We examine a period during the prevalence of the gold standard in the United States to provide evidence that speculation about a currency peg can have damaging effects on bank balance sheets. In particular, the defeat of the pro-silver candidate in the 1896 presidential election was associated...

The recent crisis has shown that the inconsistent design of the Euro area had previously produced financial convergence, not integration. The crisis increased fragmentation thus further exposing the limits of the single monetary policy. The absence of a common fiscal authority impedes the birth...

We examine the implications of central bank digital currency (CBDC) for financial stability using a monetary general equilibrium model in which (i) banks provide liquidity in the form of fiat currency, and (ii) commercial bank deposits compete with the central bank deposits in CBDC account. CBDC...

Distributed Ledger Technology (DLT) is out to change our future. Its scope is not limited to tokenizing physical objects. In the case of Central Bank Digital Currencies (hereinafter, CBDCs), they can change the way we look at money, one of the earliest inventions of humanity.As soon as digital...

The main result of the quick reactions of the Federal Reserve (the Fed) and the European Central Bank (ECB) to the Covid-19 crisis are that more than 20% of their public debt is now held by these central banks and that the balance sheet of the ECB is now near 50% of GDP (33% for the Fed). Two...

Central banks hold gold reserves that are designed to build confidence in fiat currency. This confidence is undermined if the price of gold falls significantly or rises significantly. Central banks thus have an incentive to manage the price of gold. Such management is evident in fixed gold...

The unconventional monetary policies (UMPs) pursued by the advanced economies (AEs) have posed macroeconomic challenges for the emerging market economies (EMEs) through volatile capital flows and exchange rates. AE central banks need to acknowledge and appreciate the spillovers resulting from...

The Federal Reserve's ideological "support coalition" in Congress is not constant but changes over time with the mandate that it is pursuing. When the Federal Reserve (Fed) is fighting inflation, the Right supports it and the Left attacks it. But when the Fed's primary focus shifts to recession...

Traditionalists believe that foreign policy is forged by conflict between the legislature and the executive, with the judiciary acting as referee. We reject that paradigm, and make the case that the country's independent agencies, exemplified by its central bank, have become significant and...

Recent technological developments linked to secure messaging and traceability present an opportunity to address certain challenges in international and domestic payment systems. From an international perspective, foreign exchange markets remain costly and relatively less efficient than domestic...