The Repression of Financial Markets
In the years after the great financial crisis gross government debt in the developed world reached a 200-year high watermark1 of around 107% of GDP by 2014, according to IMF estimates; up from 72.5% in 2007. It is expected to remain close to this level in coming years. Over and above the officially recorded debt stock, governments are facing high future and contingent liabilities, such as underfunded social security and health care liabilities and loan guarantees, as has been illustrated for the United States by Hamilton (2013).
KeywordsMonetary Policy Euro Area Credit Spread Monetary Policy Shock European Banking Authority
Unable to display preview. Download preview PDF.
- Adrian, Tobias, Adam Ashcraft, Hayley Boesky, and Zoltan Pozsar (2013a). “Shadow Banking”, Federal Reserve Bank of New York, Economic Policy Review, December 2013 http://www.newyorkfed.org/research/epr/2013/0713adri.pdf.
- Adrian, Tobias, Adam Ashcraft, and Nicola Cetorelli (2013b). “Shadow Bank Monitoring”, Federal Reserve Bank of New York Staff Reports, no. 638, September 2013. http://www.newyorkfed.org/research/staff_reports/sr638.pdf.
- Adrian, Tobias, Michael Fleming, Jonathan Goldberg, Morgan Lewis, Fabio Natalucci, and Jason Wu (2013c). “Dealer Balance Sheet Capacity and Market Liquidity during the 2013 Selloff in Fixed-Income Markets”, Liberty Street Economics, 16 October 2013. http://libertystreeteconomics.newyorkfed.org/2013/10/dealer-balance-sheet-capacity-and-market-liquidity-during-the-2013-selloff-in-fixed-income-markets.html#.VBldGk10xpg.
- Akitoby, Bernardin, Takuji Komatsuzaki, and Ariel Binder (2014). Inflation and Public Debt Reversals in the G7 Countries”, IMF Working Paper 14/96, June 2014. http://www.imf.org/external/pubs/cat/longres.aspx?sk=41633.0.
- Allianz Global Investors (2013). “Financial Repression and Regulation: Paradigm Shift for Insurance Companies and Institutions for Occupational Retirement Provision”, Allianz Global Capital Markets & Thematic Research, July 2013. https://www.allianzglobalinvestors.de/MDBWS/doc/Market-Insights-Financial-Repression-and-Regulation-Paradigm-Shift-for-Insurance-Companies-Institutions-for-Occupational-Retirement-Provision.pdf?9f4f5c08b8b6f7c36b8624030836c7e15480c72awebweb.
- Andritzky, Jochen (2012). “Government Bonds and Their Investors: What Are the Facts and Do They Matter?”, IMF Working Paper 12/158, June 2012. https://www.imf.org/external/pubs/ft/wp/2012/wp12158.pdf.
- Angelini, Paolo, Giuseppe Grande and Fabio Panetta (2014). “The Negative Feedback Loop between Banks and Sovereigns”, Banca d’Italia, Occasional Paper No. 213, January 2014 http://www.bancaditalia.it/pubblicazioni/econo/quest_ecofin_2/qef213/QEF_213.pdf.
- Bailey, Andrew (2014). “The Capital Adequacy of Banks – Today’s Issues and What We Have Learned from the Past”, Speech, London, 10 July 2014. http://www.bis.org/review/r140711e.htm.
- Basel Committee on Banking Supervision (2013). “Basel III: The Liquidity Coverage Ratio and Liquidity Risk Monitoring Tools”, Bank for International Settlements, January 2013. http://www.bis.org/publ/bcbs238.pdf.
- Bleich, Dirk, Ralf Fendel, and Jan-Christoph Rülke (2013). “Monetary Policy and Stock Market Volatility”, Discussion Paper of the Deutsche Bundesbank, No 45/2013. http://econstor.eu/bitstream/10419/87722/1/771925875.pdf.
- Claessens, Stijn, Zoltan Pozsar, Lev Ratnovski, and Manmohan Singh (2012). “Shadow Banking: Economics and Policy”, IMF Staff Discussion Note 12/12, 4 December 2012 http://www.imf.org/external/pubs/ft/sdn/2012/sdn1212.pdf.
- Claessens, Stijn and Lev Ratnovski (2014). “What Is Shadow Banking?”, IMF Working Paper, WP/14/25. http://www.imf.org/external/pubs/ft/wp/2014/wp1425.pdf.
- Claus, Edda, Iris Claus, and Leo Krippner (2014). “Asset Markets and Monetary Policy Shocks at the Zero Lower Bound, Reserve Bank of New Zealand”, Discussion Paper Series, DP2014/03, July 2014. http://rbnz.govt.nz/research_and_publications/discussion_papers/2014/dp14_03.pdf.
