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NY Fed

The Federal Reserve Bank of New York was incorporated in May 1914 and opened for business in November later that year. To commemorate the New York Fed’s centennial, take a look at the people and events that helped shape our history.

Articles by NY Fed

Intraday Timing of General Collateral Repo Markets

10 days ago

Kevin Clark, Adam Copeland, R. Jay Kahn, Antoine Martin, Mark Paddrik, and Benjamin Taylor

Market participants have often noted that general collateral (GC) repo trades happen very early in the morning, with most activity being completed soon after markets open at 7 a.m. Data on intraday repo volumes timing are not publicly available however, obscuring those dynamics to outside observers. In this post, we use confidential data collected by the Office of Financial Research (OFR) to describe the intraday timing dynamics of GC repo in the interdealer market. We demonstrate that a significant majority of interdealer overnight Treasury repo is completed prior to 8:30 a.m. (all times Eastern time), and explore the various factors that are driving repo traders to secure funding in the early

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Tailoring Regulations

12 days ago

Rebecca Reubenstein and Asani Sarkar

Regulations are not written in stone. The benefits derived from them, along with the costs of compliance for affected institutions and of enforcement for regulators, are likely to evolve. When this happens, regulators may seek to modify the regulations to better suit the specific risk profiles of regulated entities. In this post, we consider the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) passed by Congress in 2018, which eased banking regulations for smaller institutions. We focus on one regulation—the Liquidity Coverage Ratio (LCR)—and assess how its relaxation affected newly exempt banks’ assets and liabilities, and the resilience of the banking system.

Economic Growth, Regulatory Relief, and Consumer

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Credit, Income, and Inequality

23 days ago

Manthos Delis, Fulvia Fringuellotti, and Steven Ongena

Access to credit plays a central role in shaping economic opportunities of households and businesses. Access to credit also plays a crucial role in helping an economy successfully exit from the pandemic doldrums. The ability to get a loan may allow individuals to purchase a home, invest in education and training, or start and then expand a business. Hence access to credit has important implications for upward mobility and potentially also for inequality. Adverse selection and moral hazard problems due to asymmetric information between lenders and borrowers affect credit availability. Because of these information issues, lenders may limit credit or post higher lending rates and often require borrowers to pledge collateral.

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Hold the Check: Overdrafts, Fee Caps, and Financial Inclusion

24 days ago

Jennifer Dlugosz, Brian Melzer, and Donald P. Morgan

The 25 percent of low-income Americans without a checking account operate in a separate but unequal financial world. Instead of paying for things with cheap, convenient debit cards and checks, they get by with “fringe” payment providers like check cashers, money transfer, and other alternatives. Costly overdrafts rank high among reasons why households “bounce out” of the banking system and some observers have advocated capping overdraft fees to promote inclusion. Our recent paper finds unintended (if predictable) effects of overdraft fee caps. Studying a case where fee caps were selectively relaxed for some banks, we find higher fees at the unbound banks, but also increased overdraft credit supply, lower bounced check rates, and

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Hold the Check: Overdrafts, Fee Caps, and Financial Inclusion

24 days ago

Jennifer Dlugosz, Brian Melzer, and Donald P. Morgan

Editor’s Note: Our series continues tomorrow with an examination of “Credit, Income, and Inequality.”

The 25 percent of low-income Americans without a checking account operate in a separate but unequal financial world. Instead of paying for things with cheap, convenient debit cards and checks, they get by with “fringe” payment providers like check cashers, money transfer, and other alternatives. Costly overdrafts rank high among reasons why households “bounce out” of the banking system and some observers have advocated capping overdraft fees to promote inclusion. Our recent paper finds unintended (if predictable) effects of overdraft fee caps. Studying a case where fee caps were selectively relaxed for some banks, we

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Banking the Unbanked: The Past and Future of the Free Checking Account

24 days ago

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti

About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for their transactional needs and can also hinder access to credit when households need it. That, in turn, can have adverse effects on the financial health, educational opportunities, and welfare of unbanked households, thereby aggravating economic inequality. Why is access to financial services so uneven?

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Banking the Unbanked: The Past and Future of the Free Checking Account

24 days ago

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti

About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for their transactional needs and can also hinder access to credit when households need it. That, in turn, can have adverse effects on the financial health, educational opportunities, and welfare of unbanked households, thereby aggravating economic inequality. Why is access to financial services so uneven?

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Central Banks and Digital Currencies

June 23, 2021

Tobias Adrian, Michael Lee, Tommaso Mancini-Griffoli, and Antoine Martin

Recent developments in payments technology raise important questions about the role of central banks either in providing a digital currency themselves or in supporting the development of digital currencies by private actors, as some authors of this post have discussed in a recent IMF blog post. In this post, we consider two ways a central bank could choose to become involved with digital currencies and discuss some implications of these potential choices.

