On Inequality of Wealth and Income – Causes and Consequences

 On Inequality of Wealth and Income – Causes and Consequences

 

Disparity in Wealth and Income of American workers/household is a hot public policy/economic/social/political issue.

  • Wealth (Stock)
  • Income (Flow)

what are the causes and consequences of Inequality on economics and society?

 

From TRENDS IN INCOME INEQUALITY AND ITS IMPACT ON ECONOMIC GROWTH (OECD)

The disparity in the distribution of household incomes has been rising over the past three decades in a vast majority of OECD countries and such long-term trend was interrupted only temporarily in the first years of the Great Recession. Addressing these trends has moved to the top of the policy agenda in many countries. This is partly due to worries that a persistently unbalanced sharing of the growth dividend will result in social resentment, fuelling populist and protectionist sentiments, and leading to political instability. Recent discussions, particularly in the US, about increased inequality being one possible cause of the 2008 financial crisis also contributed to its relevance for policy making. But another growing reason for the strong interest of policy makers in inequality is concern about whether the cumulatively large and sometimes rapid increase in inequality might have an effect on economic growth and on the pace of exit from the current recession. Is inequality a pre-requisite for growth? Or does a greater dispersion of incomes across individuals rather undermine growth? And which are the short and long-term consequences of redistributive policies on growth?

From Causes and Consequences of Income Inequality: A Global Perspective (IMF)

Widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCs), with some countries experiencing declining inequality, but pervasive inequities in access to education, health care, and finance remain. Not surprisingly then, the extent of inequality, its drivers, and what to do about it have become some of the most hotly debated issues by policymakers and researchers alike. Against this background, the objective of this paper is two-fold.

First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work has shown that income inequality matters for growth and its sustainability. Our analysis suggests that the income distribution itself matters for growth as well. Specifically, if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels.

Second, we investigate what explains the divergent trends in inequality developments across advanced economies and EMDCs, with a particular focus on the poor and the middle class. While most existing studies have focused on advanced countries and looked at the drivers of the Gini coefficient and the income of the rich, this study explores a more diverse group of countries and pays particular attention to the income shares of the poor and the middle class—the main engines of growth. Our analysis suggests that

  • Technological progress and the resulting rise in the skill premium (positives for growth and productivity) and the decline of some labor market institutions have contributed to inequality in both advanced economies and EMDCs. Globalization has played a smaller but reinforcing role. Interestingly, we find that rising skill premium is associated with widening income disparities in advanced countries, while financial deepening is associated with rising inequality in EMDCs, suggesting scope for policies that promote financial inclusion.

  • Policies that focus on the poor and the middle class can mitigate inequality. Irrespective of the level of economic development, better access to education and health care and well-targeted social policies, while ensuring that labor market institutions do not excessively penalize the poor, can help raise the income share for the poor and the middle class.

  • There is no one-size-fits-all approach to tackling inequality. The nature of appropriate policies depends on the underlying drivers and country-specific policy and institutional settings. In advanced economies, policies should focus on reforms to increase human capital and skills, coupled with making tax systems more progressive. In EMDCs, ensuring financial deepening is accompanied with greater financial inclusion and creating incentives for lowering informality would be important. More generally, complementarities between growth and income equalityobjectives suggest that policies aimed at raising average living standards can also influence the distribution of income and ensure a more inclusive prosperity.

From World changes in inequality: an overview of facts, causes, consequences and policies (BIS)

Public concern about inequality has grown substantially in recent years. Politicians and journalists descant with increasing frequency on the increase in inequality as a threat to social stability, laying the blame on globalisation and its attendant so-called neo-liberal policies. There is certainly much truth in such views. However, the lack of rigour in the public debate is striking, and one may doubt whether a constructive discussion of inequality, its causes and its economic, social and political consequences can take place without more clarity. Is it really the case that inequality is everywhere increasing more or less continuously, as actually seems to be happening in the United States? What type of inequality are we talking about: earnings, market income, household disposable income per consumption unit, wealth? What matters most: the inequality of opportunity or the inequality of economic outcome, including income? What kind of measure should be used? The recently highly publicised share of the top 5, 1.1% taken from tax data may not evolve in the same way as the familiar Gini coefficient defined on disposable incomes. And, then, what is known about the nature of the unequalising forces that seem to affect our economies and what tools might be available to counteract them?

In an international survey conducted in 2010, people were asked how they thought inequality had changed over the previous 10 years.1 In few countries was the perception of inequality trends in agreement with what could be observed from standard statistical sources about inequality. US citizens felt inequality had remained the same, whereas it was surging by most accounts, Brazilians found it was also increasing despite the fact that, for the first time in over 40 years, inequality was declining, while French and Dutch people thought that inequality had increased although the usual inequality coefficients were remarkably stable.

Good policies must rely on precise diagnostics. It is the purpose of this paper to take stock of what is known at this stage about the evolution of inequality around the world. In so doing, it will be shown that an ever-increasing degree of inequality at all times and everywhere over the last 30 years is far from the reality, and that there is a high degree of specificity across countries. In turn, this suggests that the combination of equalising and unequalising forces may be quite different from one country to another. Some factors may be common and truly global but others may be country-specific, the outcome being quite variable across countries. It also follows that tools to correct inequality, if need be, may have to differ in nature depending on the causes of increased inequality.

Tackling all these issues in depth is beyond the scope of this paper. My aim is only to offer an overview of what is observed and the main ideas being debated in the field of economic inequality. The paper is organised as follows. It starts with a quick “tour d‘horizon“ of the evidence for the evolution of various dimensions of economic inequality. It then tackles the issue of the potential causes, identifying what may be seen as common to most countries and what may be specific. Finally, it touches upon the consequences of excessive inequality and the tools available to counter it, emphasising the rising constraints imposed by globalisation.

Causes of Inequality

  • Shareholder Capitalism
  • Focus on Cost Minimization
  • Focus on ROIC and Economic Value Added (EVA)
  • Consolidation – Mergers and Acquisitions
  • Free Trade Agreements – NAFTA
  • Increased Outsourcing
  • Global Commodity Chains
  • Global Production Networks
  • Global Value Chains
  • Lack of Educated Workforce
  • Lack of protection for Low income earners
  • Compensation for Executives vs Labor
  • Unemployment, Underemployment
  • Value of High Skilled Technical Workers
  • Technological Change
  • Skills Obsolescence

Consequences of Inequality

  • Impact on Effective Demand
  • Slows Economic Growth
  • Decreased Economic Mobility
  • Health and Social effects
  • Living Standards at the Bottom (Poverty)
  • Intergenerational Mobility
  • Democratic Process and Social Justice
  • Reduced Consumption
  • Financial Crisis
  • Social Cohesion
  • Global Imbalances
  • Hampers Poverty reduction
  • Access to Health services
  • Access to Financial Services
  • Access to Education

 

Key Sources of Research:

 

The Age of Inequality

Edited by Jeremy Gantz

2017

 

 

The Price of Inequality

Joseph Stiglitz

2012

A Firm-Level Perspective on the Role of Rents in the Rise in Inequality

Jason Furman

Peter Orszag

October 16, 2015

http://gabriel-zucman.eu/files/teaching/FurmanOrszag15.pdf

Firming Up Inequality

Jae Song, David J. Price Fatih Guvenen, Nicholas Bloom

2015

http://eprints.lse.ac.uk/62587/1/dp1354.pdf

 

 

 TOWARDS A BROADER VIEW OF COMPETITION POLICY

 

Joseph E. Stiglitz

University Professor, Columbia University,

Chief Economist at the Roosevelt Institute

June 2017

https://www8.gsb.columbia.edu/faculty/jstiglitz/sites/jstiglitz/files/Towards%20a%20Broader%20View%20of%20Competition%20Policy_0.pdf

 

 

ACCOUNTING FOR RISING CORPORATE PROFITS: INTANGIBLES OR REGULATORY RENTS?

Boston University School of Law
Law & Economics Working Paper No. 16-18

November 9, 2016

https://www.bu.edu/law/files/2016/11/Accounting-for-Rising-Corporate-Profits.pdf

Inequality: Facts, Explanations, and Policies

Jason Furman
Chairman, Council of Economic Advisers

City College of New York New York, NY

October 17, 2016

https://obamawhitehouse.archives.gov/sites/default/files/page/files/20161017_furman_ccny_inequality_cea.pdf

Domestic Outsourcing, Rent Seeking, and Increasing Inequality

 Eileen Appelbaum

First Published July 21, 2017

http://journals.sagepub.com/doi/abs/10.1177/0486613417697121

 

Global Concentration and the Rise of China

Caroline Freund and Dario Sidhu

Peterson Institute for International Economics

http://econ.au.dk/fileadmin/Economics_Business/Research/Seminars/2016/Global_Concentration_Final.pdf

How Could Wage Inequality within and Across Enterprises Be Reduced?

Columbia Business School Research Paper No. 17-62

Posted: 10 Jun 2017 Last revised: 17 Aug 2017

Christian Moser

Columbia University

Date Written: December 15, 2016

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2983691

 

 

 

The Fall of the Labor Share and the Rise of Superstar Firms

David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, John Van Reenen

NBER Working Paper No. 23396
Issued in May 2017

http://www.nber.org/papers/w23396

Inequality: A Hidden Cost of Market Power

Posted: 29 Mar 2017 Last revised: 31 Mar 2017

Sean F. Ennis  Pedro Gonzaga  Chris Pike

Organization for Economic Co-Operation and Development (OECD) – Competition Division

Date Written: March 6, 2017

https://papers.ssrn.com/Sol3/papers.cfm?abstract_id=2942791

 

 

Wealth and Income Inequality in the Twenty-First Century

Joseph E. Stiglitz
International Economic Association World Congress
Mexico City
June 2017

https://www8.gsb.columbia.edu/faculty/jstiglitz/sites/jstiglitz/files/Wealth%20and%20Income%20Inequality%2021st%20Century.pdf

 

 

The Globalization of Production and Income Inequality in Rich Democracies

Matthew C Mahutga
Anthony Roberts
Ronald Kwon

Social Forces, Volume 96, Issue 1, 1 September 2017, Pages 181–214,

 

INCOME AND WEALTH INEQUALITY: EVIDENCE AND POLICY IMPLICATIONS

EMMANUEL SAEZ

Contemporary Economic Policy

Vol. 35, No. 1, January 2017, 7–25
Online Early publication October 14, 2016

 

https://eml.berkeley.edu/~saez/SaezCEP2017.pdf

 

 

Consequences of Rising Income Inequality

BY KEVIN J. LANSING AND AGNIESZKA MARKIEWICZ

October 17, 2016

Economic Research Department of the Federal Reserve Bank of San Francisco.

 

http://www.frbsf.org/economic-research/files/el2016-31.pdf

 

 

 

Top Incomes, Rising Inequality, and Welfare

Kevin J. Lansing
Federal Reserve Bank of San Francisco

Agnieszka Markiewicz

June 2016

http://www.frbsf.org/economic-research/files/wp12-23bk.pdf

 

 

Causes and Consequences of Income Inequality: A Global Perspective

Era Dabla-Norris, Kalpana Kochhar, Frantisek Ricka, Nujin Suphaphiphat, and Evridiki Tsounta
(with contributions from Preya Sharma and Veronique Salins)

IMF

June 2015

https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf

 

 

Piketty, Thomas. 2014.

Capital in the Twenty-First Century.

Cambridge, MA: Harvard University Press.

 

 

Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze—an Update to 2007

Edward N. Wolff

Levy Economics Institute of Bard College

March 2010

http://www.levyinstitute.org/pubs/wp_589.pdf

 

 

 

CONSUMPTION AND INCOME INEQUALITY IN THE U.S. SINCE THE 1960S

Bruce D. Meyer James X. Sullivan

NATIONAL BUREAU OF ECONOMIC RESEARCH

August 2017

http://www.nber.org/papers/w23655.pdf

 

 

Top Income Inequality in the 21st Century: Some Cautionary Notes

Fatih Guvenen Greg Kaplan

April 2, 2017

https://gregkaplan.uchicago.edu/sites/gregkaplan.uchicago.edu/files/uploads/top_income_inequality_web_April2_2017.pdf

 

FIFTY YEARS OF GROWTH IN AMERICAN CONSUMPTION, INCOME, AND WAGES

Bruce Sacerdote

May 16, 2017

http://www.dartmouth.edu/~bsacerdo/Sacerdote%2050%20Years%20of%20Growth%20in%20American%20Wages%20Income%20and%20Consumption%20May%202017.pdf

http://www.nber.org/papers/w23292.pdf

 

 

The Inequality Puzzle

BY LAWRENCE H. SUMMERS

 

http://democracyjournal.org/magazine/33/the-inequality-puzzle/

 

 

 

 GLOBAL INEQUALITY DYNAMICS: NEW FINDINGS FROM WID.WORLD

Facundo Alvaredo Lucas Chancel Thomas Piketty Emmanuel Saez Gabriel Zucman

NATIONAL BUREAU OF ECONOMIC RESEARCH
February 2017, Revised April 2017

 

http://www.nber.org/papers/w23119.pdf

 

 

 

Power and inequality in the global political economy

NICOLA PHILLIPS

March 2017

https://academic.oup.com/ia/article-lookup/doi/10.1093/ia/iix019

 

 

 Outsourcing governance: states and the politics of a ‘global value chain world’

Frederick W. Mayer & Nicola Phillips

04 Jan 2017

 

http://www.tandfonline.com/doi/full/10.1080/13563467.2016.1273341

 

 

What’s caused the rise in income inequality in the US?

https://www.weforum.org/agenda/2015/05/whats-caused-the-rise-in-income-inequality-in-the-us/

Why are American Workers getting Poorer? China, Trade and Offshoring

Avraham Ebenstein, Ann Harrison, Margaret McMillan

NBER Working Paper No. 21027
Issued in March 2015

http://www.nber.org/papers/w21027

 

 

 

The Geography of Trade and Technology Shocks in the United States

David H. Autor, David Dorn, and Gordon H. Hanson

American Economic Review

May 2013

https://www.aeaweb.org/articles?id=10.1257/aer.103.3.220

 

Economic Consequences of Income Inequality

Jason Furman
Joseph E. Stiglitz

https://pdfs.semanticscholar.org/cee6/1573cd50b9c8eae3379cf1f1c92301f40927.pdf

 

Labor’s Declining Share of Income and Rising Inequality

https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/2012-economic-commentaries/ec-201213-labors-declining-share-of-income-and-rising-inequality.aspx

 

 

World changes in inequality: an overview of facts, causes, consequences and policies

by François Bourguignon
Monetary and Economic Department
August 2017

BIS working paper

http://www.bis.org/publ/work654.pdf

“Trends in Income Inequality and its Impact on Economic Growth”

OECD Social, Employment and Migration Working Papers, No. 163

http://www.oecd.org/social/inequality.htm

http://www.oecd.org/els/soc/trends-in-income-inequality-and-its-impact-on-economic-growth-SEM-WP163.pdf

 

Causes of income inequality in the United States

https://en.wikipedia.org/wiki/Causes_of_income_inequality_in_the_United_States

 

Economic inequality

https://en.wikipedia.org/wiki/Economic_inequality

 

 

Income inequality in the United States

https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States

 

 

Redistribution, Inequality, and Growth

Prepared by Jonathan D. Ostry, Andrew Berg, Charalambos G. Tsangarides

 

April 2014

IMF

 

https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf

 

 

 

Understanding the Economic Impact of the H-1B Program on the U.S.

John Bound† Gaurav Khanna‡ Nicolas Morales§

April 20, 2017

 

http://www.nber.org/chapters/c13842.pdf

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Bank of Finland’s Payment And Settlement System Simulator (BoF-PSS2)

Bank of Finland’s Payment And Settlement System Simulator (BoF-PSS2)

 

From Payment and Settlement System Simulator

BOF-PSS2

The Bank of Finland provides a simulator called BoF-PSS2 for replicating payment and securities settlement systems. The simulator is adaptable for modelling multisystem setups that can be a combination of payment, securities settlement systems and CCP’s. The simulator is known to be unique and the first of its kind. Since its launch in 2002 it has been distributed to more than 90 countries and has contributed to numerous studies and research papers.

The simulator can be used to fulfill some of the regulatory requirements stated in the PFMI’s and BCBS requirements such as identifying the liquidity risks inpayment systems. Here under are topics the simulator can be used for:

  • Settlement, liquidity and credit risks in FMI’s
  • Systemic Risks and Counterparty risks in FMI’s
  • Identification of critical counterparts
  • Policy change impact evaluation
  • Network analysis
  • Liquidity dependency analysis
  • Relationship analysis of Monetary policy and liquidity needs for settlement of payments
  • Evaluation of sufficiency of liquidity buffers and margins
  • System merger effects on liquidity needs
  • System performance benchmarking
  • Netting algorithm testing and development
  • System development and prototyping

In comparison to static calculations of indicators, the simulation results naturally incorporate network (or systemic) effects rising from the payments flows and the technical properties of the infrastructures themselves. The results obtained from simulations are directly interpretable and have a self-evident meaning which is not always the case with all indicators. The results can directly be used for risk management purposes for example when evaluating the sufficiency of liquidity buffers and margins. Computer simulations take advantage of using the available information in full without losing micro-level information due to indicator aggregations.

The simulator is freely available for research purposes, and has already been introduced in numerous countries. It is possible to tailor and adapt the simulator to specific payment systems. Several adaptations of the simulator have already been made, eg. for TARGET2. The simulator team provides trainings, consultation and tailored adaptations which are priced for cost recovery. The training course aims at providing necessary skills for efficient use of BoF-PSS2 with hands on computer class exercises. It also presents numerous examples from real studies where the tool has been used. For more details see the training course outline. Minimum attendance to the session is four participants.

Basically, trainings are organised upon demand and it is also possible to order a training course to be held onsite outside the proposed dates.

 

From Payment and Settlement System Simulator / Product Page

product_en_144ppi

From Payment and Settlement System Simulator / Documentation page

The Bank of Finland Payment and Settlement System Simulator, version 2 (BoF-PSS2), is a powerful tool for payment and securities settlement system simulations. The simulator supports multiple system structures and various settlement models.

The simulator is designed for analysing liquidity needs and risks in payment and settlement systems. Special situations, often difficult or impossible to test in a real environment, can be readily simulated with BoF-PSS2. Thus, users can study how behavioral patterns and changes in policy and conventions impact the payment and settlement systems and participants. The efficiency of gridlock-resolution and liquidity-saving measures can be analyzed as well.

The application is divided into three sub-systems:

  • Input sub-system for preparing and defining the input data,
  • Execution sub-system for running simulations,
  • Output sub-system for basic analyses of simulation results.

Different settlement logics are implemented into separate algorithms. To replicate specific systems, appropriate algorithms must be selected with appropriate parameters. Different algorithm combinations can be used to replicate a large number of current and potential settlement conventions and structures. Real-time gross settlement systems (RTGS), continuous net settlement systems (CNS), deferred net settlement systems (DNS) and hybrid systems can be implemented with the simulator as well as securities settlement and multicurrency systems. Inter-system connections and bridges make it possible to define multi- system environments consisting of various types of interdependent systems. E.g. it is possible to replicate the interaction of RTGS and securities settlement systems.

