Nicolas Véron, 23 May 2011

The quip that “cross-border banks are international in life, but national in death” resonates loudly amongst the empty shells of international banks that have since been bailed out by their home countries. This column argues that such tensions will intensify in the coming years.

Charles Goodhart, Avinash Persaud, 13 May 2011

The UK’s Independent Commission on Banking was set up last year to consider reforms to promote financial stability and competition. This column reacts to the commission’s interim report released on 11 May 2011. It argues that the commissioners have a lot to ponder before the final report is due in September – they have not gone far enough.

Paolo Angelini, Stefano Neri, Fabio Panetta, 23 May 2011

The global financial crisis has prompted an intense debate on the role of macroprudential policies in limiting the accumulation of risks and imbalances. Major economies have recently established new institutions, or strengthened existing ones, with a mandate to pursue financial stability. This column examines the effectiveness and consequences of macroprudential policies with a focus on their interaction with monetary policy.

Raihan Zamil, 07 May 2011

How much capital should banks hold to cover their risk? This column argues that the preoccupation with capital rules misses a more fundamental concern. No amount of feasible regulatory capital can be an appropriate substitute for robust asset selection and valuation standards of banks.

David Miles, 27 April 2011

The global crisis has called into question how banks are run and how they should be regulated. Highly leveraged banks went under, threatening to drag down the entire financial system with them. Here, David Miles of the Bank of England’s Monetary Policy Committee, shares his personal views on the optimal leverage for banks. He concludes that it is much lower than is currently the norm.

Nicolas Véron, 26 April 2011

On 11 April, the Independent Commission on Banking in the UK, chaired by Oxford economist John Vickers, published its much-awaited interim report on reform options for British banking. This column argues that despite its critics, the policy proposals are a significant milestone not only for the UK, but for European and global banking reform.

Diane Coyle, 22 April 2011

Diane Coyle talks to Viv Davies about her new book 'The Economics of Enough: How to Run the Economy as if the Future Matters'. The book addresses the need to create a sustainable economy - how to consider tomorrow's needs as well as today's. It covers a broad range of issues, from the banking crisis to climate change, and sets out some of the initial, practical steps that will be needed to build a future economy that is based on a true sense of value. The interview was recorded in London in April 2011. [Also read the transcript.]

Morris Goldstein, Nicolas Véron, 14 April 2011

Are banks too big to fail? This column suggests now is the time for Europeans to ask this question. It argues that given the potential risks to systemic stability, there is a case for policy action even in the absence of analytical certainty.

Venkatachalam Shunmugam, 09 April 2011

Derivatives markets are a controversial member of the financial-sector family. This column looks at derivatives markets across the world and notes the wide discrepancy in regulatory frameworks. It argues that this calls for the “synergistic coordination” of regulators – first at the national level and then at the global level – to ensure these markets operate efficiently and without imposing excessive risk on the wider economy.

Jean-Louis Arcand, Enrico Berkes, Ugo Panizza, 07 April 2011

Over the last three decades the US financial sector has grown six times faster than nominal GDP. This column argues that there comes a point when the financial sector has a negative effect on growth – that is, when credit to the private sector exceeds 110% of GDP. It shows that, of the advanced countries currently suffering in the fallout of the global crisis were all above this threshold.

Hans Gersbach, 02 April 2011

When banks failed, the government paid up. But the bankers responsible kept their bonuses from the years of excess. This column argues for “crisis contracts”. Such contracts require that, in the event of a crisis, bank managers forfeit a portion of their past earnings to rescue the banking system.

Raphael Auer, Sébastien Kraenzlin, 31 March 2011

Banks across the globe have a high balance-sheet exposure to foreign currencies. During the panic of the global financial crisis, the private supply of cross-border liquidity came to a halt, requiring government action. This column documents the unmet demand for cross-border liquidity for the case of the Swiss Franc and describes the countermeasures that were adopted by the Swiss authorities.

Stijn Claessens, Ceyla Pazarbasioglu, 30 March 2011

The comparisons between the global financial crisis and past episodes have been many, but this column argues that policymakers should look again, and closer. It says that without restructuring financial institutions’ balance sheets and their operations, as well as their assets, the economic recovery will suffer – and the seeds will be sown for the next crisis.

Santiago Carbó-Valverde, Edward Kane, Francisco Rodríguez Fernández, 22 March 2011

The problem of banks being too big to fail haunts discussions of regulation. This column provides new evidence on the implicit support provided to banks deemed too-difficult-to-fail and too-difficult-to-unwind in Europe and the US. It finds that regulators could be doing a much better job.

Venkatachalam Shunmugam, 19 March 2011

The exchange-traded derivatives market has been growing rapidly, particularly in the decade preceding the global crisis. This column discusses the various policies available for mitigating the downside risks and argues that the dynamic nature of the market calls for the continuous evolution of regulation and regulatory tools.

Harry Huizinga, Asli Demirgüç-Kunt, 18 March 2011

Today's big banks are enormous. By 2008, 12 banks worldwide had liabilities exceeding $1 trillion. This column, using data on banks from 80 countries over the years 1991-2009, provides new evidence on how large banks differ in terms of their risk and return outcomes and investigates how market perceptions of bank risk are affected by bank size. It concludes that policies should reward bank managers for keeping their banks safe rather than for making them big.

David Aikman, Andrew Haldane, Benjamin Nelson, 17 March 2011

Credit booms sow the seeds of subsequent credit crunches. This column argues that these have their source in cross-bank externalities. To internalise these cross-sectional spillovers, policy should operate “across the system”. It adds that this is the essence of macro-prudential policy, which, for the first time is about to be undertaken internationally.

Enrico Perotti, Javier Suarez, 16 March 2011

How to regulate systemic risk? This column presents a new CEPR discussion paper assessing the performance of Pigouvian taxes and quantity-based regulations in containing the social costs of high-risk banking. It finds that, depending on how banks differ, the socially efficient solution may be attained with Pigouvian taxes, quantity regulations, or a combination of both.

Viral Acharya, Thomas Cooley, Robert Engle, Matthew Richardson, 27 February 2011

As part of the US policy response to the global crisis, the Dodd-Frank Financial Reform Act calls for regulators to identify systemically risky financial firms – the sort that took the US financial crisis global. But how to identify these firms remains unclear. Some claim the task is impossible. This column begs to differ and names the 10 most systemically risky financial firms in the US.

David Miles, 25 February 2011

David Miles of the Bank of England's Monetary Policy Committee talks to Viv Davies about ‘Monetary Policy in Extraordinary Times’, a speech he delivered in London on 23 February 2011. Two very large shocks have hit the UK economy – the near collapse of the banking system and, more recently, a sharp increase in commodity, energy and food prices. The first shock is deflationary, the second inflationary. Miles discusses how best to set monetary policy in the wake of these shocks and analyses how regulation and monetary policy can most effectively reduce the likelihood of future financial instability. [Also read the transcript]

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