- Coates, John (2014). “The Biology of Risk”, New York Times, Sunday Review, 7 June 2014. http://www.nytimes.com/2014/06/08/opinion/sunday/the-biology-of-risk.html?_r=0.
- Coates, John, Paul C. Fletcher, Johann Graggaber, Mark Gurnella, Ben Hardy, Narayanan Kandasamya, Lionel Page, Andrew S. Powlson, and Markus Schaffner (2014). “Cortisol Shifts Financial Risk Preferences”, Proceedings of the National Academy of Sciences (18 February 2014). http://www.pnas.org/content/early/2014/02/13/1317908111.full.pdf.
- Cohen, Benjamin, and Michela Scatigna (2014). “Banks and Capital Requirements: Channels of Adjustment”, BIS Working Paper, No. 443, March 2014. http://www.bis.org/publ/work443.pdf.
- Committee on the Global Financial System (2013). “Asset Encumbrance, Financial Reform and the Demand for Collateral Assets”, CGFS Papers, No 49, May 2013. http://www.bis.org/publ/cgfs49.pdf.
- Corsetti, Giancarlo, and Luca Dedola (2013). “The Mystery of the Printing Press: Self-fulfilling Debt Crises and Monetary Sovereignty”, CEPR Discussion Paper, September 2013. http://www.cepr.org/pubs/dps/DP9358.asp.
- Cour-Thimann, Philippine, and Bernhard Winkler (2013). “The ECB’s Non-Standard Monetary Policy Measures: The Role of Institutional Factors and Financial Structure”, ECB Working Paper Series, No. 1528, April 2013. http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1528.pdf.
- Cunliffe, Jon (2014). “The Role of the Leverage Ratio and the Need to Monitor Risks Outside the Regulated Banking Sector”, Speech, London, 17 July 2014. http://www.bis.org/review/r140721a.htm.
- Danielsson, J., H.S. Shin and J. Zigrand (2013). Endogenous and Systemic Risk. Chicago, IL: University of Chicago Press by NBER, pp. 73–94.Google Scholar
- Ehlers, Torsten (2012). “The Effectiveness of the Federal Reserve’s Maturity Extension Program — Operation Twist 2: The Portfolio Rebalancing Channel and Public Debt Management”, in “Threat of Fiscal Dominance?”, BIS Papers No. 65, May 2012. http://www.bis.org/publ/bppdf/bispap65.htm.
- European Banking Authority (2014). “On the Impact on the Volatility of Own Funds of the Revised IAS 19 and the Deduction of Defined Pension Assets from Own Funds under Article 519 of the Capital Requirements Regulation”, Discussion Paper, 2014–1. https://www.eba.europa.eu/regulation-and-policy/own-funds/discussion-paper-on-the-impact-on-the-volatility-of-own-funds-of-the-revised-ias-19-and-the-deduction-of-defined-pension-assets-from-own-funds.
- Fahr, Stephan, Roberto Motto, Massimo Rostagno, Frank Smets and Oreste Tristani (2011). A Monetary Policy Strategy in Good and Bad Times: Lessons from the Past, ECB Working paper Series, No. 1336, May 2011. http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1336.pdf.
- Fischer, Stanley (2014). “Financial Sector Reform – How Far Are We?”, Martin Feldstein Lecture at the National Bureau of Economic Research, Cambridge, Massachusetts, 10 July 2014. http://www.bis.org/review/r140715b.htm.
- Gagnon, Joseph, Matthew Raskin, Julie Remache and Brian Sack (2010). “Large-Scale Asset Purchases by the Federal Reserve: Did They Work?”, Federal Reserve Bank of New York, Staff Report No. 441, March 2010. http://www.newyorkfed.org/research/staff_reports/sr441.pdf.
- Hamilton, James D (2013). “Off-Balance-Sheet Federal Liabilities”, NBER Working Paper No. 19253, July 2013. http://www.nber.org/papers/w19253.
- Hannoun, Hervé (2011). “Sovereign Risk in Bank Regulation and Supervision: Where Do We Stand?”, speech at the Financial Stability Institute high-level meeting in Abu Dhabi, 26 October 2011. http://www.bis.org/speeches/sp111026.pdf.
- Ingves, Stefan (2014). “Restoring Confidence in Banks”, Keynote address to the 15th Annual Convention of the Global Association of Risk Professionals, New York, 4 March 2014. http://www.bis.org/speeches/sp140304.htm.
- International Monetary Fund (2011). “The Legacy of the Crisis: How Long Will It Take to Lower Public Debt?”, Fiscal Monitor, September 2011. http://www.imf.org/external/pubs/ft/fm/2011/02/fmindex.htm.
