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Journal Article
The Offshore Dollar and US Policy
Dollar borrowing outside the United States has over generations grown to be very large, with US policy providing some inducement and, in critical episodes, support. But in lending dollars through open-ended central bank swaps in 2008 and 2020, the Fed broke new ground as international lender of last resort. By countering dollar runs on non-US banks, the Fed supplied the global public good of financial stability. In addition, it restored domestic US monetary transmission. In 2020 the Fed's last-resort buying of domestic corporate bonds also did double duty, stabilizing the global dollar bond ...
Journal Article
How Much Do Guarantees and Bailouts Cost the Government?
Governments in advanced economies absorb a large and growing share of aggregate credit risk. That exposure arises from explicit and implicit contingent liabilities such as the ones that culminated in bailouts during the Global Financial Crisis (GFC) and from loan guarantees extended during the Covid-19 pandemic. Despite the growth of credit policy as a crisis response tool and substitute for traditional fiscal assistance, governments continue to underreport the associated costs and risks. More comprehensive and timely cost estimates, produced using a fair value framework, would increase ...