Financial crisis
Icelandic paper finds country's response to banking crisis was optimal
Research by Central Bank of Iceland looks at various alternatives to Iceland’s handling of the 2008 banking collapse, but finds none yield better outcomes than the baseline scenario
Nalm 2013: Kotz stresses necessity of exceptional policy despite moral hazard
Former Bundesbank board member says exceptional response by major central banks to the financial crisis was unavoidable as cost of inaction would have been ‘massive’
BIS paper urges inclusion of financial cycle in output gap calculation
Working paper warns ignoring the financial cycle when calculating the output gap can cause policy-makers to overlook unsustainable output movements
NY Fed paper highlights money market fund ‘stampede’ risk
Staff report finds intermediation by money market funds can turn unexpected withdrawals into runs, meaning a small shock can bring down the whole banking system
BIS paper anatomises global liquidity
Study finds liquidity conditions are shaped by credit supply, credit demand, and monetary policy; financial crisis a product of all three
Dutch paper says foreign banks can help or harm developing markets
Working paper finds foreign-owned banks in developing countries can provide cheaper and higher quality financial services, but may also transmit shocks across borders
ECB paper tweaks the evaluation of early warning systems
Research proposes changes in the way the costs and benefits of early warning systems are calculated
Banking crises scar labour productivity, finds BoE paper
Research says short-term growth of productivity and long-run levels are damaged by financial and banking crises
NY Fed paper studies Treasury liquidity crunches
Staff report finds negative feedback relationship between price volatility and liquidity in US Treasury markets – a trend that worsens during financial crises
Governing the central bank governors
Central banks face multiple challenges in the current market environment. But they still need to press towards better governance to build institutions that are fit for purpose
Striving for a strategic role for risk management
Risk management needs to be split from control functions to provide boards with a holistic view of qualitative and quantitative risks
Book notes: The Great Recession: Market Failure or Policy Failure?
This is a hugely important book that should be read by all central bankers, bank supervisors, politicians and newspaper editors
Book notes: Guardians of Finance
This is a book offering a useful contribution to the debate over the future of regulation. By James R Barth, Gerard Caprio Jr and Ross Levine
Book notes: First Principles: Five Keys to Restoring America's Prosperity
The author's premise is that the best way to understand the problems confronting the American economy is to go back to the first principles of economic freedom upon which the country was founded
Paper finds flimsy productivity base for banks in Spain
A Bank of Spain working paper says two-thirds of pre-crisis banking productivity growth was attributable to the expansion of mortgage lending, a reliance on short-term finance and leverage
Bank of Finland's Erkki Liikanen on bank separation in Europe
Bank of Finland governor, Erkki Liikanen, tells Christopher Jeffery why he believes the separation of ‘risky’ activities at banks represents the third leg to ensure financial stability in Europe
Systemic risk in Europe heightened by Target trap
Huge Target liabilities may explain why Germany sanctioned proposals for ECB bond-buying and the formation of the ESM. But this will not solve Europe’s problems
BIS research identifies ways to smooth the financial cycle
Bank for International Settlements working paper designs model of financial cycles and examines the difficulties of reducing the size of their peaks and troughs
Taming the finance monster
The best way to resolve global financial instability is for the owners of capital to assert themselves, with sovereign funds well positioned to take the lead, say Paul Woolley and Dimitri Vayanos
Fin paper assesses eurozone’s fiscal planning
Research finds countries on the periphery had adjusted their budgets before the euro crisis event; others were more reactive and may have suffered as a result
Ingves explores common characteristics between crises
Riksbank governor says liquidity measures are only temporary solution; warns government deficits are unsustainable
European fiscal stimulus assessed by Fed paper
Economic Recovery Plan had a sizeable but short-lived impact on GDP
IMF’s Lipton cools recovery talk
Greater euro area and US progress is needed to avoid another global downturn; more co-operation required on regulatory reform
International reserves provided shelter from crisis, says Finland paper
Bank of Finland study says the accumulation of international reserves provided some countries with a buffer against the crisis; not such a clear-cut relationship with economic growth