The investor base matters since different investors behave differently. During the emerging-market sell-off episodes in 2013 and early 2014:
New-breed global investors and emerging-market financial stability
Gaston Gelos, Hiroko Oura, 23 August 2014
Topics: Financial markets, International finance
Tags: capital flows, emerging markets, financial deepening, financial stability, herding, institutional investors, investment, mutual funds, original sin, Pension Funds
Why is financial stability essential for key currencies in the international monetary system?
Linda Goldberg, Signe Krogstrup, John Lipsky, Hélène Rey, 26 July 2014
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).
Financial stability and monetary policy
Gabriel Chodorow-Reich, 27 July 2014
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.
Repairing the transmission of monetary policy through asset-backed securitisation
Markus K Brunnermeier, Yuliy Sannikov, 3 June 2014
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.
Spillovers from systemic bank defaults
Mark Mink, Jakob de Haan, 24 May 2014
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.
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
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).
Exploring the transmission channels of contagious bank runs
Martin Brown, Stefan Trautmann, Razvan Vlahu, 10 April 2014
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.
Banks’ disclosure and financial stability
Rhiannon Sowerbutts, Ilknur Zer, Peter Zimmerman, 5 April 2014
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).
The role of central banks in financial stability: How has it changed?
Willem Buiter, 16 January 2012
Vox readers can download CEPR Discussion Paper 8780 for free here.
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
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).
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