Advanced users of BoF-PSS2 can define and build their own user modules/algorithms and expand the basic features of the simulator to analyse new types of settlement processes. It is also possible to implement agent based modeling by adding algorithms replicating the participants’ behavior and decision making to control and alter the flow of submitted transactions. As a later addition, the simulator also has a network analysis module for generating networks and network indicators from either input data or results of simulations.

BoF-PSS2 has an easy to use graphical user interface. It is also possible to automate the use of the simulator via its command line interface (CLI).

 

From Payment and Settlement System Simulator / Product Page

TARGET2 SIMULATOR

A separate TARGET2 simulator version of BoF-PSS2 has been developed and delivered for the European System of Central Banks. It is based on the same basic software architechture and features of BoF-PSS2. Additional features are implemented as separate algorithm modules which replicate the proprietary algorithms of actual TARGET2 system. It is used by Eurosystem for quantitative analyses and numerical simulations of TARGET2.

TARGET2 simulator has been jointly delivered by Suomen Pankki (Bank of Finland) and the 3CB (Banca d’Italia, Deutsche Bundesbank, Banque de France) based on a decision of ECB Governing Council.

 

 

Key Terms

  • Liquidity Simulator
  • Payment System
  • Risk Management
  • Financial Stability
  • Cascades of Failures
  • Congestions and Delays
  • Financial Market Infrastructures
  • Payment Networks
  • Contagion
  • RTGS
  • Simulation Analysis
  • TARGET2
  • Intraday Payments

 

Key People

  • Harry Leinonen
  • Tatu Laine
  • Matti Hellqvist
  • Kimmo Soramäki

 

 

Key Sources of Research:

 

Payment and Settlement System Simulator – A tool for analysis of liquidity, risk and efficiency

Bank of Finland Payment and Settlement Simulator

2006

 

https://www.suomenpankki.fi/globalassets/en/financial-stability/payment-and-settelement-system-simulator/events/2006_11a_hl.pdf

 

 

BoF-PSS2 Technical structure and simulation features

Harry Leinonen

https://www.suomenpankki.fi/globalassets/en/financial-stability/payment-and-settelement-system-simulator/events/20031519seminarpresentationleinonen2.pdf

 

 

Payment and Settlement System Simulator

https://www.suomenpankki.fi/en/financial-stability/bof-pss2-simulator/

https://www.suomenpankki.fi/en/financial-stability/bof-pss2-simulator/product/

https://www.suomenpankki.fi/en/financial-stability/bof-pss2-simulator/events/

 

 

Publications

https://www.suomenpankki.fi/en/financial-stability/bof-pss2-simulator/publications/

 

 

Quantitative analysis of financial market infrastructures: further perspectives on financial stability

E50

https://helda.helsinki.fi/bof/handle/123456789/13990

 

 

Diagnostics for the financial markets : computational studies of payment system : Simulator Seminar Proceedings 2009-2011

E45

https://helda.helsinki.fi/bof/handle/123456789/9381

 

 

Simulation analyses and stress testing of payment networks

E42

https://helda.helsinki.fi/bof/handle/123456789/9369

 

 

Simulation studies of liquidity needs, risks and efficiency in payment networks : Proceedings from the Bank of Finland Payment and Settlement System Seminars 2005-2006

E39

https://helda.helsinki.fi/bof/handle/123456789/9370

 

 

Liquidity, risks and speed in payment and settlement systems : a simulation approach

E31

https://helda.helsinki.fi/bof/handle/123456789/9355

 

 

Simulation Analysis and Tools for the Oversight of Payment Systems

 

http://www.cemla.org/actividades/2012/2012-12-payments/2012-12-vigilanciasistemasdepago-10.pdf

 

 

Utilizing the BoF simulator in quantitative FMI analysis

Tatu Laine

Banco de México

15.10.2014

 

http://www.banxico.org.mx/publicaciones-y-discursos/publicaciones/seminarios/banco-de-mexico_-the-evolving-landscape-of-payment/%7B15D9D1D3-D455-1E98-6FA6-AFB3B30C4ACB%7D.pdf

 

 

TARGET2 Simulator

https://www.banque-france.fr/sites/default/files/media/2016/11/07/target_newsletter_7_2013.pdf

 

 

Intraday patterns and timing of TARGET2 interbank payments

Marco Massarenti

Silvio Petriconi

Johannes Lindner

 

https://pdfs.semanticscholar.org/7177/0b5a0eb557b478843891449221c6ed2e7502.pdf

 

 

Communities and driver nodes in the TARGET2 payment system

Marco Galbiatiy, Lucian Stanciu-Vizeteuz

June 17, 2015

 

https://www.researchgate.net/profile/Marco_Galbiati/publication/279511583_Communities_and_driver_nodes_in_the_TARGET2_payment_system/links/5593d39c08ae1e9cb42a1904.pdf

 

 

Payment Delays and Contagion

Ben Craig† Dilyara Salakhova‡ Martin Saldias§

November 14, 2014

http://www.systemic-risk-hub.org/papers/bibliography/CraigSalakhovaSaldias_2014_preview.pdf

 

 

Federal Reserve Bank of New York Economic Policy Review

September 2008 Volume 14 Number 2

Special Issue: The Economics of Payments

 

https://www.newyorkfed.org/medialibrary/media/research/epr/2008/EPRvol14n2.pdf

 

 

Contagion in Payment and Settlement Systems

 

Matti Hellqvist

2006

 

https://www.imf.org/external/np/seminars/eng/2006/stress/pdf/mh.pdf

 

 

Applications of BoF-PSS2 simulator and how to use it in agent based models

 

http://terna.to.it/ABM-BaF09/presentations/Hellqvist(presentation)_ABM-BaF09.pdf

 

 

Simulation and Analysis of Cascading Failure in Critical Infrastructure

Robert Glass, Walt Beyeler, Kimmo Soramäki, MortenBech and Jeffrey Arnold

Sandia National Laboratories, European Central Bank,  Federal Reserve Bank of New York

https://www.suomenpankki.fi/globalassets/en/financial-stability/payment-and-settelement-system-simulator/events/07-glass_pres.pdf

 

 

Simulation analysis of payment systems

 

Kimmo Soramäki

2011

http://www.cemla.org/actividades/2011/2011-11-vigilancia/2011-11-vigilancia-07.pdf

 

 

Simulating interbank payment and securities settlement mechanisms with the BoF-PSS2 simulator

Harry Leinonen

Kimmo Soramäki

 

2003

 

https://www.suomenpankki.fi/globalassets/en/rahoitusjarjestelman_vakaus/bof-pss2/documentation/bof_dp_2303.pdf

 

Global Financial Safety Net: Regional Reserve Pools and Currency Swap Networks of Central Banks

Global Financial Safety Net: Regional Reserve Pools and Currency Swap Networks of Central Banks

 

You can read this post from two perspectives

  • Geo Strategic (International Financial and Economic Architecture)
  • Financial and Economic stability / Macro-prudential Policy

 

Recent Financial Crisis has exposed the fact that global financial liquidity can be in shortage.  Since US Dollar is the global currency and is used in more that 40 percent of all financial transactions globally.

Asian Countries faced dollar shortage during 1997-1998 asian financial crisis.  Recent Global Financial crisis caused dollar shortage in advanced countries.  US Central Bank Federal Reserve responded by setting up currency swap lines with central banks of other countries.  These swap lines were made permanent in 2013.

After Asian financial crisis in 1997, many countries in developing world started accumulating FX reserves.  There was also a swap agreement (known as Chiang Mai Initiative) which was set up between ASEAN countries in south east Asia.

Nations also go to IMF to get conditional financing which they do not like to do.  New Trend is toward regional pooling of financial resources.  Latest example is BRICS CRA.

Even advanced economies such as EU have established European Stability Mechanism (ESM).

Chiang Mai Initiative has been revamped as Chiang Mai Initiative Multilateralism (CMIM).

 

Financial and Economic Stability / Macro Prudential Policy

A. Reserve Pools

  • Chiang Mai Initiative (CMI)
  • Chiang Mai Initiative Multi-Lateralism (CMIM)
  • BRICS Contingent Reserve Arrangement (CRA)
  • European Stability Mechanism (ESM)

B. Currency Swap Lines

  • Federal Reserve Central Bank US Dollar Swap Lines
  • PBOC China Central bank RMB Swap Lines

C. Global

  • IMF Financing

D. Self Insurance

  • Nation’s Foreign Exchange (FX) Reserves

 

From The decentralised global monetary system requires an efficient safety net

The global financial safety net as a set of protection mechanisms

The current decentralised system also lacks a central authority that is actively integrated and, above all, contractually bound into the maintenance of the monetary system by providing temporary liquidity, such as the IMF in the Bretton Woods system. Instead, various protection mechanisms have evolved because the current system has not led to greater external stability of national economies and the global economy. The problem of volatile capital flows became particularly clear once again in the course of the financial crisis of 2008 and 2009. For emerging market economies, the warning of a sudden reversal of capital flows has been omnipresent ever since the Asian crisis. However, the last crisis has demonstrated that even for industrialised countries their developed financial markets are a significant contagion mechanism for crisis developments. The following are regarded as key elements of the global financial safety net:11

International reserves. These include official foreign exchange and gold reserves as well as claims on inter-national financial institutions such as the IMF that can be rapidly converted into foreign currency under the countries’ own responsibility. •

Bilateral swap arrangements between central banks.  In a currency swap two central banks agree to exchange currency amounts, e.g. US dollars for euros. They agree on a fixed date in the future on which they will reverse the transaction applying the same exchange rate. During the term central banks can make foreign currency loans to private banks. •

IMF programmes and regional financing arrangements (e.g. European Stability Mechanism, Chiang Mai Initiative Multilateralisation Agreement, BRICs CRA, Arab Monetary Fund, Latin American Reserve Fund). They make financial resources available to the members to tackle balance of payments difficulties, manage crises and prevent regional contagion effects. Depending on their design, they may impose conditions and requirements for economic policy measures on the recipient countries. Some regional programmes require a combination with IMF funds.

The most important element of the protection mechanisms: international reserves

International reserves are by far the largest element of the global safety net.12 The lack of predictability and robustness of other elements has led to an over-accumulation of reserves. After the Asian crisis, upper middle income countries in particular built up reserves. While China holds a major portion of the reserves in this group of countries, all other countries also boosted their reserves significantly. As a result of central bank interventions in the foreign exchange market, reserves have decreased since the year 2013.

The renaissance of bilateral swap arrangements

Bilateral swap arrangements were used by the US Treasury as early as in 1936 to supply developing countries with bridging loans. During the Bretton Woods period, the Fed introduced a network of swap lines known as reciprocal currency arrangements to prevent a sudden and substantial withdrawal of gold by official foreign institutions.13 A swap protected foreign central banks from the exchange rate risk when they had obtained excess and unwanted dollar positions. It allowed them to dispense with the temporary conversion of dollars into gold. Between 1973 and 1980, the swap lines were used instead of US currency reserves to finance interventions by the Fed in the foreign exchange market. Gains and losses were shared with the other central bank when the Fed drew on a line. However, the G10 central banks could try to use the swap arrangements to influence the US foreign currency market interventions, so the Fed stopped using them in the mid-1980s. All existing swap lines except those with Canada and Mexico were ended in 1998. After the terror attacks of September 11, 2001, the Fed established swap lines with the European Central Bank and the Bank of England for 30 days and expanded the existing line with the Bank of Canada. Currency swaps were used here for the first time to restore liquidity in financial markets. During the global financial crisis, the Fed then financed the lender-of-last-resort actions of other central banks in industrialised and emerging market economies, with the latter assuming the credit risk. The international reserves of many central banks at the start of the crisis were smaller than the amounts they borrowed under the swap lines. In 2013 the swap arrangements between the six most important central banks were converted into standing arrangements. All these swap arrangements have one thing in common: they signal the central banks’ willingness to cooperate with each other, whether it be in defence of the parities under the Bretton Woods system, to avert speculative attacks on the Fed, or with the aim of providing dollar liquidity during the financial crisis. China has also set up a far-reaching system of swap arrangements, mainly with the aim of pushing ahead with the internationalisation of the renminbi. But from the perspective of these central banks, the agreements with the Bank of England, the Monetary Authority of Singapore, the Reserve Bank of Australia and the ECB also serve the goal of being able to provide renminbi liquidity in their area of responsibility when needed Swaps represent a powerful and flexible tool of central banks that issue reserve currencies to regulate international capital flows. Central banks are the only institutions capable of changing their balance sheets quickly enough to keep pace with the volatility of international capital flows. Swaps are unsuitable, however, for longer-lasting crises, sovereign debt crises and to finance balance of payments imbalances. That is why they would be the most suitable tool for emerging market economies, as they are more likely to face abrupt changes in capital flows. Nevertheless, so far only the most important central banks that issue reserve currencies have been able to access unlimited swaps. Granting them is determined by the mandate of the central banks and they represent contractual, not institutional agreements. Accordingly, the central banks are able to choose their contractual partners, and there is no central independent authority to supervise swap arrangements. The swap arrangements for central banks in industrial countries that do not issue a reserve currency can therefore be expected to be reinstated in the event of a global shock, while they are less likely to be employed in case of a regional shock. Their use is even less predictable for systemic emerging market economies.

 

Growth of Global Financial Safety Net

rr6

 

Features of Instruments in the Global Financial Safety net

 

rr9

 

Use of GFSN in various shock Scenarios

  • Balance of Payment shock
  • Banking Sector FX Liquidity shock
  • Sovereign Debt shock

 

rr10

US Dollar Swap Lines

These six central banks have permanent US Dollar swap lines since 2013.

  • USA (Fed Reserve),
  • Canada (BoC),
  • Japan (BoJ),
  • Switzerland (SNB),
  • EU (ECB),
  • UK(BOE)

 

During the global financial crisis, the Federal Reserve extended swap arrangements to 14 other central banks. The ECB drew very heavily, followed by the BoJ. At one point during the crisis in 2009, outstanding swaps amounted to more than $580 billion and represented about one-quarter of the Fed’s balance sheet. The novel element of this effort was the extension of swaps to four countries outside the usual set of advanced-country central banks: Mexico, Brazil, South Korea and Singapore.16 Mexico previously had a standing swap facility with the Federal Reserve by virtue of geographic proximity and the North American Free Trade Agreement, but the new arrangement expanded the amount that Mexico’s central bank could draw and the Fed’s swaps with Brazil, South Korea and Singapore broke new ground. The swaps in general were credited with preventing a more serious seizing up of interbank lending and financial markets during 2008 to 2009 (Helleiner 2014, 38–45; Prasad 2014, 202–11; IMF 2013a; 2014a, Box 2). The Federal Reserve board of governors considered the “boundary” question at length, torn between opening itself up to additional demands for coverage from emerging markets and creating stigma against those left outside the safety net. Fed officials used economic size and connections to international financial markets as the main criteria for selecting Brazil, Mexico, Singapore and South Korea. Chile, Peru, Indonesia, India, Iceland and likely others also requested swaps but were denied. The governors wanted to deflect requests by additional countries to the IMF, which coordinated its announcement of the SLF with the Fed’s announcement of the additional swaps at the end of October 2008. Governors and staff saw in this tiering a natural division of labour that coincided with the resources and analytical capacity of the Fed and IMF.17 The ECB extended swaps to Hungary, Poland, Sweden, Switzerland and Denmark, in addition to its arrangement with the United States. The BoJ extended swaps as well, notably to South Korea after the Federal Reserve announced its Korean swap. The PBoC began to conclude a set of swap agreements with Asian and non-Asian central banks that would eventually number more than 20 and amount to RMB 2.57 trillion. Only those swaps with the central banks of Hong Kong, Singapore and South Korea are known to have been activated (Zhang 2015, 5). Boosting the role of the renminbi in international trade was the express objective of these swaps, although their establishment also helped to secure market confidence during unsettled times. The proliferation of swaps resulted in a set of star-shaped networks of agreements among central banks that were linked by Fed liquidity (Allen and Moessner 2010). Although a number of the swaps in the network were activated, only those swaps of the Federal Reserve were heavily used during the crisis. The “fortunate four” emerging market countries among the Fed 14 were each covered for amounts up to $30 billion, but only temporarily. When the Fed later declined to renew the swaps,  these countries became as vulnerable to liquidity shortfalls as the others. So, when South Korea took the chair of the G20 in 2010, its government proposed that the central bank swaps be multilateralized on a more permanent basis. It argued this would be increasingly necessary to stabilize the global financial system and would be in the interest of swap providers and recipients alike. Specifically, during the preparations for the G20 summit, South Korean officials proposed that the advanced-country central banks provide swaps to the IMF, which would conduct due diligence and provide liquidity to qualifying central banks. In this way, the global community could mobilize enough resources to address even a massive liquidity crunch and central banks would avoid credit risk.

In late 2013, six key-currency central banks made their temporary swap arrangements permanent standing facilities. Each central bank entered into a bilateral arrangement with the five others, comprising a network of 30 such agreements.18 But they prefer to maintain a constructive ambiguity with respect to whether they would re-extend swap arrangements to the other central banks that were covered during the global financial crisis, including Brazil, Mexico,19 South Korea and Singapore (Papadia 2013).

 

rr11

During the global financial crisis of 2008-2009, Federal Reserve extended USD swap lines to several central banks.  The financial institutions in these countries faced USD shortages as the normal channels of money markets froze during crisis.

 

US Dollar Swap amounts extended during 2008-2009 Global Financial Crisis

rr8

 

China RMB Swap Lines

During the 2007-8 global financial crisis, the international monetary system experienced an acute US dollar shortage that severely curtailed global trade and pressured international banking business (McCauley and McGuire, 2009; McGuire and von Peter, 2009). The US authorities, in response to the elevated strain in the global market, have arranged dollar swap lines with major central banks to mitigate the global dollar squeeze (Aizenman and Pasricha, 2010; Aizenman, Jinjarak and Park, 2011). On Thursday, October 31, 2013, the network of central banks comprises the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank agreed to convert their bilateral liquidity swap arrangements to standing arrangements until further notice.1 The dollar squeeze critically illustrated the danger of operating a US-centric global financial system. Against this backdrop, China has actively implemented measures of promoting the cross-border use of the Chinese currency, the renminbi (RMB), to reduce its reliance on the US dollar. The aggressive policy move was considered a clear signal of China’s efforts to internationalize RMB (Chen and Cheung, 2011; Cheung, Ma and McCauley, 2011). In 2009, China launched the scheme of cross-border trade settlement in RMB to encourage the denomination and settlement of international trade in its own currencies. One practical issue of settling trade in RMB is the limited availability of the currency outside China. China at that time had strict regulations on circulating the RMB across its border. To facilitate its RMB trade settlement initiative, China signed its first bilateral RMB local currency swap agreement with the Bank of Korea in December 2008, and the second one with Hong Kong in January 2009. Since then, China has signed various swap agreements with economies around the world.2

 

crossbor7

 

rr2

 

 

BRICS CRA

The 5th and 6th BRICS summits in 2013–2014 marked a watershed in the evolution of the BRICS group with the establishment of the first BRICS institutions. These included the BRICS New Development Bank, the CRA, the BRICS Business Council and the Think Tanks Council. Although this has weakened the ‘political talk shop’ perception of the group, critics have questioned whether these institutions will have a substantive effect. In particular, doubts have been cast upon the effectiveness of the CRA.

