The text discusses the systemic instability in financial markets and the framework for understanding financial market fragility proposed by Hyman Minsky. It emphasizes the importance of analyzing the institutional and legal struct...
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The text discusses the shift towards using interest rate swaps (IRS) as synthetic repos to fill funding gaps and compensate for failures in the repurchase agreement (repo) market. It explores the functions of IRS in the global fin...
The text discusses the relationship between interest rate swaps (IRS) and the repo market, focusing on regulatory changes and market structures. Ralph Axel, an interest rate strategist at Bank of America, provides insights into th...
The US fixed-income market has faced instability due to events like the Covid-19 pandemic, leading to concerns about market stability. The focus on hedge funds as the cause of instability is a misdiagnosis, with the real issue bei...
The interview with Mohsen Fahmi discusses the evolution of the US Treasury market structure, the role of primary dealers, the impact of Dodd-Frank Act, and the need for more diversity of opinion in the market. Fahmi suggests solut...
The symposium on Market Microstructure and Financial Stability aims to bridge the gap between financial stability experts and market practitioners to discuss the relationship between market microstructure and financial stability. ...
0Banks as Alternative Investment Funds?
2023-04-01 •
The text discusses the transformation of modern commercial banking, focusing on SVB's business model and its collapse. It explores the shift from uninformed to informed depositors, the use of financial engineering methods like sub...
SVB offered 'Fund Subscription Facilities' to Private Equities, resembling a Ponzi scheme. The use of subscription lines transformed banking into alternative investment, with systemic risks. The SVB crisis revealed the interconnec...
The blog post discusses how regional banks like SVB may be adopting a 'fixed-income arbitrage' strategy similar to hedge funds, leading to high exposure to interest rate risks. The post explains the mechanics of fixed-income arbit...
The March 2023 banking crisis exposed the shift in deposit-taking institutions towards investing in liquid assets like government bonds, leading to interest rate risk. Regulators focused on liquidity risk post-GFC, neglecting inte...
The blog post discusses the use of interest rate swaps as a solution to bank runs, focusing on the case of Silicon Valley Bank (SVB). It highlights the shift from uninformed to informed depositors and the importance of using deriv...