- International Monetary Fund (2013a). “Reassessing the Role and Modalities of Fiscal Policy in Advanced Economies”, IMF Policy Paper, September 2013. http://www.imf.org/external/np/pp/eng/2013/072113.pdf.
- International Monetary Fund (2013b). “Unconventional Monetary Policies — Recent Experiences and Prospects”, IMF Policy Paper, 16 May 2013. http://www.imf.org/external/pp/longres.aspx?id=4764.
- Kirkegaard, Jacob, Carmen Reinhart, and Belen Sbrancia (2011). “Financial Repression Redux”, IMF Finance & Development, June 2011. http://www.imf.org/external/pubs/ft/fandd/2011/06/pdf/reinhart.pdf.
- Krishnamurthy, Arvind and Annette Vissing-Jorgensen (2011). “The Effects of Quantitative Easing on Interest Rates: Channels and Implications for Policy”, NBER Working Paper No. 17555, October 2011. http://www.nber.org/papers/w17555.
- Kuroda, Haruhiko (2013). “Quantitative and Qualitative Monetary Easing”, Speech at a Meeting Held by the Yomiuri International Economic Society in Tokyo, 12 April 2013. http://www.boj.or.jp/en/announcements/press/koen_2013/ko130412a.htm/.
- Lambert Frederic, and Kenichi Ueda (2014). “The Effects of Unconventional Monetary Policies on Bank Soundness”, IMF Working Paper 14/152. http://www.imf.org/external/pubs/ft/wp/2014/wp14152.pdf.
- Li, Canlin and Min Wei (2014). “Term Structure Modelling with Supply Factors and the Federal Reserve’s Large Scale Asset Purchase Programs”, Federal Reserve Finance and Economics Discussion Series, 2014–07. http://www.federalreserve.gov/pubs/feds/2014/201407/201407pap.pdf.
- Luck, Stephan and Paul Schempp (2014). “Banks, Shadow Banks, and Fragility”, ECB Working Paper Series, No. 1726, August 2014. http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1726.pdf.
- Malz, Allan, Ernst Schaumburg, Roman Shimonov, and Andreas Strzodka (2014). “Convexity Event Risks in a Rising Interest Rate Environment”, Liberty Street Economics, March 2014. http://libertystreeteconomics.newyorkfed.org/2014/03/convexity-event-risks-in-a-rising-interest-rate-environment.html#.U-yOast0zcs.
- Moreira, Alan and Alexi Savov (2014). “The Macroeconomics of Shadow Banking”, NBER Working Paper No. 20335, July 2014. http://www.nber.org/papers/w20335.
- McKinnon, Ronald (1973). Money and Capital in Economic Development. Washington, DC: Brookings Institute.Google Scholar
- Moessner, Richhild (2013). “Effects of Explicit FOMC Policy Rate Guidance on Market Interest Rates”, DNB Working Paper, No. 384/July 2013. http://www.dnb.nl/en/binaries/Working%20Paper%20384_tcm47-294337.pdf.
- Nemoto, Naoko and Ryo Onodera (2013). “What Is the Japanese Banking System’s Tolerance for Rising Interest Rates?” Standard & Poor’s ratings Service, 8 July 2013.Google Scholar
- Pescatori, Andrea, Damiano Sandri, and John Simon (2014). Debt and Growth: Is There a Magic Threshold?, IMF Working Paper 14/34, February 2014. http://www.imf.org/external/pubs/cat/longres.aspx?sk=41352.0.
- Ramaswamy, Srichander (2012). “The Sustainability of Pension Schemes”, BIS Working Paper, No. 368, January 2012. http://www.bis.org/publ/work368.pdf.
- Reinhart, Carmen, Vincent R. Reinhart and Kenneth S. Rogoff (2012). “Public Debt Overhangs: Advanced-Economy Episodes since 1800”. Journal of Economic Perspectives, 26(3), 69–86.Google Scholar
- Shaw, Edward (1973). Financial Deepening in Economic Development. Oxford: Oxford University Press.Google Scholar
- Shirai, Sayuri (2014). “Communication and Forward Guidance in a World of Unconventional Monetary Policy: The Case of the Bank of Japan”, February 2014. http://www.boj.or.jp/en/announcements/press/koen_2014/data/ko140301a1.pdf.
- Turner, Philip (2014). The Exit from Non-conventional Monetary Policy: What Challenges?, BIS Working Paper, No. 448, May 2014. http://www.bis.org/publ/work448.pdf.
- Yellen, Janet (2014). “Monetary Policy and Financial Stability”, Michel Camdessus Central Banking Lecture, 2 July 2014. http://www.bis.org/review/r140703a.htm?ql=1.