The CRA is modest in size in comparison to the IMF and other similar arrangements such as the Chiang Mai Initiative Multilateralization (CMIM). At this stage the BRICS countries have committed $100 billion to the CRA, with China committing $41 billion, Russia, Brazil and India $18 billion each and South Africa $5 billion. The CMIM reportedly has a reserve pool of $240 billion and the IMF resources of $780 billion. It has been noted that with BRICS’s foreign reserves standing at about $5 trillion, a commitment of 16% would take the CRA pool to $800 billion.

 

From GLOBAL AND REGIONAL FINANCIAL SAFETY NETS: LESSONS FROM EUROPE AND ASIA

ASEAN +3 CMIM

ASEAN + Japan Korea China

The embryo of an Asian regional safety net arrangement has existed since 1977, when the five founding members of the ASEAN signed the ASEAN Swap Arrangement (ASA)5. Following the Asian crisis and after aborted discussion on the creation of an Asian Monetary Fund, Japan launched the New Miyazawa Initiative in October 1998 amounting to about $35 billion, which was targeted at stabilising the foreign exchange markets of Indonesia, the Republic of Korea, Malaysia, the Philippines, and Thailand6. The initiative was particularly valuable in containing instability in Malaysia’s financial sector, since that country had refused an IMF Stand-By Arrangement. The Japanese manoeuvre was deemed somewhat mutinous, since the IMF was very critical of Malaysia’s approach. But it also cemented the idea that Asia could gather enough resources to sandbag itself during a crisis period so long as Asian countries were united and managed to roll out timely and credible support mechanisms. In Asian countries under IMF programmes, the conditionality associated with the loans included severe fiscal cuts, deep structural reforms, and substantial increases in interest rates to stabilise currency markets. The economic and social cost of the adjustment was so high and abrupt that it provoked social unrest in a number of countries. This would reverberate strongly in the months that followed and leave a lasting scar in relations between Asian countries and the IMF7. This experience fuelled both a willingness to self-insure through accelerated reserve accumulation and to strengthen regional arrangements to reduce the reliance on global financial safety nets. Building on this lesson, the CMI was formalised in May 2000 during the ASEAN+3 Finance Ministers Meeting8. It largely built on the original ASA and bilateral swap agreements involving the PRC, Japan, and the Republic of Korea but was grounded in a broader programme that also included developing Asia’s local currency bond market and introduced a regional economic review and policy dialogue to enhance the region’s surveillance mechanism (Kawai and Houser 2007). The initiative included the new ASEAN members, increasing the total number of parties to the arrangement from 5 to 10. Table A.1 in the appendix highlights the evolution of the CMI. The question of cooperation between the CMI and the IMF quickly became quite heated, with a number of countries arguing that strong ties to the Fund would defeat the initial purpose of the initiative (Korea Institute of Finance, 2012), but the ties were kept nonetheless both to mitigate moral hazard (Sussangkarn, 2011) and to ensure some consistency with conditionality attached to the IMF’s own programmes. After the formal creation of the CMI in 2000, the era of Great Moderation that followed to some degree doused further ambitions to strengthen regional arrangements. As a result, when the global financial crisis hit in 2008, the Asian regional financial safety net proved too modest to play a meaningful role.

Indeed, instead of seeking support under CMI, the Bank of Korea and the Monetary Authority of Singapore sought a swap agreement with the US Federal Reserve for some $30 billion each. The Republic of Korea concluded bilateral agreements with Japan and the PRC that were not related to the CMI. Similarly, Indonesia established separate bilateral swap lines with Japan and the PRC to shore up its crisis buffer and did not resort to the CMI for credit support (Sussangkarn, 2011). The plan to consolidate the bilateral swap arrangements and form a single, more solid, and effective reserve pooling mechanism – which had initially been put forward by the finance ministers of the ASEAN+3 in May 2007 in Kyoto – was accelerated and evolved in several iterations before the final version was laid out more than two years later. In December 2009, the CMI was multilateralised and the ASEAN+3 representatives signed the Chiang Mai Initiative Multilateralisation (CMIM) Agreement, which effectively became binding on March 24, 2010 (BSP, 2012). These successive transformations have strengthened the initiative, but it remains largely untested. In addition, other aspects of any credible regional financial arrangement, such as surveillance capacity and coordination of some basic economic policies, remain relatively embryonic.

 

 

From GLOBAL AND REGIONAL FINANCIAL SAFETY NETS: LESSONS FROM EUROPE AND ASIA

 

EU ESM

The history of European financial safety nets cannot be dissociated from the history of European monetary integration. With this perspective in mind, it dates back to the late 1960s and has been an ongoing debate to this day. The history of European political integration at every turn is marked by failed projects or actual mechanisms of financial solidarity, ranging from loose exchange rate arrangements to the project of a full-fledged European Monetary Fund. The advent of the monetary union was precisely designed to reduce the need for financial safety nets within the euro area. But the architectural deficiencies of the euro area and the lack of internal transfers have required the establishment of alternative mutual insurance mechanisms since the onset of the euro crisis in 2010. In 2008, when the global financial crisis hit, Hungary had accumulated important external imbalances and large foreign exchange exposures. It had to seek financial assistance almost immediately and initiated contacts with the IMF. The total absence of coordination with European authorities came as an initial shock because it showed that despite decades of intense economic, political, and monetary integration, EU countries could still come to require international financial assistance. The experience pushed European institutions to unearth a forgotten provision of the Maastricht Treaty to provide financial assistance through the Balance of Payments Assistance Facility9. This created preliminary and at first ad-hoc coordination between the IMF and the European Commission, which was then rediscovering design and monitoring of macroeconomic adjustment programmes. Despite the rapid use of this facility and the emergence of a framework of cooperation with the IMF, contagion from the global financial crisis continued for months and prompted some Eastern European leaders to seek broader and more pre-emptive support10, which failed. However, beyond official sector participation, there was a relatively rapid realisation that cross-border banking and financial retrenchment could become a major source of financial disruption and effectively propagate the crisis further – including back to the core of Europe, as large European banks were heavily exposed to Eastern Europe through vast and dense networks of branches and subsidiaries. In response, in late February 2009, under the leadership of the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank decided to establish what was known as the Vienna Initiative. This was designed as a joint multilateral and private sector coordination and enforcement mechanism to reduce the risk of banking sector sudden stops. In particular, it compelled cross-border European banks to continue to provide appropriate liquidity to their branches and subsidiaries in Central and Eastern Europe. The formalisation of such an arrangement11 quite early in the crisis has certainly proven the case for coordination of financial institutions in emerging-market economies, especially when a relatively small number of institutions have a disproportionate impact on capital flows. But with the crisis spreading to the euro area, starting with Greece in the fall of 2010, new regional arrangements proved necessary. The lack of instruments forced European officials to first consider bilateral assistance from member states. The idea of involving the IMF was initially violently rejected 9 on intellectual and political grounds12 but proved inevitable. In a number of successive iterations, more solid regional arrangements were designed (Bijlsma and Vallée 2012). Table A.2 in the appendix shows the evolution of European regional financial safety nets.

 

List of Regional Financial Agreements (RFA)

rr5

 

rr

 

rr7

rr14

 

Key Terms:

  • RMB
  • Bilateral Currency Swaps
  • Reserve Pooling
  • CMI
  • CMIM
  • BRICS CRA
  • AMRO
  • IMF SDR Basket
  • Currency Internationalization
  • Global Liquidity
  • Funding Liquidity
  • Market Liquidity
  • BRICS NDB
  • CHINA AIIB
  • Regional Integration
  • Multilateralism
  • Multipolar
  • FX Swap Networks
  • Central Banks
  • Reserve Currency
  • Global Financial Safety Nets (GFSN)
  • Foreign Exchange Reserves
  • Regional Financial Agreements (RFA)
  • Regional Financial Networks (RFN)
  • Bilateral Currency Swap Agreement (BSA)
  • RMB (Renminbi also known as Yuan)
  • International Lender of Last Resort (ILOLR)
  • Regional Financial Safety Net (RFSN)
  • Multilateral Financial Safety Net (MFSN)
  • National Financial Safety Net (NFSN)

 

Key Sources of Research:

 

Self-Insurance, Reserve Pooling Arrangements, and Pre-emptive Financing

Sunil Sharma

 

https://www.imf.org/external/np/seminars/eng/2006/cpem/pdf/sharma.pdf

 

 

Regional Reserve Pooling Arrangements

Suman S. Basu Ran Bi

Prakash Kannan

First Draft: 8 February, 2010 This Draft: 7 June, 2010

 

http://www.frbsf.org/economic-research/files/Prakash.pdf

 

 

Toward a functional Chiang Mai Initiative

15 May 2012

Author: Chalongphob Sussangkarn, TDRI

http://www.eastasiaforum.org/2012/05/15/toward-a-functional-chiang-mai-initiative/

 

 

The International Financial Architecture and the Role of Regional Funds

Barry Eichengreen

University of California, Berkeley

August 2010

 

http://eml.berkeley.edu/~eichengr/intl_finan_arch_2010.pdf

 

 

Examining the case for Reserve Pooling in East Asia: Empirical Analysis

Ramkishen S. Rajan, Reza Siregar and Graham Bird

2003

 

https://www.adelaide.edu.au/cies/documents/papers/0323.pdf

 

 

Financial Architectures and Development: Resilience, Policy Space and Human Development in the Global South

by Ilene Grabel

2013

 

http://hdr.undp.org/sites/default/files/hdro_1307_grabel.pdf

 

 

International reserves and swap lines: substitutes or complements?

Joshua Aizenman,
Yothin Jinjarak, and Donghyun Park,

March 2010

 

http://economics.ucsc.edu/research/downloads/ajp-ir-sw-0301.pdf

 

 

How can we fix the global financial safety net?

WEF

https://www.weforum.org/agenda/2015/10/how-can-we-fix-the-global-financial-safety-net/

 

 

Regional Monetary Cooperation: Lessons from the Euro Crisis for Developing Areas?

Sebastian Dullien

Barbara Fritz

Laurissa Mühlich

 

http://wer.worldeconomicsassociation.org/files/WEA-WER2-Dullien.pdf

 

 

The Global Dollar System

Stephen G Cecchetti

 

http://people.brandeis.edu/~cecchett/Polpdf/Polp61.pdf

 

 

The Future of the IMF and of Regional Cooperation in East Asia

Yung Chul Park, Charles Wyplosz

2008

 

http://www.nomurafoundation.or.jp/en/wordpress/wp-content/uploads/2014/09/20081111-12_Y-C_Park-C_Wyplosz.pdf

 

 

China’s Bilateral Currency Swap Agreements: Recent Trends

Aravind Yelery

 

http://journals.sagepub.com/doi/pdf/10.1177/0009445515627210

 

 

The Spread of Chinese Swaps

CFR

 

https://www.cfr.org/international-finance/central-bank-currency-swaps-since-financial-crisis/p36419#!/

 

 

Chiang Mai Initiative Multilateralization

http://www.bsp.gov.ph/downloads/Publications/FAQs/CMIM.pdf

 

 

The Chiang Mai Initiative

https://piie.com/publications/chapters_preview/345/3iie3381.pdf

 

 

Beyond the Chiang Mai Initiative: Prospects for Regional Financial and Monetary Integration in East Asia

 

https://www.g24.org/wp-content/uploads/2016/01/Session-2_1-4.pdf

 

 

Currency internationalisation: an overview

 

Peter B Kenen

 

http://www.bis.org/repofficepubl/arpresearch200903.01.pdf

 

 

 

Why Was the CMI Possible?

Embedded Domestic Preferences and Internationally Nested Constraints in Regional Institution Building in East Asia

Saori N. Katada

 

http://web.isanet.org/Web/Conferences/FLACSO-ISA%20BuenosAires%202014/Archive/1f1966fe-1c48-4d32-a463-ea268ecb2903.pdf

 

 

Emergent International Liquidity Agreements: Central Bank Cooperation after the Global Financial Crisis

Daniel McDowell

 

http://faculty.maxwell.syr.edu/dmcdowel/mcdowell_eln.pdf

 

 

Regional Financial Cooperation in Asia

Daikichi Momma

 

https://www.imf.org/external/np/seminars/eng/2013/PIC/pdf/Session_2_Momma.pdf

 

 

East Asian Economic Cooperation and Integration: Japan’s Perspective

Takatoshi Ito

 

https://www8.gsb.columbia.edu/apec/sites/apec/files/files/discussion/41RegionalCoop.pdf

 

 

What Motivates Regional Financial Cooperation in East Asia Today?

JENNIFER AMYX

 

http://www.eastwestcenter.org/system/tdf/private/api076.pdf?file=1&type=node&id=32049

 

 

Evaluating Asian Swap Arrangements

Joshua Aizenman, Yothin Jinjarak, and Donghyun Park

No. 297 July 2011

 

https://www.adb.org/sites/default/files/publication/156152/adbi-wp297.pdf

 

 

Regional Monetary Cooperation in East Asia Should the United States Be Concerned?

Wen Jin Yuan Melissa Murphy

 

https://csis-prod.s3.amazonaws.com/s3fs-public/legacy_files/files/publication/101129_Yuan_RegionalCoop_WEB.pdf

 

 

Chiang Mai Initiative as the Foundation of Financial Stability in East Asia

http://www.asean.org/uploads/2012/10/17902.pdf

 

 

COMPLEX DECISION IN THE ESTABLISHMENT OF ASIAN REGIONAL FINANCIAL ARRANGEMENT

Iwan J Azis

 

http://www.isahp.org/2003Proceedings/paper/p02.pdf

 

 

Chiang Mai Initiative Multilateralization

December 2013

 

http://www.obela.org/system/files/ChiangMaiInitiative_0.pdf

 

 

 

RMBI or RMBR?
Is the Renminbi Destined to Become a Global or Regional Currency?

Barry Eichengreen

Domenico Lombardi

 

http://clausen.berkeley.edu/assets/clausen_open_pages/3/RMBI_or_RMBR_-_Eichengreen.pdf

 

 

 

Monetary and financial cooperation in Asia: taking stock of recent ongoings

Ramkishen S. Rajan

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.473.361&rep=rep1&type=pdf

 

 

FINANCIAL CRISES AND EAST ASIA’S FINANCIAL COOPERATION

 

By Park Young-joon

 

http://keia.org/sites/default/files/publications/ParkYJ.pdf

 

 

MONETARY INTEGRATION IN EAST ASIA

Peter B. Kenen
Ellen E. Meade

 

http://www.frbsf.org/economic-research/files/Kenen.pdf

 

 

Regional cooperation for financial and exchange rates stability in East Asia

 

Kenichi Shimizu

https://www.swp-berlin.org/fileadmin/contents/products/arbeitspapiere/WP_FG7_2013_01_Dezember_Kenichi_Shimizu.pdf

 

 

ASIAN FINANCIAL CO-OPERATION

Address by Mr GR Stevens

 

https://www.rba.gov.au/publications/bulletin/2005/nov/pdf/bu-1105-3.pdf

 

 

The Rise of China and Regional Integration in East Asia

 

https://www.researchgate.net/publication/290788291_The_Rise_of_China_and_Regional_Integration_in_East_Asia

 

 

REGIONAL FINANCIAL COOPERATION IN EAST ASIA: THE CHIANG MAI INITIATIVE AND BEYOND

 

http://www.unescap.org/sites/default/files/Bulletin02-ch8.pdf

 

 

Financial RegionaliSm: a Review oF the iSSueS

Domenico lombaRDi

2010

 

https://www.brookings.edu/wp-content/uploads/2016/06/11_global_economy_lombardi.pdf

 

 

The layers of the global financial safety net: taking stock

2016

 

https://www.ecb.europa.eu/pub/pdf/other/eb201605_article01.en.pdf

 

 

Regional Financial Arrangements for East Asia: A Different Agenda from Latin America

By Yung Chul Park

 

http://www19.iadb.org/intal/intalcdi/PE/2007/00510.pdf

 

 

Elasticity and Discipline in the Global Swap Network

Perry Mehrling

Working Paper No. 27 November 12, 2015

 

https://www.ineteconomics.org/uploads/papers/WP27-Mehrling.pdf

 

 

 Swap Agreements & China’s RMB Currency Network

https://www.cogitasia.com/swap-agreements-chinas-rmb-currency-network/

 

 

Central Bank Currency Swaps and the International Monetary System

Christophe Destais

 

http://www.obela.org/system/files/CentralBankCurrencySwap_ChristopheDestais.pdf

 

 

Renminbi internationalisation – The pace quickens

https://www.sc.com/en/resources/global-en/pdf/Research/2015/Renminbi-internationalisation-The-pace-quickens.pdf

 

 

What Will China’s RMB Bilateral Currency Swap Deals Lead To?

 

https://www.chinamoneynetwork.com/2013/11/08/what-will-chinas-rmb-bilateral-currency-swap-deals-lead-to

 

 

Emergent International Liquidity Agreements: Central Bank Cooperation after the Global Financial Crisis

Daniel McDowell

 

http://faculty.maxwell.syr.edu/dmcdowel/mcdowell_eln.pdf

 

 

Currency Swap of Central Bank: Influence on International Currency System

 

http://www.sdrf.org.cn/upfile/2016/03/16/20160316142214_202.pdf

 

 

Building Global and Regional Financial Safety Nets

February 2016

Yung Chul Park

 

http://www.reinventingbrettonwoods.org/sites/default/files/35E%20Yung%20Chul%20Park£∫Building%20Global%20and%20Regional%20Financial%20Safety%20Nets%20%20Final.pdf

 

 

RMBI or RMBR?

Is the Renminbi Destined to Become a Global or Regional Currency?

Barry Eichengreen

Domenico Lombardi

 

http://clausen.berkeley.edu/assets/clausen_open_pages/3/RMBI_or_RMBR_-_Eichengreen.pdf

 

 

China’s Bilateral Currency Swap Lines

Yin-Wong Cheung, Hung Hing Ying  LIN Zhitao

ZHAN Wenjie

2016

 

https://www.cb.cityu.edu.hk/ef/doc/GRU/WPS/GRU%232016-013%20_YW.pdf

 

 

Internationalisation of the Chinese Currency: Towards a Multipolar International Monetary System?

Lucia Országhová

 

http://www.nbs.sk/_img/Documents/_PUBLIK_NBS_FSR/Biatec/Rok2016/01-2016/biatec_01_2016_orszaghova.pdf

 

 

Central bank: China currency swap deals surpass 3t yuan

http://english.gov.cn/state_council/ministries/2015/06/11/content_281475125318660.htm

 

 

The International Lender of Last Resort for Emerging Countries: A Bilateral Currency Swap?

