Managing credit bubbles

Alberto Martin, Jaume Ventura 05 July 2014

a

A

Credit markets play an increasingly central role in modern economies. Within the OECD, for instance, domestic credit has risen from 100% of GDP in 1970 to approximately 160% of GDP in 2012 (as measured by the Bank for International Settlements). To be sure, this growth masks large variations across countries and over time, but there is a common feature to all these different country experiences that stands out. Credit has often alternated between ‘booms’ – periods of rapid growth – and ‘busts’ – periods of stagnation or significant decline.

a

A

Topics:  Financial markets Macroeconomic policy

Tags:  credit booms, lender of last resort, bubbles, credit, Leaning against the wind, collateral, financial accelerator

Lessons for rescuing a SIFI: The Banque de France’s 1889 ‘lifeboat’

Pierre-Cyrille Hautcoeur, Angelo Riva, Eugene N. White 02 July 2014

a

A

In the aftermath of the 2008 financial crisis, the Dodd-Frank Act of 2010 set out to limit the authority of the Federal Reserve to rescue insolvent financial institutions. Since 1932, Section 13(3) of the Federal Reserve Act had given the agency the power to lend to “any individual partnership, or corporation” in “unusual and exigent circumstances.” The 2010 Act now compels the Fed to consult with the Secretary of the Treasury before implementing a new lending program.

a

A

Topics:  Economic history Financial markets

Tags:  Central Banks, financial crises, moral hazard, lender of last resort, bailout, bank runs, SIFIs, central banking, Banque de France

Incentives for avoiding delayed sovereign defaults

Ugo Panizza 03 March 2013

a

A

The international financial architecture needs a structured mechanism for dealing with sovereign defaults. The main problem with the status quo is that countries tend to sub-optimally delay necessary defaults, leading to substantial loss of value for debtors and creditors alike. Opponents and supporters of a structured mechanism for dealing with sovereign insolvency agree on the fact that this is a difficult endeavour.

a

A

Topics:  Europe's nations and regions International finance

Tags:  lender of last resort, Eurozone crisis, sovereign debt restructuring

Thanks to the ECB

Charles Wyplosz 30 July 2012

a

A

On Thursday, the President of the European Central Bank, Mario Draghi, created a buzz by saying that the central bank “is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” This was enough to send the euro up and bond spreads down. But what was Draghi really saying? Very smart things, in fact, for the third time.

Draghi’s first installment

On 11 December 2011, barely one month after assuming his new responsibilities, and two weeks after having lowered the interest rate, Draghi said:

a

A

Topics:  EU policies International finance

Tags:  ECB, lender of last resort, EZ crisis, banking union, EU Summit

Procyclical bank risk-taking and the lender of last resort

Mark Mink 31 August 2011

a

A

Since the outbreak of the global financial crisis in 2007, and particularly since the bankruptcy of Lehman brothers in September 2008, central banks in their roles as lenders of last resort have provided large-scale liquidity support not only to individual banks, but also to the banking sector as a whole. As President Trichet of the European Central Bank explained in November 2009:

a

A

Topics:  International finance Macroeconomic policy

Tags:  Central Banks, lender of last resort, financial regulation

The European Central Bank as a lender of last resort

Paul De Grauwe 18 August 2011

a

A

In October 2008 the ECB discovered that there is more to central banking than price stability. This discovery occurred when it was forced to massively increase liquidity to save the banking system. The ECB did not hesitate to serve as lender of last resort to the banking system, despite fears of moral hazard, inflation, and the fiscal implications of its lending.

a

A

Topics:  EU policies

Tags:  ECB, lender of last resort, Eurozone crisis

Global safety nets: The IMF as a swap clearing house

Eduardo Levy Yeyati, Tito Cordella 18 April 2010

a

A

The emerging members of the G20 are promoting the debate on global safety nets as a key topic for the next G20 meeting. While an international lender of last resort is more appealing to these countries than conditionality-heavy IMF-led packages, its practical advantages depend critically on a number of aspects that are sometimes downplayed in the policy discussion. Is the international-lender-of-last-resort agenda overdue or simply passé? And would the IMF ever play an effective role on this front?

a

A

Topics:  Institutions and economics International finance

Tags:  IMF, lender of last resort, central bank swaps

Who should decide on emergency liquidity assistance?

Jorge Ponce 16 January 2010

a

A

Many countries are revising their institutions to deal with troubled banks. In the UK, the Labour Party believes that the current arrangement – the Tripartite Standing Committee constituted by the HM Treasury, the Bank of England, and the Financial Services Authority – is the best framework for regulating and supervising financial institutions and wants to strengthen it.

a

A

Topics:  Financial markets

Tags:  lender of last resort, UK, banks

A stability pact à la Maastricht for emerging markets

Alejandro Izquierdo, Ernesto Talvi 12 December 2009

a

A

One of the most intriguing puzzles following the Lehman debacle is that, in spite of its global nature, the current crisis dealt a much smaller blow to emerging markets than its predecessor, the Russian/Long-Term Capital Management crisis of 1998 (Levy-Yeyati 2009, Walti 2009).

a

A

Topics:  Global economy

Tags:  emerging markets, lender of last resort, global crisis

Crisis Management at Cross-Roads

16 November 2009 - 1 January 1970, Auditorium, National Bank of Belgium, Brussels

Event Type

Conference

Institution

SUERF, CEPS and BFF
Dates

Start Date

Mon, 11/16/2009

Location

Auditorium, National Bank of Belgium, Brussels

More information

www.suerf.org

Attendance

Yes
Organizer

Organizer(s)

Michael Bailey

Contact Email

michael.bailey@oenb.at

Disclaimer: Vox is not responsible for the accuracy of this information.


Topics

Institutions and economics
Tags
lender of last resort, crisis management, Cross-Border Bank Resolution, Deposit Guarantee Schemes

Pages

Events