Author Archives: Guest Blogger

Congress and the President Must Counteract the Wealth Inequality the Fed Will Create

By | March 23, 2020

Courtesy of Todd Phillips* This morning, the Federal Reserve announced it would begin open-ended quantitative easing, offering to buy “Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy.” This expands on its announcement last week that it’d buy up to $700 billion worth… Read More »

A World Without LIBOR: A New Financial Order?

By | March 16, 2020

Courtesy of Xing Huan, Gary J. Previts, and Antonio Parbonetti Introduction On June 27, 2012, news of Barclays being fined for manipulating the daily setting of the London Interbank Offered Rate (LIBOR) and Euro Interbank Offered Rate (EURIBOR) flooded the media. Nearly eight years later, the transition away from LIBOR is still a work in… Read More »

Dealing with the Carbon Bubble: The Senate Select Committee on the Climate Crisis

By | March 12, 2020

Courtesy of Graham Steele  Introduction  Today, the Senate Select Committee on the Climate Crisis has convened a hearing about the potential financial risks from climate change. This hearing is the culmination of years of expert warnings about the risks of a growing carbon bubble that, like other asset bubbles, could result in stranded assets and… Read More »

Negative Interest Rates: Sharp Increase in Risk-Taking Behavior

By | February 12, 2020

Courtesy of Maren Baars, Henning Cordes, and Hannes Mohrschladt As a consequence of the global financial crisis and the European sovereign debt crisis, risk-free nominal interest rates have plummeted – in some countries, they even turned negative. These interest rate decreases lead to a systematically higher risk appetite by institutional investors, such as banks and… Read More »

A Closer Look at CECL: What Can We Learn from the European Implementation of IFRS 9?

By | January 29, 2020

Courtesy of Arndt-Gerrit Kund and Daniel Rugilo Introduction The sub-prime crisis of 2008 drew attention to the fundamental drawbacks of the incurred loss accounting model, which determined the loan loss provisions for troubled exposures. The subsequent financial crisis revealed in particular that the recognition of impairments was not only too late, but also incomplete. As… Read More »

Ethical Considerations of Blockchain: Do We Need a Blockchain Code of Conduct?

By | January 21, 2020

Courtesy of Michele Benedetto Neitz  Blockchain technology is not as decentralized as we think. From the outset, the original innovators of blockchain viewed the technology as an opportunity to solve the “problem” of government oversight over economic activities. A truly decentralized, immutable ledger, would remove the potential for human shortcomings and state control, impacting everything… Read More »

Smart Contracts for Securities Transactions on the DLT Network: Legal Obstacles and Regulatory Challenges

By | January 16, 2020

Courtesy of Joseph Lee Fintech developers and financial institutions[1] have presented the benefits of using smart contracts to facilitate securities/interests transfers (trading) on distributed ledger technology (DLT) platforms. The benefits are DLT’s technological ability to bring about decentralization and disintermediation which are the main characteristics of peer-to-peer (P2P) trading platforms and reduction of transaction costs… Read More »

Surviving the Perfect Storm: Exports, Fiscal Austerity, and Firm Heterogeneity

By | January 7, 2020

Courtesy of Manuel Adelino, Paulo Fagandini, Miguel Ferreira, and Francisco Queiro How do economically depressed areas recover following a recession? Our recent paper uses the 2010–2011 European sovereign debt crisis and a Euro area periphery country as a laboratory to answer this question. The 2010–2011 European sovereign debt crisis led to a severe recession in… Read More »

What do the proposed changes to the supervision of liquidity and funding risks in the UK mean?

By | December 11, 2019

Courtesy of Mete Feridun When it comes to changing UK liquidity regulations, each round of revisions – such as the liquidity coverage ratio, net stable funding ratio, and the cash-flow mismatch risk framework – typically makes funding and liquidity risk management more complex and costly for firms. However, the Prudential Regulation Authority’s (PRA) recent consultation paper… Read More »

Issuing a Central Bank Digital Currency: Possible Motives, Characteristics and Consequences

By | November 21, 2019

Courtesy of Christian Pfister* In 2018, the Bank for International Settlements conducted a survey to which 63 central banks responded. According to the results, 70% of the central banks were then (or planned to be soon) engaged in central bank digital currency (CBDC) work. However, only three central banks reported that they were likely to… Read More »