During the last few decades, securitization has become a primary channel for enlarging financial markets and transferring credit risk from lenders to investors. Outstanding issues of privately securitized assets peaked worldwide at just under $12 trillion in 2008.
The events of the last year have reminded us all that a central bank does not just have one responsibility, that of achieving price stability. It is indeed its first core purpose (CP1); but as the sole institution that can create cash, and hence bank reserve balances, a central bank has a responsibility for acting […]
In its broad outlines the current financial crisis was foreseen, though not in its specific detail. Virtually all of the major central banks and international financial institutions had been warning about the underpricing of risk and excessive leveraging by 2006/7. the BIS had been warning about it for years. Admittedly few outside the banks themselves […]