Financial crisis
Rethinking reserve management
The crisis demands a rethink on both the size and composition of central banks’ reserves, argues Ludek Niedermayer.
How Ireland is reforming its central bank
A change of leadership offers Ireland’s central bank an opportunity to assert its independence from the country’s much maligned political and banking elite. It is doing much to grasp it, Claire Jones finds.
Denmark’s Bernstein explains new investment income estimation method
National Bank of Denmark governor Nils Bernstein says new method will enhance analysis of balance of payment movements
‘Bail-in’ rather than bailout, says European markets group
Association for Financial Markets in Europe proposes regulator-enforced version of contingent capital to replace state-funded bailouts; proposals still troublesome, Goodhart says
Reserves growth does not boost lending: Fed study
Federal Reserve study says notion that money multiplier can improve bank lending is misguided
Norway’s wealth fund slumps to first loss in a year
Government Pension Fund–Global posts $25 billion loss for first quarter; fund’s equity portfolio takes a beating, led by BP shares
BIS’s Hannoun flags dangers of exceptional measures
Bank for International Settlements’ Hannoun calls on central banks to shrink balance sheets
Commentators sharpen knives ahead of Bank’s forecasts
Leading media outlets criticise Bank of England’s forecasting methods ahead of Wednesday Inflation Report; former Bank economists say new model welcome but will not remedy rate-setters unfounded optimism, which underpins off-target predictions
BoK’s Kim: Asia was well prepared for market turmoil
Bank of Korea governor Kim Choong-soo says Asian crisis taught region many lessons that helped prepare them in onset of the last crisis
Bank Indonesia plans rupiah redenomination: reports
Bank Indonesia acting governor Darmin Nasution says redenomination of the currency should be inflation neutral
Northern Rock’s bad bank posts first profit
Northern Rock Asset Management shows $267m profit for first half of year as split with so-called “good bank” lowers costs of funding; FSA slaps RBS with $9m fine for screening failures
Philosopher says financial crisis puts economics profession into disrepute
Philosopher Philip Mirowski says economists’ outdated theories had a large hand in fueling the financial crisis
BIS: Global banking at a crossroads
Bank for International Settlements study says financial crisis has changed the model for international banking
IMF: high indebtedness depresses growth
Fund study says higher initial debt levels have negative effect on growth
ECB closes in on inferior collateral with new haircut scheme
European Central Bank’s new discount schedule increases haircuts levied on troublesome collateral, such as asset-backed securities; analysts expect move to discourage pledging of risky assets
Fed’s response averted a depression: Blinder
A paper co-authored by former Federal Reserve governor Alan Blinder says the central bank’s extraordinary polices prevented the country from entering a second Great Depression
CEPR: Central banks stuck in interest rate trap
Centre for Economic Policy Research study says central banks will inevitably end up in a low interest rate trap during a crisis
Quantitative easing doesn’t work: Woodford
National Bureau of Economic Research paper co-authored by Michael Woodford says quantitative easing has little impact, but credit easing does occasionally when targeting specific assets
Cross-border collateral may alleviate dollar funding strains: Emeap
Executives’ Meeting of East Asia Pacific Central Banks says crisis revealed shortcomings in regional money markets; swaps deals, cross-border collateral could alleviate some problems
Canada’s Carney explains rate hike
Bank of Canada governor Mark Carney says decision to hike rates was due to unexpected improvement in private demand
Goodhart: Anglo-Saxon model of banking is flawed
Bank of England former MPC member Charles Goodhart says Asian model of banking is better suited to staving off crises
ECB: Crisis amplified monetary policy channels
European Central Bank study on credit channels finds the financial crisis amplified the impact of monetary policy on the economy
Bank of Italy: north hit hardest by crisis
Bank of Italy study says geographical differences in growth reflects dependence on industry
ECB will always end up bailing out sovereigns: Buiter
Former Bank of England rate-setter Willem Buiter says ECB will lose in “game of chicken” with finance ministries over who rescues sovereigns