Bricongne, Rémy Lecat Despite the large capital outflows during the Covid-19 crisis, emerging economies did not make extensive use of capital controls. Indeed, these have had limited effects on capital outflows, being more effective on inflows. This column …
By Tobias Adrian Russia’s invasion of Ukraine raises financial stability risks for the world and poses questions about the longer-term impact on economies and markets. The war, amid an already slowing recovery from the pandemic, is set to test the …
By Tobias Adrian, Gita Gopinath, Pierre-Olivier Gourinchas, Ceyla Pazarbasioglu, and Rhoda Weeks-Brown Capital flows can help countries to grow and to share risks. But economies with large external debts can be vulnerable to financial crises and deep recessions when capital …
By Pablo Hernández de Cos The term crypto-assets typically refers to a wide range of highly heterogeneous assets whose common trait is the fact that they are a digital representation of value or a set of contractual rights. Moreover, crypto-assets …
By Simon Gilchrist, Bin Wei, Vivian Yue, Egon Zakrajšek The interconnections between the balance sheet of a sovereign and those of global financial institutions can lead to a widening of sovereign spreads unrelated to country-specific fundamentals. This column explores this …
By Zsolt Darvas and Catarina Martins This briefing paper investigates the practice of close cooperation and examines the banking system performance in Bulgaria and Croatia. The factors that could pose risks to Bulgarian and Croatian banks are identified. This document …
By Aitor Erce, Enrico Mallucci, Mattia Picarelli The debt jurisdiction affects a government’s ability to restructure its debt, is key to shaping the restructuring process, and affects the timing and conditions of market access. This column introduces a new database …
By Angelo Duarte, Jon Frost, Leonardo Gambacorta, Priscilla Koo Wilkens and Hyun Song Shin Key takeaways Public payment infrastructures build on the central bank’s foundational role in the monetary system by promoting competition and interoperability between payment platforms. They can …
Heavily reliant on commodity exports, remittances and tourism, the economies of the Caucasus and Central Asia and their financial systems are vulnerable to volatile external shocks. The Chart of the Week shows how exposed countries in the region are to …
By the European Central Bank (ECB) ECB approves Cyprus’ RCB Bank’s sale of part of its loan portfolio to Hellenic Bank ECB restricts RCB’s business: it cannot take new deposits, grant new loans, or make new investments ECB appoints temporary …
by Financial Stability Board (FSB) This report examines whether the COVID-19 pandemic changed the ways in which individuals and firms engage with innovative financial service providers and traditional financial incumbents. Its main finding is that the pandemic has accelerated the …
Key Takeaways: Banks are increasingly exploring opportunities for using artificial intelligence (AI), including machine learning (ML). Banks’ use of AI/ML presents significant opportunities but can also heighten certain risks and challenges. The Committee intends to continue exploring banks’ use of …
by Jon Danielsson, Charles Goodhart, Robert Macrae The Western countries have sanctioned Russia in a way not applied to any globally integrated major power in over a century, ever since 1914. This column argues that there are lessons to be …
by Rachel Cho, Rodolphe Desbordes, Markus Eberhardt The current consensus in the literature that the finance-growth nexus is more complex than previously thought has led to concerns about ‘too much finance’. This column looks at the effects of ‘too much …
by Financial Stability Board (FSB) Crypto-asset markets are fast evolving and could reach a point where they represent a threat to global financial stability due to their scale, structural vulnerabilities and increasing interconnectedness with the traditional financial system. This is …
By Leora Klapper, and Yira Mascaró When COVID-19 hit, governments rushed to provide financial relief to citizens, often using digital channels to do so. At the same time, social distancing forced people to find alternatives to cash and face-to-face shopping. …
By Thorsten Beck, interviewed by Tim Phillips Since the GFC the UK has used innovative macroprudential and monetary policy tools to maintain stability. But the UK is an international financial centre, and so does this policy framework create spillovers in …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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. …
By Cathérine Casanova, Eugenio Cerutti, Swapan-Kumar Pradhan The global footprint of Chinese banks is substantial and growing, including during the COVID-19 pandemic. While they are similar to other banks from emerging countries in terms of their ownership and asset structure, …
By Alejandro Van der Ghote Short-term interest rates, particularly the natural rate, have been in steady decline in the euro area and the US. This column argues that in economies with low natural rates, such as the euro area today, …
by Luis de Guindos Speech by Luis de Guindos, Vice-President of the ECB, at the 5th ESRB Annual Conference Link: Macroprudential policy for non-bank financial intermediation
By Sirio Aramonte and Fernando Avalos The last two decades have seen the growth and consolidation of private markets. These revolve around funds gathered from institutional investors by “alternative asset managers”, typically private equity or venture capital firms that have subsequently expanded into credit. …
By the European Central Bank (ECB) The Financial Stability Review provides an overview of potential risks to financial stability in the euro area. It aims to promote awareness in the financial industry and among the public of euro area financial …
The European Commission has today adopted a review of EU banking rules (the Capital Requirements Regulation and the Capital Requirements Directive). These new rules will ensure that EU banks become more resilient to potential future economic shocks, while contributing to …
By Luis Garcia, Ulf Lewrick and Taja Sečnik Global systemically important banks (G–SIBs) are key nodes in the financial system. The identification of G–SIBs and the attendant calibration of capital surcharges to bolster their resilience is thus a supervisory priority. …
