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Europe > Switzerland

You are looking at 1 - 3 of 3 items for :

  • Type: Journal Issue x
  • International Policy Coordination and Transmission x
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Cover IMF Working Papers
Friend or Foe? Cross-Border Linkages, Contagious Banking Crises, and “Coordinated” Macroprudential Policies
Mr. Seung M Choi
,
Ms. Laura E. Kodres
, and
Jing Lu
This paper examines whether the coordinated use of macroprudential policies can help lessen the incidence of banking crises. It is well-known that rapid domestic credit growth and house price growth positively influence the chances of a banking crisis. As well, a crisis in other countries with high trade and financial linkages raises the crisis probability. However, whether such “contagion effects” can operate to reduce crisis probabilities when highly linked countries execute macroprudential policies together has not been fully explored. A dataset documenting countries’ use of macroprudential tools suggests that a “coordinated” implementation of macroprudential policies across highly-linked countries can help to stem the risks of widespread banking crises, although this positive effect may take some time to materialize.
Keywords:
WP; break; banking crisis; center; house price growth; Trade Linkages; Financial Linkages; Financial Crisis; Macroprudential Policies; trade partner; credit growth; loan recipient; crisis probability; Housing prices; Banking crises; Credit; Macroprudential policy; Macroprudential policy instruments; Global
Cover IMF Working Papers
Financial Contagion Through Bank Deleveraging: Stylized Facts and Simulations Applied to the Financial Crisis
Mr. Thierry Tressel
The financial crisis has highlighted the importance of various channels of financial contagion across countries. This paper first presents stylized facts of international banking activities during the crisis. It then describes a simple model of financial contagion based on bank balance sheet identities and behavioral assumptions of deleveraging. Cascade effects can be triggered by bank losses or contractions of interbank lending activities. As a result of shocks on assets or on liabilities of banks, a global deleveraging of international banking activities can occur. Simple simulations are presented to illustrate the use of the model and the relative importance of contagion channels, relying on bank losses of advanced countries’ banking systems during the financial crisis to calibrate the shock. The outcome of the simulations is compared with the deleveraging observed during the crisis suggesting that leverage is a major determinant of financial contagion.
Keywords:
WP; interbank market; asset; Financial Contagion; Deleveraging; Funding Shocks; Network Analysis; bank level; banks liability; bank capital outflow; bank assets; parent bank; risk exposure; Foreign banks; Commercial banks; Foreign currency exposure; Emerging and frontier financial markets; Asset liquidity; Eastern Europe; Central and Eastern Europe; Global
Cover IMF Working Papers
The Euro’s Effecton Trade Imbalances
Mr. Helge Berger
and
Volker Nitsch
When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.
Keywords:
WP; trade imbalance; member country; dependent variable; imbalances; trade balance; trade surplus; trade deficit; euro; EMU; European integration; product market; × EMU; exchange rate variability; area trade; exchange rate volatility; euro area member; Plurilateral trade; Trade surpluses; Exchange rates; Trade deficits