How Could a Central Bank Support Stablecoins?

One criticism of cryptocurrencies, such as Bitcoin, is that they exhibit excessive price volatility, which undermines their ability to serve as a common means of payment. And yet, cryptocurrencies’

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Central Banks and Digital Currencies

June 23, 2021

Tobias Adrian, Michael Lee, Tommaso Mancini-Griffoli, and Antoine Martin

Recent developments in payments technology raise important questions about the role of central banks either in providing a digital currency themselves or in supporting the development of digital currencies by private actors, as some authors of this post have discussed in a recent IMF blog post. In this post, we consider two ways a central bank could choose to become involved with digital currencies and discuss some implications of these potential choices.

How Could a Central Bank Support Stablecoins?
One criticism of cryptocurrencies, such as Bitcoin, is that they exhibit excessive price volatility, which undermines their ability to serve as a common means of payment. And yet, cryptocurrencies’ underlying

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Cyberattacks and Supply Chain Disruptions

June 22, 2021

Matteo Crosignani, Marco Macchiavelli, and André F. Silva.

Cybercrime is one of the most pressing concerns for firms. Hackers perpetrate frequent but isolated ransomware attacks mostly for financial gains, while state-actors use more sophisticated techniques to obtain strategic information such as intellectual property and, in more extreme cases, to disrupt the operations of critical organizations. Thus, they can damage firms’ productive capacity, thereby potentially affecting their customers and suppliers. In this post, which is based on a related Staff Report, we study a particularly severe cyberattack that inadvertently spread beyond its original target and disrupted the operations of several firms around the world. More recent examples of disruptive cyberattacks include the

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Cyberattacks and Supply Chain Disruptions

June 22, 2021

Matteo Crosignani, Marco Macchiavelli, and André F. Silva

Cybercrime is one of the most pressing concerns for firms. Hackers perpetrate frequent but isolated ransomware attacks mostly for financial gains, while state-actors use more sophisticated techniques to obtain strategic information such as intellectual property and, in more extreme cases, to disrupt the operations of critical organizations. Thus, they can damage firms’ productive capacity, thereby potentially affecting their customers and suppliers. In this post, which is based on a related Staff Report, we study a particularly severe cyberattack that inadvertently spread beyond its original target and disrupted the operations of several firms around the world. More recent examples of disruptive cyberattacks include the ransomware

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What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict?

June 21, 2021

Hunter L. Clark and Anna Wong

The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.

There Was an Unprecedented Shift in the Trade Balance Discrepancy after 2018

The U.S.-reported bilateral trade deficit with China during the decade prior to 2018

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What Happened to the U.S. Deficit with China during the U.S.-China Trade Conflict?

June 21, 2021

Hunter L. Clark and Anna Wong

The United States’ trade deficit with China narrowed significantly following the imposition of additional tariffs on imports from China in multiple waves beginning in 2018—or at least it did based on U.S. trade data. Chinese data tell a much different story, with the bilateral deficit rising nearly to historical highs at the end of 2020. What’s going on here? We find that (as also discussed in a related note) much of the decline in the deficit recorded in U.S. data was driven by successful efforts to evade U.S. tariffs, with an estimated $10 billion loss in tariff revenues in 2020.

There Was an Unprecedented Shift in the Trade Balance Discrepancy after 2018
The U.S.-reported bilateral trade deficit with China during the decade prior to 2018 was on average

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Has Market Power of U.S. Firms Increased?

June 21, 2021

Mary Amiti and Sebastian Heise

A number of studies have documented that market concentration among U.S. firms has increased over the last decades, as large firms have grown more dominant. In a new study, we examine whether this rising domestic concentration means that large U.S. firms have more market power in the manufacturing sector. Our research argues that increasing foreign competition over the last few decades has in fact reduced U.S. firms’ market power in manufacturing.

Measuring Market Power

A rise in market power is often interpreted to mean that firms can increase their markups over marginal cost without sacrificing profitability. However, markups are unobservable, which helps explain why different studies don’t agree on whether aggregate markups have risen or

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Has Market Power of U.S. Firms Increased?

June 21, 2021

Mary Amiti and Sebastian Heise

A number of studies have documented that market concentration among U.S. firms has increased over the last decades, as large firms have grown more dominant. In a new study, we examine whether this rising domestic concentration means that large U.S. firms have more market power in the manufacturing sector. Our research argues that increasing foreign competition over the last few decades has in fact reduced U.S. firms’ market power in manufacturing.

