Where Does Profit Come from in the Payments Industry?
The recent development in the payments industry, namely the rise of Fintech companies, has created an opportunity to revisit the economics of the payment system and the puzzling nature of…
Is the Recent Buyback Spree Creating Liquidity Problems for the Dealers?
The anxiaties about large financial corporations' debt-funded payouts—aka "stock buybacks"—is reemerging a decade after the financial crisis. Companies on the S&P 500 have poured more than $5.3 trillion into repurchasing…
Can Shadow Banking Replace Traditional Banking? We Will See Soon Enough
"A person often meets his destiny on the road he took to avoid it." Jean De La Fontaine The shift in the provision of financial intermediation away from traditional banks…
Should the Fed Open its Balance Sheet to the Securities Dealers? A Lesson from the Recent Wild Swings in the Repo Rate
“The secret of change is to focus all of your energy not on fighting the old, but on building the new” -Socrates If the Fed's understanding of the existing problems in…
What Rules Inflation Targeting? A Time for Abandoning Taylor Rule
“No matter how much suffering you went through, you never wanted to let go of those memories.” ? Haruki Murakami Following the Global Financial Crisis (GFC), most central banks around…
Central Counterparties: When Monetary Policy is Not Enough
The overall picture of the U.S. economy, though far from stable, is hardly threatening. For instance, U.S. payrolls grew by 128,000 in October. Nevertheless, the Fed cut the interest rate…
Quantitative Easing: No Words to Describe It
“Words have no power to impress the mind without the exquisite horror of their reality." - Edgar Allan Poe The experience of the global financial crisis (GFC) was a painful…