Camila Villard Duran

http://www.geg.ox.ac.uk/sites/geg/files/documents/WP_108%20-%20The%20International%20Lender%20of%20Last%20Resort%20for%20Emerging%20Countries%20-%20Camila%20Duran.pdf

 

http://www.modernmoneynetwork.org/sites/default/files/biblio/Duran%20-%20The%20International%20Lender%20of%20Last%20Resort%20for%20Emerging%20Countries.pdf

 

 

Entry of yuan into SDR may give a boost to global liquidity

http://www.marketwatch.com/story/entry-of-yuan-into-sdr-may-give-a-boost-to-global-liquidity-2016-10-17

 

 

Redback Rising: China’s Bilateral Swap Agreements and RMB Internationalization

Steven Liao
Daniel E. McDowell

 

http://www.stevenliao.org/uploads/2/5/6/9/25699716/yuan_isq.pdf

 

 

International reserves and swap lines: substitutes or complements? 

Joshua Aizenman
Yothin Jinjarak,  Donghyun Park

March 2010

 

http://economics.ucsc.edu/research/downloads/ajp-ir-sw-0301.pdf

 

 

The Asian Monetary Fund Reborn? Implications of Chiang Mai Initiative Multilateralization

William W. Grimes

2011

 

https://www.bc.edu/content/dam/files/schools/cas_sites/economics/pdf/Seminars/SemS2011/Grimes.pdf

 

 

Avoiding the next liquidity crunch: how the G20 must support monetary cooperation to increase resilience to crisis

Camila Villard Duran

 

http://www.geg.ox.ac.uk/sites/geg/files/GEG%20Villard%20Duran%20October%202015.pdf

 

Stitching together the global financial safety net

Edd Denbee, Carsten Jung and Francesco Paternò

2016

 

http://www.bankofengland.co.uk/financialstability/Documents/fpc/fspapers/fs_paper36.pdf

 

 

Why Are There Large Foreign Exchange Reserves?  The Case of South Korea

Franklin Allen

Joo Yun Hong

 

http://www.kossrec.org/wp-content/uploads/2015/04/01_KSSJ_11-02-03.pdf

 

 

Federal Reserve Policy in an International Context

Ben S. Bernanke

 

http://www.imf.org/external/np/res/seminars/2015/arc/pdf/Bernanke.pdf

 

 

The dollar’s international role: An “exorbitant privilege”?

Ben S. Bernanke

Thursday, January 7, 2016

https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-dollars-international-role-an-exorbitant-privilege-2/

 

 

TRADE AND DEVELOPMENT REPORT, 2015

Making the international financial architecture work for development

 

http://unctad.org/en/PublicationChapters/tdr2015ch3_en.pdf

 

 

Global Economic Governance in Asia: Through the Looking Glass of the European Sovereign Debt Crisis

China in Global Financial Governance: Implications from Regional Leadership Challenge in East Asia

Takashi Terada

 

https://lkyspp.nus.edu.sg/cag/wp-content/uploads/sites/5/2013/07/China-in-Global-Financial-Governance-Implications-from-Regional-Leadership-Challenge-in-East-Asia-by-Takashi-Terada.pdf

 

 

Central Bank Currency Swaps Key to International Monetary System

http://andrewsheng.net/Article_Central_bank_currency_swaps_key_to_IMS.html

 

 

The Federal Reserve’s Foreign Exchange Swap Lines

Michael J. Fleming and Nicholas J. Klagge

 

https://www.newyorkfed.org/medialibrary/media/research/current_issues/ci16-4.pdf

 

 

Central Bank Liquidity Swaps

https://www.newyorkfed.org/markets/liquidity_swap.html

 

 

Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs

Linda S. Goldberg, Craig Kennedy, and Jason Miu

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.422.11&rep=rep1&type=pdf

 

 

eXperience With foreign currency liquidity-providing centrAl bAnK sWAps

 

https://www.ecb.europa.eu/pub/pdf/other/art1_mb201408_pp65-82en.pdf

 

 

Banking on China through Currency Swap Agreements

October 23, 2015

By Cindy Li

http://www.frbsf.org/banking/asia-program/pacific-exchange-blog/banking-on-china-renminbi-currency-swap-agreements/

 

 

TESTING THE GLOBAL CENTRAL BANK SWAP NETWORK

http://www.perrymehrling.com/2015/07/testing-the-global-central-bank-swap-network/

 

 

The impact of international swap lines on stock returns of banks in emerging markets

Alin Marius Andries1 Andreas M. Fischer2 Pınar Ye ̧sin

June 2015

 

http://www.snb.ch/n/mmr/reference/sem_2015_07_09_Andries_Fischer_Yesin/source/sem_2015_07_09_Andries_Fischer_Yesin.n.pdf

 

 

Why Did the US Federal Reserve Unprecedentedly Offer Swap Lines to Emerging Market Economies during the Global Financial Crisis? Can We Expect Them Again in the Future?

Hyoung-kyu Chey

 

http://www.grips.ac.jp/r-center/wp-content/uploads/11-18.pdf

 

 

International reserves and swap lines: substitutes or complements? 

Joshua Aizenman,
Yothin Jinjarak,  Donghyun Park

July 2010

 

https://pdfs.semanticscholar.org/3145/037b0b0312cfb51cee7dffd5c3399332a669.pdf

 

 

Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs

Linda S. Goldberg Craig Kennedy Jason Miu

 

https://pdfs.semanticscholar.org/4cbb/9a564d30e508dcd3799ceb7a99b5e2c2e273.pdf

 

 

Central Bank Liquidity Swaps

https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2011-economic-trends/et-20111219-central-bank-liquidity-swaps.aspx

 

 

Central bank currency swaps key to international monetary system

April 2014

Author: Andrew Sheng, Fung Global Institute

http://www.eastasiaforum.org/2014/04/01/central-bank-currency-swaps-key-to-international-monetary-system/

 

 

Evaluating Asian Swap Arrangements

Joshua Aizenman, Yothin Jinjarak, and Donghyun Park

No. 297 July 2011

 

https://www.adb.org/sites/default/files/publication/156152/adbi-wp297.pdf

 

 

Central Bank Liquidity Swaps Overview

Yubo Wang

February 15, 2010

 

http://www.centerforfinancialstability.org/research/Central_Bank_Liquidity_Swaps_201002.pdf

 

 

The implications of cross-border banking and foreign currency swap lines for the international monetary system

 

Már Guðmundsson:

https://www.imf.org/external/np/seminars/eng/2011/res/pdf/MGpresentation.pdf

 

 

The Politics of Rescuing the World’s Financial System: The Federal Reserve as a Global Lender of Last Resort

J. Lawrence Broz

 

2014

http://robobees.seas.harvard.edu/files/pegroup/files/broz2014.pdf

 

 

From Exorbitant Privilege to Existential Trilemma

 

https://doc.research-and-analytics.csfb.com/docView?language=ENG&format=PDF&sourceid=em&document_id=1067001821&serialid=FdgDLSRBS51YJLr69%2BcO6H1iGqGyLNuzqEDE5DwoUt8%3D

 

 

The dollar is now everyone’s problem

September 29, 2014

http://www.moneyandbanking.com/commentary/2014/9/29/the-dollar-is-now-everyones-problem

 

 

The Global Dollar System

Stephen G Cecchetti

 

http://people.brandeis.edu/~cecchett/Polpdf/Polp61.pdf

 

 

Central Bank Swaps and International Dollar Illiquidity

Andrew K. Rose Mark M. Spiegel∗

March 14, 2012

 

http://faculty.haas.berkeley.edu/arose/RSGJE.pdf

 

 

DOLLAR FUNDING AND THE LENDING BEHAVIOR OF GLOBAL BANKS

VICTORIA IVASHINA DAVID S. SCHARFSTEIN JEREMY C. STEIN

First draft: October 2012 This draft: March 2015

 

http://www.hbs.edu/faculty/Publication%20Files/ISS%20revision%20march%202015%20FINAL_7529aa88-fe19-4fd1-8427-43b83c5d8589.pdf

 

 

THE INTERNATIONALIZATION OF THE RENMINBI AND THE RISE OF A MULTIPOLAR CURRENCY SYSTEM

By Miriam Campanella

 

http://www.ecipe.org/app/uploads/2014/12/WP201201_1.pdf

 

 

Dollar Illiquidity and Central Bank Swap Arrangements During the Global Financial Crisis

Andrew K. Rose Mark M. Spiegel

August 2011

 

http://www.frbsf.org/economic-research/files/wp11-18bk.pdf

 

 

Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs

Linda S. Goldberg, Craig Kennedy, Jason Miu

http://www.nber.org/papers/w15763.pdf

 

 

US Dollar Swap Arrangements between Central Banks

 

https://www.rba.gov.au/publications/smp/2008/nov/pdf/box-b.pdf

 

 

Currency Swaps with Foreign Central Banks

 

BY RENEE COURTOIS

 

https://www.richmondfed.org/-/media/richmondfedorg/publications/research/region_focus/2010/q2/pdf/policy_update.pdf

 

 

Central Banks Make Swaps Permanent as Crisis Backstop

Jeff Black

October 31, 2013

https://www.bloomberg.com/news/articles/2013-10-31/ecb-makes-crisis-cash-lines-at-central-banks-permanent

 

 

Swap Lines Underscore the Dollar’s Global Role

 

https://www.frbatlanta.org/-/media/documents/regional-economy/econsouth/12q1currencyswaps.pdf

 

 

Central bank co-operation and international liquidity in the financial crisis of 2008-9

by William A Allen and Richhild Moessner

Monetary and Economic Department

May 2010

 

http://www.bis.org/publ/work310.pdf

 

 

Financial instability, Reserves, and Central Bank Swap Lines in the Panic of 2008

Maurice Obstfeld Jay C. Shambaugh  Alan M. Taylor

 

http://www.dartmouth.edu/~jshambau/Papers/ObstfeldShambaughTaylorAEAPP.pdf

 

 

The Federal Reserve as Global Lender of Last Resort, 2007-2010

 

J. Lawrence Broz

 

http://ucrpoliticaleconomy.ucr.edu/wp-content/uploads/2013/09/Broz_Fed.pdf

 

 

Lenders of Last Resort and Global Liquidity

Rethinking the system

 

http://siteresources.worldbank.org/WBI/Resources/213798-1259968479602/outreach_obstfeld_dec09.pdf

 

 

The Fed’s FX swap facilities have been quiet… too quiet?

https://ftalphaville.ft.com/2016/07/13/2169137/the-feds-fx-swap-facilities-have-been-quiet-too-quiet/

 

 

Swap Lines Underscore the Dollar’s Global Role

 

https://frbatlanta.org/-/media/documents/regional-economy/econsouth/12q1currencyswaps.pdf

 

 

THE EVOLUTION OF THE FEDERAL RESERVE SWAP LINES SINCE 1962

Michael D. Bordo Owen F. Humpage Anna J. Schwartz

2014

 

http://www.nber.org/papers/w20755.pdf

 

 

How China Covered The World In “Liquidity Swap Lines”

http://www.zerohedge.com/news/2015-05-17/how-china-covered-world-liquidity-swap-lines

 

 

The Federal Reserve’s Foreign Exchange Swap Lines

Michael J. Fleming  Nicholas Klagge

April 1, 2010

https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=1597320

 

 

The Federal Reserve as Global Lender of Last Resort, 2007-2010

 

J. Lawrence Broz

 

http://eprints.lse.ac.uk/60951/1/dp-30.pdf

 

 

The Fed’s Role in International Crises

Donald Kohn

Thursday, September 18, 2014

https://www.brookings.edu/on-the-record/the-feds-role-in-international-crises/

 

 

Options for meeting the demand for international liquidity during financial crises

 

http://www.bis.org/publ/qtrpdf/r_qt1009g.pdf

 

 

The Chiang Mai Initiative Multilateralization: Origin, Development and Outlook

Chalongphob Sussangkarn

No. 230 July 2010

 

https://www.adb.org/sites/default/files/publication/156085/adbi-wp230.pdf

 

 

The Amended Chiang Mai Initiative Multilateralisation (CMIM) Comes Into Effect on July 17, 2014

 

https://www.boj.or.jp/en/announcements/release_2014/rel140717a.pdf

 

 

Note on Chiang Mai Initiative Multilateralization (CMIM)* 

Chalongphob Sussangkarn

 

http://policydialogue.org/files/events/Chalongphabs_Note.pdf

 

 

SOURCES AND EVOLUTION OF THE CHIANG MAI INITIATIVE

 

Vyacheslav Amirov

https://interaffairs.ru/i/pdf_asean/7.pdf

 

 

The Chiang Mai Initiative

PIIE

https://piie.com/publications/chapters_preview/345/3iie3381.pdf

 

 

Why Was the CMI Possible?

Embedded Domestic Preferences and Internationally Nested Constraints in Regional Institution Building in East Asia**

Saori N. Katada

 

http://web.isanet.org/Web/Conferences/FLACSO-ISA%20BuenosAires%202014/Archive/1f1966fe-1c48-4d32-a463-ea268ecb2903.pdf

 

 

From the Chiang Mai Initiative to an Asian Monetary Fund

Masahiro Kawai

No. 527 May 2015

 

https://www.adb.org/sites/default/files/publication/160056/adbi-wp527.pdf

 

 

Asian Monetary Fund: Getting Nearer

By Pradumna B. Rana

 

https://www.rsis.edu.sg/wp-content/uploads/2014/07/CO11079.pdf

 

 

Panel on Financial Affairs Meeting on 2 November 2009

 

Background Brief
on Hong Kong’s participation in Chiang Mai Initiative Multilateralization

 

http://www.legco.gov.hk/yr09-10/english/panels/fa/papers/fa1102cb1-144-e.pdf

 

 

The Chiang Mai Initiative Multilateralisation: Origin, Development and Outlook

 

 

Much Ado about Nothing? Chiang Mai Initiative Multilateralisation and East Asian Exchange Rate Cooperation

Wolf HASSDORF

 

http://www.ritsumei.ac.jp/acd/cg/ir/college/bulletin/e-vol.10/06Hassdorf.pdf

 

 

Financial Safety Nets in Asia: Genesis, Evolution, Adequacy, and Way Forward

Hal Hill and Jayant Menon

 

https://crawford.anu.edu.au/acde/publications/publish/papers/wp2012/wp_econ_2012_17.pdf

 

 

Financial Community Building in East Asia

The Chiang Mai Initiative: Its Causes and Evaluation

 

EPIK 2010 Economics of Community Building

Yoon Jin Lee

 

http://www.eai.or.kr/data/bbs/kor_report/YoonJinLee.pdf

 

 

FROM “TAOGUANG YANGHUI” TO “YOUSUO ZUOWEI”:

CHINA’S ENGAGEMENT IN FINANCIAL MINILATERALISM

HONGYING WANG

 

https://www.cigionline.org/sites/default/files/cigi_paper_no52.pdf

 

 

Foundation of Regional Integration: Common or Divergent Interests?

Yong Wook Lee

 

http://www.eastasiair.com/uploads/2/9/7/5/29758289/이용욱-_foundation_of_regional_integration__1_.pdf

 

 

CMIM and ESM: ASEAN+3 and Eurozone Crisis Management and Resolution Liquidity Provision in Comparative Perspective

Ramon PACHECO PARDO

 

http://law.nus.edu.sg/cbfl/pdfs/working_papers/CBFL-WP-RPP01.pdf

 

 

An Overview of Regional Financial Cooperation: Implication for BRICS Contingent Reserve Arrangement

Zhang Liqing,NianShuting

 

http://www.sdrf.org.cn/upfile/2016/03/16/20160316142109_641.pdf

 

 

CMIM-Asian Multilateralism and Cooperation

Keynote speech by Dr. Junhong Chang, AMRO Director, at the 6th Asia Research Forum
1 July 2016

http://www.amro-asia.org/keynote-speech-by-dr-junhong-chang-amro-director-at-the-6th-asia-research-forum-cmim-asian-multilateralism-and-cooperation/

 

 

Financial RegionaliSm: a Review oF the iSSueS

Domenico lombaRDi

 

https://www.brookings.edu/wp-content/uploads/2016/06/11_global_economy_lombardi.pdf

 

 

Practices of Financial Regionalism and the Negotiation of Community in East Asia

Mikko Huotari

 

https://www.southeastasianstudies.uni-freiburg.de/Content/files/occasional-paper-series/op8_huotari_feb-2012_end.pdf

 

 

Financial Integration in Emerging Asian Economies

Gladys Siow

 

http://www.ipedr.com/vol38/032-ICEBI2012-A10048.pdf

 

 

Regional Monetary Cooperation: Lessons from the Euro Crisis for Developing Areas?

Sebastian Dullien

Barbara Fritz

Laurissa Mühlich

 

http://wer.worldeconomicsassociation.org/files/WEA-WER2-Dullien.pdf

 

 

The Need and Scope for Strengthening Co-operation Between Regional Financing Arrangements and the IMF

 

Ulrich Volz

 

http://edoc.vifapol.de/opus/volltexte/2014/5026/pdf/DP_15.2012.pdf

 

 

Towards institutionalization: The BRICS Contingent Reserve Arrangement (CRA)

http://www.postwesternworld.com/2013/05/12/the-politics-of-the-brics-contingency-reserve-arrangement-cra/

 

 

The BRICS Contingent Reserve Arrangement and its Position

in the Emerging Global Financial Architecture

NIColETTE CATTANEo, MAyAMIko BIzIwICk & DAvID FRyER

 

https://www.saiia.org.za/policy-insights/752-policy-insights-10-the-brics-contingent-reserve-arrangement-and-its-position-in-the-emerging-global-financial-architecture/file

 

 

Financial Architectures and Development:

Resilience, Policy Space and Human Development in the Global South

by Ilene Grabel

 

http://hdr.undp.org/sites/default/files/hdro_1307_grabel.pdf

 

 

Financial Regionalism in East Asia

 

http://www.economia.uniroma2.it/mondragone/Public/16/File/VOLZ.pdf

 

 

Enhancing the Effectiveness of CMIM and AMRO: Selected Immediate Challenges and Tasks

Reza Siregar and Akkharaphol Chabchitrchaidol

No. 403 January 2013

 

http://saber.eaber.org/sites/default/files/documents/2013.01.17.wp403.enhancing.effectiveness.cmim_.amro_.pdf

 

 

Regional and Global Liquidity Arrangements

Ulrich Volz / Aldo Caliari (Editors)

 

http://eml.berkeley.edu/~eichengr/regional_funds_oct2010.pdf

 

 

A regional reserve fund for Latin America

Daniel Titelman, Cecilia Vera, Pablo Carvallo and Esteban Pérez Caldentey

 

http://repositorio.cepal.org/bitstream/handle/11362/37018/RVI112Titelmanetal_en.pdf

 

 

Financial Crises as Catalysts for Regional Integration? The Chances and Obstacles for Monetary Integration in ASEAN+3 and MERCOSUR

Sebastian Krapohl  Daniel Rempe

 

http://www.eisa-net.org/be-bruga/eisa/files/events/stockholm/KrapohlRempe.pdf

 

 

Financial Integration

 

http://www.aec.com.mm/download/Financial%20Integration.pdf

 

 

Framework of the ASEAN Plus Three Mechanisms Operating in the Sphere of Economic Cooperation

Prof. Dr. Vyacheslav V. Gavrilov

 

http://cale.law.nagoya-u.ac.jp/_src/sc597/CALE20DP20No.207-110826.pdf

 

 

Regional Integration in Europe and East Asia: Experiences of Integration and Lessons from Functional Multilateralism

Uwe Wissenbach

 

http://gsis.korea.ac.kr/wp-content/uploads/2015/04/13-2-02_Uwe_Wissenbach.pdf

 

 

General Overview: “Financial Risk and Crisis Management after the Global Financial Crisis”

 

https://www.jeri.or.jp/en/activities/pdf/Jun2016No9.pdf

 

 

Remaking the architecture: the emerging powers, self-insuring and regional insulation 

GREGORY T. CHIN

 

http://www.risingpowersinitiative.org/wp-content/uploads/chin1.pdf

 

 

The Origins and Transformation of East Asian Financial Regionalism

 

http://dspace.uni.lodz.pl:8080/xmlui/bitstream/handle/11089/18824/6-069_084-Klecha-Tylec.pdf?sequence=1&isAllowed=y

 

 

Regional Financial Arrangement: An Impetus for Regional Policy Cooperation

Reza Siregar and Keita Miyaki

 

https://mpra.ub.uni-muenchen.de/51050/1/MPRA_paper_51050.pdf

 

 

Role of Regional Institutions in East Asia

 

http://www.eria.org/RPR_FY2011_No.10_Chapter_11.pdf

 

 

Asia’s new financial safety net: Is the Chiang Mai Initiative designed not to be used?

