Yale School of Management

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News in Systemic Risk: Thursday, July 2, 2020 (10 a.m. ET)

July 2, 2020
Clarifying the ECB’s supervisory approach to consolidation (Edouard Fernandez-Bollo; ECB Banking Supervision) The Shift from Active to Passive Investing: Potential Risks to Financial Stability? (Kenechukwu Anadu, Mathias Kruttli, Patrick McCabe, Emilio Osambela; Federal Reserve Board of Governors) Building a financial regulatory system suitable for the UK in the new era (Nausicaa Delfas; UK Financial Conduct Authority) ESRB risk dashboard (European Systemic Risk Board) Employment Situation Summary (Bureau of Labor Statistics) ESG Risk in Times of COVID-19 (Fabrizio Ferriani, Filippo Natoli; Bank of Italy) Saudi Arabia Extends Some Stimulus Measures for Business (Reema Al Othman, Vivian Nereim; Bloomberg) IMF urges Ukraine to keep central bank independent as governor's exit rattles market (Matthias Williams, Natalia Zinets; Reuters) Continue reading “News in Systemic Risk: Thursday, July 2, 2020 (10 a.m. ET)”

US Treasury Extends $700 Million Loan to YRC Worldwide Inc. under CARES Act Provision

July 1, 2020
On July 1, the US Treasury announced it would make a $700 million loan to YRC Worldwide Inc., a heavyweight equipment transportation company that was deemed by the US Secretary of Defense to be critical to national security. Treasury will receive a 29.6% equity stake in the company in connection with the loan. Continue reading “US Treasury Extends $700 Million Loan to YRC Worldwide Inc. under CARES Act Provision”

U.S. Banks to Maintain Dividends for Now, Following Pre-COVID Stress Test

July 1, 2020
Most of the largest U.S. banks announced Monday that they will continue to pay dividends in the third quarter at the same level as the second quarter. This news comes just two business days after the Federal Reserve announced the results of its annual stress test and an unprecedented “sensitivity analysis” estimating the potential impact of different economic recoveries from the COVID recession on bank performance. Based on these scenarios, the Fed announced a number of temporary restrictions on dividends and other corporate actions.  Continue reading “U.S. Banks to Maintain Dividends for Now, Following Pre-COVID Stress Test”

Reserve liquidity facilities shift from advanced economies to emerging markets

July 1, 2020
On June 19, the European Central Bank (ECB) joined the central banks of England, Japan, and Switzerland in scaling back the frequency of their US dollar liquidity swaps with the Federal Reserve (Fed). Central bank liquidity swap lines facilitate access to foreign capital during periods of international financial stress. While these bilateral swap operations with the Fed have slowed, the ECB announced on June 25 the establishment of the Eurosystem repo facility for central banks (EUREP). The new facility will complement the ECB’s current bilateral swap lines by allowing for less stable currencies to participate in repurchase agreements. This post summarizes the recent activity on Fed swap lines and documents the shift in currency facilities from those aimed at the sturdiest reserve institutions to those aimed at central banks with smaller stocks of dollars. Continue reading “Reserve liquidity facilities shift from advanced economies to emerging markets”

News in Systemic Risk: Wednesday, July 01, 2020 (10 a.m. ET)

July 1, 2020
Interview with Reuters news agency (Phillip R. Lane; European Central Bank) Rethinking capital regulation: the case for a dividend prudential target (Manuel A. Muñoz; European Central Bank) The Promise of Fintech : Financial Inclusion in the Post COVID-19 Era (Ratna Sahay, Ulric Erickson Allmen, Amina Lahreche, Purva Khera, Sumiko Ogawa, Majid Bazarbash, Kimberly Beaton ; International Monetary Fund) Usable bank capital (Alissa Kleinnijenhuis, Laura Kodres, Thom Wetzer ; VoxEU) Sweden Gets Heavy Dose of QE to Slow Economy’s Freefall (Niclas Rolander, Rafaela Lindeberg, Love Liman; Bloomberg) Why Bank Indonesia Will Fund $40 Billion of Government’s Budget (Grace Sihombing, Rieka Rahadiana; Bloomberg) Who Says Emerging Economies Shouldn’t Print Money? (Jon Sindreu; Wall Street Journal) Continue reading “News in Systemic Risk: Wednesday, July 01, 2020 (10 a.m. ET)”

News in Systemic Risk: Tuesday, June 30, 2020 (10 a.m. ET)

June 30, 2020
The prudential response to the Covid-19 crisis (Claudio Borio; Bank of International Settlements) Designing a Main Street Lending Facility (Alexandros P. Vardoulakis; Federal Reserve Board of Governors) Municipal Debt Markets and the COVID-19 Pandemic (Marco Cipriani, Andrew Haughwout, Ben Hyman, Anna Kovner, Gabriele La Spada, Matthew Lieber, Shawn Nee; Federal Reserve Bank of New York) Credible emerging market central banks could embrace quantitative easing to fight COVID-19 (Gianluca Benigno, Jon Hartley, Alicia García-Herrero, Alessandro Rebucci, Elina Ribakova; VoxEU) Indebted Governments May Hold Monetary Policy Hostage, BIS Warns (Catherine Bosley; Bloomberg) Bank capital and the European recovery from the COVID-19 crisis (Moritz Schularick, Sascha Steffen, Tobias Tröger; Centre for Economic Policy Research) Continue reading “News in Systemic Risk: Tuesday, June 30, 2020 (10 a.m. ET)”

