Journal of Money, Credit and Banking

Monetary policy and housing investment in the euro area and the United States

Retrieved on: 
Thursday, May 18, 2023
Journal of the European Economic Association, Housing, Prevalence, Franklin American Mortgage Championship, Coronavirus, Fannie Mae, OECD, S, Conference proceedings, Federal Reserve Bank of Kansas City, Economics, Journal, Federal Reserve Bank, Face, Contract, Policy, Shock, Freddie Mac, Applied Economic Perspectives and Policy, Lesson, ECB, Journal of Macroeconomics, Issue 1, Interest, Growth, Credit, Business cycle, International, European Economic Association, COVID-19, Journal of Money, Credit and Banking, N, Government, Journal of Banking and Finance, Journal of Economic Perspectives, United, Journal of Housing Economics, A, Money, BVAR, Journal of Applied Econometrics, Estrella, GDP, GSE, Bookkeeping, Real estate, Textile, Atlantic Ocean, Corsetti, Green, Battistini
Key Points: 

What information does the euro area bank lending survey provide on future loan developments?

Retrieved on: 
Monday, January 16, 2023
The Review of Financial Studies, Review, Deutsche Bundesbank, Coronavirus, Altavilla, House, Journal, Securitization, COVID-19, Acceleration, Interest, BLS, Bank of France, Credit, Journal of Money, Credit and Banking, Risk, Supervision, Public sector, SAFE, Emirates Institute for Banking and Financial Studies, Growth, Access, Policy, ECB, Forecasting, Economics Bulletin, Journal of Banking and Finance, Jenny Hempel, Convention (norm), Cross, A, Euro, Housing, Loan, Security (finance), Bank, Bookkeeping, Real estate, Financial services, Maddaloni

The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.

Key Points: 
  • The *euro area bank lending survey (BLS) * provides valuable information on bank lending standards and conditions as well as on loan demand in the euro area.
  • *By collecting this information, the survey sheds light on the transmission of monetary policy in the euro area via the bank lending channel.
  • While the survey information is qualitative, the replies of the banks are closely related to actual loan growth and lending rate developments.
  • *BLS data provide timely information on bank lending conditions and loan demand.
  • The short reporting lag compared with other statistical data means that BLS data provide early information on key lending developments in the euro area, which has been especially valuable for identifying turning points in lending conditions and assessing lending developments during exceptional periods.
  • [4] Overall, the BLS has proved to be a very useful tool for understanding and analysing bank lending conditions in the euro area.
  • A first indication of the information BLS indicators provide for future loan growth is to consider cross-correlations between BLS indicators at different leads relative to data on actual loan growth.
  • BLS indicators either lead loan growth (negative value on the y-axis) or lag loan growth (positive value).
  • Beyond the simple correlations mentioned above, the information that the BLS indicators provide on future loan growth can be assessed by analysing their value in forecasting actual loan growth.
  • Broadly corresponding evidence on the information that the BLS provides regarding future loan growth is also found for individual euro area countries.
  • The BLS contains information on future loan growth not only at the aggregate level, but also for individual banks.
  • Loan demand also helps predict future housing loan growth at the bank level – banks reporting a decrease in demand experience lower loan growth over the following quarters compared with banks reporting unchanged or increased loan demand (Chart D, panel b).

Financial stability and macroprudential regulation under diagnostic expectations

Retrieved on: 
Saturday, November 26, 2022
Diamond, The Journal of Finance, Journal, DSGE, European Central Bank, University of Mannheim, S, Credit, Ricardian equivalence, Economics, Crash, Policy, Daniel Kahneman, Journal of Money, Credit and Banking, Judgement, American Economic Review, Disagreement, Investment, Element, Instability, Review, Political economy, Magazine, Arab Center for Consultancy & Economic Studies, Central bank, Decision-making, University, Hart O. Berg, Business, Journal of Political Economy, RESEARCH, Global, Ben Bernanke, Welfare, The Review of Economic Studies, Writing, McGraw Hill Education, Risk, George Selgin, Directorate, P, Nature, Rafael Bordalo Pinheiro, Frictional unemployment, Literature, McMillan, Private sector, History, Risk management, Bank, Security (finance), Bookkeeping, Machine tool, Real estate, Dybvig, Gertler, Maxted

In this article, we examine the joint implications of external financing frictions and cognitive misperceptions for the stability of the financial system and the appropriate conduct of macroprudential regulation.

Key Points: 
  • In this article, we examine the joint implications of external financing frictions and cognitive misperceptions for the stability of the financial system and the appropriate conduct of macroprudential regulation.
  • [2]
    Relative to the rational benchmark, diagnostic expectations and their interactions with financing frictions exacerbate instability in financial markets and economic activity.
  • Financial implications of financing frictions and diagnostic expectations (1/2)

    Notes: The chart illustrates interactions between fluctuations in financial net worth (i.e.