Hal Hill, Jayant Menon

25 July 2012

http://voxeu.org/article/chiang-mai-initiative-designed-not-be-used

 

 

Will the new BRICS institutions work?

 

https://www.weforum.org/agenda/2014/08/brics-new-development-bank-contingent-reserve-agreement/

 

 

BRICS NEW DEVELOPMENT BANK AND CONTINGENT RESERVE ARRANGEMENT

 

http://pmg-assets.s3-website-eu-west-1.amazonaws.com/150428BRICS_Bank.pdf

 

 

The Contingent Reserve Arrangement and the International Monetary System

Manmohan Agarwal

 

http://www.icsin.org/uploads/2015/04/12/2ead896b5e52456a098bbd2d0b25774b.pdf

 

 

The BRICS Bank and Reserve Arrangement: towards a new global financial framework?

2014

 

http://www.europarl.europa.eu/RegData/etudes/ATAG/2014/542178/EPRS_ATA(2014)542178_REV1_EN.pdf

 

 

China’s Bilateral Currency Swap Lines

Lin Zhitao Zhan Wenjie Yin-Wong Cheung

CESIFO WORKING PAPER NO. 5736 CATEGORY 7:MONETARY POLICY AND INTERNATIONAL FINANCE JANUARY 2016

 

 

Elasticity and Discipline in the Global Swap Network

Perry Mehrling Barnard College and INET

November 6, 2015

http://www.perrymehrling.com/wp-content/uploads/2015/11/Global-Swap-Network.pdf

 

 

A Proposal for a New Regional Financial Arrangement: The Reserve Liquidity Line

Young-Joon Park

2014

 

 

International Liquidity in a Multipolar World

Barry Eichengreen

 

 

 

International Liquidity Swaps: Is the Chiang Mai Initiative Pooling Reserves Efficiently ?

Emanuel Kohlscheen and Mark P. Tayl

http://macro.soc.uoc.gr/11conf/docs/liquidity_swaps.pdf

http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp_752.pdf

 

 

International Reserves and Swap Lines in Times of Financial Distress: Overview and Interpretations

Joshua Aizenman

No. 192 February 2010

https://www.adb.org/sites/default/files/publication/156047/adbi-wp192.pdf

 

 

Coordinating Regional and Multilateral Financial Institutions

C. Randall Henning

 

https://piie.com/publications/wp/wp11-9.pdf

 

 

The Asian Monetary Fund Reborn? Implications of Chiang Mai Initiative Multilateralization

William W. Grimes

https://www.bc.edu/content/dam/files/schools/cas_sites/economics/pdf/Seminars/SemS2011/Grimes.pdf

 

 

REGIONAL LIQUIDITY MECHANISMS IN DEVELOPING COUNTRIES

Gustavo Rojas de Cerqueira César

http://repositorio.ipea.gov.br/bitstream/11058/6420/1/PWR_v4_n3_Regional.pdf

 

 

Much Ado about Nothing? Chiang Mai Initiative Multilateralisation and East Asian Exchange Rate Cooperation

Wolf HASSDORF

http://www.ritsumei.ac.jp/acd/cg/ir/college/bulletin/e-vol.10/06Hassdorf.pdf

 

 

Global Liquidity: Public and Private

Jean-Pierre Landau

 

http://www.jeanpierrelandau.com/wp-content/uploads/2013/05/Jackson-Hole-Print.pdf

 

 

Safety for whom? The scattered global financial safety net and the role of regional financial arrangements

Mühlich, Laurissa; Fritz, Barbara

 

http://www.ssoar.info/ssoar/bitstream/handle/document/48298/ssoar-2016-muhlich_et_al-Safety_for_whom_The_scattered.pdf?sequence=1

 

 

The International Financial Architecture and the Role of Regional Funds

Barry Eichengreen

August 2010

 

http://eml.berkeley.edu/~eichengr/intl_finan_arch_2010.pdf

 

 

The evolving multi-layered global financial safety net : role of Asia

 

 

 

Asian Regional Financial Safety Nets? Don’t Hold Your Breath

Iwan J Azis

https://www.mof.go.jp/english/pri/publication/pp_review/ppr017/ppr017e.pdf

 

 

STITCHING TOGETHER THE GLOBAL FINANCIAL SAFETY NET

Minouche Shafik,

Deputy Governor, Bank of England

26th February 2016

 

http://www.reinventingbrettonwoods.org/sites/default/files/31E%20Minouche%20Shafik£∫Stitching%20Together%20The%20Global%20Financial%20Safety%20Net.pdf

 

 

The Global Financial Safety Net through the Prism of G20 Summits

Gong Cheng

European Stability Mechanism

https://mpra.ub.uni-muenchen.de/68070/1/MPRA_paper_68070.pdf

 

 

ADEQUACY OF THE GLOBAL FINANCIAL SAFETY NET

 

 The Evolving Multi-layered Global Financial Safety Net: Role of Asia

Pradumna B. Rana

 

Global Financial Safety Nets: Where Do We Go from Here?
Eduardo Levy-Yeyati and Eduardo Fernández-AriasFriday,
January 14, 2011
 Strengthening the Global Financial Safety Net

 

The Global Liquidity Safety Net

Institutional Cooperation on Precautionary Facilities and Central Bank Swaps

https://www.cigionline.org/sites/default/files/new_thinking_g20_no5_web.pdf

 

 

Inadequate Regional Financial Safety Nets Reflect Complacency

Iwan J. Azis

No. 411 March 2013

 

https://www.adb.org/sites/default/files/publication/156266/adbi-wp411.pdf

 

 

Stitching together the global financial safety net

by Edd Denbee, Carsten Jung and Francesco Paternò

 

https://www.bancaditalia.it/pubblicazioni/qef/2016-0322/QEF_322_16.pdf

 

 

GLOBAL AND REGIONAL FINANCIAL SAFETY NETS: LESSONS FROM EUROPE AND ASIA

CHANGYONG RHEE, LEA SUMULONG AND SHAHIN VALLÉE

 

http://bruegel.org/wp-content/uploads/imported/publications/WP_2013_02.pdf

 

 

Financial Safety Nets in Asia: Genesis, Evolution, Adequacy, and Way Forward

 

Hal Hill and Jayant Menon

No. 395 November 2012

https://www.adb.org/sites/default/files/publication/156250/adbi-wp395.pdf

 What we really know about the global financial safety net

 

Beatrice Scheubel, Livio Stracca

04 October 2016

Global Financial Safety Nets: Where Do We Go from Here?

Eduardo Fernandez-Arias

Eduardo Levy Levy-Yeyati

November 2010

Global Financial Safety Nets
How can countries cooperate to mitigate contagion and limit the spread of crises?November 7, 2011

 

What do we know about the global financial safety net? Rationale, data and possible evolution

 Global Financial Safety Net

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

Balance Sheets, Financial Interconnectedness, and Financial Stability – G20 Data Gaps Initiative

 

From G-20 Data Gaps Initiative II: Meeting the Policy Challenge

In 2009, the G-20 Finance Ministers and Central Bank Governors (FMCBG) endorsed 20 recommendations to address data gaps revealed by the global financial crisis. The initiative, aimed at supporting enhanced policy analysis, is led by the Financial Stability Board (FSB) and the International Monetary Fund (IMF). The Inter-Agency Group on Economic and Financial Statistics (IAG)1 plays the global facilitator role to coordinate and monitor the implementation of the DGI recommendations.

The financial crisis which started in 2007 with problems in the U.S. subprime market, spread to the rest of the world becoming the most severe global crisis since the Great Depression. One difference between the global financial crisis and earlier post-war crises was that the crisis struck at the heart of the global financial system spreading throughout the global economy. This required global efforts for recovery. As one element of the global response, in October 2009, the G-20 Finance Ministers and Central Bank Governors (FMCBG) endorsed a DGI led by the Financial Stability Board (FSB) Secretariat and the IMF Staff. DGI was launched as an overarching initiative of 20 recommendations to address information gaps revealed by the global financial crisis.

Following the global financial crisis, in 2008, the G-20 leaders, at their meeting in Washington,9 committed to implement a fundamental reform of the global financial system to strengthen financial markets and regulatory regimes so as to avoid future crises.10 As part of the reform agenda, the FSB was established in April 2009 as the successor to the Financial Stability Forum (FSF) and started working as the central locus of coordination to take forward the financial reform program as developed by the relevant bodies. The obligations of members of the FSB were set to include agreeing to undergo periodic peer reviews, using among other inputs IMF/World Bank Financial Sector Assessment Program (FSAP) reports. The G-20 leaders noted the importance of global efforts in implementing the global regulatory reform so as to protect against adverse cross-border, regional and global developments affecting international financial stability.

The components of the G-20 regulatory reform agenda complement each other with an ultimate goal of strengthening the international financial system. The DGI has been an important element of this agenda as the regulatory reform agenda items mostly require better data. The collection of data on Global Systemically Important Banks’ (G-SIBs) exposures and funding dependencies is among the steps towards addressing the “too-big-to-fail” issue by reducing the probability and impact of G-SIBs’ failing. The FSB work on developing standards and processes for global data collection and aggregation on securities financing transactions aims to improve transparency in securitization towards the main goal of reducing risks related to the shadow banking system. Over-the-counter (OTC) derivatives markets including Credit Default Swap (CDS) were brought under greater scrutiny towards the main goal of making derivatives markets safer following the global crisis. DGI supported this goal by improving information in CDS markets. A number of other G-20 initiatives have strong links with the DGI project including the FSB work on strengthening the oversight and regulation of the shadow banking system; and on the work on global legal entity identifiers (LEI)11 which contribute to the robustness of the data frameworks with a more micro focus. The changing global regulatory reforms particularly the implementation of Basel III was also taken into consideration in the development of the DGI.

Surveillance Agenda

The importance of closing the data gaps hampering the surveillance of financial systems was also highlighted as part of the IMF’s 2014 Triennial Surveillance Review (TSR).12 The 2014 TSR emphasized that due to growing interconnectedness across borders, financial market shocks will continue to have significant spillovers via both capital flows and shifts in risk positions. Also, new dimensions to interconnectedness will continue to emerge such as through the potential short-run adverse spillovers generated by the financial regulatory reforms. To this end, the TSR recommended improving information on balance-sheets and enriching flow-of funds data. The IMF has overhauled its surveillance to make it more risk-based. To this end, the IMF Managing Director’s Action Plan for Strengthening Surveillance following the 2014 TSR13 underlined that the IMF will revive and adapt the Balance Sheet Approach (BSA) to facilitate a more in-depth analysis of the impact of shocks and their transmission across sectors, and possibly initiate the global flow of funds to better reflect global interconnections (Box 1). This work requires data from the DGI as it will help support the IMF’s macro-financial work including in the key exercises and reports (i.e., Early Warning Exercise, FSAP, and GFSR).

Global Flow of Funds

Through the use of internationally-agreed statistical standards, data on cross-border financial exposures (IBS, CPIS, and Coordinated Direct Investment Survey (CDIS)) can be linked with the domestic sectoral accounts data to build up a comprehensive picture of financial interconnections domestically and across borders, with a link back to the real economy through the sectoral accounts. This work is known as the “Global Flow of Funds (GFF).”14 The GFF project is mainly aimed at constructing a matrix that identifies interlinkages among domestic sectors and with counterpart countries (and possibly counterpart country sectors) to build up a picture of bilateral financial exposures and support analysis of potential sources of contagion. The concept of the GFF was first outlined in the Second Progress Report on the G-20 Data Gaps Initiative and initiated in 2013 as part of a broader IMF initiative aimed at strengthening the analysis of interconnectedness across borders, global liquidity flows and global financial interdependencies. In the longer term, the GFF matrix is intended to support regular monitoring of bilateral cross-border financial positions through a framework that highlight risks to national and international financial stability. IMF Staff is working towards developing a GFF matrix starting with the largest global economies.

 

How Does the DGI Address the Surveillance Agenda?

As noted above, in the wake of the 2014 TSR the IMF Managing Director published an Action Plan for Strengthening Surveillance. Among the actions to be taken was that “The Fund will revive and adapt the balance sheet approach to facilitate a more in-depth analysis of the impact of shocks and their transmission across sectors.” This responded to a call from outside experts David Li and Paul Tucker in their external study for the 2014 TSR on risks and spillovers.37

Sectoral Analysis

Even though the 2007/2008 crisis emerged in the financial sector, given its intermediary role, the problems in the financial sector also affected other sectors of an economy. To this end, analysis of balance sheet exposures is essential given the increasingly interconnected global economy. As it is pointed out in the IMF TSR 2014, the use of balance sheets to identify sources of vulnerability and the transmission of shocks, could have helped detect risks associated with European banks’ reliance on U.S. wholesale funding to finance structured products. In June 2015, the IMF set out the way forward in a paper for the IMF Executive Board on Balance Sheet Analysis in Surveillance. 38 Sectoral accounts and balance sheet data are essential, including from-whom to-whom data, in providing the context for an assessment of the links between the real economy and financial sectors. The sectoral balance sheets of the SNA is seen as the overarching framework for balance sheet analysis as the IMF Executive Board paper makes clear. Further, the paper sets out a data framework for such analysis.39 Putting the sectoral balance sheets of the SNA in a policy context, the IMF has developed a BSA, which compiles all the main balance sheets in an economy using aggregate data by sector. The BSA is based on the same conceptual principles as the sectoral accounts, providing information on a from-whom-to-whom basis with an additional focus on vulnerabilities arising from maturity and, currency mismatches as well as the capital structure of economic sectors.

While currently not that many economies compile from-whom-to-whom balance sheet data, BSA data can be compiled from the IMF’s Standardized Report Forms, IIP, and government balance sheet data—a more limited set of data than needed to compile the sectoral accounts. The DGI-2 recommendations address key data gaps that act as a constraint on a full-fledged balance sheet analysis. The DGI recommends addressing such gaps through improving G-20 economies’ dissemination of sectoral accounts and balance sheets building on 2008 SNA, including for the non-financial corporate and household sectors. (Annex 1, Recommendation II.8) Given the multifaceted character of the datasets, implementation of this recommendation is challenging and progress has been slow. However, all G-20 economies agree on the importance of having such information and have plans in place to make it happen.

Understanding Cross-border Financial Interconnections

The crisis emphasized the fact that it is not possible to isolate the problems in a single financial system as shocks propagate rapidly across the financial systems. Indeed, the IMF, since 2010, has been identifying jurisdictions with systemically important financial sectors based on a set of relevant and transparent criteria including size and interconnectedness. Within this identification framework, cross-border interconnectedness is considered an important complementary measure to the size of the economy: it captures the systemic risk that can arise through direct and indirect interlinkages among financial sectors in the global financial system (i.e., the risk that failure or malfunction of a national financial system may have severe repercussions on other countries or on overall systemic stability.48 The 2014 TSR summed up the issue succinctly in its Executive Summary: “Risks and spillovers remain first-order issues for the world economy and should be central to Fund surveillance. Recent reforms have made surveillance more risk-based, helping to better capture global interconnections. Experience so far also points to the need to build a deeper understanding of how risks map across countries, and how spillovers can quickly spread across sectors to expose domestic vulnerabilities.”49 Four existing datasets that include key information on cross-country financial linkages are the IIP, BIS IBS, IMF CPIS and IMF CDIS. Together these datasets provide a comprehensive picture of cross-border financial interconnections. This picture is especially relevant for policy makers as financial connections strengthen across border and domestic conditions are affected by financial developments in other economies to whom they are closely linked financially. DGI-2 focuses on improving the availability and cross-country comparability of these datasets (Annex1, Recommendations II.10, 11, 12 and 13). The well-known IIP is a key data source to understanding the linkages between the domestic economy and the rest of the world by providing information on both external assets and liabilities of the economy with a detailed instrument breakdown. However, the crisis revealed the need for currency and more detailed sector breakdowns, particularly for the other financial corporations (OFCs) sector. Consequently, as part of the DGI, the IIP was enhanced to support these policy needs. Significant progress has also been made in ensuring regular reporting of IIP along with the increase in frequency of reporting from annual to quarterly. By end-2015 virtually all G-20 economies reported quarterly IIP data. The IBS have been a key source of data for many decades providing information on aggregate assets and liabilities of internationally active banking systems on a quarterly frequency. The CPIS data, while on an annual frequency, provided significant insights into portfolio investment assets. That said, both datasets had limitations in terms of country coverage and granularity. CPIS also needed to be improved in terms of frequency and timeliness. To this end, the DGI supported the enhancements in these datasets.

