China’s Bad Debts Can’t Be Simply ‘Socialized’

Once again I am going to discuss debt, and my discussion will be mainly conceptual. I suspect that many of my regular readers might wonder why I keep returning to this subject – and, often enough, keep saying the same things. The reason is because while debt plays a key role in understanding the recent […]

Banking on the Government

By Jesus Gonzalez-Garcia and Francesco Grigoli: (Version in Español) Government ownership of banks is still common around the world, despite the large number of privatizations that took place over the past four decades as governments reduced their role in the economy. On average, state-owned banks hold 21 percent of the assets of the banking system worldwide. In Latin American […]

China: Market Mechanisms Need Official Help

Last July, the People’s Bank of China removed controls on the lending rate and began liberalizing savings rates. This aggravated the volatility of money market rates. It is becoming clearer to PBOC officials that even the successful functioning or market mechanism require an important official role. PBOC Governor Zhou told a conference in Beijing last […]

Reducing Risks in Asia With Macroprudential Policies

By Edda Zoli: Booming real estate markets, rapid credit growth and—at least before the Fed’s tapering announcement last year—sustained capital inflows have raised financial stability challenges across many parts of Asia. To address them, policymakers have increasingly made use of macroprudential policies that address the stability of the financial system as a whole rather than that […]

Antitrust in the New Gilded Age

We’re in a new gilded age of wealth and power similar to the first gilded age when the nation’s antitrust laws were enacted. Those laws should prevent or bust up concentrations of economic power that not only harm consumers but also undermine our democracy — such as the pending Comcast acquisition of Time-Warner. In 1890, […]

Searching For Banking Regulation’s Godiva

The Federal Reserve is mulling a new set of tougher banking rules to boost the odds that the financial system will remain sufficiently liquid when the next crisis strikes. It’s a worthy goal, if only because one day another event will surely arrive. But all the usual caveats apply when it comes to engineering outcomes in economics, starting with […]

China Moves Against Shadow Banking

China is slated to release its latest estimates for banking lending and aggregate financing in the coming days. Over the past 12-months bank lending accounted for about 53% of the total financing, the remainder comes from the shadow banking sector. In China, shadow banking often refers to the trust companies, which are non-bank lenders. At the […]

Global Financial Stability: Beginning to Turn the Corner

By José Viñals Global financial stability is improving—we have begun to turn the corner. But it is too early to declare victory as there is a need to move beyond liquidity dependence—the central theme of our report—to overcome the remaining challenges to global stability. Progress We have made substantial strides over the past few years, and this […]

Bank Lending: Too Much of a Good Thing?

Global banks do not have much to cheer about these days. Earnings are falling, and the banks are responding by cutting jobs. The Federal Deposit Insurance Corporation has charged 16 banks of colluding to rig the London Interbank Offer rate (LIBOR). And theFederal Reserve has approved a rule that requires foreign banks with $50 billion of assets […]

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