Financial crisis
Fed expands lending facility to support municipal bond market
Political pressure mounting to support local governments; senator proposes bill to broaden QE powers
Dollar crunch eases as central banks step up swaps action
Core swap recipients will offer daily dollar auctions; cross-currency basis narrows
US banks increase discount window borrowing
Federal Reserve “encouraged by the notable increase” in use of the backstop facility
Fed expands network of swaps to emerging markets
Emerging markets will now have direct access to a dollar backstop, but it is still limited
Fed re-launches Primary Dealer Credit Facility in latest crisis move
New PDCF is more easily accessible than similar measure used in 2008 crisis
Fed moves to ease commercial paper strains
Commercial paper market under “considerable strain” due to coronavirus-related uncertainty, Fed says
Central banks and banks: a changed relationship
The development of large, complex international capital markets has reshaped the relationship between central banks and their commercial counterparts
Fed cuts rates 100bp as central banks launch joint action
US central bank unveils unprecedented coronavirus response package as global swap lines are bolstered through co-ordinated action
Fed to flood repo market with up to $5.5 trillion
NY Fed unveils substantial liquidity package as analysts warn massive market disruption is possible
Financial crises harm innovation – BIS paper
Loss of access to bank credit can harm research spending for more than 10 years, study finds
Fed ramps up Covid-19 response
Central bank in “firefighting mode”, undoing repo tapering and offering regulatory relief to banks
Tough inspections help cut zombie lending, paper finds
Checking banks’ assessments of asset quality cut loans to non-viable firms – Bank of Portugal paper
Book notes: After the crash, by Sharyn O’Halloran and Thomas Groll
The book seeks to identify seeds of the next crisis, and the overriding impression is a plea for more regulation
Do low rates spur investment?
Many believe low interest rates spur investment, but there appears to be little hard evidence to support such claims, writes former IMF head Jacques de Larosière
Activist claims Bailey ‘not fit’ to govern BoE
High-profile activist criticises Bailey and FCA in new report, calling for investigation into his appointment
Weak eurozone banks hindered monetary policy – Bundesbank paper
“High-risk” banks failed to increase loan spreads despite ECB liquidity injection, researchers say
Authorities in Bahamas and Colombia sign supervision agreement
Bahamas central bank and Colombian regulator will share information on financial firms
Stability versus solvency
There is still far too much regulatory forbearance on troubled bank debt. More on-site inspections and genuine writedowns are needed to fix the banking system
Book notes: The power of money, by Robert Pringle
Economists would benefit from reading this “remarkable” book, which contains “brilliantly written snapshots” about money’s historical and social roles
IMF confirms it has abandoned fifteenth quota reform
US thought to oppose proposals to increase emerging economies’ voting power
Credit-fuelled construction booms lead to busts – IMF research
Credit booms that lead to rapid growth in construction more likely to end in crisis, researchers find
Interview: Luiz Awazu Pereira da Silva
BIS deputy general manager talks about the obstacles central banks face with regard to climate change and why the status quo needs to evolve
Coronavirus contagion risk prompts central bank action
Asian central banks deploy contingency plans and tell banks to minimise risk of virus spread
Some countries lack systemic banking crisis resilience – IMF report
IMF staff sketch out priorities for countries’ resolution-planning frameworks