As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk.
Avinash Persaud, Friday, November 20, 2015 - 00:00
Mouhamadou Sy, Monday, November 9, 2015 - 00:00
From the introduction of the euro in 1999 to the Greek crisis in 2010, the Eurozone witnessed external imbalances between countries at its core and those at its periphery. These imbalances have been attributed either to differences in competitiveness or to the effect of financial integration. This column argues that in order to understand the imbalances within the Eurozone, it is necessary to consider credit costs and capital flows. The lower real cost of credit for high-inflation countries must be taken into account, as well as the inflow of capital to the non-tradable sector that this implies. Monetary policy cannot be conducted in a ‘one size fits all’ manner.
Jakob de Haan, Wijnand Nuijts, Mirea Raaijmakers, Friday, November 6, 2015 - 00:00
The Global Crisis revealed serious deficiencies in the supervision of financial institutions. In particular, regulators neglected organisational culture at the institutional level. This column reviews efforts since 2011 by De Nederlandsche Bank to oversee executive behaviour and cultures at financial institutions. These measures aimed at identifying risky behaviour and decision-making processes at a sufficiently early stage for appropriate countermeasures to be implemented. The findings show that regulators can play a larger part in securing the stability of the financial system by taking an active role in shaping institutional cultural processes.
Alex Pienkowski, Pablo Anaya, Thursday, August 6, 2015 - 00:00
During the Global Crisis, sovereign debt-to-GDP ratios grew substantially in the face of shocks to growth, increased fiscal deficits, bank recapitalisation costs, and rising borrowing costs. This column looks at how these various shocks interact with each other to exacerbate or mitigate the eventual impact on debt. Choice of monetary policy regime is an important determinant of how public debt reacts to these shocks.
Esa Jokivuolle, Jussi Keppo, Xuchuan Yuan, Thursday, July 23, 2015 - 00:00
Bankers’ compensation has been indicted as a contributing factor to the Global Crisis. The EU and the US have responded in different ways – the former legislated bonus caps, while the latter implemented bonus deferrals. This column examines the effectiveness of these measures, using US data from just before the Crisis. Caps are found to be more effective in reducing the risk-taking by bank CEOs.
Stefan Gerlach, Reamonn Lydon, Rebecca Stuart, Tuesday, July 21, 2015 - 00:00
Despite being a mainstay of macroeconomic theory for the past half century, the Phillips curve often receives the death knell from various commentators. These critiques often rely on results from data samples spanning relatively short periods. Using the case of Ireland, this column argues that short-term idiosyncrasies can explain the failure of the model in these contexts. Taking a longer historical view, the Phillips curve remains a useful macroeconomic model, at least in the Irish context.
Jakob de Haan, Dirk Schoenmaker, Monday, July 6, 2015 - 00:00
The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students.
Caroline Fohlin, Thomas Gehrig, Marlene Haas, Thursday, May 7, 2015 - 00:00
The story of the run-up to the Global Crisis is, unfortunately, not an entirely new one. This column argues that regulators would do well to read up on the ‘Panic of 1907’. What quelled rumours and panicky behaviour back then still applies – maintaining market liquidity through measures that encourage transparency.
Xavier Vives, Tuesday, March 17, 2015 - 00:00
Anusha Chari, Peter Blair Henry, Friday, March 6, 2015 - 00:00
Philippe Bacchetta, Kenza Benhima, Céline Poilly, Thursday, February 19, 2015 - 00:00
Philip Bunn, May Rostom, Monday, January 12, 2015 - 00:00
Xavier Vives, Monday, December 22, 2014 - 00:00
Brian Pinto, Wednesday, December 17, 2014 - 00:00
Irina Balteanu, Aitor Erce, Wednesday, November 12, 2014 - 00:00
Hugh Rockoff, Saturday, October 4, 2014 - 00:00
Alan Moreira, Alexi Savov, Tuesday, September 16, 2014 - 00:00
Karl Walentin, Thursday, September 11, 2014 - 00:00
Stephen Golub, Ayse Kaya, Michael Reay, Monday, September 8, 2014 - 00:00
Christoph Trebesch, Helios Herrera, Guillermo L. Ordoñez, Saturday, September 6, 2014 - 00:00