by Ana Aguilar, Carlos Cantú and Claudia RamírezWe model the interaction between fiscal and monetary policy and qualify their effects in a semi-structural small open economy model calibrated for Mexico. In our model, fiscal and monetary policy follow rules tied to specific targets. We estimate how fiscal policy, through deficits and public debt accumulation, and …

Most central banks are exploring central bank digital currencies (CBDCs), and more than a quarter of them are now developing or running concrete pilots. This BIS paper updates earlier surveys that asked central banks about their engagement in this area. The latest responses from 81 central banks show that the Covid-19 pandemic and the emergence …

Technological developments over the last two decades have led to an explosion in the availability of data and their processing. Consumers often do not know the benefits of the data they generate, and find it difficult to assert their rights regarding the collection, processing and sharing of their data. We propose a data governance system …

by Frederic Boissay, Fiorella De Fiore, Deniz Igan, Albert Pierres Tejada and Daniel ReesInflation has returned, reaching levels not seen in decades. Whether inflation enters a persistently higher regime will depend on labour market developments, and on whether a wage-price spiral emerges. …

by Thorsten Beck, Leonardo Gambacorta, Yiping Huang, Zhenhua Li and Han QiuUsing a unique dataset of around half a million Chinese firms that use a QR code-based mobile payment system, we find that (i) the creation of a digital payment footprint allows firms to access credit provided by the same big tech company; (ii) transaction …

The International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems are intended for jurisdictions that wish to establish or enhance their deposit insurance systems. The Core Principles (CPs) were originally published in 2009. In 2014, IADI issued the Revised Core Principles for Effective Deposit Insurance Systems in response to the lessons …

BIS Papers No 123 – Papers in this volume were prepared for a meeting of emerging market Deputy Governors organised by the Bank for International Settlements on 9–10 February 2022.

Central banks are considering how retail central bank digital currencies (CBDCs) may help support financial inclusion. While they are not a magic bullet, central banks see CBDC as a further tool to promote financial inclusion if this goal features prominently in the design from the get-go.

Banks rarely become weak overnight, and flaws in business models and strategies are often the root causes of banks’ vulnerabilities and failures. While sudden shocks may be the immediate cause of banks’ demise, the root causes are generally more structural. …

Report by the Consultative Group on Risk Management (CGRM) established at the BIS Representative Office for the Americas

Project Ellipse

Stress tests are forward-looking exercises that aim to evaluate the impact of severe but plausible adverse scenarios on the resilience of financial firms.

by Stefan Avdjiev and Tsvetana SpasovaWe conduct a comprehensive empirical examination of the link between inequality and external financial openness for a sample of 48 countries between 1991 and 2013.

by Angelo Duarte, Jon Frost, Leonardo Gambacorta, Priscilla Koo Wilkens and Hyun Song ShinPublic payment infrastructures build on the central bank’s foundational role in the monetary system by promoting competition and interoperability between payment platforms. They can reduce costs for users and promote financial inclusion. Brazil’s recent experience with the Pix retail instant payment system …

Project Dunbar explores how a common platform for multiple central bank digital currencies (multi-CBDCs) could enable cheaper, faster and safer cross-border payments. It identified challenges of implementing a multi-CBDC platform shared across central banks and proposed practical design approaches to address them.

by Boris Hofmann and Dora XiaWe assess quantitative forward guidance through interest rate projections along four key dimensions: (i) predictability, (ii) credibility, (iii) redundancy and (iv) consistency.

by Tirupam Goel and Kostas TsatsaronisIn the decade before the pandemic, inflation expectations became less volatile worldwide, as well as more consistent with inflation targets and less sensitive to inflation surprises. This progress has paid off for many economies during the past year’s surge in inflation: long-term expectations have remained largely anchored, but with notable …

BIS Papers No 122 – The papers in this volume were prepared for a meeting of senior officials from central banks held at the Bank for International Settlements on 24-25 February 2021.

by Deniz Igan, Emanuel Kohlscheen and Phurichai RungcharoenkitkulHouse prices rose strongly in advanced economies during the pandemic, breaking with typical post-recession patterns. These developments support domestic demand in the short term but carry risks to the outlook if they reverse. Rapid economic recovery, fiscal support and high saving rates amid negative real interest rates explain …

by Torsten Ehlers, Ulrike Elsenhuber, Anandakumar Jegarasasingam and Eric JondeauWe demonstrate an investment strategy based on deconstructing ESG scores. The strategy focuses on specific underlying ESG categories such as emissions reduction and human rights.

by Pierre-Richard Agénor, Timothy Jackson and Luiz Awazu Pereira da SilvaA core-periphery model with financial frictions, imperfect financial integration, and cross-border banking is used to assess the magnitude of regulatory spillovers and the gains from international macroprudential policy coordination.

BIS Quarterly Review for March 2022 – The March 2022 Quarterly Review highlights research that relates lending patterns to financial intermediaries’ funding sources and examines long-term growth prospects.

by Alessandro Barbera, Áron Gereben and Marcin WolskiWe shed light on the transmission channels of public support schemes to the SME sector by investigating whether the positive impacts of EIB support vary depending on types of intermediaries and financial term sheets.

by Ana Aguilar, Carlo Alcaraz, Claudia Ramírez and Cid Alonso Rodríguez-PérezIn this paper, we present an estimation of the traditional NAIRU for Mexico and an alternative measure that includes informality as an indicator of labor underutilization.

by Boris Hofmann, Nikhil Patel and Steve Pak Yeung WuThis paper provides a model-based evaluation of the original sin redux hypothesis based on a two-country model.

by Raphael Auer, Bruce Muneaki Iwadate, Andreas Schrimpf and Alexander F. WagnerWith our new measures, we provide evidence of a strong link between changes in real integration – in particular via GVCs – and equity market co-movement.

FSI Briefs No 16, February 2022. There is a need for authorities to review their prudential frameworks with a view to taking full account of the implications of climate-related financial risks for financial stability. Given the longer time horizons and the higher degree of uncertainty associated with the materialisation of climate-related financial risks, standard Pillar …

by Viral V Acharya, Ryan Niladri Banerjee, Matteo Crosignani, Tim Eisert and Renée SpigtWe document capital misallocation in the U.S. investment-grade (IG) corporate bond market, driven by quantitative easing (QE)

by Raphael Auer, Ariel Burstein, Sarah M Lein and Jonathan VogelWe find that demand from lower-income households is substantially more price elastic than that of high-income households.

The Covid-19 pandemic reinforced the already close interactions between monetary and fiscal policies in Africa. Policymakers provided support to their economies in a coordinated way. Both policies were countercyclical and complementary. Central banks reacted more forcefully than fiscal authorities, as high debt constrained the fiscal response…