Zhandos Ybrayev

Super interesting! 💻 WEBINAR: “Central Bank Balance Sheets and Financial Crises: New Historical Evidence from Advanced and Emerging Economies since 1900,” Pablo Aguilar (Centre d'Études Prospectives et d'Informations Internationales, CEPII), joint work Eric Monnet. ⏲️ November 11, 16:00 – 17:00 CET REGISTRATION HERE: forms.cloud.microsoft/r/9z1q… "This paper introduces a new historical database on the balance sheets of 132 central banks, covering both advanced and emerging economies from their foundation to the present. Using this dataset, we show that while central bank responses to banking crises are broadly similar across countries, emerging markets experience more persistent downturns due to limited fiscal and external policy space. Our findings highlight that the stronger effects of crises in emerging markets stem less from weaker central banks than from constraints on the overall policy mix." REGISTRATION HERE: forms.cloud.microsoft/r/9z1q…

Super interesting! "Central Bank Losses and Inflation: 350 Years of Evidence" by Anna Grodecka-Messi, Martin Kliem, and Gernot Müller. "Are central bank losses inflationary? We show in a simple model that, absent fiscal support, large losses can create a trade-off between stabilizing inflation and stabilizing central bank net worth. We then provide evidence that central bank net worth matters for monetary policy in practice, drawing on a new historical data set with more than 350 years of annual data for Sweden and its central bank, the Riksbank. Using a narrative approach, we identify large adverse shocks to the Riksbank's profitability and trace their dynamic effects. They raise inflation persistently under fiat but not under metallic standards. Moreover, adverse import-price shocks generate more inflation and a more accommodative monetary response when central bank net worth is low. This historical evidence therefore bears directly on current debates over the monetary-policy consequences of large and risky central-bank balance sheets." drive.google.com/file/d/1sES…

Food for thought! "Central Bank Reserves and the Balance Sheet of Banks" by Hans Gersbach, Jean-Charles Rochet, and Ernst-Ludwig von Thadden. "We introduce a tractable model of a two-tier monetary system with heterogeneous banks and incomplete markets. We use this model to characterize the dynamics of bank lending under general fiscal and monetary policy and derive the welfare optimal level of Central Bank reserves and the optimal interest rate on reserves. We also identify a new risk channel of monetary policy. In the model, banks have a dual role as loan providers and money creators, and cannot fully diversify credit risk. Central Bank reserves are used to settle interbank claims and serve as a safe asset, thereby buffering risks for banks. We show how the Central Bank and the Treasury can implement any desired allocation by setting interest rates, issuing a particular amount of reserves, and imposing taxes, and show that uncoordinated policy responses to shocks by the Central Bank alone may cause sub-optimal outcomes and significant instability." bankofengland.co.uk/-/media/…

Super interesting! "Monetary Policy, Bank Fragility, and the Modern Financial Intermediation" by Gregor Matvos, Tomasz Piskorski, and Amit Seru. "This article reviews recent research on monetary policy transmission through banks and the broader financial intermediation sector, and its implications for financial stability. Traditional banks remain fragile due to high leverage and maturity transformation, making them vulnerable to interest rate, credit, and liquidity shocks. Meanwhile, the rise of nonbank intermediation—now involved in most lending—has reshaped how credit is originated, funded, and distributed, complicating policy transmission and regulation. We examine evidence on six key adjustment margins of monetary policy transmission through banks and the financial intermediation sector: (a) balance sheet valuation, (b) loan retention, (c) securities holdings, (d) shadow bank lending substitution, (e) deposit substitution, and (f) bank-to-nonbank lending. These channels often reallocate credit in response to monetary and capital shocks rather than just altering its aggregate level, highlighting the need for a system-wide perspective that reflects the adaptive, interconnected nature of modern financial intermediation." annualreviews.org/content/jo…

Highly relevant! "Endogenous monetary policy effectiveness" by Valerio Scalone and Silvana Tenreyro. "How does the effectiveness of monetary policy vary over the policy cycle? Do tightenings and loosenings have symmetric effects on the macroeconomy? This paper addresses these questions using a nonlinear empirical framework that allows financial exposure to evolve endogenously in response to macroeconomic conditions and monetary policy changes. We provide new evidence on how monetary policy effectiveness varies over the policy cycle and across economic states. We find that i) monetary policy transmits more strongly to the real economy in periods of elevated private-sector financial exposure; ii) tightening cycles increase financial exposure in the short run, which in turn amplifies the effect of further interest rate increases, whereas loosening cycles lower financial exposure, increasingly dampening the effect of interest rate cuts; iii) tightening during economic downturns further intensifies debt-servicingpressures, making monetary policy even more potent; instead, when the tightening occurs during expansions, monetary policy effectiveness is not materially affected." ecb.europa.eu/pub/pdf/scpwps…

Super interesting! "Expectations-based Capital Inflow Shocks" by Jongrim Ha, Dohan Kim, M. Ayhan Kose, and Francis E. Warnock. "Identifying the impact of capital inflows on output is challenging because inflows are forward-looking and respond to expectations about future economic conditions. We develop a new measure of capital inflow shocks using a simple and broadly applicable expectations-based framework that isolates the unexpected component of inflows by purging movements predicted by professional forecasters’ expectations. Estimates using the new measure for 27 emerging market economies indicate that capital inflows have sizable expansionary effects on output, operating through stronger domestic consumption and investment and easier financing conditions. Additional analysis indicates that equity-type inflows generate greater and more persistent effects than debt-type inflows, while large inflow reversals result in more pronounced effects than comparable increases in inflows. These results are robust to a wide range of alternative specifications." nber.org/papers/w35716

Very valuable! "Trading and Price Discovery for Crude Oils: Growth and Development of International Oil Markets" by Adi Imsirovic. amzn.to/4yxlPum "This is a book about the international oil market. It takes a historical perspective on how the market emerged, developed, and became what it is today—the biggest commodity market in the world. It is mature and complex, but far from perfect. Throughout most of its 150-year history, the oil market has been monopolised by companies and governments. For only a fraction of that, oil traded in a relatively free market. As a result, we had to live with ‘big oil’, economic shocks, high oil prices, instability and wars. Using a simple concept of market power, this book will explain the meaning of ‘oil price’ and how it is established while offering a valuable lesson for other commodities." Giacomo Luciani, Paris School of International Affairs: “Oil is an increasingly competitive business, but oil markets are esoteric and rarely well understood. Adi Imsirovic’s book combines insider knowledge of markets and prices with economic rigor yet is accessible to all. The price of oil is a key global economic indicator, reported daily even in the generalist press. What determines the price? Which factors influence it? In this book, history, anecdotes, and details combine to unveil the riddle. Oil still moves the world, and markets move the oil.” amzn.to/4yxlPum