 

Key Terms:

  • G-20 Data Gaps Initiative (DGI)
  • Financial Stability Board (FSB)
  • The Inter-Agency Group on Economic and Financial Statistics (IAG)
  • Finance Ministers and Central Bank Governors (FMCBG)
  • Financial Stability Forum (FSF)
  • Global Systemically Important Banks (G-SIBs)
  • Over-the-counter (OTC)
  • Credit Default Swap (CDS)
  • Global legal entity identifiers (LEI)
  • IMF Triennial Surveillance Review (TSR)
  • IMF Balance Sheet Approach (BSA)
  • IMF Global Flow of Funds (GFF)
  • IMF IIP (International Investment Positions)
  • BIS IBS (International Banking Statistics)
  • IMF CPIS (Coordinated Portfolio Investment Survey)
  • IMF CDIS (Coordinated Direct Investment Survey)
  • IMF GFSR ( Global Financial Stability Report)

 

Other Related Terms:

  • Global Systemically Important Financial Institutions (G-SIFIs )
  • GLOBAL SYSTEMICALLY IMPORTANT INSURERS (G-SIIS)
  • Systemically Important Financial Market Utilities (G-FMUs)
  • Nonbank Financial Companies (G-SINFC)
  • Financial Stability Oversight Council (FSOC)

     

The IAG members are

  • BIS (Bank of International Settlements)
  • G20 (Group of 20 Nations)
  • IMF (International Monetary Fund)
  • OECD (Organisation for Economic Co-operation and Development)
  • ECB (European Central Bank)
  • World Bank
  • Eurostat (European Statistics/Directorate-General of the European Commission)
  • UN (United Nations)

 

From G-20 Data Gaps Initiative II: Meeting the Policy Challenge

balancesheets

From G-20 Data Gaps Initiative II: Meeting the Policy Challenge

dgi

 

Progress of DGI ((DGI-I and DGI-II)

From G-20 Data Gaps Initiative II: Meeting the Policy Challenge

The first phase of the DGI was successfully concluded in September 2015 and the second phase of the initiative (DGI-2) was endorsed by the G-20 FMCBG. The key objective of the DGI-2 is to implement the regular collection and dissemination of comparable, timely, integrated, high quality, and standardized statistics for policy use. DGI-2 encompasses 20 new or revised recommendations, focused on datasets that support: (i) monitoring of risk in the financial sector; and (ii) analysis of vulnerabilities, interconnections and spillovers, not least cross-border.

Following the significant progress in closing some of the information gaps identified during the global financial crisis of 2007/08, the G-20 FMCBG endorsed, in September 2015, the closing of DGI-1. During the six-year implementation of DGI-1, significant achievements were obtained, particularly regarding the development of conceptual frameworks, as well as enhancements in some statistical collection and reporting. Regarding the latter, more work is needed for the implementation of some recommendations, especially in seven high-priority areas across G-20 economies, notably in government finance statistics and sectoral accounts and balance sheets.

In September 2015, the G-20 FMCBG also endorsed the launch of the second phase of the DGI. The main objective of DGI-2 is to implement the regular collection and dissemination of reliable and timely statistics for policy use. Its twenty recommendations are clustered under three main headings: (1) monitoring risk in the financial sector, (2) vulnerabilities, interconnections and spillovers, and (3) data sharing and communication of official statistics. The DGI-2 maintains the continuity with the DGI-1 recommendations while setting more specific objectives with the intention for the G-20 economies to compile and disseminate minimum common datasets for these recommendations. The DGI-2 also includes new recommendations to reflect the evolving users’ needs. Furthermore, the DGI-2 aims at strengthening the synergies with other relevant global initiatives.

The DGI-2 facilitates closing data gaps that are policy-relevant. By achieving its main objective, the DGI-2 will be instrumental in closing gaps in policy-relevant data. Most of the datasets covered by the DGI-2 are particularly relevant for meeting the emerging macro- financial policy needs, including the analysis of international positions, global liquidity, foreign currency exposures, and capital flows volatility.

The DGI-2 introduces action plans that set out specific “targets” for the implementation of its twenty recommendations through the five-year horizon of the initiative. The action plans acknowledge that countries may be at different stages of statistical development and take into account national priorities and resource constraints. The DGI-2 intends to bring the G-20 economies at higher common statistical standards through a coordinated effort; however, flexibility will be considered in terms of intermediate steps to achieve the targets based on national priorities, resource constraints, emerging data needs, and other considerations.

 

 

 

Key Sources of Research:

 

Second Phase of the G-20 Data Gaps Initiative (DGI-2) Second Progress Report

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2017

http://www.imf.org/external/np/g20/pdf/2017/092117.pdf

http://www.imf.org/external/ns/cs.aspx?id=290

 

 

 

Second Phase of the G-20 Data Gaps Initiative (DGI-2) First Progress Report

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2016

 

http://www.imf.org/external/np/g20/pdf/2016/090216.pdf

 

 

Sixth Progress Report on the Implementation of the G-20 Data Gaps Initiative

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2015

 

http://www.fsb.org/wp-content/uploads/The-Financial-Crisis-and-Information-Gaps.pdf

 

 

Fifth Progress Report on the Implementation of the G-20 Data Gaps Initiative

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2014

http://www.imf.org/external/np/g20/pdf/2014/5thprogressrep.pdf

 

 

Fourth Progress Report on the Implementation of the G-20 Data Gaps Initiative

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2013

 

http://www.imf.org/external/np/G20/pdf/093013.pdf

 

 

 

Progress Report on the G-20 Data Gaps Initiative: Status, Action Plans, and Timetables

 

Prepared by the Staff of the IMF and the FSB Secretariat September 2012

http://www.imf.org/external/np/g20/pdf/093012.pdf

 

 

 

Implementation Progress Report

 

Prepared by the IMF Staff and the FSB Secretariat June 2011

http://www.imf.org/external/np/g20/pdf/063011.pdf

 

 

 

Progress Report Action Plans and Timetables

 

Prepared by the IMF Staff and the FSB Secretariat May 2010

 

http://www.imf.org/external/np/g20/pdf/053110.pdf

 

 

 

Report to the
G-20 Finance Ministers and Central Bank Governors

 

Prepared by the IMF Staff and the FSB Secretariat October 29, 2009

 

http://www.imf.org/external/np/g20/pdf/102909.pdf

 

 

 

G-20 Data Gaps Initiative II: Meeting the Policy Challenge

by Robert Heath and Evrim Bese Goksu

2016

https://www.imf.org/external/pubs/ft/wp/2016/wp1643.pdf

 

 

 

Why are the G-20 Data Gaps Initiative and the SDDS Plus Relevant for Financial Stability Analysis?

Robert Heath

http://www.imf.org/external/pubs/ft/wp/2013/wp1306.pdf

 

 

 

Toward the Development of Sectoral Financial Positions and Flows in a From-Whom-to-Whom Framework

Manik Shrestha

 

http://www.nber.org/chapters/c12835.pdf

 

 

An Integrated Framework for Financial Positions and Flows on a From-Whom-to- Whom Basis: Concepts, Status, and Prospects

Manik Shrestha, Reimund Mink, and Segismundo Fassler

 

https://www.imf.org/external/pubs/ft/wp/2012/wp1257.pdf

 

 

Financial investment and financing in a from-whom-to-whom framework

Mink, Reimund

https://www.bis.org/ifc/events/2011_dublin_61_01_mink.pdf

 

 

Users Conference on the Financial Crisis and Information Gaps

Conference co-hosted by The International Monetary Fund and The Financial Stability Board

2009

http://www.imf.org/external/np/seminars/eng/2009/usersconf/index.htm

 

 

A Status on the Availability of Sectoral Balance Sheets and Accumulation Accounts in Advanced Economies not Represented by Membership in the G-20

2011

 

https://www.imf.org/external/np/seminars/eng/2011/sta/pdf/g20a.pdf

 

 

A Status on the Availability of Sectoral Balance Sheets and Accumulation Accounts in G-20 Economies

2011

 

https://www.imf.org/external/np/seminars/eng/2011/sta/pdf/g20b.pdf

 

 

AN UPDATE ON THE IMF-OECD CONFERENCE ON STRENGTHENING SECTORAL POSITION AND FLOW DATA IN THE MACROECONOMIC ACCOUNTS

FEBRUARY 28 – MARCH 2, 2011

 

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=COM/STD/DAF(2010)21&docLanguage=En

 

 

The Balance Sheet Approach:
Data Needs, Data at Hand, and Data Gaps (August 2009)

 

Alfredo Leone, Statistics Department, International Monetary Fund

 

https://www.czso.cz/staticke/conference2009/proceedings/data/quaterly_accounts/leone_paper.pdf

 

 

Development of financial sectoral accounts

New opportunities and challenges for supporting financial stability analysis

by Bruno Tissot

2016

 

http://www.bis.org/ifc/publ/ifcwork15.pdf

 

 

A Flow-of-Funds Perspective on the Financial Crisis Volume I: Money, Credit

edited by B. Winkler, A. van Riet, P. Bull, Ad van Riet

 

 

A Flow-of-Funds Perspective on the Financial Crisis Volume II: Macroeconomic

edited by B. Winkler, A. van Riet, P. Bull

 

 

Financial investment and financing in a from-whom-to-whom framework

Mink, Reimund

2011

http://2011.isiproceedings.org/papers/650287.pdf

 

 

Expanding the Integrated Macroeconomic Accounts’ Financial Sector

By Robert J. Kornfeld, Lisa Lynn, and Takashi Yamashita

2016

https://www.bea.gov/scb/pdf/2016/01%20January/0116_expanding_the_integrated_macroeconomic_accounts_financial_sector.pdf

 

 

Using the Balance Sheet Approach in Surveillance: Framework, Data Sources, and Data Availability

Johan Mathisen and Anthony Pellechio

2006

http://www.imf.org/external/pubs/ft/wp/2006/wp06100.pdf

 

 

Balance Sheet Analysis: A New Approach to Financial Stability

Surveillance

By Jean Christine A. Armas

2016

 

http://www.bsp.gov.ph/downloads/EcoNews/EN16-01.pdf

 

 

USING THE BALNCE SHEET APPROACH IN FINANCIAL STABILITY SURVEILLANCE:
Analyzing the Israeli economy’s resilience to exchange rate risk

 

http://www.suomenpankki.fi/en/tutkimus/konferenssit/konferenssit_tyopajat/Documents/JFS2007/JFS2007_HaimLevy_pres.pdf

http://www.boi.org.il/deptdata/stability/papers/dp0701e.pdf

 

 

 

A Balance Sheet Approach to Financial Crisis

Mark Allen, Christoph Rosenberg, Christian Keller, Brad Setser, and Nouriel Roubini

2002

https://www.imf.org/external/pubs/ft/wp/2002/wp02210.pdf

 

 

THE BALANCE SHEET APPROACH TO FINANCIAL CRISES IN EMERGING MARKETS

Giovanni Cozzi and
Jan Toporowski

2006

http://www.levyinstitute.org/pubs/wp_485.pdf

 

 

Balance-sheets. A financial/liability approach

Bo Bergman

2015

 

http://iariw.org/papers/2015/bergman_paper.pdf

 

 

Understanding Financial Crisis Through Accounting Models

Dirk J Bezemer

2009

http://www.uclm.es/actividades/2009/workshopESHET-UCLM/Bezemer_-_No_one_show_this_comming.pdf

 

 

 

Schumpeter Might Be Right Again: The Functional Differentiation of Credit

Dirk J. Bezemer
University of Groningen

https://www.rug.nl/staff/d.j.bezemer/the_functional_differentiation_of_credit.pdf

 

 

Causes of Financial Instability: Don’t Forget Finance

Dirk J. Bezemer

April 2011

 

http://www.levyinstitute.org/pubs/wp_665.pdf

 

 

THE ECONOMY AS A COMPLEX SYSTEM: THE BALANCE SHEET DIMENSION

DIRK J BEZEMER

2012

http://www.economicsofcreditanddebt.org/media/research/ACS_1250047_1st_Prf.pdf

 

 

Did Credit Decouple from Output in the Great Moderation?

Maria Grydaki and Dirk Bezemer

June 2013

https://mpra.ub.uni-muenchen.de/47424/1/MPRA_paper_47424.pdf

 

 

 

Towards an ‘accounting view’ on money, banking and the macroeconomy: history, empirics, theory

Dirk J. Bezemer

2016

http://www.economicsofcreditanddebt.org/media/research/Camb._J._Econ.-2016-Bezemer-1275-95.pdf

 

 

Modelling systemic financial sector and sovereign risk

Dale F. Gray anD anDreas a. Jobst

2011

 

http://www3.tcmb.gov.tr/konferanslar/fsr/Gray_2.pdf

 

 

BALANCE SHEET ANALYSIS IN FUND SURVEILLANCE

2015

https://www.imf.org/external/np/pp/eng/2015/061215.pdf

https://www.imf.org/external/np/pp/eng/2015/071315.pdf

 

 

The role of external balance sheets in the financial crisis

Yaser Al-Saffar, Wolfgang Ridinger and Simon Whitaker

2013

 

http://www.bankofengland.co.uk/financialstability/Documents/fpc/fspapers/fs_paper24.pdf

 

 

Global Conferences on DGI

June 2, 2016

http://www.imf.org/external/np/seminars/eng/dgi/

 

 

CAPITAL FLOWS AND GLOBAL LIQUIDITY

IMF Note for G20 IFA WG

February 2016

 

http://g20chn.org/English/Documents/Current/201608/P020160811536051676178.pdf

 

 

Introduction to Balance of Payments and International Investment Position Manual, 6th Edition and BPM6 Compilation Guide

http://www.imfmetac.org/Upload/Link3_766_105.pdf

 

 

Introduction: ‘cranks’ and ‘brave heretics’: rethinking money and banking after the Great Financial Crisis

Geoffrey Ingham Ken Coutts Sue Konzelmann

Camb J Econ (2016) 40 (5): 1247-1257.

 

 

Network Analysis of Sectoral Accounts: Identifying Sectoral Interlinkages in G-4 Economies

by Luiza Antoun de Almeida

2016

https://www.imf.org/external/pubs/ft/wp/2015/wp15111.pdf

 

 

2014 TRIENNIAL SURVEILLANCE REVIEW—EXTERNAL STUDY—RISKS AND SPILLOVERS

Prepared By David Daokui Li and Paul Tucker

 

https://www.imf.org/external/np/pp/eng/2014/073014e.pdf

https://www.imf.org/external/pubs/ft/bop/2014/pdf/14-10.pdf

 

 

 

2014 TRIENNIAL SURVEILLANCE REVIEW—OVERVIEW PAPER

 

http://www.imf.org/external/np/pp/eng/2014/073014.pdf

http://www.imf.org/external/np/spr/triennial/2014/

 

 

Measuring Global Flow of Funds and Integrating Real and Financial Accounts: Concepts, Data Sources and Approaches

Nan Zhang (Stanford University)

2015

http://iariw.org/papers/2015/zhang.pdf

 

 

Cross-border financial linkages: Identifying and measuring vulnerabilities

 

Philip R. Lane

2014

 

http://cepr.org/sites/default/files/policy_insights/PolicyInsight77.pdf

 

 

Global Flow of Funds: Mapping Bilateral Geographic Flows

Authors1: Luca Errico, Richard Walton, Alicia Hierro, Hanan AbuShanab, Goran Amidzic

 

2013

http://2013.isiproceedings.org/Files/STS083-P1-S.pdf

 

Global-Flow-of-Funds Analysis in a Theoretical Model -What Happened in China’s External Flow of Funds –

 

Nan Zhang

 

http://ns1.shudo-u.ac.jp/~zhang/08GFOF.pdf

 

 

Mapping the Shadow Banking System through a Global Flow of Funds Analysis

Hyun Song Shin

Princeton University

https://www.imf.org/external/np/seminars/eng/2013/sta/forum/pdf/Hyun-Song-Shin2.pdf

 

 

The Composition of the Global Flow of Funds in East Asia

 

Nan Zhang

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.534.757&rep=rep1&type=pdf

 

 

What Has Capital Flow Liberalization Meant for Economic and Financial Statistics?

Robert Heath

2015

https://pdfs.semanticscholar.org/48dd/41aac8864e53b6176f7b3b7df22aba05ac0e.pdf

 

 

Global flows in a digital age: How trade, finance, people, and data connect the world economy

McKinsey & Company Report

2014

 

 

Managing global finance as a system

Speech given by

Andrew G Haldane, Chief Economist, Bank of England

At the Maxwell Fry Annual Global Finance Lecture, Birmingham University 29 October 2014

http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech772.pdf

Economic Growth Theories – Orthodox and Heterodox

Economic Growth Theories – Orthodox and Heterodox

My humble  attempt to make sense of Economic Growth Theories.

 

Economic Growth (Trend) and Business Cycles ( Fluctuations)

Growth- Cycles

Economists distinguish between short-run economic changes in production and long-run economic growth. Short-run variation in economic growth is termed the business cycle. Generally, economists attribute the ups and downs in the business cycle to fluctuations in aggregate demand. In contrast, economic growth is concerned with the long-run trend in production due to structural causes such as technological growth and factor accumulation.

 

economic-growth-5

Types of Models

  • Economic Cycles Vs Business Cycles Vs Financial Cycles
  • Economic Growth , Business Growth, Financial Growth
  • Equilibrium Vs. Non Equilibrium
  • Deterministic vs Stochastic
  • Linear Vs Non Linear Models

 

From Introduction to Post Keynesian Economics / Lavoie

economic-schools

 

Classical and Neo Classical Growth Models

(Equilibrium Models) – Supply Side / No aggregate demand -Say Law

  • Wassily Leontief – Input-Output Linear Models
  • John Von Neumann
  • Cass – T Koopmans
  • Solow Swan Growth Model
  • Ramsey Model
  • Endogenous Growth Theory
    • Robelo – AK Model
    • Uzawa – Lucas Model
    • Romer Model
    • Jones Model
    • Grossman Helpman
    • Aghion and Howitt
    • Barro
  • DSGE Models
  • Real Business Cycles

 

Classical/Neo Classical /Monetarists/Neo Keynesian  Economists

  • Alfred Marshall
  • Leon Walrus
  • Irving Fisher
  • Paul Samuelson – Multiplier Accelerator
  • John Maynard Keynes
  • Alvin Hansen – IS-LM Framework
  • AW Phillips
  • Robert M Solow – Neo Classical Growth Model
  • Trevor W Swan
  • Paul Romer – Endogenous Growth Theory
  • Robert Lucas, Jr.
  • Milton Friedman
  • James Tobin
  • John G Gurley
  • Edward S Shaw
  • Knut Wicksell 
  • Franco Modigliani
  • James Meade
  • Luigi Pasinetti
  • Piero Sraffa

 

Keynesian Growth Models

Role of Aggregate Demand

  • John M Keynes Model
  • Harrod Domar Model
  • Hicks – Hansen IS-LM Model
  • AD-AS
  • Tobin’s Model
  • New Keynesian Models
  • Non Walrasion Equilibrium models
  • Phillips Curve

 

economic-growth-2economic-growth-3economic-growth-theory

 

economic-growth-4

 

Heterodox Schools

  • Institutionalist
  • Cambridge Keynesians
  • American Post Keynesians
  • Evolutionary Economics
  • Complexity School/Santa Fe
  • System Dynamics
  • Behavioral Economics
  • Austrian Economics
  • Ecological Economics

 

Cambridge/Oxford Keynesians

(Dynamic/Business Cycles/Non Linear Models)

  • N. Kaldor
  • J Robinson
  • M. Kalecki
  • John Hicks
  • Roy Harrod

 

Post Keynesians

  • Evsey Domar
  • Hyman Minsky
  • Steve Keen
  • Marc Lavoie
  • Richard Werner
  • Perry Mehrling
  • Morris Copeland
  • Wynn Godley
  • Dirk Bezemer
  • Paul Davidson
  • Mark Setterfield
  • Steve Pressman
  • Basil Moore
  • Tom Palley
  • LP Rochon
  • L Randall Ray
  • Eckhard Hein
  • G C Harcourt
  • G Fontana
  • J King
  • AK Dutt
  • Stephanie Kelton
  • Scott Fullwiler
  • Lance Taylor
  • Geoffrey Hodgson
  • Alfred Eichner

     

Evolutionary School / Institutionalist School

(Increasing Returns/Circular and Cumulative Causation)

  • Karl Marx
  • R M Goodwin
  • J Schumpeter
  • Ken Boulding
  • T Veblen
  • Gunnar Myrdal

 

Complexity/Santa Fe

  • Scott Page
  • W Brian Arthur
  • Doyne Farmer

 

System Dynamics

  • John Sterman
  • Jay Forrester
  • Khalid Saeed
  • M Radzicki
  • K Yamaguchi
  • N Forrester
  • Tom Fiddaman
  • David Wheat
  • Peter Senge

 

Austrian Economics

  • F Hayak
  • Ludwig Von Mises
  • Murray Rothbard

 

 

Heterodox Growth Models

  • Kaldor
    • Dixen and Thirlwall
  • Kalecki
    • AK DUTT
    • Marglin
    • Rawthorn
  • Harris
  • Sweezy

 

Heterodox / Post Keynesian School – Ideas

  • Debt Deflation of Irving Fisher
  • Financial Stability Hypothesis of Hyman Minsky
  • Credit/Debt Cycles of Steve Keen
  • Stock Flow Consistent (Accounting) Models of Marc Lavoie and Wynn Godley
  • Joseph Schumpeter – Innovation/Creative Destruction
  • Richard Werner – Disaggregated Credit – Financial vs Real 
  • Perry Mehrling / Zoltan Pozsar – Money View
  • Morris Copeland – Flow of Funds
  • Austrian School – Hayak / Von Mises / Rothberg
  • Dirk Bezemer – Money as Credit / Accounting Models
  • Richard Koo – Balance sheet Recession
  • Quadruple Accounting / Interlocking Balance sheets
  • Asset Liability Matrix Analysis – K Tsujimura
  • Financial Social Accounting Matrix (F-SAM)
  • Monetary Circuit
  • Banks as Payment System
  • Banks as Market Makers (Dealers)
  • Liquidity – Solvency Nexus
  • Central Banks as Lender and Dealer of Last Resort
  • Focus on Disaggregated / Operational/Horizontal View of Banks and Central Banks and Financial Markets.

