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The recent financial crisis has triggered a major rethink of analytical approaches and policy towards financial stability. The crisis has encouraged a sharper focus on systemic risk, the inclusion of a financial sector in macroeconomic models, a shift from a microprudential to a macroprudential...
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In the economic environment that has been emerging over the last couple of decades, it is more likely that the occasional build-up of financial imbalances, typically in the form of unsustainable credit and asset price booms, will occur against the background of low and stable inflation, posing a...
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What are liquidity crises? And what can be done to address them? This short paper brings together some personal …: the distinction between idiosyncratic and systematic elements of liquidity crises; the growing reliance on funding … liquidity in a market-based financial system; the role of payment and settlement systems; the need to improve liquidity buffers …
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The concept of the natural rate of interest, or r*, has risen to prominence in monetary policy following the Great Financial Crisis. No doubt a key reason for the concept's newfound prominence has been the further decline of real and nominal interest rates to new lows, which has further...
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