Young-Hwa Seok and Hyun Song Shin
- Published in print:
- 2013
- Published Online:
- November 2015
- ISBN:
- 9780231165266
- eISBN:
- 9780231536462
- Item type:
- chapter
- Publisher:
- Columbia University Press
- DOI:
- 10.7312/columbia/9780231165266.003.0005
- Subject:
- Economics and Finance, International
This chapter considers the phenomenon of financial globalization. This type of globalization is organized within the role of financial intermediaries, especially banks, in the proliferation of ...
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This chapter considers the phenomenon of financial globalization. This type of globalization is organized within the role of financial intermediaries, especially banks, in the proliferation of financial cycles. Firstly, this chapter reviews the merits of financial globalization with particular attention to the effects of unhindered capital flows. Secondly, it analyzes these effects against the financial system as a whole of the balance sheet management done by the financial intermediaries, after which the next section applies these insights to four certain episodes; namely, the 2008 liquidity crisis in Korea, Japans experience in the 1980s, US financial crisis of 2007–2009, and the European crisis that began in 2010. The chapter concludes with an emphasis on the importance of macro-prudential policies.Less
This chapter considers the phenomenon of financial globalization. This type of globalization is organized within the role of financial intermediaries, especially banks, in the proliferation of financial cycles. Firstly, this chapter reviews the merits of financial globalization with particular attention to the effects of unhindered capital flows. Secondly, it analyzes these effects against the financial system as a whole of the balance sheet management done by the financial intermediaries, after which the next section applies these insights to four certain episodes; namely, the 2008 liquidity crisis in Korea, Japans experience in the 1980s, US financial crisis of 2007–2009, and the European crisis that began in 2010. The chapter concludes with an emphasis on the importance of macro-prudential policies.
Hans-Werner Sinn
- Published in print:
- 2014
- Published Online:
- October 2014
- ISBN:
- 9780198702139
- eISBN:
- 9780191771828
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198702139.003.0006
- Subject:
- Economics and Finance, Macro- and Monetary Economics
When the US financial crisis spilled over to Europe after 2007, investors shied away from the southern euro countries, declining to continue financing their current account deficits and even ...
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When the US financial crisis spilled over to Europe after 2007, investors shied away from the southern euro countries, declining to continue financing their current account deficits and even recalling some of the credit they had lent them previously. In this situation the ECB helped out with the printing press, allowing the local national central banks to provide generous refinancing credit as a replacement. To that end it, dramatically reduced the collateral requirements for such credit, accepting government bonds that did not qualify for investment grade, non-traded asset-backed securities composed of dubious credit titles, own bonds created by the banks themselves, and many other types of assets that it had not accepted previously due to their risky nature and poor quality. It also tolerated huge volumes of ELA credit, which the national central banks could grant formally on their own account, but actually at the Eurosystem’s risk.Less
When the US financial crisis spilled over to Europe after 2007, investors shied away from the southern euro countries, declining to continue financing their current account deficits and even recalling some of the credit they had lent them previously. In this situation the ECB helped out with the printing press, allowing the local national central banks to provide generous refinancing credit as a replacement. To that end it, dramatically reduced the collateral requirements for such credit, accepting government bonds that did not qualify for investment grade, non-traded asset-backed securities composed of dubious credit titles, own bonds created by the banks themselves, and many other types of assets that it had not accepted previously due to their risky nature and poor quality. It also tolerated huge volumes of ELA credit, which the national central banks could grant formally on their own account, but actually at the Eurosystem’s risk.
