Strengthening “Mario’s Plan”

Strengthening “Mario’s Plan”

photo: European Parliament The bottom line is that unconventional monetary policies that move away from repairing markets or institutions to changing prices and inflationary expectations seem to be a step into the dark. (Rajan 2013) A step into the dark Following the announcement of last 10 March, as part of its enhanced monetary policy action, Mario […]

Brexit: Financial Risks for the UK

[Photo Credit: Becky McCray] The head of the Bank of England, the British equivalent of the US Federal Reserve, told parliament today that a potential Brexit was the “biggest domestic risk to financial stability” for the UK. BoE Governor Mark Carney elaborated on the risk by saying that he was unable to “provide a blanket assurance that there would […]

Can Systemic Financial Risk Be Contained?

Can Systemic Financial Risk Be Contained?

Risk aversion is a basic human characteristic, and in response to it we seek to safeguard the world live in. We mandate airbags and safety belts for automobile driving, set standards for the handling and shipment of food, build levees and dams to control floods, and regulate financial transactions and institutions to avoid financial collapses. […]

Hunt for Alpha Succeeds if the Entrepreneur Attracts the Right Investors

Hunt for Alpha Succeeds if the Entrepreneur Attracts the Right Investors

From a speech given at the Olivetti day: “How to finance innovation and why it needs to be done.” Brescia, Italy, 16 October 2015 Italy is experiencing a period of extraordinary importance for its future. If current developments have positive outcomes, a virtuous circle could be created with the potential to launch a new and much […]

Dilemmas, Trilemmas and Difficult Choices

Dilemmas, Trilemmas and Difficult Choices

photo: Fr Lawrence Lew, O.P. In 2013 Hélène Rey of the London Business School presented a paper at the Federal Reserve Bank of Kansas City’s annual policy symposium. Her address dealt with the policy choices available to a central bank in an open economy, which she claimed are more limited than most economists believe. The subsequent debate reveals […]

Shadow Banking in China: A Morphing Target

Shadow Banking in China: A Morphing Target

China’s shadow banking system thrived in the years after the global financial crisis, until reined in by regulators since 2013. Nevertheless, new forms of shadow banking are emerging. China’s style of shadow banking “Shadow banking” has become a buzzword ever since Paul McCulley, then with PIMCO, coined the term in 2007 to describe the financial […]

De-Risking Is De-Linking Small States from Global Finance

De-Risking Is De-Linking Small States from Global Finance

photo: Images Money Small states, like the Caribbean countries, have been negatively affected by recent “de-risking” policies implemented by international banks, with particularly damaging consequences on correspondent banking relationships. While recommendations from the Financial Action Task Force (FATF) to deal with risks of money laundering and terrorism financing have often been mentioned to justify those de-risking […]

Central Banks Policy Asynchronous-ity – A Source of New Risk

Since 2009, the key driver of financial markets has been low rates and abundant liquidity which has boosted all asset prices. The total amount of money pumped into global money markets is around US$10-12 trillion, enough to buy each person on earth a widescreen flat TV.  In the great reflation, according to one estimate, over […]

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