34 posts in this category
The almost infinite complexity of the financial system is the main reason why it is so hard to keep it under control. And that complexity is due to ev…
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The US dollar has been the reserve currency for the past century, never seriously challenged. Is that now under threat with Trump?
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The America First thrust of the Trump tariffs caught many by surprise. But it shouldn't have. We have been there before — in (my) living memory.
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We missed the excessive build-up of risk before 2007 despite having all the numbers and models right in front of us. Now we have doubled down on model…
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Terrible events dominate the news. There was an endless stream of bad news when I was listening to Today on BBC4 this morning. But are things really …
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The way the financial authorities address threats to financial stability is by resilience. But is that the right way? Might it be better to emphasise …
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Inflation is exploding. The reason is the central banks doing what it takes to keep the economy going. Now they are damned if they do and damned if th…
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Central-bank digital currencies will make the financial system more efficient. But will they make it safer? Maybe, but they could easily end up increa…
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Financial crises and bailouts of financial institutions are inevitable and can't be prevented without paying too high a price. Diversity is the best w…
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A libertarian sees the Covid-19 bailout of the financial system as a predictable failure of regulations. Much better to have a laissez-faire economy a…
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The state just saved the financial system from itself. What is the point of privately owned banks if they need to be bailed out every decade?
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The financial authorities have just bailed the financial system out for the second time in a decade. While the authorities are proud of having prevent…
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The central banks bailed out the financial system in March 2020, the second time they have done so in 12 years. What is the point of privately owned b…
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The type of risk we most care about is long-term, what happens over years or decades, but we tend to manage that risk over short periods. This column …
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On top is the authority in charge of fiscal policy, followed by those running monetary, microprudential, and finally macroprudential policies. This ra…
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European banks and sovereigns are much more closely linked than American banks and their government. The resulting bank-sovereign doom loop has been g…
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Discretionary macroprudential policies aim to be countercyclical by adjusting risk-taking across the financial cycle. This column argues that the oppo…
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Macroprudential policy has become increasingly popular in the aftermath of the Global Crisis, but it remains controversial. This column argues that vi…
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Why do the regulatory authorities seemingly fall into the category of model believers, if not quite to the view that there must be one true model?…
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There has always been conflict between macro- and microeconomic regulation. Microeconomic policy reigns supreme during good times, and macro during ba…
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Some financial authorities have proposed designating asset managers as systemically important financial institutions (SIFIs). This column argues that …
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It is important that we understand and do something about systemic risk. The problem is that we desire two incompatible things simultaneously: we wish…
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The proposed EU capital markets union aims to revitalise Europe's economy by creating efficient funding channels between providers of loanable funds a…
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Just looked again at the what I did on the January 2015 Swiss FX shock, looking at how the various risk measures performed in the days after the even…
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Basel III is coming into focus. The fundamental logic of the regulatory changes seems sensible, but the devil is in the detail - empirical implementa…
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Europe is set to finally approve new insurance regulation, Solvency II. This column argues that the final text should respect three fundamental princi…
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Central banks frequently lead the macroprudential policy implementation. The hope is that their credibility in conquering inflation might rub off on m…
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Is the fact that different banks have different risk models problematic? Contrary to the Basel Committee and the European Banking Authority, this colu…
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October 2011 saw the latest draft of Solvency II, the European Union's code for regulation of the insurance industry. This column argues that the late…
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A debate is raging on capital adequacy requirements for banks. The UK wants to be allowed to be on ÛÏtop upÛ the agreed levels, i.e. to impose stri…
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A delicate regulatory question is under consideration on the capital (reserve) requirements at the heart of Solvency II (the insurance industry equiva…
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In crises, insurance companies' asset values may fall significantly without a corresponding drop in their liabilities. European insurers have argued t…
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Bank bonuses have been blamed for contributing to the crisis, and regulators and politicians are now demanding changes in compensation arrangements. M…
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