Measuring Market Power
A rise in market power is often interpreted to mean that firms can increase their markups over marginal cost without sacrificing profitability. However, markups are unobservable, which helps explain why different studies don’t agree on whether aggregate markups have risen or not. Our

Read More »

The Future of Remote Work in the Region

June 18, 2021

Jaison R. Abel, Jason Bram, Richard Deitz, and Jessica Lu

The coronavirus pandemic abruptly changed the way we work, in meaningful and potentially lasting ways. While working from home represented a small share of work before the pandemic, such arrangements became unexpectedly widespread once the pandemic struck. With the pandemic now being brought under control and conditions improving, workers have begun to return to the office. But just how much remote work will persist in the new normal? The New York Fed’s June regional business surveys asked firms about the extent of remote working before, during, and after the pandemic. Results indicate that before the pandemic, the average firm in the region conducted just a small share of its work remotely, a figure that currently stands at

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The Future of Remote Work in the Region

June 18, 2021

Jaison R. Abel, Jason Bram, Richard Deitz, and Jessica Lu

The coronavirus pandemic abruptly changed the way we work, in meaningful and potentially lasting ways. While working from home represented a small share of work before the pandemic, such arrangements became unexpectedly widespread once the pandemic struck. With the pandemic now being brought under control and conditions improving, workers have begun to return to the office. But just how much remote work will persist in the new normal? The New York Fed’s June regional business surveys asked firms about the extent of remote working before, during, and after the pandemic. Results indicate that before the pandemic, the average firm in the region conducted just a small share of its work remotely, a figure that currently stands

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The New York Fed DSGE Model Forecast—June 2021

June 18, 2021

William Chen, Marco Del Negro, Shlok Goyal, and Alissa Johnson
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since March 2021. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

Estimating the Model taking the Pandemic and the New Monetary Policy Framework into Account
The key drivers of the model’s forecast remain the responses of the economy and policy to the COVID-19 pandemic. The model’s parameters

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The New York Fed DSGE Model Forecast—June 2021

June 18, 2021

William Chen, Marco Del Negro, Shlok Goyal, and Alissa Johnson

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since March 2021. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

Estimating the Model taking the Pandemic and the New Monetary Policy Framework into Account

The key drivers of the model’s forecast remain the responses of the economy and policy to the COVID-19 pandemic. The model’s

Read More »

Sophisticated and Unsophisticated Runs

June 2, 2021

Marco Cipriani and Gabriele La Spada

In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis. In a previous post, we characterized the run on the prime MMF industry as a whole and the role of the liquidity facility established by the Federal Reserve (the Money Market Mutual Fund Liquidity Facility) in stemming the run. In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.

Retail and Institutional Investors during the COVID-19 Run of March 2020

The chart below shows cumulative percentage outflows from prime MMFs offered to retail and institutional investors from January to

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Sophisticated and Unsophisticated Runs

June 2, 2021

Marco Cipriani and Gabriele La Spada

In March 2020, U.S. prime money market funds (MMFs) suffered heavy outflows following the liquidity shock triggered by the COVID-19 crisis. In a previous post, we characterized the run on the prime MMF industry as a whole and the role of the liquidity facility established by the Federal Reserve (the Money Market Mutual Fund Liquidity Facility) in stemming the run. In this post, based on a recent Staff Report, we contrast the behaviors of retail and institutional investors during the run and explain the different reasons behind the run.

Retail and Institutional Investors during the COVID-19 Run of March 2020

The chart below shows cumulative percentage outflows from prime MMFs offered to retail and institutional investors from January to April 2020.

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Who Benefited from PPP Loans by Fintech Lenders?

May 27, 2021

Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani Sarkar

In the previous post, we discussed inequalities in access to credit from the Paycheck Protection Program (PPP), showing that, although fintech lenders had a small share of total PPP loan volumes, they provided important support for underserved borrowers. In this post, we ask whether smaller firms received the amount of PPP credit that they requested, and whether loans went to the hardest-hit areas and mitigated job losses. Our results indicate that fintech providers were a key channel in reaching minority-owned firms, the smallest of small businesses, and borrowers most affected by the coronavirus pandemic.

Did Smaller Firms Seek and Receive PPP Loans?

A request for a small dollar loan—defined as $25,000

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Who Received PPP Loans by Fintech Lenders?

