News and Commentary
Liberty Street Economics has a new model for contagion risk in the financial sector. They are able to model by inputting different losses from sectors outside the financial sector (say, an increase in mortgage defaults) to examine how severe a crisis will be and how it propagates.
The Basel Committee on Banking Supervision published a press release based on their June 19-20 meeting. The committee discussed revisions to the leverage ratio, including better disclosure requirements.
VoxEU has published a new commentary summarizing the findings of a paper on leverage ratio regulation and covered interest parity. The column finds that increases in the leverage ratio increases dollar borrowing costs.
Alan S. Binder argues in The Wall Street Journal that the Financial Stability Oversight Committee (FSOC) does not have the tools to combat the next financial crisis.
New Research
A new paper from the Financial Stability Board evaluates the effects of the 2010 Basel III reforms. It finds that while there were some slight negative effects of these reforms on small and medium-sized enterprises, to the extent that they were negative they varied by jurisdiction and were only temporary.
A new paper from the Hoover Institution tells the history how ideas have proliferated throughout the decentralized Federal Reserve System. FOMC reforms in the ’50s made it possible for individual reserve banks to influence the development of different policies, reducing groupthink in monetary policy.
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