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Working Paper
Trade Uncertainty and U.S. Bank Lending
This paper uses U.S. credit register data and the 2018–19 Trade War to study the effects of uncertainty on domestic credit supply. Exploiting differences in banks' ex-ante exposure to trade uncertainty, we find that increased uncertainty is associated with a broad lending contraction across their customer firms. This result is consistent with banks responding to uncertainty with wait-and-see behaviors, where more exposed banks curtail risky exposures, reduce loan maturities, and adjust loan supply along both intensive and extensive margins. The lending contraction is larger for more ...
Working Paper
A bargaining theory of trade invoicing and pricing
We develop a theoretical model of international trade pricing in which individual exporters and importers bargain over the transaction price and exposure to exchange rate fluctuations. We find that the choice of price and invoicing currency reflects the full market structure, including the extent of fragmentation and the degree of heterogeneity across importers and across exporters. Our study shows that a party has a higher effective bargaining weight when it is large or more risk tolerant. A higher effective bargaining weight of importers relative to exporters in turn translates into lower ...
Discussion Paper
Fifth Conference on the International Roles of the U.S. Dollar: Stablecoins, Digital Payments, and the International Role of the U.S. Dollar
The U.S. dollar continues to occupy a central role in the global economy. It remains the most widely used currency in foreign exchange transactions and cross-border payments, the leading currency in official reserve holdings, and the dominant currency of denomination for international debt securities and loans. This dominant position reflects several enduring features of the U.S. economy and financial system, including the size and strength of U.S. economy, the depth and liquidity of U.S. financial markets, and enduring confidence in U.S. institutions.
Discussion Paper
The Fed’s Inaugural Conference on the International Roles of the U.S. Dollar
The U.S. dollar has played a preeminent role in the global economy since the second World War. It is used as a reserve currency and the currency of denomination for a large fraction of global trade and financial transactions.
Discussion Paper
2nd Annual International Roles of the U.S. Dollar Conference
The U.S. dollar plays a central role in the global economy. In addition to being the most widely used currency in foreign exchange transactions, it represents the largest share in official reserves, international debt securities and loans, cross-border payments, and trade invoicing.
Discussion Paper
Third Conference on the International Roles of the U.S. Dollar
On May 20 and 21, 2024, the Federal Reserve Board and the Federal Reserve Bank of New York jointly hosted the Third Annual International Roles of the U.S. Dollar Conference. The conference brought together researchers, practitioners, and policymakers to understand how changes in the global economic and financial landscape may affect the central role of the dollar.
Working Paper
International Banking and Cross-Border Effects of Regulation : Lessons from the United States
Domestic prudential regulation can have unintended effects across borders and may be less effective in an environment where banks operate globally. Using U.S. micro-banking data for the first quarter of 2000 through the third quarter of 2013, this study shows that some regulatory changes indeed spill over. First, a foreign country's tightening of limits on loan-to-value ratios and local currency reserve requirements increase lending growth in the United States through the U.S. branches and subsidiaries of foreign banks. Second, foreign tightening of capital requirements shifts lending by U.S. ...
Working Paper
Liquidity Risk and U.S. Bank Lending at Home and Abroad
While the balance sheet structure of U.S. banks influences how they respond to liquidity risks, the mechanisms for the effects on and consequences for lending vary widely across banks. We demonstrate fundamental differences across banks without foreign affiliates versus those with foreign affiliates. Among the nonglobal banks (those without a foreign affiliate), cross-sectional differences in response to liquidity risk depend on the banks' shares of core deposit funding. By contrast, differences across global banks (those with foreign affiliates) are associated with ex ante liquidity ...
Working Paper
Bank Complexity, Governance, and Risk
Bank holding companies (BHCs) can be complex organizations, conducting multiple lines of business through many distinct legal entities and across a range of geographies. While such complexity raises the the costs of bank resolution when organizations fail, the effect of complexity on BHCs' broader risk profiles is less well understood. Business, organizational, and geographic complexity can engender explicit trade-offs between the agency problems that increase risk and the diversification, liquidity management, and synergy improvements that reduce risk. The outcomes of such trade-offs may ...