With the underpricing of liquidity risk prior to the crisis, a return to the same pre-crisis liquidity pattern is not expected. There is widespread consensus that banks’ extensive pre-crisis reliance on deep and broad unsecured money markets is to be avoided in the future (see e.g. IMF 2013).
Recent studies reinforce the case for the Liquidity Coverage Ratio
Stefan W Schmitz, Heiko Hesse, 28 February 2014
Falling short of expectations? Stress-testing the European banking system
Viral Acharya, Sascha Steffen, 17 January 2014
The Eurozone is mired in a recession. In 2013, the GDP of the 17 Eurozone countries fell by an average of 0.5%, and the outlook for 2014 shows considerable risks across the region. To stabilise the common currency area and its (partly insolvent) financial system, a Eurozone banking union is being established.
Why fiscal sustainability matters
Willem Buiter, 10 January 2014
Does fiscal sustainability matter only when there is a fiscal house on fire, as was the case with the Greek sovereign insolvency in 2011–12? Far from it.
Topics: Financial markets, Global crisis, International finance, Macroeconomic policy
Tags: balance-sheet recession, banking, banking union, banks, capital flows, credit booms, Currency wars, emerging markets, eurozone, Eurozone crisis, financial crisis, fiscal policy, fiscal sustainability, global financial crisis, sovereign debt, sovereign debt restructuring
Gambling for resurrection in Iceland
Friðrik Már Baldursson, Richard Portes, 6 January 2014
The demise of the three large Icelandic banks, just after the fall of Lehman Brothers, was a key event in the spread of the financial crisis. A couple of weeks before its collapse in October 2008, Kaupthing bank announced that the Qatari investor Sheikh Mohammed Bin Khalifa Bin Hamad al-Thani had bought a 5.01% stake. This briefly boosted market confidence in Kaupthing (Financial Times 2008).
Is a 25% bank equity requirement really a no-brainer?
Charles W Calomiris, 28 November 2013
Professor Allan Meltzer famously quipped that “capitalism without failure is like religion without sin”. If some firms are protected from failure when they cannot pay their bills, then competition is skewed to favour inefficient, protected firms.
Shadow banking and the global financial ecosystem
Zoltan Pozsar, 7 November 2013
Regulatory reform has focused on banks and how much liquidity and capital they should hold, rather than on the evolution of the broader financial ecosystem that banks are only a part of. However, understanding this ecosystem is imperative, as it can influence the types of activities banks engage in and the types of liabilities they issue.
The determinants of banks’ liquidity buffers and the role of liquidity regulation
Clemens Bonner, Iman van Lelyveld, Robert Zymek, 1 November 2013
Until recently, liquidity risk was not the main focus of banking regulators. However, the 2007–2009 crisis showed how rapidly market conditions can change, exposing severe liquidity risks for some institutions. Although capital buffers were effective in reducing liquidity stress to some extent, they were not always sufficient.
Enhancing the global financial safety net through central-bank cooperation
Edwin M. Truman, 10 September 2013
The prospect that the Federal Reserve will soon ease off on its purchases of long-term assets has increased financial-market uncertainty and contributed to a retrenchment in global capital flows. This turbulence has revived discussion of the need to enhance the global financial safety net –i.e.
Is there a future for international banks?
Dirk Schoenmaker, 25 August 2013
The international, centralised, business model of banks has come under pressure after the global financial crisis. Supervisors are leaving their traditional consolidated approach, under which a bank as a whole is assessed. Instead, they are moving towards a stand-alone approach, under which the national subsidiaries are supervised separately.
Big banks and macroeconomic outcomes
Franziska Bremus, Claudia M. Buch, Katheryn Russ, Monika Schnitzer, 10 July 2013
Does the mere presence of big banks affect macroeconomic outcomes?
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DellaVigna, Durante, Knight, La Ferrara
Ostry, Berg, Tsangarides
Allen, Eichengreen, Evans
Greenwood, Guner, Kocharakov, Santos
CEPR Policy Research
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- Finance and Poverty: Evidence from IndiaAyyagari, Beck, Hoseini
- The Manipulation of Basel Risk-WeightsMariathasan, Merrouche
- Making city lights shine brighterYusuf, Leipziger
- The euro in the 'currency war'Bénassy-Quéré, Martin
- The roots of shadow bankingPerotti
- What’s wrong with Europe?Baldini, Manasse
- How the EZ crisis is permanently changing EU institutionsMicossi
- 21st Century Challenges: The Mobile Middle Class13 - 13 March 2014 / Royal Geographical Society, 1 Kensington Gore, SW7 London / Royal Geographical Society (with IBG)
- The 13th Annual GEP Postgraduate Conference 20141 - 2 May 2014 / Nottingham / Sponsored by Nottingham Centre for Research on Globalisation and Economic Policy (GEP) University of Nottingham, United Kingdom