Dirk Niepelt

In an ECB occasional paper, Ulrich Bindseil, Marco Corsi, Benjamin Sahel, and Ad Visser review the European Central Banks’s collateral framework. From the executive summary, on misconceptions: … differences e.g. with interbank repo markets: first, central banks are not subject to liquidity risk in the way “normal” market participants are, and can therefore accept less liquid collateral. Second, as the central bank has a zero default probability in its domestic market operations,...

On VoxEU, Stefan Gerlach reviews the case for tilting Phillips curves in Switzerland. Previous research had suggested that the Swiss Phillips curve had steepened in the second half of the 20th century. Gerlach estimates a Phillips curve model that includes lagged inflation, an output gap measure, and a measure of import price inflation. His model suggests several structural breaks: The first structural break occurs in 1936-37. The estimated Phillips curves indicate that inflation became...

On the Brookings blog, Aaron Klein discusses the Orderly Liquidation Authority that was introduced with the Dodd-Frank Act. Dodd-Frank extended the FDIC’s authority to resolve failed institutions beyond commercial banks to include the entire bank holding company and all firms designated as Systemically Important Financial Institutions (SIFIs). Thus, if a large, complex financial institution were to fail, the FDIC would have authority to resolve the entire institution, both the commercial...

On VoxEU, Myrvin Anthony, Narcissa Balta, Tom Best, Sanaa Nadeem, and Eriko Togo discuss the history of government debt with state contingent coupons and offer some lessons. In the mid-19th century, the Confederate states issued cotton-linked bonds In the late 1970s, Mexico issued oil-linked bonds In the 2000s, Turkey issued revenue-indexed bonds Since 2014, Uruguay issues nominal wage-issued bonds Some other examples (figure taken from the column): Obviously, confidence in data quality...

On Alphaville, Izabella Kaminska comments on the pecking order induced by initial coin offerings (ICOs). All of this raises an important point about actual shareholder rights within these structures. Say a legally-incorporated institution with actual shareholders dishes out an uncapped amount of tokens promising a share of revenues or dividends via the ICO process. Do shareholders’ rights to those revenue/dividends trump rights of the token holders? And if so, how does that square with...

The Economist reports about a study by Annette Alstadsæter, Niels Johannesen and Gabriel Zucman who matched leaked information from Swiss banks and Panamanian shell companies with Scandinavian wealth records. Their findings: Tax evasion is progressive. The average / top 1% / top 0.01% Scandinavian household paid 3% / 10% / 30% fewer taxes than it should. Accordingly, estimates of wealth inequality (based on tax data) likely underestimate the degree of inequality.

The Economist reports about government initiatives aimed at using blockchain technology in the public sector. Possible uses include land registries, identity-management systems, health-care records, or elections. Proponents expect the technology to improve efficiency and transparency and foster trust. Adoption requires significant investments. According to a survey “nine in ten government organisations say they plan to invest in blockchain technology to help manage financial transactions,...

In the FT, Martin Arnold, Tobias Buck, and Rachel Sanderson discuss the significance of the Banco Popular bailin. The Single Resolution Board was created at the start of 2015 as a pan-European authority for dealing with failing banks. Since then however, the institution has remained almost entirely untested. Now with Banco Popular it has shown its teeth at last. The SRB, chaired by Elke Koenig, acted swiftly after it was informed by the European Central Bank that Popular was “failing or...

On his blog, Gilles Saint-Paul comments on the publication process in economics. Of course I was wrong in all accounts. The publication process in economics is not a publication process, it is a validation process by which we acquire a certain rank in a certain pecking order. Submitting a paper to a journal has nothing to do with research dissemination, it is far more similar to taking an exam or participating in a sports competition. The actual dissemination takes place mostly orally, in...

In the NZZ, Hansueli Schöchli reports about further steps by UBS, the Swiss bank, to prepare for the next financial crisis. In the future, a legally independent service unit—UBS Business Solutions AG—provides other business units with critical internal services, including payments, trading systems as well as legal services. A “Master Service Agreement” specifies that the service unit remains operative even if other business units fail. Die UBS vollzieht nun einen weiteren Schritt. Sie...