Margins as Canaries in the Coal Mine
Central clearing counterparties (CCPs) manage counterparty risk by requiring clearing members to post margins. This paper explores the role of margins...
How Reform Happens
What determines whether and how regulations are reformed? We use a newly constructed data set of 3,590 successful and failed regulatory reforms in 189...
Stablecoins: Policy, sovereignty and backstops
No jurisdiction can ignore stablecoins. They can be banned outright only in the most effectively authoritarian countries, or accommodated and even...
The geopolitics of stablecoins
Stablecoins are private digital money pegged to a fiat currency, overwhelmingly the US dollar. Dollar stablecoins reinforce American monetary and...
Stablecoins are run-optimised instruments
Stablecoins are private digital money designed to trade at par with a fiat currency, usually the US dollar. This column argues that stablecoins are...
The paradox of perfect supervision
Each financial crisis brings more financial supervision, more models and larger buffers – but still fragility persists. The paradox of perfect...
How financial authorities best respond to AI challenges
Artificial intelligence is transforming finance faster than the authorities can adapt. This column argues that while AI enhances the financial system...
Of AI bubbles and crashes
Warnings of an AI stock market bubble abound. Should investors and policymakers be concerned? This column argues that innovation-driven bubbles can...
Talk and the City: How Far to Trust Bankers (Not) Calling for Bailouts?
To evaluate a bank’s resilience to financial stress, authorities often rely on private information from a peer institution, or counterparty. This...
Artificial intelligence and financial crises
The rapid adoption of artificial intelligence (AI) poses new and poorly understood threats to financial stability. We use a game-theoretic model to...
How central banks can meet the financial stability challenges arising from artificial intelligence
The growing use of artificial intelligence (AI) poses difficult challenges for the financial authorities. AI allows private-sector firms to optimise...
Five systemic threats and what to do about them
Systemic financial risk has both internal and external drivers. So, when we focus too strongly on preventing internal crises, such as the 2008 Global...
Financial instability transition under heterogeneous investments and portfolio diversification
We analyze the stability of financial investment networks, where financial institutions hold overlapping portfolios of assets. We consider the effect...
India’s Unified Payments Interface (UPI) system and its transformative impact on the economy
India’s Unified Payment Interface (UPI) is an example of how an innovative payments and settlement system can initiate an economy wide transformation...
