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The author Dirk Niepelt
Dirk Niepelt
Dirk Niepelt is Director of the Study Center Gerzensee and Professor at the University of Bern. A research fellow at the Centre for Economic Policy Research (CEPR, London), CESifo (Munich) research network member and member of the macroeconomic committee of the Verein für Socialpolitik, he served on the board of the Swiss Society of Economics and Statistics and was an invited professor at the University of Lausanne as well as a visiting professor at the Institute for International Economic Studies (IIES) at Stockholm University.

Dirk Niepelt

Report of the Banking Stability Expert Group

The “Banking Stability” Expert Group that was formed following the failure of Credit Suisse has published its report (in German). I quote and add my own comments in brackets […]. Summary: Die staatlich unterstützte Übernahme der Credit Suisse durch die UBS im März 2023 hat eine gefährliche Situation schnell stabilisiert. Die Schweiz hat damit einen wichtigen Beitrag zur internationalen Finanzstabilität geleistet. Die Credit Suisse war am 19. März 2023 die erste global systemrelevante Bank...

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“Why the Digital Euro Might be Dead on Arrival,” VoxEU, 2023

With Cyril Monnet. VoxEU, August 10, 2023. HTML. … promoting the digital euro requires an aggressive marketing strategy because private incentives for adoption are limited. However, the pursuit of such an aggressive approach is unlikely as this runs counter to the ECB’s fourth, implicit objective of protecting banks’ existing business model. This is problematic and could turn the project into a significant missed opportunity, for the potential social benefits of the digital euro...

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“Payments and Prices,” CEPR/SNB, 2023

CEPR Discussion Paper 18291 and SNB Working Paper 3/2023, July 2023. HTML, PDF (local copy CEPR, local copy SNB). We analyze the effect of structural change in the payment sector and of monetary policy on prices. Means of payment are obtained through portfolio choices and commodity sales and “liquified” through velocity choices. Interest rates, intermediation margins, and costs of payment instrument use affect portfolios, velocities, liquidity, relative prices, and the aggregate price...

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“Digital Euro: An Assessment of the First Two Progress Reports,” SUERF, 2023

SUERF Policy Brief 612, June 2023. HTML, PDF. Executive summary: The ECB’s first two progress reports on the digital euro clarify the project teams’ considerations. Some motivations for a digital euro remain vague, some fundamental tradeoffs receive limited attention. Most importantly, the reports lack an analysis of why digital euro holdings as stores of value are not desirable and whether strategies to limit such holdings cause collateral damage. Against that backdrop some of the design...

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“Digital Euro: An Assessment of the First Two Progress Reports,” European Parliament, 2023

European Parliament, April 2023. PDF. Executive summary: The two progress reports provide an insightful overview over some of the thinking underlying the digital euro project. The reports remain vague in some respects, which is not surprising given the early stage of the project and the division of tasks between the ECB and the Commission. The first report suggests that the digital euro can help preserve public money as the anchor of the payment system, but it does not explain how the...

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The Economist on CBDC—and SVB

The Economist refers to our work in the `Free Exchange’ section: But some argue banks would work fine if the public switched their deposits for central-bank digital currencies, so long as the central bank stepped in to replace the lost funding. “The issuance of [such currencies] would simply render the central bank’s implicit lender-of-last-resort guarantee explicit,” wrote Markus Brunnermeier and Dirk Niepelt in 2019. This scenario seems to have partly materialised since the failure...

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Bank Solvency vs. Liquidity

Recall this post from six years ago. Òscar Jordà, Björn Richter, Moritz Schularick, and Alan M. Taylor suggest that higher bank capital ratios help stabilize the financial system ex post but not ex ante, and that illiquidity breeds fragility.

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SNB Strategy Update

With its annual report from a few weeks ago the SNB communicated minor changes in its monetary policy strategy (p. 24): The review of the monetary policy strategy showed that it has fundamentally proved its worth. There was no need to adjust the first two elements, namely the definition of price stability and the conditional inflation forecast. The strategy has enabled the SNB to fulfil its mandate of price stability well, despite repeated strong external shocks in recent years. The...

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