Since the Euro crisis, investors and policymakers are well aware of the so-called "doom loop" between the banking system and the sovereign. That is, a crisis originating in the banking system (sovereign) will weaken the sovereign (banking system), which in turn will worsen the banking (sovereign) crisis itself.In a recent ECB discussion Paper "Managing the sovereign-bank nexus", the 7 economists - Giovanni Dell’Ariccia, Caio Ferreira, Nigel Jenkinson, Luc Laeven, Alberto Martin, Camelia Minoiu, and Alexander Popov - coauthored the paper suggested that the banks and sovereigns are linked by three interacting channels:
Former Fed Governor Jeremy Stein explain to us his recent research “The Federal Reserve's Balance Sheet as a Financial-Stability Tool” coauthored with Robin Greenwood and Samuel Hanson.
John Cochrane talks about Fiscal Theory of Price Level and how can we apply this theory on the current macroeconomy.
Federal Reserve announced yesterday that it will start purchasing Treasury bills from Oct 15 (Tuesday) until at least the second quarter of next year.
Cochrane discusses with us his view on the development in Macroeconomics since the Great Depression. He also explains what Neo-Fisherian and Fiscal Theory of Price Level are, and why they are important for understanding the current economic situation around the world.
Countries with swap line arrangement with Federal Reserve, be it the standing ones or temporary, saw smaller increases in spread during the initial pandemic stress period.
HKD tends to be on the strong side (closer to HKD 7.75 per USD) when the interest rate differential is positive (HIBOR > LIBOR).