Forecast Targeting and Financial Stability: Evidence from the European Central Bank and Bank of England

Curi, Claudia; Murgia, Lucia Milena

doi:10.1016/j.frl.2022.103486

Cited by 4 publications

(2 citation statements)

References 20 publications

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“…The proposition of a monetary authority directly responding to the exchange rate remains a point of contention. Empirical evidence supporting this concept has been found by Curi and Murgia [44], Lee et al [45], and Miteza et al [46], which suggest the inclusion of the exchange rate in the Bank's policy rule. Nevertheless, we maintain the possibility that the Bank of China may adjust its monetary policy in response to exchange rate fluctuations.…”

Section: Central Bankmentioning

confidence: 84%

Assessing the Macroeconomic Consequences of External Financial Upheavals on China: A Caution of a Silicon Valley Bank’s Collapse

Wang,

2023

Axioms

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In the context of an increasingly interconnected global economy, deciphering the complex ripple effects of external financial disruptions on national economies is a task of utmost significance. This article dives deep into the intricate repercussions of such disturbances on the macroeconomic dynamics of China using the example of the potential insolvency of a Silicon Valley bank. Grounded in empirical scrutiny, we leverage data spanning from Q1 2000 to Q1 2022 and the analytical utility of the impulse response function to illuminate our findings. We find that external financial tumult triggers a global recession, adversely impacting China’s export-driven economy while simultaneously unsettling aggregate output, employment levels, and wage stability. Simultaneously, these disruptions induce variability in consumption tendencies, investment trajectories, and import volumes and inject instability into interest rate paradigms. We also acknowledge the potential for currency depreciation and bank insolvency incidents to induce inflationary stresses, primarily by escalating the costs of imports. However, these inflationary tendencies may be offset by the concomitant economic slowdown and diminished demand inherent to global recessions. Importantly, the tightening of global credit conditions, coupled with existing financial ambiguities, may obstruct investment initiatives, curtail imports, and exert influence on both risk-free and lending interest rates. Our investigation also probes into the response of the Chinese government’s monetary policy to these external financial shocks. Despite the vital role of monetary policy in alleviating the impacts of these shocks, the potential secondary effects on China’s domestic economy warrant attention. Our study underscores the imperative of proper policy design rooted in a profound understanding of the intricate economic interdependencies for effective management and mitigation of the potentially detrimental consequences of such financial upheavals on China’s macroeconomic resilience within the tapestry of a tightly knit global financial ecosystem.

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Section: Central Bankmentioning

confidence: 84%

Assessing the Macroeconomic Consequences of External Financial Upheavals on China: A Caution of a Silicon Valley Bank’s Collapse

Wang,

2023

Axioms

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“…Hong et al (2019) show that the digitalization of asset management can lead to highly synchronized investor behavior. Curi et al (2023) show that the digitalization of banking has been a significant factor in market valuation, especially during the Covid-19 shock. Related to the recent banking crisis, Cookson et al (2023) document the role of social media, specifically Twitter, in fueling the bank run at SVB.…”

Section: Related Literaturementioning

confidence: 99%

Destabilizing Digital 'Bank Walks'

2023

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Problems and Countermeasures of China’s Problematic Bank Risk Supervision from the Disposal of Silicon Valley Bank

陈

2024

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Forecast Targeting and Financial Stability: Evidence from the European Central Bank and Bank of England

Cited by 4 publications

References 20 publications

Assessing the Macroeconomic Consequences of External Financial Upheavals on China: A Caution of a Silicon Valley Bank’s Collapse

Assessing the Macroeconomic Consequences of External Financial Upheavals on China: A Caution of a Silicon Valley Bank’s Collapse

Destabilizing Digital 'Bank Walks'

Problems and Countermeasures of China’s Problematic Bank Risk Supervision from the Disposal of Silicon Valley Bank

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