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This paper presents evidence that spillovers through shifts in bank lending can help explain the pattern of contagion. To test the role of bank lending in transmitting currency crises we examine a panel of data on capital flows to 30 emerging markets disaggregated by 11 banking centers. In addition we study a cross-section of emerging markets for which we construct a number of measures of competition for bank funds. For the Mexican and Asian crises, we find that the degree to which countries compete for funds from common bank lenders is a fairly robust predictor of both disaggregated bank flows and the incidence of a currency crisis. In the Russian crisis, the common bank lender helps to predict the incidence of contagion but there is also evidence of a generalized outflow from all emerging markets. We test extensively for robustness to sample, specification and definition of the common bank lender effect. Overall our findings suggest that spillovers through banking centers may be more important in explaining contagion than similarities in macro-economic fundamentals and even than trade linkage.
The great financial crisis and the euro area crisis led to a substantial reform of financial safety nets across Europe and – critically – to the introduction of supranational elements. Specifically, a supranational supervisor was established for the euro area, with discrete arrangements for supervisory competences and tasks depending on the systemic relevance of supervised credit institutions. A resolution mechanism was created to allow the frictionless resolution of large financial institutions. This resolution mechanism has been now complemented with a funding instrument.
While much more progress has been achieved than most observers could imagine 12 years ago, the banking union remains unfinished with important gaps and deficiencies. The experience over the past years, especially in the area of crisis management and resolution, has provided impetus for reform discussions, as reflected most lately in the Eurogroup statement of 16 June 2022.
This Policy Insight looks primarily at the current and the desired state of the banking union project. The key underlying question, and the focus here, is the level of ambition and how it is matched with effective legal and regulatory tools. Specifically, two questions will structure the discussions:
What would be a reasonable definition and rationale for a ‘complete’ banking union? And what legal reforms would be required to achieve it?
Banking union is a case of a new remit of EU-level policy that so far has been established on the basis of long pre-existing treaty stipulations, namely, Article 127(6) TFEU (for banking supervision) and Article 114 TFEU (for crisis management and deposit insurance). Could its completion be similarly carried out through secondary law? Or would a more comprehensive overhaul of the legal architecture be required to ensure legal certainty and legitimacy?
Background: Ipilimumab, a cytotoxic T-lymphocyte antigen-4 (CTLA-4) blocking antibody, has been approved for the treatment of metastatic melanoma and induces adverse events (AE) in up to 64% of patients. Treatment algorithms for the management of common ipilimumab-induced AEs have lead to a reduction of morbidity, e.g. due to bowel perforations. However, the spectrum of less common AEs is expanding as ipilimumab is increasingly applied. Stringent recognition and management of AEs will reduce drug-induced morbidity and costs, and thus, positively impact the cost-benefit ratio of the drug. To facilitate timely identification and adequate management data on rare AEs were analyzed at 19 skin cancer centers.
Methods and Findings: Patient files (n = 752) were screened for rare ipilimumab-associated AEs. A total of 120 AEs, some of which were life-threatening or even fatal, were reported and summarized by organ system describing the most instructive cases in detail. Previously unreported AEs like drug rash with eosinophilia and systemic symptoms (DRESS), granulomatous inflammation of the central nervous system, and aseptic meningitis, were documented. Obstacles included patientś delay in reporting symptoms and the differentiation of steroid-induced from ipilimumab-induced AEs under steroid treatment. Importantly, response rate was high in this patient population with tumor regression in 30.9% and a tumor control rate of 61.8% in stage IV melanoma patients despite the fact that some patients received only two of four recommended ipilimumab infusions. This suggests that ipilimumab-induced antitumor responses can have an early onset and that severe autoimmune reactions may reflect overtreatment.
Conclusion: The wide spectrum of ipilimumab-induced AEs demands doctor and patient awareness to reduce morbidity and treatment costs and true ipilimumab success is dictated by both objective tumor responses and controlling severe side effects.
Most recent regulations establish that resolution of global banking groups shall be done according to bail-in procedures and following a Single Point of Entry (SPE) as opposed to a Multiple Point of Entry (MPE) approach. The latter requires parent holding of global groups to put up front the equity capital needed to absorb losses possibly emerging in foreign subsidiaries-branches. No model rationalized so far such resolution regime. We build a model of optimal design of resolution regimes and compare three regimes: SPE with cooperative authorities, SPE with non-cooperative authorities and MPE (ring-fencing). We find that the costs for bondholders of bail-inable instruments is generally higher under noncooperative regimes and ring-fencing. We also find that in those cases banks have ex ante incentives to reduce their exposure in foreign assets. We also examine recent case studies that help us rationalize the model results.
The eurozone remains in a deep, largely macro-economic crisis. A robust global economy and falling oil prices have supported Europe’s economy for some time, but by now it is clear that the eurozone will only be able to pull itself out of this crisis by means of more decisive action. One response, the recent easing of monetary policy by the European Central Bank (ECB), has, for the most part, been sharply and one-sidedly criticised in Germany. Monetary policy inaction seems to be the preferred option of many in Germany.
The authors discuss the following question: What would happen if the ECB failed to respond to the excessively low inflation and the weak economy? And what economic policy would be suitable under the current circumstances, if not monetary policy?