By John Fell, Tuomas Peltonen, and Richard Portes At the end of 2019 the European Systemic Risk Board General Board mandated a Task Force on Low Interest Rates to revisit the ESRB’s 2016 report on “Macroprudential policy issues arising from …
By: Carol Bertaut, Bastian von Beschwitz, and Stephanie Curcuru For most of the last century, the preeminent role of the U.S. dollar in the global economy has been supported by the size and strength of the U.S. economy, its stability …
Aggregate Common Equity Tier 1 ratio stood at 15.60% in second quarter of 2021, up from 15.49% in previous quarter Aggregate non-performing loans ratio fell further to 2.32% (down from 2.54% in previous quarter), with stock of non-performing loans declining …
By Patrick McGuire and Philip Wooldridge International banking grew rapidly from the 1950s to the 2000s, propelled by banks avoiding regulations that burdened their domestic funding, by financial liberalisation that expanded investment opportunities, and by financial innovation that offered new …
By Giulio Cornelli, Sebastian Doerr, Lavinia Franco and Jon Frost This special feature examines trends in equity funding for financial technology firms (fintechs) and the underlying country-specific drivers. Fintechs have raised over $1 trillion in equity globally since 2010. While …
This paper analyses the implications of climate change for the conduct of monetary policy in the euro area. It first investigates macroeconomic and financial risks stemming from climate change and from policies aimed at climate mitigation and adaptation, as well …
By Catherine Casanova, Bryan Hardy and Mert Onen In the wake of the Covid-19 fallout, policymakers enacted a wide range of measures to support the flow of credit. Some measures strengthened banks’ lending capacity by preserving their capital and encouraging …
Author(s): Elsa Allman and Joonsung Won Date: March 2021 Abstract: This paper examines the effects of environmental, social and governance (ESG) disclosure on investment efficiency, using the adoption of Directive 2014/95/EU as a quasi-natural shock on disclosure quality. We document …
Author(s): Annamaria de Crescenzio and Etienne Lepers Date: July 2021 Abstract: The COVID-19 pandemic triggered a sudden funding squeeze manifested in major disruptions in international capital flows, the most dramatic of the wave of extreme capital flow episodes since the …
By Shekhar Aiyar and Manasa Patnam Recent research suggests that World Bank aid disbursements are associated with outflows from recipient countries to offshore financial centres, indicating elite capture of aid. This column uses 25 years of data to examine whether …
by Isabel Schnabel Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Annual Congress of the European Economic Association (EEA). Link: The rise of non-bank finance and its implications for monetary policy transmission
By Jongrim Ha, M. Ayhan Kose and Franziska Ohnsorge Understanding the dynamics of inflation requires a comprehensive database that covers a large number of countries over a long period. This column introduces a new global database of inflation that has …
By Carolyn Rogers We are starting to see light at the end of the Covid-19 tunnel. With all this optimism, what could possibly go wrong for the global banking system? Consider the following three questions. First, as we begin to …
By Valentina Bruno and Hyun Song Shin The strength of the US dollar in currency markets has drawn the attention of researchers, policymakers, and businesses for decades. This column examines the effects of the dollar on international trade, with a …
By Agustín Carstens, Stijn Claessens, Fernando Restoy and Hyun Song Shin Key Takeaways: Big tech firms entering financial services can scale up rapidly with user data from their existing business lines in e-commerce and social media, and by harnessing the …
By Austen Saunders and Matthew Willison Banks come in different shapes and sizes. Do prudential regulations that work well for big banks work as well for small ones? To help us find out, we measure the effectiveness of some key …
By Randolph Bruno, Nauro Campos, Saul Estrin Do different economic integration arrangements vary in terms of their capacity to attract foreign direct investment? This column uses a structural gravity framework on annual bilateral FDI data for 142 countries between 1985 …
By Thomas Lambert, Enrico Perotti and Magdalena Rola-Janicka Political considerations have become important in finance research, with significant implications for policymaking. This column summarises new research presented at the CEPR conference on the Political Economy of Finance, including work on …
PolEconFin is a platform for researchers active in political economy of finance. This initiative seeks to provide a meeting point for theorists and empiricists with shared interests and build a research community with a focus on public policy. PolEconFin comprises …
By Miguel Ampudia, Thorsten Beck, Alexander Popov The trade-off between stability and growth has long been a subject of policy debate and informs views on the extent to which the supervision of banks should be centralised. This column presents analysis …
By Mikhail Mamonov, Anna Pestova and Steven Ongena Financial sanctions against Russia’s state-owned and controlled banks were imposed consecutively between 2014 and 2019, allowing banks that would potentially be targeted in the future to adjust their international and domestic exposures. …
By Christoffer Kok, Carola Müller, Steven Ongena and Cosimo Pancaro Since the financial crisis, stress tests have become an important supervisory and financial stability tool. Relying on confidential data available at the ECB, this column presents novel evidence that supervisory …
By Hans Degryse, Sotirios Kokas and Raoul Minetti Since the financial crisis, stress tests have become an important supervisory and financial stability tool. Relying on confidential data available at the ECB, this column presents novel evidence that supervisory scrutiny associated …
By Bilyana Bogdanova, Tracy Chan, Kristina Micic and Goetz von Peter This statistical feature presents a new data set on long-term debt securities issued by central and general governments in domestic and foreign currencies. It combines national aggregates with data …
