We argue that the rapid asset growth of nonbank financial intermediaries (NBFIs) relative to banks is the outcome of transformations of risks between banks and NBFIs that increase the interconnectedness of the two sectors. These transformations are consistent with avoiding tighter, post-GFC bank...

Under which conditions do usability constraints for regulatory capital buffers emerge? To answer this question, we build a non-linear structural banking sector model with a minimum capital requirement that banks are not allowed to breach, and a capital buffer requirement (CBR) that banks can...

Bank failures can stem from runs on otherwise solvent banks or from losses that render banks insolvent, regardless of withdrawals. Disentangling the relative importance of liquidity and solvency in explaining bank failures is central to understanding financial crises and designing effective...

We study how the type of money used in blockchain-based trade affects interest rates, investment, and welfare. Stablecoins in our model are backed by safe assets, while banks issue deposits (both traditional and tokenized) to fund a portfolio of safe and risky assets. Deposit insurance creates a...

We study how short-term interest rate volatility affects the transmission of monetary policy. To identify exogenous changes in volatility, we exploit the pronounced heteroskedasticity visible in the time-series of euro area short-term rates over the past two and a half decades. Interacting the...

This paper studies the role of banking supervision in anticipating, monitoring, and disciplining failing banks. We document that supervisors anticipate most bank failures with a high degree of accuracy. Supervisors play an important role in requiring troubled banks to recognize losses, taking...

External ratings (agency ratings) and internal ratings were already in use before Basel II, as powerful management tools. Basel II "adopts" them (the former in the Standard approach, the latter in the IRB approaches) in a productive way: internal ratings represent the final summary of the...

This study emphasizes three solid questions: (i) the extent to which African banking systems are globalized; (ii) the role of regulation and technology in this process; and (iii) whether economic globalization reinforces banking stability. We conceptualize financial globalization through two...

Since 2014, several countries have implemented the Basel III countercyclical capital buffer (CCyB) to enhance the banking sector's resilience against risks arising from excessive credit growth. We analyze the CCyB decision-making process of macroprudential authorities across Europe. Our findings...

This study quantifies the impact of geopolitical risk on euro area banks using the 2025 EU-wide stress test, the first to include an explicit geopolitical scenario. Comparing outcomes with earlier stress tests, we find that geopolitical shocks measurably erode capital ratios, with smaller and...

This study quantifies the impact of geopolitical risk on euro area banks using the 2025 EU-wide stress test, the first to include an explicit geopolitical scenario. Comparing outcomes with earlier stress tests, we find that geopolitical shocks measurably erode capital ratios, with smaller and...

The shift in monetary policy has different repercussions on bank profits depending on the prevalence of fixed or floating interest rates charged on loans. The Baltic states provide a case study of the impact of monetary tightening on profits in predominantly floating interest rates setup amid...

Spikes in geopolitical risk indices have been associated with lower bank stability, leading supervisors to closely monitor how they are being managed by lenders. We propose a set of key elements that should be part of bank's geopolitical risk management systems and review an array of plausible...

Spikes in geopolitical risk indices have been associated with lower bank stability, leading supervisors to closely monitor how they are being managed by lenders. We propose a set of key elements that should be part of bank's geopolitical risk management systems and review an array of plausible...

This study quantifies the impact of geopolitical risk on euro area banks using the 2025 EU-wide stress test, the first to include an explicit geopolitical scenario. Comparing outcomes with earlier stress tests, we find that geopolitical shocks measurably erode capital ratios, with smaller and...

This paper argues that the European macroprudential regime has evolved into a complex architecture of buffers, national discretion, and instrument-specific controls due to persistent doubts regarding the credibility of the EU bank resolution regime. Moreover, macroprudential controls are...

The digitalisation of banking services, driven by smartphone access and limited physical presence, has transformed bank-customer interactions but introduced challenges, such as a reliance on third-party devices and external software contracts. Based on findings from focus groups held in Hong...

Despite its growing success, open banking (OB) struggles to present a coherent identity. Indeed, despite its widespread adoption around the world, various models can be identified based on rationales, the nature of data-sharing obligations, and the standardisation process. Against this...