  • Blue ink indicates additional effects over a world with rational expectations that stem from diagnostic expectations.
  • First, diagnostic expectations intensify a positive interaction between fluctuations in financial net worth and fluctuations in asset prices (Chart 1).
  • Financial implications of financing frictions and diagnostic expectations (2/2)

    Notes: The chart reports stationary density functions of the aggregate capitalisation of financial intermediaries under rational and diagnostic expectations.

  • Relative to the rational framework, under diagnostic expectations, appropriate macroprudential restrictions on new credit to the nonfinancial sector are tighter, even when the regulator is subject to the same expectations as the private sector.
  • These results naturally reveal disagreements among potential regulators with differing degrees of diagnostic expectations about the appropriate regulation.
  • We examine the joint implications of external financing frictions and diagnostic cognitive misperceptions about economic fundamentals or asset prices for the stability of the financial system and the appropriate conduct of macroprudential regulation.
  • The key result is that diagnostic expectations exacerbate financial instability relative to the benchmark of rational expectations.
  • This finding calls for tighter macroprudential regulation even when the regulator is also subject to misperceptions.

Monetary and macroprudential policies: trade-offs and interactions

Retrieved on: 
Friday, November 11, 2022
Review, Fahr, Daniel Schwaab, Puglisi, Martin Eichenbaum, Risk, Center for Financial Studies, American Economic Journal, S, ECB, Literature, Research, Central bank, Paper, P, Journal of Money, Credit and Banking, Internet Research Task Force, F, Complementarity, Credit, Altavilla, Macroprudential regulation, GDP, Time, Journal of Monetary Economics, Policy, RESEARCH, Monetary economics, Employment, Journal, Directorate, BULLETIN, Growth, Central, The Review of Financial Studies, RTF, St. Louis Fed Financial Stress Index, European Central Bank, Food industry, Insurance, Risk management, Bookkeeping, Bank, Security (finance), Reinsurance, Real estate, Gum arabic, Textile, Machine tool, Adhesive, Heider

Hence, macroprudential policies should be used appropriately to manage the balance between deeper recessions and longer-term benefits for economic growth.

Key Points: 
  • Hence, macroprudential policies should be used appropriately to manage the balance between deeper recessions and longer-term benefits for economic growth.
  • Generally, the instruments of monetary policy and macroprudential policy both operate through the financial system.
  • For instance, Van der Ghote (2021) argues that (conventional) monetary policy interventions and macroprudential policy interventions can both help to safeguard financial stability.
  • In this situation, the degree of monetary policy accommodation is key to smooth the negative effects of tighter macroprudential policy (see Chart 3).
  • Accommodative monetary policy is shown by the black solid line, a constrained monetary policy is shown by the red dashed line.
  • Macroprudential policy can also have an impact on the transmission of monetary policy.
  • The interaction of monetary policy and macroprudential policy also affects bank lending, resulting in strong complementarity between the two policies (see Altavilla, Laeven and Peydr, 2020).
  • The effects of monetary policy easing on bank lending and risk-taking are greater when macroprudential policy is accommodative and are particularly strong for less capitalised banks.
  • Overall, monetary and macroprudential policies cannot be considered in isolation, as their transmission channels give rise to significant spillovers.
  • The degree of monetary policy accommodation has an effect on the short-term impact of macroprudential policy and therefore on the macroprudential policy space.
  • Recent research developed within the ECB Research Task Force on monetary policy, macroprudential policy and financial stability shows that monetary and macroprudential authorities must take account of important trade-offs and interactions when deciding on policy actions.
  • Substantial progress has been made on developing practical frameworks of analysis to assess the costs and benefits of macroprudential and monetary policy interventions.

Systemic risk and policy interventions: monetary and macroprudential policy

Retrieved on: 
Friday, November 11, 2022
American Economic Review, National Bureau of Economic Research, Research, Risk, Credit, Prudential, Fourth, Policy, Political economy, Household, Economics, European Central Bank, Review, American Economic Journal, ECB, Literature, Central bank, Cologne Institute for Economic Research, Tinbergen, Macroprudential regulation, Ampudia, Chart, Decision-making, Rigidity, Speech, Journal of Money, Credit and Banking, No, Journal of Monetary Economics, Federal Reserve Bank of St. Louis, Directorate, Journal of Political Economy, National Bureau of Asian Research, Martin Feldstein, Great Recession, Adoption, Mendicino, Federal Reserve Bank, A, RESEARCH, Monetary economics, Journal, Renewable energy, Insurance, Risk management, Bank, Bookkeeping, Food industry, Marketing, Textile, Luc Laeven

Note: The chart displays the distribution of output as a share of output in the absence of macroprudential policy measures, i.e.

