Financial Crises

    Credit-financed markets are inherently unstable. Inevitably, the pattern of payment promises doesn't align with actual ability to pay. What happens then depends on institutions, regulations and management. Today, the credit system is global, and so also is the prospect of financial instability.

    Narrow by:

    Narrow results by…

    Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence

    The global financial cycle has transformed the well-known trilemma into a ‘dilemma’. Independent monetary policies are possible if and only if the capital account is managed directly or indirectly. This column argues the right policies to deal with the ‘dilemma’ should aim at curbing excessive leverage and credit growth. A combination of macroprudential policies guided by aggressive stress‐testing and tougher leverage ratios are needed. Some capital controls may also be useful. Read more

    Sleepwalking with Heiner

    A Response to Heiner Flassbeck’s questions about the Institute’s Council on the Euro Crisis Read more