NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Dennis Reinhardt

Bank of England,
Threadneedle Street,
London EC2R 8AH

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Bank of England

NBER Working Papers and Publications

September 2018Macroprudential FX Regulations: Shifting the Snowbanks of FX Vulnerability?
with Toni Ahnert, Kristin Forbes, Christian Friedrich: w25083
Can macroprudential foreign exchange (FX) regulations on banks reduce the financial and macroeconomic vulnerabilities created by borrowing in foreign currency? To evaluate the effectiveness and unintended consequences of macroprudential FX regulations, we develop a parsimonious model of bank and market lending in domestic and foreign currency and derive four predictions. We confirm these predictions using a rich dataset of macroprudential FX regulations. These empirical tests show that FX regulations: (1) are effective in terms of reducing borrowing in foreign currency by banks; (2) have the unintended consequence of simultaneously causing firms to increase FX debt issuance; (3) reduce the sensitivity of banks to exchange rate movements, but (4) are less effective at reducing the sensitivi...
June 2016The Spillovers, Interactions, and (Un)Intended Consequences of Monetary and Regulatory Policies
with Kristin Forbes, Tomasz Wieladek: w22307
Have bank regulatory policies and unconventional monetary policies—and any possible interactions—been a factor behind the recent “deglobalisation” in cross-border bank lending? To test this hypothesis, we use bank-level data from the UK—a country at the heart of the global financial system. Our results suggest that increases in microprudential capital requirements tend to reduce international bank lending and some forms of unconventional monetary policy can amplify this effect. Specifically, the UK’s Funding for Lending Scheme (FLS) significantly amplified the effects of increased capital requirements on cross-border lending. Quantitative easing did not appear to have a similar effect. We find that this interaction between microprudential regulations and the FLS can explain roughly 30% of ...

Published: Forbes, Kristin & Reinhardt, Dennis & Wieladek, Tomasz, 2017. "The spillovers, interactions, and (un)intended consequences of monetary and regulatory policies," Journal of Monetary Economics, Elsevier, vol. 85(C), pages 1-22. citation courtesy of

 
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