Summary. This is an extended working paper version of the paper that appeared in Economic Theory. It paper compares the merits of alternative exchange rate regimes in small open economies where financial intermediaries perform a real allocative function, there are multiple reserve requirements,...

The aim of this work is to present in a systematic way elements around the debate on the persistence of a central bank arrangement, currency boards or the Dollarization option. In some special circumstances, both later arrangements could be desirable. They are not a universal panacea in the way...

This paper discusses that a lot of the debate on selecting an exchange rate regime misses the time. It begins explaining the standard theory of choice between exchange rate regimes, and then explores the fragilities in this theory, specifically when this is applied to emerging economies. Next...

Currency board (CB) was a corner solution for Argentine hyperinflation, however its balance is controversial. How does a CB work as a long run regime? After evaluating the result of ten years CB regime, we obtain important lessons for a monetary union and for dollarization proposals. We discuss:...

The study presented main features of possible currency options which can be potentially adopted by Zimbabwe in the aftermath of multi-currency regime. The currency options analyzed are dollarization, joining the CMA and re-introduction of the Zimbabwe dollar (Z$). The proposed management systems...

We examine how the fluctuations in financial and housing markets in U.S. affect the asset returns and GDP in Hong Kong. In contrast to the results from linear specifications, which concludes that the U.S. and Hong Kong are virtually delinked in terms of the asset markets, our regime-switching...

This paper investigates banking system instability vis-à-vis the day-to-day interbank market and monetary policy effectiveness in the Dominican Republic. The analysis reveals a negative relationship among excess banking system reserves and the interbank interest rate, and shows that in crisis...

The paper analyzes liquidity risk and contagion in interbank markets. The aim of the research is to define the different structures of interbank markets and structures that allow the better allocation of liquidity and thus avoid the spread of crisis in the whole system. For this purpose, this...

We implement a novel method to detect systemically important financial institutions in a network. The method consists in a simple model of distress and losses redistribution derived from the interaction of banks' balance-sheets through bilateral exposures. The algorithm goes beyond the...

This review of the book “The Challenge of Financial Stability: A New Model and its Applications” by Goodhart C.A.E. and Tsomocos D.P. highlights the potential of the framework of strategic partial default of banks with credit chain on the interbank market for further theoretical and applied...