Global Factors in Noncore Bank Funding and Exchange Rate Flexibility

Wed, 01 Jan 2025 00:00:00 +0000

Research question and motivation: The paper asks how far global factors drive the foreign-borrowing component of advanced-economy banks’ non-core funding, and whether exchange rate flexibility (and macroprudential policy) can insulate national banking systems from those global factors. This speaks to the long-running “trilemma vs. dilemma” debate (Rey 2015 vs. Mundell 1963; Miranda-Agrippino and Rey 2020) over whether a flexible exchange rate buys monetary/financial autonomy under open capital accounts. Non-core funding (funding other than deposits — repos, debt securities, foreign borrowing) matters because, per Shin and Shin (2011), Hahm et al. (2013) and Jorda et al. (2017), it is an elastic, crisis-predictive funding source closely tied to credit booms and leverage.

A Housing Portfolio Channel of QE Transmission

Research Question

This paper identifies and quantifies a housing portfolio channel of quantitative easing (QE) transmission that operates through household portfolio rebalancing toward second homes (as opposed to the well-studied bank credit channel). The central question is whether, and how much, the ECB’s formal adoption of QE in January 2015 induced households with larger pre-existing bond holdings to shift wealth into residential real estate—specifically second homes held for investment—and what the downstream effects on regional housing market outcomes were.

Daniel Marcel Te Kaat | Macro Paper Warehouse

Global Factors in Noncore Bank Funding and Exchange Rate Flexibility

A Housing Portfolio Channel of QE Transmission