June 13, 2024
Central bank research
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Digital Payments in Firm Networks: Theory of Adoption and Quantum Algorithm
We build a network formation game of firms with trade flows to study the adoption and usage of a new digital currency as an alternative to correspondent banking. -
The Macroeconomic Implications of Coholding
Coholder households simultaneously carry high-cost credit card debt and low-yield cash. We study the implications of this behavior for fiscal and monetary policy, finding that coholder households have smaller consumption responses in the short run but larger responses in the long run. -
U.S. Macroeconomic News and Low-Frequency Changes in Small Open Economies’ Bond Yields
Using two complementary approaches, we investigate the importance of U.S. macroeconomic news in driving low-frequency fluctuations in the term structure of interest rates in Canada, Sweden and the United Kingdom. We find that U.S. macroeconomic news is particularly important to explain changes in the expectation components of the nominal, real and break-even inflation rates of small open economies. -
Central Bank Digital Currency and Banking Choices
To what extent does a central bank digital currency (CBDC) compete with bank deposits? To answer this question, we develop and estimate a structural model where each household chooses which financial institution to deposit their digital money with. -
The Role of International Financial Integration in Monetary Policy Transmission
We propose an open-economy New Keynesian model with financial integration that allows financial intermediaries to hold foreign long-term bonds. We study the implications of financial integration on monetary policy transmission. Among various aspects of financial integration, the bond duration plays a major role. These results hold for conventional and unconventional monetary policies. -
January 15, 2024
Flood risk and residential lending
We present key findings of a recent study that evaluates the credit risk that flooding poses to the residential lending activities of Canadian banks and credit unions. Results show that such risk currently appears modest but could become larger with climate change.
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