Is the ECB doing QE?

Charles Wyplosz 12 September 2014

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The 4 September announcement by Chairman Mario Draghi has been greeted with enthusiasm by the markets and the media. It has been long awaited, and many believe that the ECB has finally delivered. This is not sure. The ECB intends to buy large amounts of securities backed by bank lending to households (mortgages) and to firms.

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Topics:  Exchange rates Financial markets Monetary policy

Tags:  quantitative easing, QE, monetary policy, unconventional monetary policy, ECB, securitisation, bank lending, Europe, eurozone, Subprime, stress tests, deleveraging, recapitalisation, depreciation, exchange rates, euro, central banking

Ballooning finance

Bruno Biais, Jean-Charles Rochet, Paul Woolley 21 August 2014

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One of the curiosities of the modern economy is why the finance sector is so large. Economists have only recently sought to document and ponder this phenomenon. Empirically, Greenwood and Scharfstein (2013) find that, in the US, financial services, which accounted for 2.8% of GDP in 1950, made up 8.3% of GDP in 2006.

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Topics:  Financial markets

Tags:  securitisation, financial crises, moral hazard, asymmetric information, financial innovation, global crisis, bubbles, monitoring, shirking, junk bonds, CDOs, CDSs, ETFs

Repairing the transmission of monetary policy through asset-backed securitisation

Markus K Brunnermeier, Yuliy Sannikov 03 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.

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Topics:  Monetary policy

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

The role of the equity tranche in the private-label RMBS markets

Taylor Begley, Amiyatosh Purnanandam 01 April 2014

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Following the financial crisis, there has been a lot of discussion about what went wrong in securitisation markets. Much of this work has focused on the conflicts of interests and moral hazard problems that occur at the various links in the securitisation chain (see Keys et al. 2012, Gorton and Metrick 2012). In response, academics, policymakers and practitioners alike have debated potential reforms. Some key elements of the Dodd-Frank reforms involve requirements of the level and type of credit risk retention by the deal sponsors.

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Topics:  Financial markets

Tags:  securitisation, equity tranche, mortgage-backed securities markets

Shadow banking: Economics and policy priorities

Stijn Claessens, Zoltan Pozsar, Lev Ratnovski, Manmohan Singh 12 January 2013

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This column is a lead commentary in the VoxEU Debate "Banking reform: Do we know what has to be done?"

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Topics:  International finance

Tags:  securitisation, financial deregulation, shadow banking, collateral intermediation

Lending relationships and credit rationing: the impact of securitisation

Hans Degryse, Santiago Carbó-Valverde, Francisco Rodríguez Fernández,

Date Published

Sun, 09/23/2012

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securitisation, financial crisis, lending relationships

Securitisation: Let’s not throw the baby out with the bathwater

Ugo Albertazzi, Leonardo Gambacorta, Carmelo Salleo 25 May 2011

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Before the crisis, securitisation was hailed as a major improvement to the functioning of financial markets. By allowing risk to be held more widely and banks’ balance sheets to be more liquid, securitisation had increased the supply of credit and was thought to have improved financial stability (Duffie 2007).

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Topics:  International finance

Tags:  securitisation, financial regulation

Understanding the global turmoil: It’s the general equilibrium, stupid

Ricardo Caballero 21 May 2010

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Here we go again. Financial volatility is re-emerging, this time from the other side of the ocean. But in the current globalised environment the ocean isn’t wide enough to contain the contagion and fear.

  • Will this rollercoaster ride end any time soon?
  • Do policymakers (and Congress in particular) have the right diagnosis so we can hope that a cure is around the corner?

I fear the answer to both is no.

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Topics:  Global crisis

Tags:  securitisation, global crisis, safe assets

Lessons from the financial crisis

Hyun Song Shin interviewed by Romesh Vaitilingam,

Date Published

Fri, 09/04/2009

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See Also

Background on the Millennium Bridge here.

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Topics

Financial markets Macroeconomic policy
Tags
securitisation, mark-to-market

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Securitisation undermined financial stability
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Financial globalisation and securitisation in mortgage markets

Mathias Hoffmann, Thomas Nitschka 20 June 2009

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The securitisation of mortgage-related debt has played a major role in the emergence and proliferation of the current financial crisis (Brunnermeier 2009). Understandably, this has led to widespread about the usefulness of such instruments for allocating macroeconomic risk. It is now obvious that the repackaging of mortgage debt in mortgage-backed securities can have enormous aggregate costs, but so far no one has empirically documented the macroeconomic benefits of these instruments.

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Topics:  Financial markets International finance

Tags:  securitisation, financial globalisation, mortgage backed securities

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