Financial Stability Implications of Increasing Interest Rates

Daniel Gros.  Ιncreasing interest rates appear to pose little risk to financial stability at present. The basic reason is simple: Monetary policy normalisation, which comes as a reaction to the ‘normalisation’ of the economy, should not lead to a deterioration   […]

Should we care about central bank profits?

Francesco Chiacchio, Grégory Claeys, Francesco Papadia. Central banks are not profit-maximising institutions; their objectives are rather of macroeconomic nature. The European Central Bank’s overriding objective is price stability. Nevertheless, there are three good reasons to conclude that it is preferable for central   […]

Monetary policy and household inequality

Miguel Ampudia, Dimitris Georgarakos, Jiri Slacalek, Oreste Tristiani, Philip Vermeulen, Giovanni L. Violante. This paper considers how monetary policy produces heterogeneous effects on euro area households, depending on the composition of their income and on the components of their wealth.   […]

A macro approach to international bank resolution

Dirk Schoenmaker. As regulators rush to strengthen banking supervision and implement bank resolution regimes, a macro approach to resolution is needed that considers both the contagion effects of bail-in and the continuing need for a fiscal backstop to the financial   […]

What happened to global banking after the crisis?

Dirk Schoenmaker. The large global banks were at the heart of the global financial crisis. In response to the crisis, the international Financial Stability Forum was upgraded to the Financial Stability Board (FSB) in 2009, with the full participation of   […]

Central bank independence under threat?

Jakob de Haan, Sylvester C W Eijffinger. Traditionally Central Bank Independence has been viewed as important, if inflationary biases are to be effectively countered. Recently, however, economists have raised concerns that CBI has decreased since the financial crisis and may   […]

Central Bank Independence Revisited: After the financial crisis, what should a model central bank look like?

Ed Balls, James Howat, and Anna Stansbury. In the aftermath of the global financial crisis, countries around the world have dramatically expanded the objectives and powers of central banks beyond their traditional inflation targets and policy rates. But as these   […]

The effects of ultra-loose monetary policies on inequality

Grégory Claeys, Zsolt Darvas, Alvaro Leandro and Thomas Walsh. Low interest rates, asset purchases and other accommodative monetary policy measures tend to increase asset prices and thereby benefit the wealthier segments of society, at least in the short-term, given that   […]

The financial stability risks of ultra-loose monetary policy

Grégory Claeys, Zsolt Darvas. • Ultra-loose monetary policies, such as very low or even negative interest rates, large-scale asset purchases, long-maturity lending to banks and forward guidance in central bank communication, aim to increase inflation and output, to the benefit   […]

Cross-border financial linkages: Identifying and measuring vulnerabilities

Philip R. Lane. There are two main approaches to measuring cross-border financial linkages: (i) price-based measures; and (ii) volume-based measures. The price-based approach examines correlations in asset prices and returns across countries, with cross-border financial linkages captured by the importance   […]