Division Of Labor In Banking: An Analysis Of Credit Derivative Usage By Commercial Banks

For the period 2002-2005, we examine a sample of 131 end-of-year observations for 57 banks that participate in the credit derivatives market.  We find that buyers of credit protection tend to be loan sellers and may have a comparative advantage in loan origination, while credit protection sellers tend to be loan buyers and may have a comparative advantage in funding loans.  Furthermore, some net credit protection buyers may derive an advantage as loan originators from a high-quality reputation, while others seem to be better able to break down informational barriers due to their position as market makers in credit derivatives

Financial System Stability, the Timing of Climate Change Action and the Federal Reserve

Timely and effective climate action is a precondition for the stability of the global financial system and for long-term, inclusive prosperity. Because the Federal Reserve and other central banks share responsibility with legislative and regulatory authorities and other experts for maintaining financial system stability, the Fed also shares responsibility for effective climate action. For climate action to be effective in reducing greenhouse gas emissions and limiting global warming, it must be widespread, it must be substantive, and it must come sooner rather than later. The new low-interest rate monetary policy environment favors sustainable long-term, but also high-risk, investments. Market participants need timely guidance and support from regulatory and supervisory authorities, including the Federal Reserve, in order to expedite global fund allocations to low-carbon assets

Financial System Stability, the Timing of Climate Change Action and the Federal Reserve

Timely and effective climate action is a precondition for the stability of the global financial system and for long-term, inclusive prosperity. Because the Federal Reserve and other central banks share responsibility with legislative and regulatory authorities and other experts for maintaining financial system stability, the Fed also shares responsibility for effective climate action. For climate action to be effective in reducing greenhouse gas emissions and limiting global warming, it must be widespread, it must be substantive, and it must come sooner rather than later. The new low-interest rate monetary policy environment favors sustainable long-term, but also high-risk, investments. Market participants need timely guidance and support from regulatory and supervisory authorities, including the Federal Reserve, in order to expedite global fund allocations to low-carbon assets