By Cathérine Casanova, Beatrice Scheubel and Livio Stracca Since the Global Crisis, the channels of capital flows have changed significantly. This column analyses key trends and underlying drivers of capital flows since the Global Crisis, including the policy trade-offs. It …
by John Fell, Tuomas Peltonen and Richard Portes At the end of 2019 the European Systemic Risk Board General Board mandated a Task Force on Low Interest Rates to revisit the ESRB’s 2016 report on “Macroprudential policy issues arising from …
CfP Deadline Date: August 1, 2021 Conference Event: October 8, 2021 Event Location: Carcavelos, Portugal Keynote speaker(s): Edward I. Altman (NYU Stern) Organizer(s): Nova Finance Knowledge Center In cooperation with BPI, Nova Finance Knowledge Center is organizing an academic conference …
by Matthieu Darracq Pariès, Christoffer Kok, and Matthias Rottner The prolonged period of negative interest rates in advanced economies has raised concerns that further monetary policy accommodation could produce contractionary effects. Using a non-linear macroeconomic model fitted to the euro …
by the ESRB More than a year of restrictions on economic activity has so far not resulted in financial instability. However, the threat of a wave of insolvencies looms large, unless Member States manage a smooth transition from liquidity support …
by the Bank for International Settlements The two reports discuss transmission channels of climate-related risks to the banking system, and the measurement methodologies of climate-related financial risks. Climate risk drivers can be captured in traditional financial risk categories, but additional …
By the International Monetary Fund Extraordinary policy measures have eased financial conditions and supported the economy, helping to contain financial stability risks. But actions taken during the pandemic may have unintended consequences such as stretched valuations and rising financial vulnerabilities. …
By the International Monetary Fund Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, …
By Ryan Niladri Banerjee, Joseph Noss and Jose María Vidal Pastor Key takeaways Since the start of the Covid-19 pandemic, a “bankruptcy gap” has emerged between measures of expected and realised bankruptcies globally. The ample supply of credit to make …
By Emine Boz, Camila Casas, Georgios Georgiadis, Gita Gopinath, Helena Le Mezo, Arnaud Mehl and Tra Nguyen Authors Emine Boz, Camila Casas, Georgios Georgiadis, Gita Gopinath, Helena Le Mezo, Arnaud Mehl and Tra Nguyen conducted an extensive data-gathering exercise to …
by Luis de Guindos Speech by Luis de Guindos, Vice-President of the ECB, at the High-level conference on “Strengthening the EU’s bank crisis management and deposit insurance framework: for a more resilient and efficient banking union” organised by the European …
By. Boštjan Jazbec There is no doubt that 2020 was a milestone year in many people’s lives. At the SRB, 2020 also saw us hit two major milestones from a resolution planning perspective. […] Link: Making good progress on resolvability
By Iñaki Aldasoro, Egemen Eren, and Wenqian Huang Non-US banks’ on-balance sheet dollar liabilities rose in 2020 despite the decline in funding from US and offshore money market funds (MMFs). Other non-bank financial institutions were behind this increase, as they …
By John H. Cochrane This is a testimony concerning financial regulation in the context of climate change, presented to the US Senate Committee on Banking, Housing, and Urban Affairs. It was posted on Cochrane’s Blog “The Grumpy Economist”. Link: Testimony …
By Thorsten Beck, Elena Carletti, and Brunella Bruno The combined effect of the measures implemented to maintain banks’ ability to provide funds during the Covid crisis was to create a virtuous circle between corporates, banks, and sovereigns, avoiding a funding …
By Claudia M. Buch, Matthieu Bussière, and Linda S. Goldberg While policymakers around the world have aggressively and swiftly reacted to the common negative economic shock from COVID-19, the timing and forms of policy responses in the economic recovery stage …
by Luis de Guindos, Vice-President of the ECB Climate change is one of the greatest challenges facing humankind this century. If left unchecked, it is likely to result in more frequent and more severe climate events, causing widespread devastation and …
What factors drive the performance of national asset management companies? By Emilios Avguleas, Rym Ayadi, Marco Bodellini, Barbara Casu, Willem Pieter de Groen and Giovanni Ferr In the past decade, asset management companies (AMCs) have been an effective tool for …
by Bryan Hardy Key takeaways In the context of the Covid crisis, authorities adopted dividend payout restrictions to enhance bank resilience and support stronger growth in bank lending. Restrictions may reduce short-term equity returns for bank shareholders, especially in the case of …
By Caterina Mendicino, Kalin Nikolov, Juan Rubio-Ramirez, Javier Suarez, and Dominik Supera Well-capitalised banks make the financial system more resilient to episodes such as the COVID-19 crisis. This column assesses how much capital would be optimal for banks to hold, …
By Hans Degryse, Mike Mariathasan and Thi Hien Tang Frequent bailouts during the Global Crisis showed that governments cannot credibly commit not to support large financial institutions. This inability leads to moral hazard and motivated the Financial Stability Board’s framework …
By Caterina Mendicino, Kalin Nikolov, Juan Rubio-Ramirez, Javier Suarez and Dominik Super Episodes such as the current coronavirus (COVID-19) crisis might lead to a significant rise in borrower defaults and, consequently, weakness in the banking sector. Having well-capitalised banks makes …
By Michael Kumhof, Phurichai Rungcharoenkitkul and Andrej Sokol Understanding gross capital flows is crucial for both macroeconomic and financial stability policy. However, theory is lagging behind empirical work, as much of the literature continues to rely on net capital flow …
Although global economic output is recovering from the collapse triggered by COVID-19, it will remain below pre-pandemic trends for a prolonged period. The pandemic has exacerbated the risks associated with a decade-long wave of global debt accumulation. It is also …
The Compendium gives a comprehensive cross-country overview of the relevant aspects for monetary policy implementation. This includes information on eg institutional features of monetary policy frameworks, communication of policy and the “nuts and bolts” of operations (including reserve requirements, the …
