banks

Standard macroeconomic theory did not help foresee the crisis, nor has it helped understand it or craft solutions. This columns argues that both the New Classical and New Keynesian complete markets macroeconomic theories not only did not…

Credit underwriters pride themselves in their ability to cut lending when they sense that economic fundamentals have changed for the worse. For example one often hears bankers talking about passing on deals in 2007 because of "not liking…

An increase in government borrowing to fund medium-term investment is not going to result in out-of-control inflation. But failure of capital investment due to an out-of-control capital account deficit will in the end impoverish Germany.

Responding to press conference questions, ECB President Mario Draghi has said the ECB is ‘technically ready’ to bring interest rates below zero. WHat do negative interest rates do? The explanation is here.

Banks pay next to nothing on deposits while charging a rate that is often linked to treasuries on the loans they make. The steeper the curve, the wider the "margin". And given the leverage inherent in the banking system, even a small margin…

Given its importance, here are some facts about the interbank lending market in the US.

European banks continue to be engaged in deleveraging. It is partly driven by new capital requirements and partly by preparing for the next year's ECB's asset quality review and stress test. The deleveraging process includes reducing…

So much has been written about the endogeneity of money that I thought it was now widely accepted. But recent exchanges have shown me that people STILL aren't getting it. Most recently, there have been two themes doing the rounds that…

This lack of credit expansion is a dangerous trend that could result in years of Japan-style stagnation. In order to address it, one approach the ECB is contemplating is forcing the banking system to use the new LTRO proceeds to provide…

Below is the full text of a speech by Federal Reserve Governor Daniel Tarullo on regulation of non-bank financial institutions.