May 27, 2021

Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani Sarkar

Small businesses not only account for 47 percent of U.S employment but also provide a pathway to success for minorities and women. During the coronavirus pandemic, these small businesses—especially those owned by minorities—were hard hit as consumers reduced spending disproportionately on services that require in-person physical interaction, such as hotels and restaurants. In response, the U.S. government launched the Paycheck Protection Program (PPP) to provide guaranteed and potentially forgivable small business loans. In this post, we examine financial technology (fintech) lenders participating in the PPP and find that, while disbursing only a small share of total loan amounts, they provide important support

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COVID-19 and Small Businesses: Uneven Patterns by Race and Income

May 27, 2021

Ruchi Avtar, Rajashri Chakrabarti, Davide Melcangi, Maxim Pinkovskiy, and Giorgio Topa

The COVID-19 pandemic resulted in one of the sharpest recessions and recoveries in U.S. history. As the virus spread over the country in a matter of weeks in March 2020, most states rapidly locked down nonessential economic activity, which plummeted as a result. As the first wave of COVID-19 subsided and people gradually learned to “live with the virus,” states reversed most of the initial lockdowns and economic activity rebounded. In our ongoing Economic Inequality series, we have explored many aspects of how the economic turmoil associated with COVID-19 differentially affected households. Here, we turn to small business experience. The first post in this three-part installment seeks to

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Who Benefited from PPP Loans by Fintech Lenders?

May 27, 2021

Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani Sarkar

In the previous post, we discussed inequalities in access to credit from the Paycheck Protection Program (PPP), showing that, although fintech lenders had a small share of total PPP loan volumes, they provided important support for underserved borrowers. In this post, we ask whether smaller firms received the amount of PPP credit that they requested, and whether loans went to the hardest-hit areas and mitigated job losses. Our results indicate that fintech providers were a key channel in reaching minority-owned firms, the smallest of small businesses, and borrowers most affected by the coronavirus pandemic.

Did Smaller Firms Seek and Receive PPP Loans?
A request for a small dollar loan—defined as $25,000 or less in the

Read More »

Who Received PPP Loans by Fintech Lenders?

May 27, 2021

Jessica Battisto, Nathan Godin, Claire Kramer Mills, and Asani Sarkar

Small businesses not only account for 47 percent of U.S employment but also provide a pathway to success for minorities and women. During the coronavirus pandemic, these small businesses—especially those owned by minorities—were hard hit as consumers reduced spending disproportionately on services that require in-person physical interaction, such as hotels and restaurants. In response, the U.S. government launched the Paycheck Protection Program (PPP) to provide guaranteed and potentially forgivable small business loans. In this post, we examine financial technology (fintech) lenders participating in the PPP and find that, while disbursing only a small share of total loan amounts, they provide important support to

Read More »

COVID-19 and Small Businesses: Uneven Patterns by Race and Income

May 27, 2021

Ruchi Avtar, Rajashri Chakrabarti, Davide Melcangi, Maxim Pinkovskiy, and Giorgio Topa
Editor’s Note: When this post was first published the U.S. Small Business Administration was incorrectly identified, the reference has been corrected. (June 4, 12:08pm)

The COVID-19 pandemic resulted in one of the sharpest recessions and recoveries in U.S. history. As the virus spread over the country in a matter of weeks in March 2020, most states rapidly locked down nonessential economic activity, which plummeted as a result. As the first wave of COVID-19 subsided and people gradually learned to “live with the virus,” states reversed most of the initial lockdowns and economic activity rebounded. In our ongoing Economic Inequality series, we have explored many aspects of how the economic turmoil

Read More »

The Overnight Drift in U.S. Equity Returns

May 26, 2021

Nina Boyarchenko, Lars C. Larsen, and Paul Whelan

Since the advent of electronic trading in the late 1990s, S&P 500 futures have traded close to 24 hours a day. In this post, which draws on our recent Staff Report, we document that holding U.S. equity futures overnight has earned a large positive return during the opening hours of European markets. The largest positive returns in the 1998–2019 sample have accrued between 2 a.m. and 3 a.m. U.S. Eastern time—the opening of European stock markets—and averaged 3.6 percent on an annualized basis, a phenomenon we call the overnight drift.

A First Look at the Overnight Drift

The chart below summarizes the overnight drift phenomenon. The blue bars plot the annualized hour-by-hour average returns across all trading days in our

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The Overnight Drift in U.S. Equity Returns

May 26, 2021

Nina Boyarchenko, Lars C. Larsen, and Paul Whelan

Since the advent of electronic trading in the late 1990s, S&P 500 futures have traded close to 24 hours a day. In this post, which draws on our recent Staff Report, we document that holding U.S. equity futures overnight has earned a large positive return during the opening hours of European markets. The largest positive returns in the 1998–2019 sample have accrued between 2 a.m. and 3 a.m. U.S. Eastern time—the opening of European stock markets—and averaged 3.6 percent on an annualized basis, a phenomenon we call the overnight drift.

A First Look at the Overnight Drift

The chart below summarizes the overnight drift phenomenon. The blue bars plot the annualized hour-by-hour average returns across all trading days in our sample, while

Read More »