The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The New York Fed engages with individuals, households and businesses in the Second District and maintains an active dialogue in the region. The Bank gathers and shares regional economic intelligence to inform our community and policy makers, and promotes sound financial and economic decisions through community development and education programs.
The February Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey released today show activity expanding at a moderate pace across the region. Like those for January, the February CEIs incorporate the annual benchmark employment revisions for 2011 and 2012, and reveal that the economies of the region did not go off track as a result of the disruptions caused by Superstorm Sandy. (A recent blog post explores the employment effects of Sandy in the New York City metropolitan area.)
Peel back the layers of complex financial institutions and instruments, and you're
left with individuals demanding to be paid, and to be paid quickly. Payments
are the electricity that powers the entire financial system. The ability to
securely send and receive timely payments is a prerequisite for commerce and
the smooth functioning of financial markets. Despite the seemingly
straightforward nature of the subject, a preliminary exploration of payments
data offers insight into how institutions react to changing economic
conditions. In this post, we aim to investigate recent volatility in the amount
of payments, particularly during the recent financial crisis. We focus on
estimating and extracting changing levels of payments required for interbank
lending, which reflect banks’ varying needs for liquidity. We find that
variables capturing macroeconomic conditions and financial market stress are
additional large drivers of fluctuations in payments.
Inflation swaps are used to transfer inflation risk and make inferences about
the future course of inflation. Despite the importance of this market to
inflation hedgers, inflation speculators, and policymakers, there is little
evidence on its liquidity. Based on an analysis
of new and detailed data in this post we show that the market appears
reasonably liquid and transparent despite low trading activity, likely
reflecting the high liquidity of related markets for inflation risk. In a previous
post, we examined similar issues for the broader interest rate derivatives
Liberty Street Economics features insight and analysis from economists working at the intersection of research and policy. The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Donald Morgan.
The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.
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