Financial crisis
ECB paper emphasises importance of time horizons for early-warning models
Working paper finds the selection of a particular time horizon can have ‘considerable implications’ for the performance of economic variables in predicting bank crises
RBA research finds CCP rules are effective in containing severe shocks
Paper tests central counterparties under extreme ‘tail of tail’ scenarios and finds new rules designed to promote their stability are effective
BIS charts ‘boundaries of the unthinkable’ as risks rise
Quarterly review flags growing vulnerabilities and signs of credit booms in some economies; research finds limited impact of deflation on growth, pointing to importance of financial sector
Iceland expects ‘significant’ progress in lifting capital controls this year
Healthy economy and sturdy banking system pave way for lifting of capital controls, but risks are 'tilted to the downside', IMF report says; central bank at a ‘difficult juncture’
BIS paper says liquidity regulation should not replace lender of last resort function
Lender of last resort and liquidity regulations perform separate roles, and therefore one cannot replace the other, working paper says
Hryvnia back from brink despite central bank U-turn
Central bank manages to stem Ukrainian currency’s free-fall despite adding to market chaos with volte-face on foreign exchange controls; two failed banks enter liquidation
Greek debt deal marks start of rough road
Negotiations on Friday ended in a compromise stacked in Germany’s favour; although disaster has been temporarily averted there are more battles to come, and Greece’s funding remains tight
BoE research finds high-frequency trading makes prices more efficient
High-frequency trading, although correlated, appears to be based on information and therefore helps markets form prices efficiently, working paper finds
More reforms needed to tackle CCP risks, warns IMF paper
Significant risks remain despite efforts to improve the resilience of central counterparties, IMF working paper warns; direct access to central bank facilities would help
NBER paper finds shareholder protection dampens crises
Stock markets provide emergency source of funding during banking crises, and the shock-absorbing effect is stronger if shareholders are better protected, working paper finds
Bank of Canada research underscores need for securitisation reform
Working paper warns asymmetric information impairs market functioning and means risk-sharing is not enough to efficiently allocate securitisations
Greek crisis meeting gets go-ahead despite German challenge
A meeting of the Eurogroup will take place Friday after Greece yesterday sought a six-month bailout extension, but Germany has moved quickly to challenge the proposed compromise
IMF too sluggish to be global lender of last resort, say Allen and Moessner
The IMF’s response to the financial crisis was too weak and too late, leaving the Federal Reserve to pick up the slack, William Allen and Richhild Moessner argue in the Central Banking Journal
Evaluating the IMF’s performance in the financial crisis
The results of the IMF’s Independent Evaluation Office investigation into the Fund’s handling of the global financial crisis are deeply flawed.
Book notes: Don’t start from here, by David Shirreff
A pointed, passionate plea for a simpler banking system that deserves to be taken seriously
Book notes: European Spring, by Philippe Legrain
Ambitious and accessible, this book's take on events is provocative and its alternative insights warrant reflection
Growth of finance sucks skill from real economy, BIS paper warns
Financial growth crowds out real growth by drawing skilled labour away from other industries, with R&D hit particularly hard, a working paper by Stephen Cecchetti and Enisse Kharroubi finds
BIS paper asks why bank and central bank rates diverged post-crisis
Authors argue direct comparison of commercial and central bank interest rates is misleading; the relationship between the two has remained stable but funding costs have risen
FOMC members too bullish on growth, researchers at San Francisco Fed say
‘Persistent overoptimism' about future growth since financial crisis may be due to overestimation of monetary policy efficacy following a balance-sheet recession, authors find
BCBS paper reviews how accounting may fuel crises
Basel Committee paper surveys research into how accounting rules may have contributed to financial crisis, with implications for the design of disclosure rules
Research finds IMF lending helps limit future crises
Working paper published by IMF examines impact of lending programmes on developing countries between 1970 and 2010, finding they reduce likelihood of future banking crises
Eichengreen says central banks should worry more about deflation than 'profits and losses'
The Berkeley professor on what last week's SNB move says about big central banks 'wrong-footing' markets and the Fed's problematic response to financial crisis
Productivity performance sparks uptick in US entrepreneurship, finds Boston Fed paper
‘Modest improvement' in 2012 and 2013 follows a 'significant decline' in firm creation after the financial crisis to the lowest level since 1977
NY Fed's Baxter targets stronger ethical culture in banks
Thomas Baxter says progress is more important than ‘perfection' in promoting better behaviour among financial industry workers