Regulating the doom loop

ECB
By September 6, 2019 11:32

Regulating the doom loop

Euro area governments have committed to break the doom loop between banks and sovereigns. But policymakers disagree on how to treat sovereign exposures in bank regulation. Our contribution is to model endogenous sovereign portfolio reallocation by banks in response to regulatory reform. Simulations highlight a tension between concentration and credit risk in portfolio reallocation. Resolving this tension requires regulatory reform to be complemented by an expansion in the portfolio opportunity set to include an area-wide low-risk asset. By reinvesting into such an asset, banks would reduce both their concentration and credit risk exposure. 

ECB
By September 6, 2019 11:32

Search

Twitter

Don't want to miss #research on #centralbanks? Check out @Opinio_Pro -> https://www.opiniopro.com/tag/central-banks/ #ecb #fed

Hoe waardeer je een Subscription Company? Op 9 juni om 11:00 organiseren we het webinar: “Subscription Economy: the road to resiliency post-Covid-19”. Meld je hier aan: https://www.alpharesearch.nl/event/subscription-economy-the-road-to-resiliency-post-covid-19/

Check out our events calendar, with a lot of interesting #webinars! https://opiniopro.com/events/ #research #HomeOffice

Load More...

Search on date

September 2019
M T W T F S S
 1
2345678
9101112131415
16171819202122
23242526272829
30