Introduction to the Floating-Rate Note Treasury Security
Ezechiel Copic, Luis Gonzalez, Caitlin Gorback, Blake Gwinn, and Ernst Schaumburg Introduction The U.S. Department of the Treasury (Treasury) auctioned its first floating-rate note (FRN) on January 29, 2014. With this auction, Treasury introduced the first new marketable debt instrument since Treasury inflation-protected securities (TIPS) in 1997. The new two-year FRN is a fixed-principal security with […]
How Liquidity Standards Can Improve Lending of Last Resort Policies
Prior to the Great Recession, the focus of bank regulation was on bank capital with little consensus about the need for liquidity regulation.
Just Released: The 2013 SOMA Annual Report in a Historical Context
Alyssa Cambron, Michael Fleming, Deborah Leonard, Grant Long, and Julie Remache In August 2013, we wrote a series of blog posts on the use of the Federal Reserve’s System Open Market Account (SOMA) portfolio in monetary policy operations. Since the onset of the financial crisis, the Federal Open Market Committee (FOMC) has increased the size […]
Liquidity Policies and Systemic Risk
One of the most innovative and potentially far-reaching consequences of regulatory reform since the financial crisis has been the development of liquidity regulations for the banking system.
Just Released: April Surveys Find Businesses Face Increasing Difficulty Retaining Skilled Workers
The Federal Reserve Bank of New York’s monthly business surveys include special supplementary questions on topics of interest.
The Liquidity Stress Ratio: Measuring Liquidity Mismatch on Banks’ Balance Sheets
Liquidity transformation—funding longer-term assets with short-term liabilities—is one of the main functions that banks provide. However, this liquidity mismatch exposes banks to liquidity risk.
On Fire-Sale Externalities, TARP Was Close to Optimal
Imagine that many large and levered banks suffer heavy losses and must quickly sell assets to reduce their leverage. We expect the market price of the assets sold to decline, at least temporarily.
Depositor Discipline of Risk-Taking by U.S. Banks
The recent financial crisis caused the largest rise in the number of bank failures since the unprecedented banking crisis of the 1980s and early 1990s.
Liquidity Risk, Liquidity Management, and Liquidity Policies
During the 2007-09 financial crisis, banks experienced widespread funding shortages, with shortfalls even hindering adequately capitalized banks.
Crisis Chronicles: Not Worth a Continental—The Currency Crisis of 1779 and Today’s European Debt Crisis
During the late 1770s, a newly founded United States began to run up significant debts to finance the American Revolution.