Arbitrage limits heighten dollar shortages abroad during volatile times
U.S. dollars are hard to find in foreign markets during times of heightened risk, as evidenced by two interesting and related features in the post-2007 international financial landscape.
January 09, 2024
Surveys
Banking Conditions Survey
Credit standards tightened at a slower pace across all loan types. Loan demand continued to decline, though at the slowest pace since the end of 2022.
January 02, 2024
State and local governments rake in surpluses after pandemic
The existence of large sums in state and local government coffers runs counter to historic post-recession trends. State and local governments usually grapple with budget shortfalls due to rising social program demands and weak revenue streams following recessions.
December 19, 2023
Reciprocal deposit networks provide means to exceed FDIC’s $250,000 account cap
Because of their prominence, reciprocal deposits are important in the broader discussion of deposit insurance. Though they have the potential to increase banks’ moral hazard, they also bring increased trust and safety to the banking system.
November 28, 2023
Surveys
Banking Conditions Survey
Credit standards continued to tighten, and loan pricing continued to rise at an above-average pace this period.
November 13, 2023
Research Department Working Papers
Deposit Convexity, Monetary Policy and Financial Stability
Banks and researchers conventionally model the response of deposit interest rates to market interest rates as constant, implying that deposits have nearly constant duration. Contrary to this standard assumption, this paper shows empirically that the “beta” of deposit rates to market rates increases as market rates rise, causing the duration of deposits to fall.
October 10, 2023
Surveys
Banking Conditions Survey
Loan demand has been declining for a year, and the pace accelerated this period.
October 02, 2023
Bankers, regulators absorb lessons of Silicon Valley Bank failure as new tests emerge
Ben Munyan, director of supervisory policy in the Banking Supervision Department at the Federal Reserve Bank of Dallas, discusses the challenges the banking industry faces in an era of rapidly rising interest rates and how Texas institutions have fared.
September 29, 2023
Mexican peso strength noteworthy among emerging markets during Fed tightening
Many emerging-market currencies have depreciated modestly during the Federal Reserve’s tightening cycle that began in March 2022. The Mexican peso, however, outperformed the group during the period.
September 26, 2023
Research Department Working Papers
High-Yield Debt Covenants and Their Real Effects
Contrary to the prevailing belief that incurrence covenants offer limited protection for creditors, this paper reveals a significant and sudden decline in investment upon triggering these covenants.
August 22, 2023