Time to set banking regulation right

Jacopo Carmassi, Stefano Micossi, 28 March 2012

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Excessive leverage and risk-taking by large international banks were among the main causes of the 2008–09 financial crisis and the ensuing sharp drop in economic activity and employment. Enormous costs were borne by taxpayers and societies at large.

Topics: Financial markets
Tags: banking regulation, banks, BASEL III

Macroprudential policy: What instruments and how to use them? Lessons from country experiences

Francesco Columba, Alejo Costa, Cheng Hoon Lim, 16 March 2012

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Macroprudential policy is quickly gaining traction in international circles as a useful tool to address system-wide risks in the financial sector (see for example Borio 2011, Galati and Moessner 2011, Viñals 2010, 2011). Yet the analytical and operational underpinnings of a macroprudential framework are not fully understood and the effectiveness of the instruments is uncertain.

Topics: Financial markets
Tags: banks, Macroprudential policy, systemic risk

Capital shortfall: A new approach to ranking and regulating systemic risks

Viral Acharya, Robert Engle, Matthew Richardson, 14 March 2012

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The most severe impacts of the financial crisis of 2007–09 arose immediately after the failure of Lehman Brothers on 15 September 2008.

Topics: Financial markets, International finance
Tags: banks, capital, systemic risk

Contagion during the Greek sovereign debt crisis

Jakob de Haan, Mark Mink, 23 February 2012

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In the course of 2010, the financial problems of Greece became so severe that the Eurozone countries together with the IMF agreed to provide emergency loans for a total amount of €110 billion, to be disbursed over the period May 2010 through June 2013.

Topics: Financial markets, International finance
Tags: banks, Greece, news, sovereign default

Home bias and the credit crunch: Evidence from Italy

Andrea F Presbitero, Gregory F Udell, Alberto Zazzaro, 12 February 2012

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The management of the Eurozone sovereign debt crisis will have significant effects on the stability of national banking systems, as argued in some recent Vox columns (Acharya et al 2011, Wyplosz 2011).

Topics: Financial markets
Tags: banks, Credit crunch, cross-border banking, Italy

Next-generation system-wide liquidity stress testing

Christian Schmieder, Heiko Hesse, Benjamin Neudorfer, Claus Puhr, Stefan W Schmitz, 1 February 2012

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Bank liquidity was traditionally viewed as of equal importance to solvency. Liquidity risks are inherent in maturity transformation, ie the usual long-term maturity profile of banks’ assets and short-term maturities of liabilities. Banks have commonly relied on retail deposits, and, to some degree, on long-term wholesale funding as supposedly stable sources of funding.

Topics: Financial markets
Tags: banks, liquidity, stress tests

Stop coddling Europe’s banks

Morris Goldstein, 11 January 2012

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After initial denials, Europe’s leaders have started to acknowledge that IMF Chief Christine Lagarde was right. Through their statements and decisions, policymakers are showing their agreement with her assessment in August 2011 at the Federal Reserve’s Jackson Hole symposium that there was an urgent need for recapitalisation of Europe’s banks (Lagarde 2011).

Topics: EU policies, International finance, Politics and economics
Tags: banks, ECB, EFSF, euro bonds, Eurozone crisis, financial regulation, IMF

Europe must change course on banks

Nicolas Véron, 22 December 2011

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The Eurozone crisis keeps evolving along multiple dimensions. On the sovereign debt front, no deal is yet in sight on Greece’s debt restructuring, and Italy and Spain face major refinancing needs in early 2012.

Topics: EU policies, Europe's nations and regions, International finance
Tags: banks, Eurozone crisis, financial regulation

Deleveraging in the Eurozone

Vincent O'Sullivan, Stephen Kinsella, 17 December 2011

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The capital shortfall at EU banks is 8% higher than originally thought, according to the latest assessment from the European Banking Authority (EBA 2011) released on 8 December.

Topics: Financial markets, International finance
Tags: banks, eurozone, leverage

What is the value added of banks?

Christina Wang, 8 December 2011

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Like an organ of the human body, the financial system calls most attention to itself when it malfunctions. But in normal times, is the financial system like the human heart, circulating essential capital throughout the economy? Or is it like the appendix, doing little when healthy but devastating when ill?

Topics: International finance
Tags: banks, financial sector, financial system

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