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Iñaki Aldasoro Profile picture
Iñaki Aldasoro
@i_aldasoro
Principal Economist at the Bank for International Settlements. Views are my own, so is the silly sense of humor. RT/like = bookmark.
MacroPru😷 Profile picture 1 subscribed
Nov 24, 2023 • 45 tweets • 8 min read
Views on stablecoins are a kind of Rorschach ink blot test that reveals unconscious monetary priors: SC are like MMFs, casino chips, wildcat banks, ETFs, currency boards. Our own conscious monetary priors are those of the money view & that leads us to analogize SC w/ Eurodollars For us, on-chain is like offshore: each term identifies a particular institutional boundary. Payment on either side of that boundary is comparatively easy; moving funds across the boundary—back off-chain, or back onshore—is comparatively difficult.
The difficulty is par.
Feb 16, 2023 • 13 tweets • 3 min read
🚨New @bis_org WP out!🚨
*Non-bank lending during crises*, joint with Sebastian Doerr and @Haonan_Zhou bis.org/publ/work1074.…
tl;dr: non-banks curtail credit by significantly more than banks during crises & the value of lending relationships explains most of the gap
👇thread We first establish that non-banks reduce their credit to non-financial firms by substantially more than banks when faced with a financial shock in the borrower country. By how much? Non-banks cut lending by about 50% more than banks.
Nov 1, 2022 • 14 tweets • 5 min read
A thread with links to academic work on the role of the dollar done by Hyun and coauthors in recent years.
In addition, there is a wealth of work done by others, at the BIS (including yours truly especially on dollar funding - see eg pinned tweet) & externally of course as well First, two seminal papers by V. Bruno and @HyunSongShin:
Cross-border banking and global liquidity (academic.oup.com/restud/article…), highlighting the bank leverage cycle as the determinant of the transmission of financial conditions across borders through banking sector capital flows.
Oct 31, 2022 • 11 tweets • 4 min read
New @BIS_org Statistical Release with data on cross-border banking and global liquidity indicators as of end-June 2022
bis.org/statistics/rpp…
Short thread below 👇 International banks' XB claims expanded 8% yoy, driven by an outsize rise in the market value of derivatives (+$515 billion), especially those reported by banks in the euro area, against the backdrop of elevated uncertainty and market volatility.
Apr 28, 2022 • 8 tweets • 4 min read
New @BIS_org statitical release wih banking data as of the end of 2021
bis.org/statistics/rpp…
Short thread with key takeaways 1/ Internationally active banks’ outstanding claims amounted to $35 trillion at end-Q4 2021, virtually unchanged from the previous quarter on an exchange rate-adjusted basis (up only 1.6% on YoY basis)
Mar 23, 2022 • 21 tweets • 9 min read
Attention dollar funding geeks!!
We have uploaded a substantially revised version of the paper "Global banks, dollar funding, and regulation"
--> bis.org/publ/work708.p…
tl;dr: establish bargaining frictions as an
important driver of price dispersion in USD funding markets🧵 US dollar funding is the lifeblood of international banking, and non-US global banks have a very
large footprint in dollar banking despite their restricted access to core dollar deposits and central bank backstops.
Feb 11, 2022 • 6 tweets • 2 min read
Important setback for dollar funding research. Unless I'm missing something, obtaining bal. sheets of branches & agencies of foreign banks in the US will be very hard going forward as the Chicago Fed discontinued publication of FFIEC 002 reports. No more graphs like those below
Feb 10, 2022 • 4 tweets • 2 min read
A pervasive feature of our world is the reliance on IT products & services. It's no surprise then that cyber risk has gained notoriety in recent years.
A revamped version of our paper "The drivers of cyber risk", just accepted at the JFS, documents stylised facts and drivers Cyber costs are higher for larger firms and for incidents that impact several organisations simultaneously. Events with malicious intent (i.e. cyber attacks) tend to be less costly, unless they are on the
upper tail of the loss distribution (similar to "connected" events).
Jan 27, 2022 • 4 tweets • 4 min read
New paper alert!!
**Non-bank lending during financial crisis**
(joint w/ S Doerr & @Haonan_Zhou)
A large literature studies how bank lending contracts around crises; we show that non-banks contract their syndicated lending by over 50% more than banks
Comments welcome!
1/ We find that differences in borrower characteristics account for around half of the additional decline in non-bank versus bank lending. We then present evidence that non-banks' more volatile funding explains the remaining difference. 2/
Jun 7, 2021 • 6 tweets • 3 min read
A now thread in the 4 interactive graphs we produced for this article. In this thread I provide quick videos introducing each of them. I wanted to hire Sean Connery to narrate, but then I learned the sad (old) news he passed away, so you'll have to bear with my dreadful voice 😊 The first graph provides a big picture view of NFC debt, considering NFCs as ultimate issuers (that is, including issuance done by affiliates of said NFC which may not be NFCs themselves). It is a movie of amounts outstanding over time & you can select/unselect country groups 2/
Mar 10, 2021 • 14 tweets • 3 min read
Thanks to two very constructive referees, a much improved version of BIS WP 858, "The Janus face of bank geographic complexity" (with amazing coauthors B Hardy & M Jager) is now available at the Journal of Banking & Finance. 50 day free access at authors.elsevier.com/a/1ciyl1M2rGHj… TL;DR --> Higher geographic complexity heightens banks’ capacity to absorb local economic shocks, reducing their risk. However, it can also help banks soften the impact of prudential regulation, increasing their risk. Bank geographic complexity therefore has a Janus face.
Mar 1, 2021 • 12 tweets • 8 min read
Attention dollar funding geeks!
Check out the new BIS Quarterly Review, where I have an article with E Eren and @hwenqian on the "Dollar funding of non-US banks hrough Covid-19"
👇 short thread 1/ During the first 3 quarters of 2020 the on-balance sheet USD funding of non US banks in fact *grew*, contrary to what happened around other periods of severe stress like the GFC. 2/
May 11, 2020 • 21 tweets • 8 min read
Global and domestic financial cycles: variations on a theme bis.org/publ/work864.h… vía @bis_org
New paper out with S Avdjiev, C Borio and P Disyatat comparing and contrasting global and domestic financial cycles. 1/ Interest in financial cycles has increased sharply in recent years, reflecting an intellectual shift towards viewing financial developments as an integral part of business cycle fluctuations. Despite the ubiquitous use of the term, there remains a degree of ambiguity. 2/
Apr 20, 2020 • 12 tweets • 3 min read
Check out our new paper on bank geographic complexity and bank risk. 1/ We use the BIS banking list to construct a Herfindahl-Hirschman(*) measure of geographic representation and complexity at the Bank Holding Company-year level, for 96 large internationally active BHCs. The banking list collects info on the banking entities reporting to BIS stats
May 27, 2019 • 16 tweets • 6 min read
To understand post-crisis dollar funding markets, the growing heterogeneity of global banks dollar business models has to be the starting point European banks fundamentally changed their operations in the US since 2011, towards short term arbitrage; Japanese banks continued to expand their dollar loan books 3/