Why is financial stability essential for key currencies in the international monetary system?

Linda Goldberg, Signe Krogstrup, John Lipsky, Hélène Rey, 26 July 2014

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Could the dollar lose its status as the key international currency for international trade and international financial transactions, and if so, what would be the principal contributing factors? Speculation about this issue has long been abundant, and views diverse. After the introduction of the euro, there was much public debate about the euro displacing the dollar (Frankel 2008).

Topics: Financial markets, International finance
Tags: capital flows, Currency, dollar, financial stability, reserve currency, SIFIs, spillovers

Financial stability and monetary policy

Gabriel Chodorow-Reich, 27 July 2014

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In the winter of 2008, the Federal Reserve began an unprecedented campaign to combat the economic downturn. The mix of policy instruments included a near zero federal funds rate, explicit communication regarding the forward path of the funds rate, and a balance sheet that ballooned to more than $4 trillion as of this writing.

Topics: Financial markets, Monetary policy
Tags: financial stability, life insurance, mutual funds

Repairing the transmission of monetary policy through asset-backed securitisation

Markus K Brunnermeier, Yuliy Sannikov, 3 June 2014

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Recent data show a decline in credit to small and medium-sized enterprise (SME) and private loans. Lack of credit growth to productive firms is one of the main obstacles to reignite the European growth engine.

Topics: Monetary policy
Tags: asset backed securities, financial stability, monetary policy, price stability, risk premia, securitisation

Spillovers from systemic bank defaults

Mark Mink, Jakob de Haan, 24 May 2014

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Financial-crisis management and prevention policies often focus on mitigating spillovers from the default of systemically important banks. During the recent crisis, governments avoided large bank failures by insuring and purchasing intermediaries’ troubled assets, by providing them with capital injections, and even by outright nationalisations.

Topics: Financial markets
Tags: banking, banks, financial stability, regulation, spillovers, systemic risk

The two faces of cross-border banking flows: An investigation into the links between global risk, arms-length funding, and internal capital markets

Dennis Reinhardt, Steven Riddiough, 7 May 2014

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Following the collapse of Lehman Brothers in September 2008, global risk spiked and the world witnessed a collapse in cross-border funding between banks. On closer inspection, however, not all countries’ banking systems experienced a withdrawal of cross-border finance. In fact, a number actually enjoyed an inflow of funding from banks overseas (Figure 1).

Topics: Financial markets, International finance
Tags: banking, cross-border banking, Cross-border lending, financial stability, interbank lending, Wholesale funding

Exploring the transmission channels of contagious bank runs

Martin Brown, Stefan Trautmann, Razvan Vlahu, 10 April 2014

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Financial contagion – the situation in which liquidity or insolvency risk is transmitted from one financial institution to another – is viewed by policymakers and academics as a key source of systemic risk in the banking sector.

Topics: Financial markets
Tags: bank runs, banking, banks, contagion, experimental economics, financial crisis, financial stability, global crisis, systemic risk

Banks’ disclosure and financial stability

Rhiannon Sowerbutts, Ilknur Zer, Peter Zimmerman, 5 April 2014

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Investors in banks need information about the risks that they are exposed to in order to be able to assess and price those risks properly. However, during the recent crisis, investors found that they did not have enough information to assess these risks, which led to a dramatic increase in funding costs, intensifying the crisis (Gorton 2008).

Topics: Global governance, International finance
Tags: bank disclosure, financial stability, risk information

The role of central banks in financial stability: How has it changed?

Willem Buiter, 16 January 2012

 

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URL: http://www.cepr.org/DP8780
Topics: EU institutions, Financial markets, Global crisis, Global economy, Institutions and economics, Macroeconomic policy, Monetary policy, Politics and economics
Tags: accountability, Central Banks, financial stability, global crisis, unorthodox monetary policy

Coordinating bank-failure costs and financial stability

Iman van Lelyveld, Marco Spaltro, 27 October 2011

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During the financial crisis, failure or distress of cross-border firms has been met by ad hoc coordinated solutions (eg Fortis and Dexia) or national solutions (eg UK and US banks).

Topics: Europe's nations and regions, Global crisis, International finance
Tags: bank resolution, burden-sharing, cross-border banking, Eurozone crisis, financial stability

Rethinking central banking

Barry Eichengreen, Eswar Prasad, Raghuram Rajan, 20 September 2011

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In the wake of the global financial crisis, there is an emerging consensus that the framework underpinning modern central banking – known as flexible inflation targeting – needs to be rethought.

Topics: Monetary policy
Tags: central banking, financial stability, flexible inflation targeting

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