Based on the FSB’s recentaly released Global Monitoring Report on Non-Bank Financial Intermediation 2020, this dashboard visualizes the main monitoring aggregates mentioned in the report by jurisdiction. Link: Main monitoring aggregates of the FSB’s Global Monitoring Report on Non-Bank Financial …
The Global Monitoring Report on Non-Bank Financial Intermediation 2020 presents the results of its annual FSB monitoring exercise to assess global trends and risks in non-bank financial intermediation (NBFI), covering 29 jurisdictions that account for 80% of global GDP. The …
By Marina Conesa Martínez, Giulia Lotti and Andrew Powell Global banks are highly connected, and banking systems are only as strong as the weakest links in the network. This column analyses cross-border syndicated lending to emerging and developing countries from …
By Andrea Enria and Edouard Fernandez-Bollo As we face the challenges raised by the coronavirus (COVID-19) pandemic, we should also focus on the actions needed to foster the integration of banking activities within the banking union. And this means, first …
The Latin American Journal of Central Banking (LAJCB) publishes high-quality research on topics that are of keen interest to central banks and associated financial regulatory and supervisory agencies. The LAJCB covers traditional topics such as monetary theory and policy, exchange …
by Reinout De Bock, Dimitris Drakopoulos, Rohit Goel, Lucyna Gornicka, Evan Papageorgiou, Patrick Schneider and Can Sever The COVID-19 pandemic caused an unprecedented sharp reversal of portfolio flows in emerging and frontier markets, triggering concerns about financial stability and consequently, …
by Bilge Erten, Anton Korinek and José and Antonio Ocampo Recent market volatility has underlined how fickle international capital flows can be, and how important it is for emerging economies to have an adequate system of macroprudential policies in place. …
By Henk Jan Reinders, Dirk Schoenmaker, and Mathijs van Dijk The severe economic impact of the COVID-19 pandemic could threaten financial stability. Since accounting-based methods report loan losses with a delay, this column adopts a real-time, market-based assessment of the …
The European Banking Authority (EBA) published today a discussion paper exploring ways on how to enhance the Bank Recovery and Resolution Directive (BRRD) framework on early intervention measures. The objective is to further enhance crisis management tools available for competent …
This year’s BIS Annual Economic Report is (naturally) centered around the topic of Covid-19 and its impact on the economy, including the chapters “A global sudden stop”, “A monetary lifeline: central banks” crisis response, and “Central Banks and Payments in …
by Jean Imbs and Laurent Pauwels Exposure to foreign shocks is often thought to be highly dependent on foreign trade and measures of openness usually build exclusively on measures of direct trade. This column argues that in a world of …
By Thorsten Beck, Francesco Mazzaferro, Richard Portes, Jean Quin, and Christian Schett On 27 May, the ESRB General Board adopted a wide-ranging recommendation to suspend pay-outs across different segments of the European financial system until the end of 2020. This …
A BIS report prepared by a Working Group chaired by Sally Davies (Board of Governors of the Federal Reserve System) and Christopher Kent (Reserve Bank of Australia) […] This report presents the Group’s findings. The growing share of the US …
Author(s): Ralph S. J. Koijen and Motohiro Yogo Date: June 2020 Abstract: Using international holdings data, we estimate a demand system for financial assets across 36 countries. The demand system provides a unified framework for decomposing variation in exchange rates, …
Author(s): Xin Liu, Shang-Jin Wei, Yifan Zhou Date: June 2020 Abstract: The opening of equity markets to foreign investment appears to generate an enormously large positive growth effect (see Bekaert, Harvey, and Lundblad, 2005) in spite of a relatively small …
Author(s): Sebastian Horn, Carmen M. Reinhart, Christoph Trebesch Date: June 2020 Abstract: Official (government-to-government) lending is much larger than commonly known, often surpassing total private cross-border capital flows, especially during disasters such as wars, financial crises and natural catastrophes. We …
This Quarterly Review draws on several BIS data sets to examine emerging market corporates’ external and foreign currency debt on the eve of the Covid-19 outbreak. It also assesses whether emerging market government debt is a cause for concern. Link: BIS Quarterly …
Published by the ECB Market infrastructures form the backbone of the financial system. They provide the networks through which financial institutions and financial markets are connected and financial transactions are cleared and settled. Therefore, it is essential to ensure that …
By Ozge Akinci, Gianluca Benigno, and Albert Queralto Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. This blog post deals with the global effects of the COVID-19 sudden …
By Egemen Eren, Andreas Schrimpf, and Vladyslav Sushko Key takeaways: Dislocations in domestic US dollar money markets reverberated globally. Non-US banks lost a substantial part of funding from money market funds and had to borrow at shorter maturities. Nevertheless, the …
by Philip R. Lane, Member of the Executive Board of the ECB, at the Institute for Monetary and Financial Stability Policy Webinar, 19 May 2020 In my recent blog post, I described the range of scenarios that have been developed …
By Mitsutoshi Adachi, Matteo Cominetta, Christoph Kaufmann and Anton van der Kraai Stablecoins with the potential for global reach (“global stablecoins”) could help to address unmet consumer demand for payment services that are fast, cheap and easy to use and …
By Anil Ari, Sophia Chen, and Lev Ratnovski During crises, the number of loans that cannot be paid back increases. What are the lessons from past crises for non-performing loan resolution after COVID-19? In this article we use a new …
By the European Central Bank (ECB) The Financial Stability Review provides an overview of potential risks to financial stability in the euro area. It aims to promote awareness in the financial industry and among the public of euro area financial …
