305 posts on "Financial Markets"
November 8, 2011
Just Released: Conference on Global Systemic Risk Explores Four Key Questions
The 2007-09 financial crisis spread to markets and institutions around the world, demonstrating why global systemic risk is a major concern in modern financial markets.
November 7, 2011
Remaining Risks in the Tri‑Party Repo Market
The tri-party repo market is one in which large U.S. securities firms and bank securities affiliates (dealers) finance much of their fixed-income securities inventories.
October 19, 2011
Sizing Up the Fed’s Maturity Extension Program
The Federal Open Market Committee (FOMC) recently announced its intention to extend the average maturity of its holdings of securities by purchasing $400 billion of Treasury securities with remaining maturities of six years to thirty years and selling an equal amount of Treasury securities with remaining maturities of three years or less.
October 18, 2011
Just Released: Money and Payments Workshop Examines Repo Market Reform
We have just posted the proceedings of a workshop held on October 7, 2011, which gathered the very latest thinking by academics, central bankers, and practitioners on how the repo market should be reformed to help avoid a recurrence of the recent financial crisis.
October 12, 2011
Short‑Term Debt, Rollover Risk, and Financial Crises
One of the many striking features of the recent financial crisis was the sudden “freeze” in the market for the rollover of short-term debt.
Posted at 7:00 am in Credit, Crisis, Financial Institutions, Financial Markets, Inflation | Permalink
October 11, 2011
Did the Fed’s Term Auction Facility Work?
We argue that the Fed’s Term Auction Facility (TAF), introduced in December 2007, lowered the cost of borrowing of banks in the market during the recent financial crisis.
October 5, 2011
How Well Do Financial Markets Separate News from Noise? Evidence from an Internet Blooper
How efficiently do financial markets process news of unexpected events?
Posted at 7:00 am in Financial Markets | Permalink
September 26, 2011
An Examination of U.S. Dollar Declines
Although the dollar strengthened somewhat recently, its level relative to the currencies of the United States’ main trading partners is nonetheless 11 percent lower than it was at the start of 2009.
September 12, 2011
Can Speculative Trading Magnify Financial Market Co‑movement?
Global financial markets tend to move together. For example, stock market movements across the globe are highly synchronized, economic data releases frequently have large spillover effects across borders, and episodes of financial turmoil often spread across countries that share no significant economic linkages.
August 31, 2011
Is There Stigma to Discount Window Borrowing?
The Federal Reserve employs the discount window (DW) to provide funding to fundamentally solvent but illiquid banks (see the March 30 post “Why Do Central Banks Have Discount Windows?”). Historically, however, there has been a low level of DW use by banks, even when they are faced with severe liquidity shortages, raising the possibility of a stigma attached to DW borrowing. If DW stigma exists, it is likely to inhibit the Fed’s ability to act as lender of last resort and prod banks to turn to more expensive sources of financing when they can least afford it. In this post, we provide evidence that during the recent financial crisis banks were willing to pay higher interest rates in order to avoid going to the DW, a pattern of behavior consistent with stigma.
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