 

 

From Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model

After Harrod and Domar independently developed a dynamic Keynesian circular flow model to illustrate the instability of a growing economy, mainstream economists quickly reduced their model to a supply side-only growth model, which they subsequently rejected as too simplistic and replaced with Solow’s neoclassical growth model. The rejection process of first diminishing the model and then replaced it with a neoclassical alternative was similar to how the full Keynesian macroeconomic paradigm was diminished into IS-LM analysis and then replaced by a simplistic neoclassical framework that largely ignored the demand side of the economy. Furthermore, subsequent work by mainstream economists has resulted in a logically inconsistent framework for analyzing economic growth; the popular endogenous growth models, which use Schumpeter’s concept of profit-driven creative destruction to explain the technological change that Solow left as exogenous, are not logically compatible with the Solow model.

 

From Institutional Economics, Post Keynesian Economics, and System Dynamics: Three Strands of a Heterodox Economics Braid

A. Lineage of Institutional Economics

In Figure 1, the intellectual lineage leading to the present-day school of institutional economics begins with Quesnay and Smith and follows two principal routes. The first runs through Ricardo and Marx and then through the “American institutionalists” Veblen, Commons, and Mitchell. The last link in this route passes through Clarence Ayres, Galbraith, and Myrdal. The second or “thermodynamics/general systems” route runs through Ricardo and Marx, passes through Schumpeter (1976), and links with Boulding (1970, 1978, 1991), Georgescu-Roegen (1971), and Robert Ayres (1978). This route has also been influenced by the cybernetics of Norbert Wiener (1948). Figure 1 also shows, via two-way arrows, four schools of thought that directly complement institutional economics: Post Keynesian economics, behavioral economics, ecological economics, and evolutionary economics. An argument can be made, however, that a two-way arrow between agent-based computational economics and institutional economics should be included as well.

 

B. Lineage of Post Keynesian Economics

Figure 1 presents one direct route and two main “directions of flow,” each incorporating several routes, that lead to the modern Post Keynesian school of economics. The direct route simply runs from Quesnay and Marx to Leontieff and then to the Post Keynesian school because input-output analysis is frequently used by Post Keynesian economists. On the other hand, the first main direction of flow runs through the Cambridge Post Keynesians (e.g., Robinson, Kaldor, Passinetti) and the founders of American Post Keynesian school (e.g., Weintraub, Davidson, Eichner, Minsky). This direction is traversed by way of Quesnay, Marx, and Kalecki or via Smith, Malthus, Keynes, Harrod, and Domar. The second main direction of flow runs through those economists who pioneered the “engineering systems” approach to economics such as Tustin (1953), Phillips (1950, 1954,1957), Allen (1955), Goodwin,10 and Leijonhufvud (1968).11 This direction is traversed via: (1) Keynes directly, (2) early Keynesian business cycle theorists such as Harrod, Hicks and Samuelson, (3) Hayek, because Post Keynesians such as Kaldor had their thinking influenced to some degree by Austrian economics, and (4) Schumpeter, because Goodwin both taught, and was taught by, Schumpeter [see Goodwin (1993, p. 305)].

 

C. Lineage of Ecological Economics

 

In Figure 1, the intellectual lineage leading to the present-day school of ecological economics begins with Quesnay and Smith and follows three principal routes. The first runs through Malthus and then directly to Costanza and Daly (1992). The second runs through Quesnay and then through Leontieff. The third runs through Ricardo and Marx and then passes through Schumpeter. In terms of complementary schools of thought, both evolutionary economics and institutional economics are linked to ecological economics with a two- way arrow. An argument can be made, however, that a two-way arrow between ecological economics and agent- based computational economics should be added because the emergence and evolution of social structures such as property rights and environmental valuations and norms, that are crucial to avoiding “tragedy of the commons” and other non-sustainable dynamics, can be identified and studied.

 

D.  Agent Based Computational Economics/Complexity/Santa Fe Institute

In Figure 1, there are several routes that lead to the present -day school of agent -based computational economics. The main route runs from John von Neumann and his work on self-replicating machines during the nineteen forties directly to the agent-based school; via John Nash and then Thomas Schelling [due to Schelling’s (1978) path-breaking agent-based work on the emergence of racially segregated neighborhoods]; or via some of von Neumann’s present-day followers such as John Holland [Holland and Miller (1991)], Stuart Koffman, John Miller (1998), W. Brian Arthur (1993, 1994), and Christopher Langton (1989).20 Leigh Tesfatsion (1997, 2000, 2001a, 2001b, 2002), Robert Axtell, Joshua Epstein, Robert Axelrod and David Lane (1993) would also be legitimately included in this group. Most of these modern day researchers have ties to the Santa Fe Institute, an organization specializing in the study of complex systems.21  One of the leaders of the Sante Fe Institute, W. Brian Arthur (1988, 1990), has written extensively about being influenced by economists who emphasized the importance of positive feedback loops, increasing returns, and path dependency, in explaining evolutionary economic behavior. As a result, in Figure 1 links to Arthur run from Nicholas Kaldor (1981), Gunnar Myrdal, Paul David (1985), and Ilya Progogine (1993).

 

E.  Lineage of Behavioral Economics

In Figure 1, the intellectual lineage leading to the present-day school of behavioral economics begins with Quesnay, Smith, and Ricardo and follows three principal routes. The first runs through Marx, to Dobb, Baran, Sweezy and Mandel, and then through some more modern-day radical political economists such as Sherman, Weiskopf, Bowles [Bowles, Ginits and Osborne (2001)], Foley (1997), and Marglin (1984). The second runs through Marx and then through Schumpeter, passes through Richard Day (1975) [see also Day and Eliasson (1986) and Day and Chen (1993)], and then through George Akerlof, Richard Thayler, and Robert Frank. The third runs through Veblen, Commons and Mitchell and then through Duesenberry and Simon (1957, 1979, 1984). It continues directly through Ackerlof, Thayler and Frank and also takes a side branch through Cyert and March (1963). This last route emphasizes the contributions to behavioral economics of the “Carnegie School” and the work of Herbert Simon. Indeed, Simon is considered to be the father of the field and frequently wrote that his thinking on bounded rationality was influenced by the work of John Commons [e.g., Simon (1979, p. 499; 1991, p. 87)].

 

F.  Lineage of Austrian Economics

In Figure 1, the intellectual lineage leading to the present-day school of Austrian economics begins with Quesnay, Smith and Ricardo and works its way to Carl Menger via Say and Mill. This route continues via Menger’s most prominent disciples Böhm-Bawerk and Wieser to Mises and then to his student Hayek.27 From Hayek, the route extends to the more modern-day Austrians such as Israel Kirzner (1987, 1997) and Murray Rothbard and finally to the school itself. A two-way arrow is shown between the Austrians and agent-based computational economics because many of Mises’ and Hayek’s beliefs are in harmony with central tenets of agent-based modeling. Indeed, Vriend (2002) lays out a strong case that Hayek was essentially an agent-based computational economist.

 

G.  Lineage of Evolutionary Economics

In Figure 1, the intellectual lineage leading to the present-day school of evolutionary economics begins with Quesnay and Smith and follows several routes. The first runs through both Marx and Schumpeter and then through economic historians such as David (1985) and Rostow (1990). The second runs through Schumpeter and the neo-Schumpeterians such as Nelson (1995), Winter (1964), Witt (1992, 1993), Iawi (1984a, 1984b), Eliasson, Silverberg (1988), and Dosi [and Nelson (1994)]. The third runs through Schumpeter and then the far-from-equilibrium thermodynamicists [Prigogine (1993), Nicolis, Allen (1988)] and the punctuated equilibrium theorists [Tushman and Romanelli (1985)], and finally through England (1994), who notes that he was inspired by Boulding (1970, 1978, 1991), Georgescu-Roegen (1971), and Prigogine (1993). The fourth runs through Schumpeter and the classical thermodynamicists [Georgescu-Roegen (1971), Ayres (1978)], and then through England (1994), or directly to the school. Two-way arrows indicating complementary schools of thought are drawn between all of the other evolutionary schools except the Austrians.

 

 

Key sources of Research:

 

A Contribution to Theory of Economic Growth

Robert Solow

1956

https://www.econ.nyu.edu/user/debraj/Courses/Readings/Solow.pdf

 

 

On the Concept of Optimal Economic Growth

T Coopmans

 

http://cowles.yale.edu/sites/default/files/files/pub/d01/d0163.pdf

 

Interactions between the Multiplier Analysis and the Principle of Acceleration

Paul A. Samuelson

The Review of Economics and Statistics
Vol. 21, No. 2 (May, 1939), pp. 75-78

 

 

ON THE MECHANICS OF ECONOMIC DEVELOPMENT

Robert E. LUCAS, Jr.

 

http://www.parisschoolofeconomics.eu/docs/darcillon-thibault/lucasmechanicseconomicgrowth.pdf

 

 

Increasing Returns and Long-Run Growth

Paul M. Romer

 

http://ihome.ust.hk/~dxie/OnlineMacro/romerjpe1986.pdf

 

 

‘Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model’

Van den Berg, Hendrik

(2013)

The Journal of Philosophical Economics, VII:1

 

http://www.jpe.ro/pdf.php?id=4995

 

 

‘Growth theory after Keynes, part II: 75 years of obstruction by the mainstream economics culture’

Van den Berg, Hendrik

(2014)

The Journal of Philosophical Economics, VII:2

 

http://jpe.ro/pdf.php?id=6300

 

 

The Neoclassical Growth Model and Twentieth-Century Economics

Mauro Boianovsky and Kevin D. Hoover

http://public.econ.duke.edu/~kdh9/Source%20Materials/Research/Boianovsky-HooverIntroductionGrowth.pdf

 

 

TREVOR SWAN AND THE NEOCLASSICAL GROWTH MODEL

Robert W. Dimand and Barbara J. Spencer (née Swan)

 

http://www.nber.org/papers/w13950.pdf

 

 

The History of Macroeconomics from Keynes’s General Theory to the Present

Michel De Vroey and Pierre Malgrange

June 2011

 

http://sites.uclouvain.be/econ/DP/IRES/2011028.pdf

 

 

Keynes and the Cambridge School

G. C. Harcourt and Prue Kerr

 

https://historiadelamacroeconomia.wikispaces.com/file/view/Chapter22.pdf

 

 

NEW GROWTH THEORY, EFFECTIVE DEMAND, AND POST-KEYNESIAN DYNAMICS

Amitava Krishna Dutt

September 2001

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.463.871&rep=rep1&type=pdf

 

 

A Brief Introduction to Post Keynesian Macroeconomics

J. E. King

2013

 

http://wug.akwien.at/WUG_Archiv/2013_39_4/2013_39_4_0485.pdf

 

 

CONTEMPORARY ECONOMIC GROWTH MODELS AND THEORIES: A LITERATURE REVIEW

Ilkhom SHARIPOV

 

http://www.ceswp.uaic.ro/articles/CESWP2015_VII3_SHA.pdf

 

 

The structure of growth models: A comparative survey

Antonio D’Agata

Giuseppe Freni

 

http://growthconf.ec.unipi.it/papers/DAgataFreni.pdf

 

 

Major Schools of Economic Theory

 

http://www.tamut.edu/Walter-Casey/DOCUMENTS/CV-and-papers/Economic%20Theory.pdf

 

 

Getting rid of Keynes? A survey of the history of macroeconomics from Keynes to Lucas and beyond

 

Michel De Vroey

2010

 

https://www.nbb.be/doc/oc/repec/reswpp/wp187en.pdf

 

 

Neoclassical Growth Theory and Heterodox Growth Theory: Opportunities For and Obstacles To Greater Engagement

Mark Setterfield

December 2009

 

http://internet2.trincoll.edu/repec/WorkingPapers2009/wp09-01.pdf

 

 

Endogenous Growth: A Kaldorian Approach

Mark Setterfield

2010

 

https://pdfs.semanticscholar.org/bea6/c7a330e8859a2fd6bf09043e864ac71bbe92.pdf

 

 

Financialization in Kaleckian economies with and without labor constraints

Soon Ryoo and Peter Skotty

18th March 2008

 

https://www.umass.edu/economics/publications/2008-05.pdf

 

 

Post-Keynesian macroeconomics since the mid-1990s – main developments

Eckhard Hein

Working Paper, No. 75/2016

Institute for International Political Economy Berlin

 

 

Aggregate Demand, Aggregate Supply and Economic Growth

AMITAVA KRISHNA DUTT

2006

 

http://piketty.pse.ens.fr/files/Dutt2006.pdf

 

 

A dynamic synthesis of basic macroeconomic theory: implications for stabilization policy analysis

Forrester, N. B.

(1982).

(Doctoral dissertation, M. I. T., Alfred P. Sloan School of Management).

 

 

The System Dynamics National Model

Jay Forrester

http://systemsmodelbook.org/uploadedfile/1470_0a924c5b-b909-42fa-be9b-932588278f36_forre004.pdf

 

 

Understanding Recent Developments in Growth Theory

Lars Weber

 

https://www.systemdynamics.org/conferences/2007/proceed/papers/WEBER326.pdf

 

 

Linking Economic Modeling and System Dynamics: A Basic Model for Monetary Policy and Macroprudential Regulation

 

Klaus Dieter John

 

https://www.systemdynamics.org/conferences/2012/proceed/papers/P1396.pdf

 

 

System Dynamics and Its Contribution to Economics and Economic Modeling

M Radzicki

https://www.researchgate.net/publication/227167378_System_Dynamics_and_Its_Contribution_to_Economics_and_Economic_Modeling

 

 

Evolutionary Economics and System Dynamics

M Radzicki

J Sterman

http://www.systemdynamics.org/conferences/1993/proceed/radzi338.pdf

 

 

A Post Keynesian Model of Macroeconomic Growth, Instability, and Income Distribution

M Radzicki and K Saeed

http://www.systemdynamics.org/conferences/1993/proceed/saeed435.pdf

 

 

Institutional Economics, Post Keynesian Economics, and System Dynamics: Three Strands of a Heterodox Economics Braid

M Radzicki

2008

https://www.researchgate.net/publication/237138677_Institutional_Economics_Post_Keynesian_Economics_and_System_Dynamics_Three_Strands_of_a_Heterodox_Economics_Braid

 

 

Was Alfred Eichner a System Dynamicist?

M Radzicki

2006

https://www.researchgate.net/publication/239920399_Was_Alfred_Eichner_a_System_Dynamicist

 

 

Mr. Hamilton, Mr. Forrester and a Foundation for Evolutionary Economics

Michael J. Radzicki

2004

 

http://www.systemdynamics.org/conferences/2003/proceed/PAPERS/923.pdf

 

 

Disequilibrium Systems Representation of Growth Models—Harrod-Domar, Solow, Leontief, Minsky, and Why the U.S. Fed Opened the Discount Window to Money-Market Funds

Frederick Betz

 

http://file.scirp.org/pdf/ME_2015120814432915.pdf

 

 

An Institutional Dynamics Model of the Euro zone crisis: Greece as an Illustrative Example

Domen Zavrl
Miroljub Kljajić

2010

 

http://www.systemdynamics.org/conferences/2010/proceed/papers/P1144.pdf

 

 

“Deterministic chaos in an experimental economic system.”

Sterman, John D.

Journal of Economic Behavior & Organization 12.1 (1989): 1-28.

https://dspace.mit.edu/bitstream/handle/1721.1/47164/deterministicchax00ster.pdf?sequence=1

 

 

NONLINEAR MODE-INTERACTION IN THE MACROECONOMY

Erik MOSEKILDE, Erik REIMER LARSEN, John D. STERMAN

and Jesper SKOVHUS THOMSEN

1992

 

https://www.researchgate.net/profile/John_Sterman2/publication/225978240_Nonlinear_Mode-Interaction_in_the_Macroeconomy/links/5733372708ae298602dce4ba.pdf

 

 

Devil’s staircase and chaos from macroeconomic mode interaction

Larsen, Erik Reimer, et al.

Article in Journal of Economic Dynamics and Control ·

February 1993

 

https://www.researchgate.net/profile/Erik_Mosekilde/publication/4830250_Devil’s_staircase_and_chaos_from_macroeconomic_mode_interaction/links/5789dd4908ae59aa6676bfe6.pdf

 

 

Mode‐locking and entrainment of endogenous economic cycles.

Haxholdt, C., Kampmann, C., Mosekilde, E., & Sterman, J. D.

System Dynamics Review, 11(3), 177-198.

(1995).

https://dspace.mit.edu/bitstream/handle/1721.1/48535/modelockingentra00haxh.pdf?sequence=1

 

 

Low Interest Rates and Banks Profitability: Update – December 2016

Low Interest Rates and Banks Profitability: Update – December 2016

 

This post is an update to my previous post published in May 2016.  You can access it below.

Impact of Low Interest Rates on Bank’s Profitability

There have been several developments in this research area since my post.  I list them below.

