Books by Jakob Vestergaard
This book reflects on the innovations that central banks have introduced since the 2008 collapse ... more This book reflects on the innovations that central banks have introduced since the 2008 collapse of Lehman Brothers to improve their modes of intervention, regulation and resolution of financial markets and financial institutions. Authors from both academia and policy circles explore these innovations through four approaches: ‘Bank Capital Regulation’ examines the Basel III agreement; ‘Bank Resolution’ focuses on effective regimes for regulating and resolving ailing banks; ‘Central Banking with Collateral-Based Finance’ develops thought on the challenges that market-based finance pose for the conduct of central banking; and ‘Where Next for Central Banking’ examines the trajectory of central banking and its new, central role in sustaining capitalism.
Papers by Jakob Vestergaard
This study was partially funded under the World Bank's Knowledge for Change Program (KCP) as part... more This study was partially funded under the World Bank's Knowledge for Change Program (KCP) as part of a larger ongoing study on the international banking system. On behalf of DIIS, we would like to thank Mansoor Dailami of the Development Prospects Group at the World Bank for useful interaction in the course of the project. We would also like to thank our colleagues Ismail Ertürk, Peter Gibbon, Tomas Lauridsen, Photis Lysandrou, Anastasia Nesvetailova, Grahame Thompson and Robert Wade for comments on an earlier version of this work. Further, our study benefited from valuable interactions that took place during the Central Banking at a Crossroads conference, organized by the Danish Institute of International Studies (DIIS) in late January 2013. The study is based on desk research, combining scrutiny of data released by the European Banking Authority with a review of the relevant literature. In assessing the recapitalization of European banks, we have drawn extensively on the bank capital regulation literature, but took particular inspiration from two sources. First, our views on capital ratios based on risk-weighted assets draw upon the work of Dr. Adrian Blundell-Wignall and colleagues at the OECD. Secondly, in assessing the equity funding of European banks, we have been particularly inspired by the work of
Central banks can potentially influence the investment decisions of private financial institution... more Central banks can potentially influence the investment decisions of private financial institutions, which in turn will create incentives towards green technology adoption and development of lower emission business models. This paper examines how monetary policies can be deployed to promote a greening of finance. To guide the efforts, the paper mobilizes the Money View literature. This enables a comparative assessment of different monetary policy options. The main finding is that a promising way forward for green monetary policy is to adopt a strategy of expanding collateral eligibility through positive screening and widening haircut spreads to change relative incentives in favor of green over brown assets.
Information-an International Interdisciplinary Journal, Jun 18, 2018
Discipline in the Global Economy?, 2009
Information-an International Interdisciplinary Journal, 2018
Information-an International Interdisciplinary Journal, 2018
I. Introduction “European banks have made significant progress in boosting their capital position... more I. Introduction “European banks have made significant progress in boosting their capital positions and in strengthening the overall resilience of the European banking system,” said Andrea Enria, Chairman of the European Banking Authority, when the results of the recapitalization exercise were published. “More than €200bn has been injected into the European banking system,” he continued, and European banks “are now in a better shape to finance the real economy.” (EBA 2012b, 1) In this chapter, we show how misleading this characterization is. The recapitalization orchestrated by the European Banking Authority (EBA) was based on a questionable capital assessment methodology. Basing regulatory capital requirements on risk-weighted assets (RWA) is a much less reliable indicator of banks' soundness and resilience than simpler ratios of capital to total assets (Acharya et al. 2011). We therefore compare the assessments undertaken by the EBA—all of which are based on RWA—with data on le...
Information-an International Interdisciplinary Journal, 2018
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Books by Jakob Vestergaard
Papers by Jakob Vestergaard
• Upgrading the mandate of the European Systemic Risk Board from monitoring to supervision
• Expanding the mandate of the Single Supervisory Mechanism to include non-banking financial institutions
• Adopting a ‘twin peaks’ model for financial supervision
• Creating one or two new specialized, supervisory bodies targeting shadow banking
• Establishing a European Financial Supervision Authority (EFSA)
We find the last of these five options as the most promising because it would make the institutional set up for financial supervision more simple, would cover a broader range of financial institutions, including nonbanks, and would allow for coherence and consistency in the execution of supervisory activities. Establishing an EFSA – legally, organisationally and geographically separate from the European Central Bank (ECB) – would correspond to what has traditionally been known as the “German model” for dealing with the dual challenges of financial supervision and monetary policy (Goodhart and Schoenmaker 1995). Mindful of the crucial member state politics of building a winning coalition behind such an initiative, we note this feature as a strength that could allow the EFSA to be located in Paris.
proposal for the last 10 years’ has proceeded at rapid pace under the leadership of the British Commissioner Lord Hill. The CMU’s ambitions are great: SME financing and job creation, growth via capital markets. Yet, we argue, if the CMU is to make
a substantial and lasting contribution to investment and job creation in Europe, it must be accompanied by reforms that address systemic risk in securities-based financial systems and
enhance pan-European supervision of securitization and repo markets.
1. Regulation of Securities Financing Transactions (SFTs) receives minimal attention, especially compared to high-quality securitisation, although the former is three times larger than the latter, while securitisation and SFT markets are closely connected.
2. The CMU plans are inconsistent with the Commission’s work on shadow banking. Whereas the latter work stream stresses the urgency of regulating SFTs due to their crucial role in systemic leverage, procyclicality and interconnectedness, the CMU Green Paper downplays the systemic issues related to SFT markets.
3. In the CMU, the Commission’s thinking about SFTs seems reduced to a notion of promoting the “free flow of collateral” - intimately related with the concept of “collateral fluidity” - a position that is indistinguishable from that of the main industry organization in the area. With this, there is considerable risk that CMU plans repeat mistakes of the pre-crisis period, when Member States and European institutions delegated regulatory responsibility to SFT market participants.
4. The CMU proposal similarly suggests a simple trade-off between regulation and market liquidity, in direct contradiction to the widely acknowledged complexity of this relationship (including amongst market participants).
5. These weaknesses of the CMU plans may be seen as part of a larger regulatory trend, by which proposals to regulate SFT markets have been watered down recently (evident also in the gradual erosion of the FSB’s plan to introduce universal mandatory haircuts).
IMF governance reforms are not ratified. The US veto hinders such reforms and a much-needed doubling of its secure lending
resources, crucial to efforts at mitigating future financial crises.
directors, shows that multilateral governance is at risk if longoverdue IMF quota and board reforms are not ratified. It
provides background to why the US Congress has refused to
ratify the reforms since 2010, and draws stark conclusions.
det ’juristeri’ uden egentlig betydning for eurozonens fremtid?