News and Commentary
At the Wall Street Journal, Simon Clark and Caitlin Ostroff cover banks’ resistance to the Basel Committee’s proposed rules for cryptocurrency assets. From the banks’ letter to the committee: “We find the proposals in the consultation to be so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets.”
Victoria Guida reports for Politico on President Biden’s nominee for Comptroller of the Currency, an important regulator of large financial institutions.
For VoxEU, J. Doyne Farmer, Charles Goodhart, and Alissa Kleinnijenhuis use “a multi-layered network model of the European financial system to study the implication of bail-in design on financial stability. It shows that early implementation of a bail-in and stronger bank recapitalisation lead to lower contagion losses. However, current bail-in design seems to be in the region of instability and the political economy of incentives makes reforms unlikely in the near future.”
In the American Economics Journal: Macroeconomics, Sebastian Di Tella and Pablo Kurlat model “home value sensitivity to interest rates, finding that “home values are nowhere near as sensitive to interest rates as the user cost model predicts,” in line with prior research and suggesting low interest rates may be more crucial in home construction and sales.”
In an NBER working paper, Silvia Miranda-Agrippino and Hélène Rey “present evidence of the causal effects of the monetary policies of the US Federal Reserve, the European Central Bank and of the People’s Bank of China on the Global Financial Cycle” and “assess whether the 2008 financial crisis has altered the transmission channels of monetary policies on the Global Financial Cycle.”
Also at NBER, Gary B. Gorton and Ping He evaluate banks’ innovations in packaging and securitizing loans, and they “estimate and calibrate a model of bank innovation to determine the quantitative contribution of bank innovation to economic growth.”