Eugenio Cerutti, Stijn Claessens, Luc Laeven, 18 September 2018

The Global Crisis was a catalyst for the adoption of macroprudential policies around the world. Using newly updated data, this column examines the adoption of macroprudential policy instruments from 2000 to 2017. Since 2015, advanced economies have on average been using more instruments than emerging economies and low-income countries. While some instruments seem to be effective, it remains to be seen whether this suite of policies can deliver overall financial stability.

Viral Acharya, Stephen Cecchetti, José De Gregorio, Sebnem Kalemli-Ozcan, Philip Lane, Ugo Panizza, 05 October 2015

Emerging market firms have borrowed in foreign currency to take advantage of low interest rates. This column argues that when the Fed inevitably raises rates, such borrowing will be a threat to emerging economy financial systems. Yet so long as authorities use their existing prudential tools wisely, the risks appear manageable.

Victoria Galsband, Thomas Nitschka, 10 March 2013

Violations of the uncovered interest-rate parity – a zero-profit equilibrium condition in foreign-exchange markets – seems to consistently give rise to profitable currency trading. This column highlights the risky nature of this phenomenon, arguing that it is the exposure to stock-market cash flows that is the key secret to making money from global currency portfolio investments. High returns from currency trading compensate investors for taking on severe stock-market risks.

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