The New York Fed’s timelines of policy responses to the global financial crisis

Rebecca Hellerstein, Jeffrey Shrader, William Ryan 14 July 2009

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Over the past two years, and particularly since the intensification of the global financial crisis in the fall of 2008, new information has been released at an astonishing pace. Between the breaking developments in the markets and the vast array of policy initiatives across countries, it has become increasingly challenging to keep track of the complex and evolving response to the crisis.

To illustrate the unfolding of events over the course of the crisis, the New York Fed has produced two timelines– one depicting events in the United States,the other in G7 (and several additional) countries. In both timelines, each event entry links users to the original government announcement or a recent news source for additional information. The timelines are a centralised repository of announcements of policy responses to the crisis not available elsewhere. The timelines, which will be updated on the first of each month, are available at http://www.newyorkfed.org/research/global_economy/policyresponses.html.

Domestic US timeline

The domestic US timeline begins in June 2007 and shows the lead-up to and development of the crisis, as well as subsequent US government responses. The timeline is divided into three sections: Federal Reserve policy actions, other policy actions, and market events, toenable users to view Federal Reserve and other policy actions in the context of major market events.

International timeline

The international timeline provides a thematic and chronological ordering of the many programmes announced by G7 countries since the intensification of the global financial crisis in the fall of 2008. It organises announcements into four general categories: bank liability guarantees, liquidity and rescue interventions, unconventional monetary policy, and other market interventions. The entries are colour-coded to allow users to follow the developments of each country individually.

What can we learn from these tools?

The timelines reveal a number of interesting patterns in the responses of policymakers to the crisis. For example, the international timeline highlights the clustering of programme announcements across countries. It shows how after the intensification of financialmarket turmoil in September 2008, the first step most countries took in mid-September was to announce bans on short-selling the stocks of financial firms. Next came a cluster of announcements of bank liability extensions and guarantees in October, followed by a series of announcements of debt guarantee and capital-injection programmes that continued through the first quarter of 2009. The first five months of 2009 saw a sequence of announcements of unconventional monetary policy in the form of direct asset purchases by Japan, the United Kingdom, Switzerland, and the European Central Bank, along with the introduction of specialised programmes such as the “bad bank” plans of Germany and Ireland and the Asset Protection Scheme of the United Kingdom.

Table 1 illustrates how a country’s perceived exposure to the crisis corresponds with the number of programmes it has announced (not just the depth of funding to existing programmes). For example, Canada is generally regarded as more insulated from the crisis than the rest of the G7; not surprisingly, it has the smallest number of programmes. Conversely, Ireland and the United Kingdom, both viewed as having significant exposure, have the largest number of programmes.

Table 1 Programme types by country

  Canada France Germany Ireland Italy Japan Sweden Switz. UK
Deposit insurance   X X X X   X X X
Funding guarantees   X X X X   X X X
Capital injections   X X X X X X X X
Bad bank     X X       X  
Nationalisation       X     X   X
Unconv. monetary policy   X X X X X   X X
Short sale ban X X   X X X     X
Asset protection progamme                 X

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Topics:  Global crisis

Tags:  global crisis

Senior Economist in the International Research section, Federal Reserve Bank of New York

Research Associate, Federal Reserve Bank of New York

Research Associate, Federal Reserve Bank of New York