Building on the success of the MoFiR Workshop on Banking, we are launching a monthly series of MoFiR virtual seminars on banking and financial intermediation to maintain an active discussion on these important topics. The seminars will be open to …
Since the start of the Covid-19 pandemic, indicators of dollar funding costs in foreign exchange markets have risen sharply, reflecting both demand and supply factors. The demand for dollar funding has grown in recent years, reflecting the currency hedging needs …
The COVID-19 pandemic has caused an unprecedented human and health crisis. The measures necessary to contain the virus have triggered an economic downturn. At this point, there is great uncertainty about its severity and length. The latest Global Financial Stability Report …
Senior Economist Vladyslav Sushko discusses the main findings of the 2019 Triennial Central Bank Survey. Link: Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019
The coronavirus (COVID-19) pandemic poses unprecedented health, economic, and financial stability challenges. Following the COVID-19 outbreak, the prices of risk assets collapsed and market volatility spiked, while expectations of widespread defaults led to a surge in borrowing costs. Several factors …
Countries around the world are easing bank capital requirements to help banks absorb losses and to allow them to maintain the flow of credit during the COVID-19 crisis. Most of these measures involve the Basel III capital standards that global …
This policy tracker summarizes the key economic responses governments are taking to limit the human and economic impact of the COVID-19 pandemic. The tracker includes 193 economies. Link: IMF Policy Tracker – Policy Responses to Covid-19
The world is coping with a global disaster, as the new Coronavirus takes a toll on many lost lives and a severe impact on economic activity. To provide a long-run perspective, this column documents the international response to a variety …
The COVID-19 pandemic has massive detrimental economic effects and demands immediate policy actions to prevent a financial or debt crisis. This column argues that while the fiscal policy responses in Europe have some merit in the short term, they put …
ECB gives banks further flexibility in prudential treatment of loans backed by public support measures ECB encourages banks to avoid excessive procyclical effects when applying the IFRS 9 international accounting standard ECB activates capital and operational relief measures announced on …
The Single Resolution Board (SRB) has decided that no compensation is due to shareholders and creditors affected by the resolution of Banco Popular Español, S.A. (BPE). It concluded that they would not have been better off under normal insolvency proceedings. …
The FSB, representing a broad and diverse membership of national authorities, international standard setters and international bodies, is actively cooperating to maintain financial stability during market stress related to COVID-19. The global financial system today is in a better position …
What’s going on in the financial markets at the moment, and what does might it mean for the economy? Torsten Slok, chief economist at Deutsche Bank, and Richard Portes of the London Business School, honorary president of the CEPR, explain …
Faced with growing uncertainty around the COVID-19 pandemic, countries around the world are taking extreme measures to lessen the already severe impact on their citizens’ health, well-being, and economic circumstances. What are the implications of the pandemic for the global …
To promote continuity in research, the Georgetown Center for Financial Markets and Policy @GUFinPolicy will be hosting a Global Virtual Seminar Series on FinTech via Zoom. Our plan is to involve researchers interested in FinTech in the US and around …
Years of quantitative easing by the ECB have suppressed sovereign yields to historic lows. This has contributed to a shadow banking boom, as market participants invested heavily in various private asset constructions. This column argues that the coronavirus shock poses …
In crises, the dollar tends to appreciate – especially against emerging market currencies – and dollar liquidity becomes scarce. This column shows that today’s events are following the historical pattern. Forex market turmoil is preceded by an inversion of the …
Governments are increasingly confronted with the task of preserving the positive effects of increased global integration while also managing their manifold side effects. This column looks at the effects of globalisation on inflation and financial stability and the role for …
The Single Resolution Board (SRB) today launches a public consultation on a number of substantial changes to its policy on the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). These changes bring the policy in line with the amendments introduced …
Foreign exchange swaps and forwards are a key instrument in the global financial system for hedging, position-taking and short-term funding. They involve the exchange of notional amounts at a future date and, as funding vehicles, they are akin to other …
Global cross-border bank claims continued to expand rapidly, growing at 9% year on year. As in previous quarters, the expansion was mainly due to claims on the non-bank sector, which grew at 12% year on year. The growth in claims on …
The European Banking Authority (EBA) launched today a public consultation on possible future changes to the EU-wide stress test. This discussion paper aims to present the EBA’s vision of the future of the EU-wide stress test and to collect comments …
Capital flows to emerging markets have continued to be highly volatile since the Global Crisis. This column uses a new framework to show that country characteristics and policy responses matter for risks to future capital flows. It finds that good …
After the Global Crisis, accommodative monetary policy also eased financial conditions in emerging market economies. This column shows that US banks contributed to the transmission of US monetary policy and that regulation and supervision attenuated it. Only US banks that …
Since the G20 declared in 2009 that “the era of bank secrecy is over”, jurisdictions have implemented an unprecedented range of measures designed to increase tax transparency by ensuring that information on foreign financial assets would be disclosed to tax …
