The Nonbank-Bank Nexus and the Shadow Banking System
Manmohan Singh,Zoltan Pozsar +1 more
TLDR
In this paper, the authors consider the role of asset managers as a major source of funding for banks through the shadow banking system and propose a policy to consider the re-use of pledged collateral when defining bank leverage ratios.Abstract:
The present way of thinking about financial intermediation does not fully incorporate the rise of asset managers as a major source of funding for banks through the shadow banking system. Asset managers are dominant sources of demand for non-M2 types of money and serve as source collateral ?mines' for the shadow banking system. Banks receive funding through the re-use of pledged collateral ?mined' from asset managers. Accounting for this, the size of the shadow banking system in the U.S. may be up to $25 trillion at year-end 2007 and $18 trillion at year-end 2010, higher than earlier estimates. In terms of policy, regulators will need to consider the re-use of pledged collateral when defining bank leverage ratios. Also, given asset managers' demand for non-M2 types of money, monitoring the shadow banking system will warrant closer attention well beyond the regulatory perimeter.read more
Citations
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What is Shadow Banking
TL;DR: In this paper, the authors define shadow banking as "all financial activities, except traditional banking, which require a private or public backstop to operate" and propose a backstop as a crucial feature of shadow banking.
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The (impossible) repo trinity: The political economy of repo markets
TL;DR: The concept of the "repo trinity" was introduced by as mentioned in this paper, which captures a set of policy objectives that central banks outlined after the 1998 Russian crisis, the first systemic crisis of collateral-based finance, connecting financial stability with liquid government bond markets and free repo markets.
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Socialism and the blockchain
Steve Huckle,Martin White +1 more
TL;DR: It is argued that blockchain technologies are not just a Libertarian tool, they also enhance Socialist forms of governance.
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In the Shadow of Basel: How Competitive Politics Bred the Crisis
TL;DR: In this paper, the authors argue that global governance mechanisms undermine the capacity of national banking regulators to deal with the deviant activities of their banks and argue that this was the case with respect to the Basel Accords and the regulation of the bank-based shadow-banking system.
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Stitched on the Edge: Rule Evasion, Embedded Regulators, and the Evolution of Markets
Matthias Thiemann,Jan Lepoutre +1 more
TL;DR: In this paper, the authors study how rule evasion affects the evolution of markets or how the interaction between regulators and the regulated about the meaning of compliance influences this effect, and propose a synthesis of relational and institutional accounts of the embeddedness of markets.
References
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Global Banking Glut and Loan Risk Premium
TL;DR: In this article, a theoretical model linking global banks and U.S. loan risk premiums was developed to show that the culprit for easy credit conditions in the United States up to 2007 may have been the Global Banking Glut rather than the Global Savings Glut.
Journal ArticleDOI
Do Global Banks Spread Global Imbalances? The Case of Asset-Backed Commercial Paper During the Financial Crisis of 2007-09
TL;DR: The global imbalance explanation of the financial crisis of 2007-09 suggests that demand for riskless assets from countries with current account surpluses created fragility in countries having current account deficits as discussed by the authors.
Book
The New Lombard Street: How the Fed Became the Dealer of Last Resort
TL;DR: The New Lombard Street as mentioned in this paper, a book about the evolution of ideas and institutions in the American banking system since the establishment of the Federal Reserve in 1913, explains how the Fed took classic central banking wisdom from Britain and Europe and adapted it to America's unique and considerably more volatile financial conditions.
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A Comparative-Advantage Approach to Government Debt Maturity
TL;DR: In this paper, the authors study the optimal government debt maturity in a model where investors derive monetary services from holding riskless short-term securities, and argue that if there are negative externalities associated with private money creation, the government should tilt its issuance more towards short maturities.
Journal ArticleDOI
Financial Intermediation and the Post-Crisis Financial System ∗
TL;DR: In this paper, the authors outline an accounting framework for the financial system for assessing the impact of securitization on financial stability. And they discuss the role of countercyclial capital requirements and the Spanish-style statistical provisioning in mitigating the harmful effects of lengthening intermediation chains.