G28 - Government Policy and Regulation

• Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market

  Staff Working Paper 2022-48 Rodney J. Garratt, Sofia Priazhkina

  This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Economic models, Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, Wholesale funding JEL Code(s): E, E4, E42, E5, E58, G, G2, G28

• Considerations for the allocation of non-default losses by financial market infrastructures

  Staff Analytical Note 2022-16 Daniele Costanzo, Radoslav Raykov

  Non-default losses of financial market infrastructures (FMIs) have gained attention due to their potential impacts on FMIs and FMI participants, and the lack of a common approach to address them. A key question is, who should absorb these losses?

  Content Type(s): Staff research, Staff analytical notes Topic(s): Financial markets, Financial system regulation and policies JEL Code(s): G, G2, G23, G28, G3, G32, G33