Keyword: financial stability

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Europe

Central Banking and Climate Change

This week’s IGM European Economic Experts Panel statements: A) Under current policies on climate change, the associated physical risks (such as those arising from total seasonal rainfall and sea level changes, and increased frequency, severity, and correlation of extreme weather events) will be at most a very small factor in monetary policy decisions over the next decade. B) The physical risks associated with climate change under current policies are likely to threaten financial stability over the next decade.
US

Central Banking and Climate Change

This week’s IGM Economic Experts Panel statements: A) Under current policies on climate change, the associated physical risks (such as those arising from total seasonal rainfall and sea level changes, and increased frequency, severity, and correlation of extreme weather events) will be at most a very small factor in monetary policy decisions over the next decade. B) The physical risks associated with climate change under current policies are likely to threaten financial stability over the next decade.
Europe

Doom Loops and Europe’s Financial System

This week’s IGM European Economic Experts Panel statements: A) Breaking the “doom loop” — a negative spiral that can result when banks hold sovereign bonds and governments bail out banks — would increase the stability of European economies in the event of another financial crisis. B) Regulators should try to break the doom loop by assigning positive risk weights — in calculating banks’ capital requirements — to banks’ holdings of domestic and other Eurozone sovereign bonds. C) Breaking the doom loop would impose substantial costs on powerful political constituencies.
Europe

Italy’s Banks

This week's European IGM Economic Experts Panel statements: A) Setting the EU rules aside, and assuming it would take 2.5% of Italy’s GDP to recapitalize its banks, the Italian government would improve financial stability in Europe if it injected this amount of public funds into its banks. B) If Italy were to inject public funds into its banks without imposing losses on at least some claimants, an important cost would be the effect on future incentives (economic or political) in Europe.