Research
BIS paper offers method of overcoming time inconsistency in macro-prudential policies
Macro-prudential policies are necessary to prevent finance amplifying imbalances, but regulators struggle to credibly commit to policies, authors warn
European real effective exchange rates are hugely misaligned, paper argues
Real effective exchange rates for European Union countries do not correspond to national economic fundamentals, a working paper from the Bank of Lithuania argues
Emerging markets appear less susceptible to global contagion than advanced economies – BIS paper
Working paper explores whether central banks can still manage domestic financial conditions despite globalisation; isolates ‘contagion’ component in bond yield dynamics
Bundesbank paper explores why banks may lend too much
A limited number of banks may engage in excessive lending, and those that do are more likely to rely upon capital support, says Bundesbank paper
Increases in securitisation may lead to under-pricing of risk, study argues
Increased asset securitisation reduces premia on bonds and equities, Bank of Spain working paper says; decrease in cost of risk may not be related to an actual fall in risk
CCPs’ initial margins ‘significantly’ raise cost of repo funding, study argues
Initial margins charged by central clearing counterparties (CCPs) can increase the cost of funds raised in repo markets, a Bank of Italy paper argues
IMF working paper explores spillovers between United States and eurozone
Spillovers from the eurozone to the US have been ‘considerable’ since 2014, reflecting policy easing in Europe, IMF paper notes
BoE paper explores link between mortgage debt and consumption
Tighter credit conditions and concern over debt repayments may have led to a 2% drop in aggregate private consumption following the crisis, working paper says
BoE committee sees benefits of moving CCB in small steps
The Bank of England's Financial Policy Committee leaves the CCB at 0% but notes the system is ‘moving into a normal phase of the credit cycle’ and sees potential advantages in using smaller increments when the time comes
Fed policy has ‘little impact’ on labour market, paper says
Paper published by Minneapolis Fed argues there is little the Fed can do to restore the level of employment relative to the population that prevailed before the crisis
Credit growth has had significant impact on EM growth, IMF paper says
IMF paper explores relationship between the level and composition of credit growth and real GDP growth across 31 emerging market economies
Economists expected lower inflation under Yellen than Bernanke, SNB paper finds
Sample of economists from ‘reputable academic and policy institutions’ on aggregate expected slightly lower inflation under Yellen compared to if Bernanke had stayed on
Global factors harming domestic policy transmission in Asia, IMF research finds
Authors find global factors help to explain why bank funding in Asian economies has such a limited role in transmitting monetary policy
BoE paper extracts inflation expectations from market rates
Market rates are an imperfect measure of expected future inflation, say economists, who break them down into constituent parts, stripping out risk premia and the ‘wedge’ between RPI and CPI
Botswana research weighs impact of various instruments on credit
While interest rates may be more effective at influencing credit than reserve requirements, more ‘direct’ macro-prudential measures could be even better, Botswana article finds
Global indicators can boost inflation forecasts in short term, paper finds
Author uses global inflation indicators and Brent oil price to augment domestic inflation forecasts in 523 countries, finding both improve accuracy
Lithuanian paper explores macroeconomic imbalances
Working paper advocates a more refined analysis of the misalignments in current accounts and real effective exchange rates for the macroeconomic imbalance procedure
BoE’s FPC says no immediate action required on buy-to-let
Bank of England financial policy committee is ‘alert’ to impact of buy-to-let loans on the housing market and overall financial volatility but finds no ‘immediate’ case for action
ECB paper considers how to mitigate US spillovers
Global economies could mitigate their vulnerability to US monetary policy decisions through a range of different policy actions, research finds.
IMF paper offers recipe for ‘de-dollarisation’
High levels of dollarisation in central Asia are contributing to macroeconomic instability, paper says; authors offer various options that could help reduce reliance on dollars
Competition can boost macro-financial stability, research finds
A survey of 54 European banks shows increased competition increases the fragility of individual banks but decreases systemic risk, working paper says
Belgian paper explores link between monetary policy and risk-taking
Model suggests central banks should stabilise the path of the real interest rate more when there is a ‘risk-taking channel’ of monetary policy, to help reduce ‘welfare detrimental fluctuations’
ECB paper traces roots of falling financial integration
Policy interventions beyond traditional capital controls may have ‘unintended’ impact on financial integration, including some macro-prudential measures based around currency
Riksbank paper takes stock of macro-prudential landscape
A survey of the empirical literature on macro-prudential policy says various tools work best in different contexts; more research is needed on combining macro-prudential and monetary policy