LTI@UniTO is a think tank established as a joint initiative of the Università di Torino and of the major Italian market players in long term financing. Through the Fellowship program, LTI@UniTO aims to foster research in long-term investing and to …
Central banks have been called on to contribute to fighting climate change. This column presents a framework for thinking about the issue and identifies some major trade-offs and choices. It argues that climate should be a major part of risk …
Targeted macroprudential policies may spill across sectors, but this does not mean that they are ineffective. This column shows how the effects of a countercyclical capital buffer designed to curb house price growth in Switzerland spilled over into commercial lending. …
Global Outlook: Fragile, Handle with Care. Global growth is expected to recover to 2.5 percent in 2020—up slightly from the post-crisis low of 2.4 percent registered last year amid weakening trade and investment—and edge up further over the forecast horizon. …
European banks have been criticised for holding too much domestic government debt during the recent euro area crisis, intensifying the doom loop between sovereign and bank credit risks. This column deviates from previous research that focused on ‘bad’ reasons for …
The global economy has experienced four waves of debt accumulation over the past fifty years. The first three debt waves ended with financial crises in many emerging and developing economies. The latest, since 2010, has already witnessed the largest, fastest …
Global imbalances are at the core of today’s trade tensions, but official current account statistics may not be sufficient to assess the external positions of financially integrated economies. For instance, balance of payments accounting standards do not prescribe the recording …
Macroprudential regulation is in vogue, but liquidity requirements are typically seen only as a microprudential tool. This column shows how a macroprudential approach to liquidity requirements could improve regulatory efficiency. By concentrating liquidity in systemically important banks, financial stability can …
The Financial Stability Board (FSB) today published the 2019 list of global systemically important banks (G-SIBs) using end-2018 data and an assessment methodology designed by the Basel Committee on Banking Supervision (BCBS). One bank (Toronto Dominion) has been added to …
Macroprudential policies are being implemented around the globe. A key question is whether these policies prompt substitution toward the non-bank financial sector. This column presents compelling evidence of such ‘waterbed effects’ after macroprudential policy action. Substitution towards non-bank credit is …
Filling the investment gap to achieve the sustainable development goals is one of the most important development challenges. Multilateral development banks can play an important role through a stronger engagement to attract additional resources from the private sector. This column …
There are still remarkable gaps in the data available on the overall structure of the financial systems of major economies. This column presents rough estimates for the UK and the US that suggest some surprising structural differences between the two …
One of the markets banks use to fund lending in foreign currencies – namely, using FX swaps to fund FX lending synthetically – has seen large dislocations in its pricing since the Global Crisis. This column documents that such dislocations affect the …
Non-performing assets are a double-edged sword. On the one hand, they often trigger episodes of financial crises. On the other, once a crisis erupts, market participants must have confidence in banks’ reported asset quality metrics in order to regain faith …
The decade since the Global Crisis has seen notable changes in the architecture of supervision, with separation of responsibility for monetary and financial stability having been reversed in many countries on the one hand, and a move towards more cross-border …
This occasional paper describes how the financial stability and macroprudential policy functions are organised at the ECB. Financial stability has been a key policy function of the ECB since its inception. Macroprudential policy tasks were later conferred on the ECB …
This paper describes the conceptual framework that guides assessments of financial stability risks for multilateral surveillance, as currently presented in the Global Financial Stability Report (GFSR). The framework emphasizes consistency in measuring financial vulnerabilities across countries and over time and …
Following the Global Crisis, countries have significantly increased their efforts to cooperate on bank supervision, the prime example being the euro area’s Single Supervisory Mechanism. However, little is known about whether such cooperation helps improve the stability of the financial …
Technology firms such as Alibaba, Amazon, Facebook, Google and Tencent have grown rapidly over the last two decades. The business model of these “big techs” rests on enabling direct interactions among a large number of users. An essential by-product of …
More than ten years have passed since the global financial crisis triggered a comprehensive regulatory reform process. Many important measures have been put in place since then. The title of the next panel discussion therefore raises a very pertinent question …
Focus The paper discusses why the financial system is not as resilient as policymakers currently claim – despite extensive regulatory reforms from a very weak starting point. Contribution The paper discusses different policy strategies for making some of the debt …
A structural feature of cross-border banking is its high degree of concentration, with a small number of very large bilateral links accounting for the lion’s share of total global cross-border bank credit. The largest links are almost exclusively between advanced …
The report summarises the responses received to the survey by Basel Committee member jurisdictions and those of the Basel Consultative Group. In brief, the majority of respondents to the survey currently apply proportionality measures in their jurisdictions. In most cases, …
There is global cycle in capital flows that is intimately connected to global risk. This column argues that, contrary to common wisdom, US monetary policy is not the only factor, or even the main factor, behind global risk and this …
