Of AI bubbles and crashes
Warnings of an AI stock market bubble abound. Should investors and policymakers be concerned? Innovation-driven bubbles can yield real benefits when f…
Read moreSystemic risk
24 posts in this category
How central banks can meet the financial stability challenges arising from artificial intelligence
The growing use of artificial intelligence (AI) poses difficult challenges for the financial authorities. AI allows private-sector firms to optimise a…
Read moreFive systemic threats and what to do about them
Systemic financial risk has both internal and external drivers. So, when we focus too strongly on preventing internal crises, such as the 2008 Global …
Read moreClimate risk does not affect systemic financial risk
Climate risk is not a systemic financial risk. Folding it into financial regulations will likely backfire, not mitigate climate damage and even increa…
Read moreArtificial intelligence and stability
Financial institutions are rapidly embracing AI – but at what cost to financial stability? This column argues that AI introduces novel stability risks…
Read moreHow the financial authorities can respond to AI threats to financial stability
Artificial intelligence can act to either stabilise the financial system or to increase the frequency and severity of financial crises. This second co…
Read moreAI financial crises
The rapid adoption of artificial intelligence is transforming the financial industry. This first of a two-column series argues that AI may either incr…
Read moreHow AI can undermine financial stability
As artificial intelligence makes inroads into the financial system, it exacerbates existing channels of instability and creates new ones. This column …
Read moreArtificial intelligence and financial stability
The use of artificial intelligence in the private sector is accelerating, and the financial authorities have no choice but to follow if they are to re…
Read moreSystemic risk in 2008 and today
The perceived wisdom maintains that systemic risk was much higher in 2008 than it is today. I am not so sure.
Read moreReview of "Nuclear folly, a new history of the Cuban missile crisis" and lessons for financial policy
I just read "Nuclear folly, a new history of the Cuban missile crisis" by Serhii Plokhy. It’s an excellent book, not only telling the story from the S…
Read moreCrypto and financial stability
A lot of turmoil in crypto. Does that mean crypto markets should be regulated? The turmoil is driven by violent price volatility, exposing weaknesses …
Read moreWho is to blame for the rising systemic risk?
I ran a poll on LinkedIn and Twitter, asking who is to blame for the rising systemic risk. The overwhelming majority on both agreed. The options were…
Read moreSystemic consequences of outsourcing to the cloud
Financial institutions are increasingly outsourcing information technology to the cloud, motivated by efficiency, security, and cost. This column argu…
Read moreThe ECB Systemic Risk Indicator
The European Central Bank has an indicator of systemic risk called, CISS. So what sort of signal does it send and what is it to be used for?
Read moreSystemic consequences of Brexit
I got to present on the systemic risk consequences of Brexit in a SUERF conference.
Read moreCyber risk as systemic risk
The threat to the financial system posed by cyber risk is often claimed to be systemic. This column argues against this, pointing out that almost all …
Read moreA proposed research and policy agenda for systemic risk
The long-running Greek crisis and China's recent stock market crash are the latest threats to the stability of the global financial system. But as thi…
Read moreAre asset managers systemically important?
Some financial authorities have proposed designating asset managers as systemically important financial institutions (SIFIs). This column argues that …
Read moreRisky business: Finding the balance between financial stability and risk
It is important that we understand and do something about systemic risk. The problem is that we desire two incompatible things simultaneously: we wish…
Read moreObjective function of macro-prudential regulations
I have been in a conference for the past few days, and have seen a few presentations on macropru type regulations.
Read moreRegulators could be responsible for next financial crash
LSE report warns that forcing financial institutions to forecast risk in the same way could mean they will all end up being caught unawares.
Read moreA prudential regulatory issue at the heart of Solvency II
A delicate regulatory question is under consideration on the capital (reserve) requirements at the heart of Solvency II (the insurance industry equiva…
Read moreValuing insurers' liabilities during crises: What EU policymakers should not do
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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