Dollar borrowing outside the United States has over generations grown to be very large, with US policy providing some inducement and, in critical episodes, support. In a new paper published by the Federal Reserve Bank of Atlanta’s Policy Hub, Robert N. McCauley highlights three instances where the US Federal Reserve (Fed) has backstopped markets as […]
The South African National Treasury (NT) recently proposed to transfer 30 percent of the unrealized gain on the South African Reserve Bank’s (SARB’s) gold and foreign exchange reserves, worth about 2.4 percent of gross domestic product (GDP), to the NT. The February budget announcement led government bond yields to decline as market participants foresaw a […]
As pandemic fears gripped investors in March 2020, foreign officials, US leveraged funds and US bond funds all dumped US bonds. This massive selling severely strained the working of the US bond market. In a new book chapter in Fault Lines after COVID-19: Global Economic Challenges and Opportunities, Robert N. McCauley discusses the response of […]
By Mridhu Khanna On Wednesday June 7, the Boston University Global Development Policy (GDP) Center hosted a webinar on “Kindleberger and the 21st Century” featuring Perry Mehrling, author of “Money and Empire: Charles P. Kindleberger and the Dollar System” and Robert N. McCauley, co-author of eighth edition of “Manias, Panics and Crashes: A History of […]
In the eighth edition of Manias, Panics, and Crashes: A History of Financial Crises, Robert McCauley joins Robert Aliber to build on Charles P. Kindleberger’s renowned work. Since 1978, Manias, Panics and Crashes has tracked various financial crises through time, from ‘Tulipmania’ in the 17th century to the more recent global financial crisis. The book, a hallmark […]
When the euro arrived in 1999, London’s established dollar business conferred an advantage in intermediating the new number two global currency. The dollar business dominates London’s international financial business, as it has since the 1960s, but London’s share in the global euro business tended to exceed its global dollar share. The Brexit vote in 2016 […]
Embedded in the foreign exchange (FX) market is huge, unseen dollar borrowing. In an FX swap, for instance, a Dutch pension fund or Japanese insurer borrows dollars and lends euro or yen in the “spot leg”, and later repays the dollars and receives euro or yen in the “forward leg.” Thus, an FX swap, along […]
International sharing of the risk of disasters through insurance markets lies on a spectrum defined by two ideal types: full risk sharing and autarky. The full risk sharing case features 100 percent insurance coverage for losses within a country and a high degree of international reinsurance to spread the risks globally. Domestic full insurance abstracts […]
In the seven decades since World War II, how has international banking changed and evolved to the present day? A new journal article by Non-Resident Senior Fellow Robert N. McCauley, Patrick McGuire and Philip Wooldridge explores the structural and cyclical factors behind the international banking industry, including its evolution in the 1950s, the role of regulatory arbitrage […]
GEGI Working Paper 041. August 2020. by Robert N. McCauley The Federal Reserve interventions in private securities markets in the spring of 2020 extended its 2008 playbook from buying high quality short-term paper to bonds, and departed from it by buying junk bonds. In March 2020, the Fed reprised its last-resort lending to primary dealers, […]