Key Points: 
  • Note: The chart displays the distribution of output as a share of output in the absence of macroprudential policy measures, i.e.
  • The green bars report the distribution in the absence of macroprudential policy measures, while the blue bars depict the same distribution when macroprudential policy measures are used optimally.
  • But going back to our initial questions, how do macroprudential policies interact with monetary policy?
  • However, as long as macroprudential policy is effective, most models suggest that monetary policy should stick to its traditional objective of price stability (see Angelini et al.
  • In principle, therefore, the traditional Tinbergen rule (of having a separate policy [tool/instrument] for each policy target) applies: macroprudential policy can focus on systemic risk whereas monetary policy can focus on keeping inflation stable and on target.
  • This being the case, there is an argument for monetary policy to play a macroprudential role (e.g.
  • Although it varies across models, this macroprudential role of monetary policy takes the general form of leaning against the wind to contain systemic risk during the build-up phase and cleaning up by a relative loosening of policy during financial crises to speed up the recovery.
  • Although the conceptual case for monetary policy to play a macroprudential role seems clear, there is much less consensus on the practical implications.
  • All in all, the view that emerges is that there are trade-offs associated with the use of monetary policy to contain systemic risk.
  • A prudential use of monetary policy may help contain systemic risk but doing so may entail sacrificing some price stability.
  • Should monetary policy to some extent give up on steering inflation in order to reduce systemic risk?

PraSaga Announces Appointment of Senior Economic Advisor, Monetary Policy and Sponsorship of Chamber of Digital Commerce Blockchain Summit 2022

Retrieved on: 
Monday, May 23, 2022
SagaCoin, Bitcoin, Cologne Institute for Economic Research, American Economic Review, Journal of Economic Literature, Swiss National Bank, American Monetary Institute, U.S. Securities and Exchange Commission, Journal, Cambridge University Press, Leadership, American Swiss Foundation, Policy, Goal, Book, American Institute, Federal Reserve Bank of St. Louis, Chamber of Digital Commerce, American, White, Summit, Digital, CTO, Industry, Free banking, Blockchain, Plague, Journal of Money, Credit and Banking, Reading, American Institute for Economic Research, Federal Reserve Bank, SEC, Growth, Gold, Cryptocurrency

WASHINGTON, May 23, 2022 /PRNewswire/ -- PraSaga™, a Swiss foundation building the next generation of Layer One blockchain, today announced the appointment of Professor Lawrence H. White as its Senior Economic Advisor, Monetary Policy. The announcement comes ahead of the Chamber of Digital Commerce. Blockchain Summit on May 24th in Washington, D.C., where PraSaga is a sponsor. White will be attending the Summit to discuss the future of blockchain and crypto policy with prominent Senators and SEC Commissioners. https://metaentertainmentworld.com/

Key Points: 
  • Blockchain Summit on May 24th in Washington, D.C., where PraSaga is a sponsor.
  • White will be attending the Summit to discuss the future of blockchain and crypto policy with prominent Senators and SEC Commissioners.
  • https://metaentertainmentworld.com/
    In his new role, White will be developing a robust monetary policy mechanism for PraSaga's SagaCoin.
  • White will be attending the Chamber of Digital Commerce's Blockchain Summit in Washington D.C. alongside PraSaga Chief Economist, Stephen Moore, and PraSaga CTO, David Beberman.

PraSaga Announces Appointment of Senior Economic Advisor, Monetary Policy and Sponsorship of Chamber of Digital Commerce Blockchain Summit 2022

Retrieved on: 
Monday, May 23, 2022
SagaCoin, Bitcoin, Cologne Institute for Economic Research, American Economic Review, Journal of Economic Literature, Swiss National Bank, European Monetary Institute, U.S. Securities and Exchange Commission, Journal, Cambridge University Press, Leadership, Multimedia, American Swiss Foundation, Policy, Goal, Book, American Institute, Federal Reserve Bank of St. Louis, Chamber of Digital Commerce, American, Summit, Digital, CTO, Industry, Free banking, Blockchain, Plague, Journal of Money, Credit and Banking, Reading, American Institute for Economic Research, Federal Reserve Bank, SEC, Growth, Gold, Cryptocurrency, White

WASHINGTON, May 23, 2022 /PRNewswire/ -- PraSaga™, a Swiss foundation building the next generation of Layer One blockchain, today announced the appointment of Professor Lawrence H. White as its Senior Economic Advisor, Monetary Policy. The announcement comes ahead of the Chamber of Digital Commerce. Blockchain Summit on May 24th in Washington, D.C., where PraSaga is a sponsor. White will be attending the Summit to discuss the future of blockchain and crypto policy with prominent Senators and SEC Commissioners. https://metaentertainmentworld.com/

Key Points: 
  • Blockchain Summit on May 24th in Washington, D.C., where PraSaga is a sponsor.
  • White will be attending the Summit to discuss the future of blockchain and crypto policy with prominent Senators and SEC Commissioners.
  • https://metaentertainmentworld.com/
    In advisor role, White to advance robust monetary policy mechanism for PraSaga's SagaCoin and wider crypto ecosphere.
  • White will be attending the Chamber of Digital Commerce's Blockchain Summit in Washington D.C. alongside PraSaga Chief Economist, Stephen Moore, and PraSaga CTO, David Beberman.