The last financial crisis has shown that large banking crises not only pose a highly dangerous risk to financial systems, but also to both the real economy and public finances. Reducing that risk has become a priority for regulators and governments. Still, the debate is open on what the systemic...

This paper uses a stylized simulation model to assess the potential impact of transition risk on banks' balance sheets and establishes a basis for calibrating relevant macro-prudential instruments. We show that even in the short run, a fire-sale mechanism could amplify an initially contained...

The recent financial crisis proved that financial contagion could spread among countries resulting in disruptive effects. In this paper, by modeling and simulating banking system behavior and linkages across countries, we assess, based on data from the BIS and IMF, the possible outcome of...