News in Systemic Risk: Thursday, July 2, 2020 (10 a.m. ET)

July 2, 2020
Clarifying the ECB’s supervisory approach to consolidation (Edouard Fernandez-Bollo; ECB Banking Supervision) The Shift from Active to Passive Investing: Potential Risks to Financial Stability? (Kenechukwu Anadu, Mathias Kruttli, Patrick McCabe, Emilio Osambela; Federal Reserve Board of Governors) Building a financial regulatory system suitable for the UK in the new era (Nausicaa Delfas; UK Financial Conduct Authority) ESRB risk dashboard (European Systemic Risk Board) Employment Situation Summary (Bureau of Labor Statistics) ESG Risk in Times of COVID-19 (Fabrizio Ferriani, Filippo Natoli; Bank of Italy) Saudi Arabia Extends Some Stimulus Measures for Business (Reema Al Othman, Vivian Nereim; Bloomberg) IMF urges Ukraine to keep central bank independent as governor's exit rattles market (Matthias Williams, Natalia Zinets; Reuters) Continue reading “News in Systemic Risk: Thursday, July 2, 2020 (10 a.m. ET)”

US Treasury Extends $700 Million Loan to YRC Worldwide Inc. under CARES Act Provision

July 1, 2020
On July 1, the US Treasury announced it would make a $700 million loan to YRC Worldwide Inc., a heavyweight equipment transportation company that was deemed by the US Secretary of Defense to be critical to national security. Treasury will receive a 29.6% equity stake in the company in connection with the loan. Continue reading “US Treasury Extends $700 Million Loan to YRC Worldwide Inc. under CARES Act Provision”

U.S. Banks to Maintain Dividends for Now, Following Pre-COVID Stress Test

July 1, 2020
Most of the largest U.S. banks announced Monday that they will continue to pay dividends in the third quarter at the same level as the second quarter. This news comes just two business days after the Federal Reserve announced the results of its annual stress test and an unprecedented “sensitivity analysis” estimating the potential impact of different economic recoveries from the COVID recession on bank performance. Based on these scenarios, the Fed announced a number of temporary restrictions on dividends and other corporate actions.  Continue reading “U.S. Banks to Maintain Dividends for Now, Following Pre-COVID Stress Test”

Reserve liquidity facilities shift from advanced economies to emerging markets

July 1, 2020
On June 19, the European Central Bank (ECB) joined the central banks of England, Japan, and Switzerland in scaling back the frequency of their US dollar liquidity swaps with the Federal Reserve (Fed). Central bank liquidity swap lines facilitate access to foreign capital during periods of international financial stress. While these bilateral swap operations with the Fed have slowed, the ECB announced on June 25 the establishment of the Eurosystem repo facility for central banks (EUREP). The new facility will complement the ECB’s current bilateral swap lines by allowing for less stable currencies to participate in repurchase agreements. This post summarizes the recent activity on Fed swap lines and documents the shift in currency facilities from those aimed at the sturdiest reserve institutions to those aimed at central banks with smaller stocks of dollars. Continue reading “Reserve liquidity facilities shift from advanced economies to emerging markets”

News in Systemic Risk: Wednesday, July 01, 2020 (10 a.m. ET)

July 1, 2020
Interview with Reuters news agency (Phillip R. Lane; European Central Bank) Rethinking capital regulation: the case for a dividend prudential target (Manuel A. Muñoz; European Central Bank) The Promise of Fintech : Financial Inclusion in the Post COVID-19 Era (Ratna Sahay, Ulric Erickson Allmen, Amina Lahreche, Purva Khera, Sumiko Ogawa, Majid Bazarbash, Kimberly Beaton ; International Monetary Fund) Usable bank capital (Alissa Kleinnijenhuis, Laura Kodres, Thom Wetzer ; VoxEU) Sweden Gets Heavy Dose of QE to Slow Economy’s Freefall (Niclas Rolander, Rafaela Lindeberg, Love Liman; Bloomberg) Why Bank Indonesia Will Fund $40 Billion of Government’s Budget (Grace Sihombing, Rieka Rahadiana; Bloomberg) Who Says Emerging Economies Shouldn’t Print Money? (Jon Sindreu; Wall Street Journal) Continue reading “News in Systemic Risk: Wednesday, July 01, 2020 (10 a.m. ET)”

News in Systemic Risk: Tuesday, June 30, 2020 (10 a.m. ET)

June 30, 2020
The prudential response to the Covid-19 crisis (Claudio Borio; Bank of International Settlements) Designing a Main Street Lending Facility (Alexandros P. Vardoulakis; Federal Reserve Board of Governors) Municipal Debt Markets and the COVID-19 Pandemic (Marco Cipriani, Andrew Haughwout, Ben Hyman, Anna Kovner, Gabriele La Spada, Matthew Lieber, Shawn Nee; Federal Reserve Bank of New York) Credible emerging market central banks could embrace quantitative easing to fight COVID-19 (Gianluca Benigno, Jon Hartley, Alicia García-Herrero, Alessandro Rebucci, Elina Ribakova; VoxEU) Indebted Governments May Hold Monetary Policy Hostage, BIS Warns (Catherine Bosley; Bloomberg) Bank capital and the European recovery from the COVID-19 crisis (Moritz Schularick, Sascha Steffen, Tobias Tröger; Centre for Economic Policy Research) Continue reading “News in Systemic Risk: Tuesday, June 30, 2020 (10 a.m. ET)”