Category Archives: Systemic Risk

The Problems with Market-Based Finance and the Risks Emerging from the EU Capital Markets Union

By | February 25, 2019

Courtesy of Vincenzo Bavoso In my recent article published in Convivium, titled Market-Based Finance, Debt and Systemic Risk: A Critique of the EU Capital Markets Union, I addressed the question of whether fully integrated capital markets across the European Union (under the EU Capital Markets Union – CMU) can facilitate economic growth and stability, or… Read More »

Safe Until They Aren’t? Investigating Liquidity Illusions in the Exchange Traded Fund Market

By | December 6, 2018

Since the 2008 global financial crisis (GFC) exchange traded funds (ETFs) have experienced remarkable growth.[1] A recent Bloomberg report pegs the worldwide ETF market at over $5.3 trillion (up from $700 billion pre-GFC) with the U.S. accounting for nearly 70 percent of its size.[2] The number of available products has grown exponentially.[3] Product variety seems… Read More »

Fostering Financial Stability with Reverse Convertible Bonds

By | October 24, 2018

Courtesy of Pierre Chaigneau Most financial crises are characterized by a widespread loss of confidence in financial institutions. Charles Kindleberger famously made this point in 1978 in his book “Manias, Panics, and Crashes: A History of Financial Crises.” The mechanisms described in this book remain highly relevant to understand the financial crisis of 2007-2008. In the… Read More »

Does Financial Tranquility Call for Stringent Regulation?

By | August 30, 2018

Courtesy of Deepal Basak and Yunhui Zhao[1] On August 22, 2018, the U.S. stock market broke the record for longest-ever bull market run after the S&P 500 went 3,453 days without a drop of 20 percent (a decline normally associated with a bear market). In fact, despite recent financial turbulence associated with monetary policy normalization… Read More »

If We Can, Does It Mean That We Should?  Volatility Linked ETPs and The Recent Crash

By | February 10, 2018

Market participants around the world are still reeling from this week’s wild ride that saw major U.S. indexes drop more than 5% and the Dow Jones Industrial Average swing by at least 1,000 points in all but one day. Early causal assessments pointed to the threat of rising interest rates and inflation, political uncertainty in… Read More »

Why a Bitcoin Bubble is a Good Thing

By | December 5, 2017

Courtesy of Lee Reiners, Ryan Clements, and Sean Semmler In the late 1990s, it was widely understood that Beanie Babies – a line of miniature stuffed animals – were in the midst of a speculative bubble. At one point, Beanie Babies made up 10% of eBay’s sales and over 60% of American households owned at… Read More »