 

Sources of Research:

BIS Annual Report released in 2015 discussed causes and concequenses of Persistent Low Interest rates.

BIS Annual Report 2014-15

 

IMF released Global Financial Stability Report in October 2016 which discussed in Chapter 1 causes and effects of Low interest rates.

Global Financial Stability Report October 2016

 

The Office of Financial Research of the USA Department of Treasury released its Annual report 2015 in which it warned of impact of low interest rates on Banks and other financial Institutions.

US Office of Financial Research Annual Report 2015

 

European Central bank released its Financial Stability Review report in November 2016 in which low interest rates environment was discussed.

ECB Financial Stability Review November 2016

 

Deutsche bank had issued its research note in 2013 detailing how Japanese Financial Institutions have coped with Low Interest Rates Environment.

Deutche Bank Research: Ultra Low Interest Rates: How Japanese Banks have coped?

 

Deutsche bank had issued its research note in 2012 on how low interest rates are pressuring US banks net interest margins.

DB Research: Low Interest rates Pressuring US Banks Margins

 

Stanley Fischer Vice Chairman of Federal Reserve Board gave his remarks recently on the Long Term Challenges for the US Economy in which he commented on impact of low interest rates on financial stability.

FRB/Stan Fischer: Longer-Term Challenges for the U.S. Economy

 

Stanley Fischer Vice Chairman of Federal Reserve Board gave his remarks recently on the causes of Low interest rates and Implications.

FRB/Stan Fischer: Why Are Interest Rates So Low? Causes and Implications

 

Stanley Fischer Vice Chairman of Federal Reserve Board gave his remarks recently on the Low interest rates.

FRB/Stan Fischer: Low Interest Rates

 

Riksbank of Sweden published paper on how do low and negative interest rates affect banks’ profitability.

MONETARY POLICY REPORT APRIL 2016

To push inflation up, the Riksbank and several other central banks have introduced negative interest rates. Critics say that negative rates counteract their purpose in that they are said to squeeze banks’ profitability, which could then lead to higher lending rates and lower credit supply. This discussion has arisen in the euro area in particular, where banks are already burdened with low profitability. The Riksbank’s assessment is that the overall effect of negative interest rates on banks’ profitability is limited and may even be positive, and that the function of Swedish banks in the monetary policy transmission mechanism is maintained even at a negative policy rate level.

Riksbank/Sweden: How do low and negative interest rates affect banks’ profitability?

 

Central Bank of Columbia has recently published article

The risks of low interest rates

Leonardo Gambacorta

 

The risks of low interest rates

 

European Parliament’s Committee on Economic and Monetary Affairs.

Karl Whelan, University College Dublin

The ECB’s QE announcement has made it clear they intend to keep interest rates in the euro area at very low levels for a long period of time. This policy should help to boost economic growth and move inflation back towards the ECB’s target. However, every economic policy produces winners and losers and certain sectors of the economy will be negatively affected by this policy. This paper presents evidence on sectoral balance sheets and household asset holdings to explain how low interest rates affect various groups. It also discusses the impact a prolonged period of low interest rates has on different types of financial institutions. The paper concludes that, at present, the risks of low interest rates provoking a new financial crisis are low.

Low Interest Rates and Financial Stability

 

Interesting Blog on Bruegel

Eurozone QE and bank profitability: Why it is too early to taper

In the eyes of the critics, the quantitative easing programs have been of little help to growth and inflation and have instead been an attack on savers, undermining the profitability of banks and insurances. Do these arguments stand scrutiny?

Eurozone QE and bank profitability: Why it is too early to taper

 

Interesting Blog on Bruegel

What impact does the ECB’s quantitative easing policy have on bank profitability?

This Policy Contribution shows that the effect of the ECB’s QE programme on bank profitability has not yet had a dramatically negative effect on bank operations.

What impact does the ECB’s quantitative easing policy have on bank profitability?

 

At the first ECB ESRB ( European Systemic Risk Board) conference Elena Carletti gave a overview of the work of the task force on Low Interest Rates and Financial Stability.

September 2016

Low interest rates and implications for financial stability – A discussion

 

See the Youtube video of conference presentations at the ECB/ESRB on Low Interest Rates and Implications for Financial Stability.

ECB: First ESRB annual conference – Low interest rates and the implications of financial stability

 

See Youtube video of Welcome Address by Mario Draghi, Chair of the ESRB

ECB: First ESRB annual conference – Welcome address: Mario Draghi, Chair of the ESRB

 

ECB/ESRB Taskforce report on Macro-prudential Policy issues arising from Low Interest rates and Structural changes in the EU Financial System.

November 28, 2016

ECB/ESRB: Macro prudential Policy Issues Arising from Low Interest Rates and Structural Changes in the EU Financial System

 

ECB/ESRB Taskforce report on Macro-prudential Policy issues arising from Low Interest rates and Structural changes in the EU Financial System.

There are several Annex of the report which can be downloaded from the link below.

The ESRB publishes a report on the macroprudential policy issues arising from low interest rates and structural changes in the EU financial system

 

Mario Draghi gave his remarks at the EU Parliament about the work of ESRB and the Taskforce report.

November 28, 2016

Introductory statement by Mario Draghi, Chair of the ESRB, Brussels, 28 November 2016

Repo Chains and Financial Instability

Repo Chains and Financial Instability

There are three issues with Repos.

  • Repo chains as source of instability
  • Impact of Repo on Money Supply
  • Re-hypothecation: Reuse of Repo and Leverage

 

From Collateral Shortages and Intermediation Networks

 

In the pre-crisis period, financial markets witnessed a growing reliance on short-term funds raised in wholesale markets. In particular, there was a dramatic rise in the use of sales and repurchase (repo) agreements to fund longer-term investment opportunities or to finance inventories of securities held for market-making purposes. Given that such funding opportunities were secured by collateral, they were mostly considered to be safe. Since the crisis of 2007–8, however, the repo and the asset-backed commercial paper (ABCP) markets have been viewed as one of the potential sources of fragility in the financial system, with conventional wisdom (partially) attributing the collapse of Bear Stearns, Lehman Brothers, and Northern Rock to their reliance on wholesale funding.

 

From The Economics of Collateral Chains

 

The ‘supply’ of pledged collateral is typically received by the central collateral desk of banks that re-use the collateral to meet the ‘demand’ from the financial system. The key providers of primary (or source) collateral to the ‘street’ (or large banks) are: hedge funds; securities lending (via custodians) on behalf of pension funds, insurers, official sector accounts, etc. and commercial banks that liaise with large banks. The securities they hold are continuously re-invested to maximize returns over their maturity tenor. Source collateral is collateral that can be re-pledged, creating dynamic collateral chains. The term re-pledged is a legal term and means that the dealer receiving the collateral has the right to reuse in its own name.  Since a single piece of source collateral can be re-used several times by several different intermediaries, the aggregate volume of repledged collateral reflects both the availability of collateral (that is collateral from the source) as well as the velocity (or reuse rate) of source collateral.

 

From The Economics of Collateral Chains

 

The ratio of the total collateral received by the large banks divided by the ‘source’ collateral is the velo- city of collateral due to the intermediation by the street. For end-2007, the numerator of $10 trillion is what the large banks received in pledged collateral. We then compare it to the denominator or the primary sources of collateral via the hedge funds and security lenders acting on behalf of pension, insurers, official accounts, etc. − this was about $3.4 trillion. Empirical evidence suggests that the chains were longer pre-Lehman and around 3 as of end-2007; they have decreased to about 2.4 as of end-2010. Intuitively, this means that collateral from a primary source now takes ‘fewer steps’ to reach the ultimate client. This is due to the concern of source collateral providers about counterparty risk of the large banks, and also from the demand for higher quality collateral by the ultimate clients. Lower quality collateral is difficult to move in the present time.

 

From The Economics of Collateral Chains

 

This decline in the re-use of collateral may be viewed positively from a financial stability perspective. However, from a monetary policy perspective, the lubrication in the global financial markets is now lower as the velocity of money type instruments has declined. The shorter “chains” − from constraining the collateral moves lowers global financial lubrication will increase overall cost of capital to the real economy.

Overall, global liquidity remains below pre-Lehman levels. When we consider collateral use/re-use in addition to M2 or the monetary base in U.S., U.K. and Eurozone, financial lubrication was over $30 trillion before Lehman (and one-third came via pledged collateral); now it is lower by about $4-5 trillion. Since cross-border funding is important for large banks, allowing for the efficient arbitrage of their funding operations, (e.g., consider the recent surge in the demand for U.S. dollar funding by European banks), the state of the pledged collateral market needs to be considered when setting monetary policy.

 

Key Sources of Research:

 

Velocity of Pledged Collateral: Analysis and Implications

Manmohan Singh

November 2011

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1961904

 

Sizing Up Repo 

Arvind Krishnamurthy   Stefan Nagel

Dmitry Orlov

June 2011

 

http://www.banqueducanada.ca/wp-content/uploads/2011/11/Sizing-up-repo_June29.pdf

 

RESALEABLE DEBT AND SYSTEMIC RISK

Jason Roderick Donaldson Eva Micheler

January 2, 2016

 

http://eprints.lse.ac.uk/66042/1/__lse.ac.uk_storage_LIBRARY_Secondary_libfile_shared_repository_Content_LSE%20SRC%20Discussions%20papers_2016_dp-53.pdf

 

Infante, S. (2015).

Liquidity windfalls: The consequences of repo rehypothecation.

Technical report, Federal Reserve Board of Governors Finance and Economics Dis- cussion Series 2015-22.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2460979

 

Kahn, C. M. and H. J. Park

(2015).

Collateral, rehypothecation, and efficiency.

UIUC Working paper.

 

Lee, J. (2015).

Collateral circulation and repo spreads.

Technical report

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2548209

 

Singh, M. (2010).

The velocity of pledged collateral.

Technical report, IMF.

 

Singh, M. and J. Aitken (2010).

The (sizable) role of rehypothecation in the shadow banking system.

Technical report, IMF.

 

Gorton, G. and A. Metrick (2010).

Haircuts.

Review (Nov), 507–520.

 

Gorton, G. and A. Metrick (2012).

Securitized banking and the run on repo.

Journal of Financial Economics 104(3), 425–451.

 

Copeland, A., A. Martin, and M. Walker (2014).

Repo runs: Evidence from the tri- party repo market.

The Journal of Finance 69(6), 2343–2380.

 

Antinolfi, G., F. Carapella, C. Kahn, A. Martin, D. Mills, and E. Nosal (2014).

Repos, Fire Sales, and Bankruptcy Policy.

Review of Economic Dynamics, (forthcoming).

 

Financial Intermediation Networks

Marco Di Maggio† Alireza Tahbaz-Salehi

March 2015

http://www.lse.ac.uk/fmg/events/Intermeidation-March2015.pdf

 

Collateral Shortages and Intermediation Networks

Marco Di Maggio  Alireza Tahbaz-Salehi

October 1, 2015

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2492007

 

The political economy of repo markets

Daniela Gabor

https://info.brot-fuer-die-welt.de/sites/default/files/blog-downloads/gabor_political_economy_of_repo_markets.pdf

 

Collateral Risk, Repo Rollover and Shadow Banking

Shengxing Zhangú

August 28, 2014

 

http://www.econ.queensu.ca/files/other/Zhang%20paper.pdf

 

Shadow Interconnectedness: The Political Economy of (European) Shadow Banking

Daniela Gabor

September 16, 2013

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2326645

 

Systemic Risk, Contagion, and Financial Networks: A Survey

Matteo Chinazzi Giorgio Fagiolo

June 3, 2015

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2243504

 

A Map of Collateral Uses and Flows

 

Andrea Aguiar Richard Bookstaber Dror Y. Kenett Thomas Wipf

https://financialresearch.gov/working-papers/files/OFRwp-2016-06_Map-of-Collateral-Uses.pdf

 

Aguiar, A., R. Bookstaber, and T. Wipf.

“A Map of Funding Durability and Risk.”

Office of Financial Research Working Paper no. 14-03, 2014.

 

Baklanova, V.,

“Repo and Securities Lending: Improving Transparency with Better Data.”

Office of Financial Research Brief no. 15-03, 2015.

 

Baklanova, V., A. Copeland, and R. McCaughrin.

“Reference Guide to U.S. Repo and Securities Lending Markets.”

Office of Financial Research Working Paper no. 15-17, 2015.

 

Shadow Banks and Systemic Risks

Rui Gong Frank H. Page Jr.

July 23, 2015

 

Financial Contagion with Collateralized Transactions: A Multiplex Network Approach

Gustavo Peralta  Ricardo Crisóstomo

July 2016

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2717411

 

Non-bank financial institutions: Assessment of their impact
on the stability of the financial system

 

http://ec.europa.eu/economy_finance/publications/economic_paper/2012/pdf/ecp472_en.pdf

 

Taxonomy of Studies on Interconnectedness

Gazi Kara  Mary H. Tian Margaret Yellen

December 15, 2015

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2704072

 

 

Financial Plumbing and Monetary Policy

Manmohan Singh

June 2014

 

http://www.reflektion.org/wp-content/uploads/2014/07/wp14111.pdf

 

Haircuts and Repo Chains

Tri Vi Dang

Gary Gorton

Bengt Holmström

http://www.columbia.edu/~td2332/Paper_Repo.pdf

 

Nonbank Financial Intermediation, Financial Stability, and the Road Forward

Stanley Fischer

 

https://www.federalreserve.gov/newsevents/speech/fischer20150330a.pdf

 

Financial Intermediation Chains in an OTC Market

Ji Shen  Bin Wei  Hongjun Yan

December 15, 2015

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2577497

 

Dealer Networks

Dan Li Norman Schürhoff

October 22, 2014

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2023201

 

Systemic Risks in Repo Markets

 

Somnath Chatterjee

Repo Runs

Antoine Martin David Skeie Ernst-Ludwig von Thadden

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr444.pdf

 

Securitized Banking and the Run on Repo

Gary Gorton

Andrew Metrick

First version: January 22, 2009 This version: November 13, 2009

https://www.moodys.com/microsites/crc2010/papers/gorton_run_on_repo_nov.pdf

 

Who Ran on Repo?

Gary Gorton, Andrew Metrick

October 4, 2012

http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf

 

Repo Runs: Evidence from the Tri-Party Repo Market

Adam Copeland Antoine Martin Michael Walker

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr506.pdf

 

Matching Collateral Supply and Financing Demands in Dealer Banks

 

Adam Kirk, James McAndrews, Parinitha Sastry, and Phillip Weed

DECEMBER 2014

https://www.newyorkfed.org/medialibrary/media/research/epr/2014/1412kirk.pdf

 

Collateral Reuse in Shadow Banking and Monetary Policy

Ameya Muley∗

7th January 2016

http://economics.mit.edu/files/10999

 

Money for Nothing: The Consequences of Repo Rehypothecation

Sebastian Infante

Federal Reserve Board September 19th, 2014 Abstract

 

Intermediary Funding Liquidity and Rehypothecation as Determinants of Repo Haircuts and Interest Rates

Egemen Eren

Stanford University July 23, 2014

http://web.stanford.edu/~eren/eren2014.pdf

 

Re-use of collateral in the repo market

Lucas Marc Fuhrer, Basil Guggenheim and Silvio Schumacher

2015

http://www.snb.ch/n/mmr/reference/working_paper_2015_02/source/working_paper_2015_02.n.pdf

 

Collateral Reuse as a Direct Funding Mechanism in Repo Markets

George Issa Elvis Jarnecic

 

http://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2016-Switzerland/papers/EFMA2016_0566_fullpaper.pdf

 

Rehypothecation and Liquidity

David Andolfatto Fernando M. Martin  Shengxing Zhang

2015-02-02

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2646142

 

Matching Prime Brokers and Hedge Funds∗

Egemen Eren†

JOB MARKET PAPER

December 23, 2015

http://web.stanford.edu/~eren/eren_jmp.pdf

 

Collateral, Rehypothecation, and Efficiency

Charles M. Kahn† Hye Jin Park‡

Last updated: April 15, 2015

https://research.stlouisfed.org/conferences/summer_workshop/docs/Collateral_Rehypothecation_and_Efficiency.pdf

 

The market for Collateral: the Potential impact of Financial Regulation

Jorge Cruz Lopez, Royce Mendes and Harri Vikstedt

http://www.bankofcanada.ca/wp-content/uploads/2013/06/fsr-0613-lopez.pdf

 

Rehypothecation

David Andolfatto Fernando Martin Shengxing Zhang

February 26, 2014

http://tippie.uiowa.edu/economics/tow/papers/andolfatto_spring2014.pdf

 

Collateralized Security Markets

John Geanakoplos William R. Zame

http://levine.sscnet.ucla.edu/archive/refs4661465000000000040.pdf

 

Rehypothecation

CRL MONNeT

https://www.phil.frb.org/research-and-data/publications/business-review/2011/q4/brq411_Rehypothecation.pdf

 

Collateral and Monetary Policy

Manmohan Singh

2013

https://www.imf.org/external/pubs/ft/wp/2013/wp13186.pdf

 

Financial Plumbing and Monetary Policy

Prepared by Manmohan Singh

June 2014

https://www.imf.org/external/pubs/ft/wp/2014/wp14111.pdf

 

Understanding the role of collateral in financial markets

M Singh

 

http://www.brookings.edu/~/media/events/2015/02/23-collateral-financial-markets/20150223-singh-slides.pdf

 

Systemic Risk and Stability in Financial Networks

Daron Acemoglu Asuman Ozdaglar Alireza Tahbaz-Salehi
This version: January 15, 2013

http://dspace.mit.edu/bitstream/handle/1721.1/77606/Acemoglu13-03.pdf?sequence=1

 

 

Systemic Risk in Endogenous Financial Networks

Daron Acemoglu Asuman E. Ozdaglar Alireza Tahbaz-Salehi

January 22, 2015

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2553900

 

Towards a theory of shadow money

Daniela Gabor and Jakob Vestergaard

https://ineteconomics.org/uploads/papers/Towards_Theory_Shadow_Money_GV_INET.pdf

 

Do Shadow Banks Create Money?

Jo Michell

http://eprints.uwe.ac.uk/28552/1/1602.pdf

 

How Does Monetary Policy A􏰝ffect Shadow Bank Money Creation? 

Kairong Xiao†

June 17, 2016

http://www.cicfconf.org/sites/default/files/paper_296.pdf

 

The Economic Consequences of ‘Market-Based’ Lending

Carolyn Sissoko

May 24, 2016

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2766693

 

Key Mechanics of the U.S. Tri-Party Repo Market

Adam Copeland, Darrell Duffie, Antoine Martin, and Susan McLaughlin

2012

https://www.newyorkfed.org/medialibrary/media/research/epr/12v18n3/1210cope.pdf

 

The Failure Mechanics of Dealer Banks

Darrell Duffie

2010

http://www.darrellduffie.com/uploads/pubs/DuffieFailureMechanicsDealerBanks2010.pdf

 

The Euro Interbank Repo Market

Loriano Mancini Angelo Ranaldo Jan Wrampelmeyer

March 26, 2014

http://www.cbs.dk/files/cbs.dk/angeloranaldopaper_4.pdf