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Finance Banking Featured Global

Geopolitical tensions and international financial fragmentation: The 28th Geneva Report on the World Economy

Rising geopolitical tensions now threaten the rules-based world order that has governed the functioning of the international monetary system since WWII with risks of geoeconomic fragmentation. The latest Geneva Report on the World Economy examines how these risks, which include a reversal in decades of financial integration, reduced international allocative efficiency, and an erosion of […]

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trade Environment News World

Ripples presaging a financial tsunami

Loss of confidence in the US dollar’s reserve currency status could trigger a collapse of the US Treasury market and international financial fragmentation. This column argues that hedging is a rational response to recent fluctuations in the US dollar, as investors look to insure against exchange rate risks. However, widespread hedging itself makes Treasuries less […]

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trade Featured Finance News World

The trade imbalance network and currency fluctuations

In recent years, concerns over global financial fragmentation have grown amid rising geopolitical tensions. This column integrates a network structure in a multi-country model with imperfect financial markets to study how currency risk premia are connected to financiers’ risk bearing capacity. Guided by the theory, it constructs a centrality-based characteristic that gives a direct role […]

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World Featured Finance media News

Managing credit in dollarised economies: The effective but asymmetric effects of foreign currency reserve requirements

Emerging markets with partially dollarised financial systems are particularly vulnerable to global financial cycles. This column examines how reserve requirements on foreign currency deposits can help mitigate credit booms induced by capital inflows. Focusing on Peru between 2008 and 2017, the authors combine microdata with a calibrated macro model to show that foreign currency reserve […]

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World Economy Featured News

Monetary policy spillovers in the global economy

Over and over in the history of the international monetary system, national policymakers have pointed to – and voiced concerns about – the effects of policy actions undertaken in foreign countries on the outlook and financial conditions in their own domestic economies. The most recent example involves the spillovers of tighter monetary policies to address […]

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