Macro-prudential rules targeting foreign exchange may achieve their primary objectives, but simultaneously shift problems elsewhere, according to a recent Bank of England working paper.
Toni Ahnert, Kristin Forbes, Christian Friedrich and Dennis Reinhardt test whether the rules “shift the snowbank” – shovelling risks from one place to another, rather than curbing them outright.
The authors built a model of bank and market funding along the lines proposed by Nobel laureates Bengt Holmstrom and
- BoE revamps expenses rules after criticism from MPs
- Draghi warns of downside risks as ECB ends net asset purchases
- Book notes: Macroprudential policy and practice, edited by Paul Mizen, Margarita Rubio and Philip Turner
- BoE paper outlines DSGE model of financial and real frictions
- Central banks turn to visual communication in 2018