Financial crises play a key role in changing existing policies concerning financial markets and institutions. This column provides new evidence for the negative impact of financial crises on the process of financial liberalisation. It also shows, however, that such interventions …
Deviations from covered interest parity represent, in theory, an arbitrage opportunity. This column shows that post-crisis, financial regulation may explain why this mispricing persists and cannot be arbitraged away. It also finds that more constrained dealers demand an extra premium …
Global growth has continued to soften this year. Subdued investment in emerging market and developing economies (EMDEs) is dampening potential growth prospects. Risks to the outlook remain firmly on the downside, including the possibility of escalating trade tensions. Another concern …
While the decade since the Global Crisis has seen clear improvements in financial regulation and supervision, there is still work to be done in several crucial areas, and political constraints may bite.This column introduces the first report in a new …
Call for Paper CfP deadline: 31 July, 2019 The special issue invites submissions of high-quality empirical research papers on topics related to the theme of changes in banks’ business models and their impact on credit supply. The banking sector is …
Frederic Boissay, Carlos Cantú, Stijn Claessens and Alan Villegas, March 5, 2019 The BIS is launching a public, online and interactive repository of studies on the effects of financial regulations, called FRAME. The purpose of this repository is to keep …
By Linda Goldberg, February 2019 Linda Goldberg of the Federal Reserve of New York talks about her work with Signe Krogstrup on a combined exchange market pressure index, which they use to look at the importance of the global factor …
Matt Lowe, Chris Papageorgiou, Fidel Pérez Sebastián 20 February 2019 Capital doesn’t flow to developing countries as much as economic theory suggests it should, and this might imply that capital is misallocated across nations. This column argues that once public …
Thorsten Beck 04 February 2019 Thorsten Beck argues that recent actions by the Italian and German governments threaten to undermine progress made in the euro area towards a Single Market in Banking and, thus, a more sustainable currency union. Link: …
Friederike Niepmann, Tim Schmidt-Eisenlohr 06 February 2019 The issuance of syndicated loans, including leveraged loans, has grown substantially in the US. Institutional investors increasingly hold these loans. This column discusses how this has created a strong link between the dollar …
Call for Paper Asia–Pacific Journal of Financial Studies (AJFS) invites manuscripts for a special issue on“Advances in International Finance in Emerging Markets” and related issues, scheduled for publication in 2020. AJFS became the first finance journal published in Asia-Pacific region …
The European Central Bank (ECB) is seeking applications from leading researchers for the Wim Duisenberg Research Fellowship. Fellowships are awarded annually. Successful candidates will conduct economic research in the ECB’s Directorate General Research (DG/R) for a period of two to …
The European Systemic Risk Board (ESRB) is an EU body with a mission to prevent and mitigate systemic risks to financial stability. The ESRB is chaired by the President of the European Central Bank, Mario Draghi, and its membership incorporates …
Ashoka Mody, Milan Nedeljkovic 14 January 2019 The ECB’s actions in the wake of the Global Crisis have been described as hesitant, relative to other central banks. Based on analysis of financial markets’ response to the ECB’s interventions during the …
Mathias Hoffmann, Egor Maslov, Bent Sørensen, Iryna Stewen 10 January 2019 Bank-to-bank lending in the euro area has increased, direct cross-border lending has not. The column shows that dependence on domestic banks reduces risk-sharing in a crisis, reducing GDP growth …
Eugenio Cerutti, Catherine Koch and Swapan-Kumar Pradhan, BIS quarterly review, December 16, 2018 Emerging market economies (EMEs) have substantially increased their footprint in the global economy over recent decades. They now produce about 40% of global GDP at market exchange …
Blog entry by Thorsten Beck, December 6, 2018 This week, the Eurogroup (Ministers of Finance of all Eurozone countries) agreed on some reforms for the banking union and Eurozone governance. As always, it is two steps forward and one step …
November 20, 2018 The evaluation is among the first under the FSB framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms, and forms part of a broader FSB examination of the effects of reforms on …
Meghana Ayyagari, Thorsten Beck, Maria Soledad Martinez Peria 11 December 2018 Macroprudential tools have been implemented widely following the Global Crisis. Using data from 900,000 firms in 49 countries, this column finds that such policies are associated with lower credit …
João Granja, Christian Leuz, Raghuram Rajan 04 December 2018 Risk taking was pervasive during the Global Crisis even in the most unlikely areas, such as stretching to lend at a distance. Using US data, this column examines the degree to …
Tobias Adrian, John Kiff 01 December 2018 The financial system has undergone far-reaching changes since the 2008 Global Crisis. This column casts those changes in terms of shifts in the way financial intermediaries manage their balance sheets, and also discusses …
Daniel Calvo, Juan Carlos Crisanto, Stefan Hohl 23 November 2018. A well designed financial supervisory architecture is essential for the effective functioning of any financial system. Using a survey of 82 jurisdictions, this column describes the state of financial supervisory …
Deutsche Bundesbank released its Financial Stability Review 2018. Link: https://www.bundesbank.de/resource/blob/766586/f9d675a9f6a50562291589f7f3409f5a/mL/2018-finanzstabilitaetsbericht-data.pdf
Job Openings for Economists: The Faculty of Economics and Business Administration at the Friedrich Schiller University Jena and the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association jointly seek qualified candidates to fill a position at …
The European Banking Authority (EBA) published the results of the 2018 EU-wide stress test. Link: https://www.eba.europa.eu/-/eba-publishes-2018-eu-wide-stress-test-results
