stevenkelly49.bsky.social
Associate Director of Research at the Yale Program on Financial Stability. Financial crises & how to fight them. [email protected]
Substacking on financial stability topics at www.withoutwarningresearch.com (free)
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happy birthday Mark!!
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www.fdic.gov/foia/certifi...
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Are you guys gonna do Tales of the Underworld episodes?
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The SNB did a lot things right, including sizing the availability of emergency liquidity to cover virtually all possible short-term outflows.
Yet, the run continued—as should be expected when a bank is nonviable.
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imports + other payments with china, "hard" currency if Brazil's came under pressure, hedge against future world where CNY is more important
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www.bcb.gov.br/detalhenotic...
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Already read it when it was posted to SSRN! I'm a fan from way back ;)
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My comments on the USD moves, broadly:
- Weaker currency ≠ weaker reserve currency status
- Comparing trade war USD moves to financial crisis USD moves is apples & oranges. If higher recession risk becomes financial crisis, I'd expect USD appreciation
- If not USD, then WUT
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We didn't classify that as "ad hoc emergency lending," but rather a capital injection and restructuring. Previous Yale studies on it here:
elischolar.library.yale.edu/journal-of-f...
elischolar.library.yale.edu/journal-of-f...
And a broader "Swiss response to the GFC" note on the way 👍
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This was a post-retirement reflection :)
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4/ The list of 21st century ad hoc rescue loans we survey:
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There's also a video version if you should for some reason prefer to look at my mug during the conversation (I don't judge):
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3/ Execs of failed banks often say they were just victims of illiquidity.
But as Mervyn King wrote, “Almost every financial crisis starts with the belief that the provision of more liquidity is the answer, only for time to reveal that beneath the surface are genuine problems...”
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2/ The paper calls time on the idea a systemically important firm needing an emergency loan is likely "solvent but illiquid"—in none of the cases was liquidity alone a "cure.”
It also highlights (literally!) other takeaways and notable design features for future crisis-fighters.
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This should also help settle the Lawrence Ball vs Paulson/Bernanke/Geithner argument that has persisted since Larry's excellent paper and eventual book (which is drawn upon considerably) came out, which suggests the crisis-fighters were just playing politics
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Awesome! Is this portending a book? 👀
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2/ (Silvergate's discount window borrowing peaked in Q4-2022.)
Link to data: www.federalreserve.gov/regreform/di...
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3/ And there's the FIMA Repo Facility, which lends against Treasury securities & is in theory is available to any country with an account at the NY Fed (ie, not North Korea, et al). The Fed does not disclose, even to Congress, who borrows or just signs up: elischolar.library.yale.edu/journal-of-f...
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2/ UK, Europe, Switzerland, Japan, & Canada lines have since become standing lines. The other countries' lines were temporary, but used again in Covid.
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You’ve been on a tear lately, Iñaki!! Loving it.