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 […]
Euro area central banks are reporting losses as they pay banks 4 percent but collect only 1 percent on trillions of euros of bonds bought to spur growth with lower yields. Once central banks exhaust their capital, they may need to go to their governments. Recently, the European Central Bank (ECB) ceased to pay interest […]
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 […]
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 […]
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 […]
Do central banks rebalance their currency shares? The answer matters, as the dollar’s predominant role in large official reserve holdings means widespread rebalancing requires central banks to buy (sell) a depreciating (appreciating) dollar, stabilizing its value against other major currencies. In a new National Bureau of Economic Research working paper, Menzie D. Chinn, Hiro Ito and Robert N. […]
Ahead of the G20 summit in Riyadh, Saudi Arabia this week, our experts outline the top policy priorities of the moment. Below are recommendations related to trade agreements, bond purchases, IMF austerity, strengthening the global financial safety net, climate change, and more: G20 Needs to Reset Multilateralism As the COVID-19 pandemic rages into a second […]