A new release of the InterConnectedness Newsletter is available for download. Link: http://bankinglibrary.com/interconnectedness_issues/2018Q4Halloween.pdf
A new IMF release is available for download. Global Financial Stability Report October 2018: A Decade after the Global Financial Crisis: Are We Safer? Link: https://www.imf.org/en/Publications/GFSR/Issues/2018/09/25/Global-Financial-Stability-Report-October-2018
Eugenio Cerutti, Stijn Claessens, and Luc Laeven, 18 September 2018 The Global Crisis was a catalyst for the adoption of macroprudential policies around the world. Using newly updated data, this column examines the adoption of macroprudential policy instruments from 2000 …
Björn Richter, Moritz Schularick, and Ilhyock Shim 21 September 2018 Central banks have increasingly relied on macroprudential measures to manage the financial cycle, but their effects on the core objectives of monetary policy to stabilise output and inflation are largely …
Ester Faia, Sébastien Laffitte, and Gianmarco Ottaviano, 20 September 2018 There is a general consensus that lax monetary policy and banking globalisation were two critical factors behind the Global Crisis. This column explores how banks’ decisions to enter foreign markets …
Vincent Bouvatier, Gunther Capelle-Blancard, Anne-Laure Delatte, 11 September 2018 Tax havens are estimated to concentrate 8% of global private financial wealth, reducing annual global tax revenues by about $200 billion. This column uses new country-by-country regulatory data on the foreign …
Bert Smid, Beau Soederhuizen, Rutger Teulings on 29 August 2018: New VoxEU Column The transition to a banking union for the EMU The transition to a European banking union is not straightforward. A key issue is how to prioritise risk …
Signe Krogstrup and Cédric Tille 29 August 2018: How global factors affect banks’ foreign currency funding: It depends on the exposure Volatility in international capital flows can disrupt international trade and finance. This column explores the role of agents’ exposure …
Bolton, P., and M. Oehmke (2018): Bank resolution and the structure of global banks. When banks are too big to fail, resolution frameworks for are hobbled by the mismatch between their global nature and the national scope of regulators. This …
European bank mergers: Domestic and cross-border. The European economy is recovering, and banks are thinking once more about mergers. This column demonstrates that, while cross-border mergers have been predicted before, most European bank mergers have consistently been domestic. Regulatory hurdles …
Database of Macroprudential Measures in the EU/EEA These macroprudential measures include those taken under Articles 124 and 164 of the Capital Requirements Regulation (CRR) to target systemic risks in the real estate sector, and macroprudential measures that are not harmonised …
ECB Macroprudential Database (MPDB) The Macroprudential Database (MPDB) is a comprehensive and harmonised dataset of indicators covering various sub-categories of indicators judged relevant for macroprudential analysis. The database focuses on the indicators that can be used to explain and predict …
European financial crises database The database on financial crises in European countries is an important step towards establishing common ground for macroprudential oversight and policymaking in the EU. The database provides precise chronological definitions of crisis periods to support the …
Completing Europe’s Banking Union means breaking the bank-sovereign vicious circle. Several euro area leaders have recently referred to the need to “complete the Banking Union”. This column, part of VoxEU’s Euro Area Reform debate, asks what would be required for …
The Global Debt Database (GDD) is the result of a multiyear investigative process that started with the October 2016 Fiscal Monitor. The dataset comprises total gross debt of the (private and public) nonfinancial sector for an unbalanced panel of 190 …
As use of macroprudential policy tools is growing, the IMF has initiated an annual survey on macroprudential policy with its membership. The resulting new database provides information on policy measures taken by IMF member countries as well as on the …
Financial globalisation and bank lending: The limits of domestic monetary policy The effectiveness of monetary policy in dictating banking activities is one of the keys to understanding how efficient monetary policy is in tuning the real economy. This column uses …
The ECB’s annual report on financial integration in Europe contributes to the advancement of the European financial integration process by analysing its development and the related policies. For the ECB, the market for a given set of financial instruments and/or …
The Global Financial Stability Report provides an assessment of the global financial system and markets, and addresses emerging market financing in a global context. It focuses on current market conditions, highlighting systemic issues that could pose a risk to financial …
FSB launches survey on infrastructure financing as part of its efforts to evaluate the impact of G20 regulatory reforms. Link: http://www.fsb.org/2018/03/fsb-launches-survey-on-infrastructure-financing-as-part-of-its-efforts-to-evaluate-the-impact-of-g20-regulatory-reforms/
The Macroprudential Policies Evaluation Database (MaPPED) provides details of macroprudential (or similar) policy actions taken in the European Union since 1995. MaPPED has been created to support the empirical assessment of the impact of macroprudential policies. Link: https://www.ecb.europa.eu/pub/research/working-papers/html/mapped.en.html
A new release of the interconnectedness newsletter is available for download. Download here: http://www.bankinglibrary.com/e/fdz/intbanklib/interconnectedness/2018Q2.pdf
The economics of supranational bank supervision. International cooperation on bank supervision is still rare. This column analyses data on supervisory cooperation among a global sample of countries between 1995 and 2013 to show that cooperation among bank supervisors is not …
The Chinese banking system: Much more than a domestic giant. Chinese banks have continued to expand rapidly both domestically and abroad. Together, they constitute the largest banking sector in the world by far. This column places the Chinese banking system …
