Biodiversity losses pose risks not only to environmental health but also to global financial stability. This column examines the propagation of nature-related transition risks from international borrowers to European lenders. Using a database of international borrowing firms that receive funds from European lenders in the syndicated loan market, the authors find that the level of […]
The US dollar is the dominant vehicle currency for global goods trade, but there is less evidence for trade in services. This column uses a novel firm-level dataset of Portuguese firms to study the currency choice for international trade in services. Larger firms, and firms with greater exposure to foreign currency imports, are more likely […]
There has been a rise in trade restrictions since the US-China tariff war and Russia’s invasion of Ukraine. This column explores the impact of geopolitical tensions on trade flows over the last decade. Geopolitical factors have affected global trade only after 2018, mostly driven by deteriorating geopolitical relations between the US and China. Trade between […]
Financial institutions, especially in Europe, hold a disproportionate amount of domestic sovereign bonds on their balance sheets. This home bias is facilitated by regulation that allows banks to assign a zero-risk weight to sovereign debt issued by any EU country. This column argues that the zero-risk weight policy leads to capital misallocation and a significant […]
The strict measures to contain the spread of COVID-19 called for a quick governmental response. This column highlights how the allocation of support across firms during the pandemic evolved over time. During the acute phase in 2020, policy support reached medium- and high-productivity firms, and therefore did not distort the efficient allocation of resources. In […]
Firms increasingly rely on immigrant researchers or imported R&D services for innovation. This column argues that these sources of foreign ideas play a pivotal role in firm growth. Drawing on administrative data from Denmark, the authors show that firms employing immigrant researchers or imported R&D services see higher productivity growth than other firms, and that […]
Since the 2008 global financial crisis, firms’ funding patterns have changed, with a shift towards more market-based finance with active issuances of debt securities by non-financial corporations. This column uses French data to investigate the implications of firms’ debt structure for the transmission of monetary policy to investment. Interest rate policy has a stronger impact […]
The US and China’s economic rebound has fueled global growth and put upward pressure on commodity prices, while geopolitical risks are increasing the volatility of prices. This column reveals the significant impact of export price fluctuations, driven by idiosyncratic events in commodity markets, on the business cycles of emerging markets and developing economies. It also […]
Monetary policy is often feared to have limited traction in emerging markets. Yet, empirical evidence supporting or disproving these concerns is scarce. This column constructs novel monetary policy shocks based on analysts’ forecasts of policy rate decisions. Critical for the identification of the shocks, analysts can update their forecasts up to the time of the […]
Non-bank financial intermediation has grown rapidly since the global financial crisis, and its size now equals that of banks in many countries. This column reviews research and policy work on this form of financial intermediation from a financial stability perspective. Research has documented the benefits relating to its specific comparative advantages in maturity and liquidity […]
