This paper examines the impact of macroeconomic and financial sector policy announcements in the United States, the United Kingdom, the euro area, and Japan during the recent crisis on interbank credit and liquidity risk premia. Announcements of interest rate cuts, liquidity support, liability guarantees, and recapitalization were associated with a reduction of interbank risk premia, albeit to a different degree during the subprime and global phases of the crisis. Decisions not to reduce interest rates and bail out individual banks in an ad hoc manner had adverse repercussions, both domestically and abroad. The results are robust to controlling for the surprise content of announcements and using alternative measures of financial distress.

ÔThis enlightening volume provides an invaluable guide for those perplexed by the seemingly intractable problems of financial crises, sovereign distress, and government guarantees. Contributors include an all-star cast of leading figures in the field. Highly recommended.Õ Ð Geoffrey Miller, New York University, US ÔThe history of the 2007Ð09 and possibly beyond near-global financial crisis needs to be examined carefully in order to identify and understand the causes, the transmission across countries, the harm to macroeconomies, the public policies adopted, the effectiveness of such policies, and the lessons to be learned to prevent or at least mitigate future such crises. This volume contributes to this task. It brings together under one cover the analyses of the various aspects of the crisis by experts in each area. It should be priority reading for serious students of the crisis.Õ Ð George G. Kaufman, Loyola University Chicago, US ÔThe combination of the skills of the lawyer and of the economist has proved increasingly fruitful, developing both understanding and policy in many areas of life, such as accident prevention, crime prevention, and healthcare. This book follows the precedent of these areas and assembles a group of lawyers and economists who by their contributions, consider how best to deal with financial crises, and how to make their future occurrence less likely. It is both intellectually stimulating and practically important. The authors and editors are to be congratulated.Õ Ð Geoffrey Wood, Cass Business School and University of Buckingham, UK Financial Crisis Containment and Government Guarantees analyses the international communityÕs commitment to forging enhanced, well thought-out, mechanisms for containing systemic risks in the context of a highly interconnected global financial framework which incorporates ongoing financial innovation. While use of government guarantees is a central theme, the book also analyses the roles played by prudential regulators, central banks, deposit insurers and treasuries in dealing with the crisis. The book examines how governments, central banks, regulators and deposit insurance agencies have worked together to contain the global financial crisis. Additionally, it focuses on efforts to overcome ongoing obstacles, as well as the most important proposals to improve safety nets, both at the national level and internationally. This concise and detailed book will strongly appeal to students in law, economics and finance, law practitioners, policymakers in central banks and ministries of finance, as well as deposit protection agencies and regulatory agencies.

What is the case for adding the unconventional balance sheet policies used by major central banks since 2007 to the standard policy toolkit? The record so far suggests that the new liquidity providing policies in support of financial stability generally warrant inclusion. As the balance sheet policies aimed at macroeconomic stability were used only by a small number of highly credible central banks facing a lower bound constraint on conventional interest rate policy, they are not relevant for most central banks or states of the world. Best practices of these policies are documented in this paper.

Unconventional central bank measures are playing a key policy role for many advanced economies in the 2007-09 global crisis. Are they playing a similar role for emerging economies? Emerging economies have widely used unconventional foreign exchange and domestic short-term liquidity easing measures. Their use of credit easing and quantitative easing measures has been much more limited. Thus, unconventional measures are much less important for emerging economies compared to advanced economies in achieving broader macroeconomic objectives. The difference can be attributed to the relatively limited financial stress in emerging economies, their external vulnerabilities and their limited scope for quasifiscal activities.

Over the past years, significant changes have occurred in the corporate sector arising from globalization, increasing international competitiveness, and intensive use of information and communication technologies (ICTs). These developments have led to new corporate and social behaviors that are affecting the entire corporate value chain. Thus, business organizations are focusing on technological innovation as a driving force of development. Emerging Tools and Strategies for Financial Management is a pivotal reference source that explores both practical and theoretical perspectives on how financial management is evolving and how future consequences of technological innovation will affect individuals, businesses, and society. While highlighting topics such as financial imbalance, venture capital, and shadow banking, this publication explores the relationship between companies and their customers and the methods of generating changes in today’s enterprises. This book is ideally designed for business managers, financial analysts, financial controllers, directors, finance officers, treasurers, entrepreneurs, CEOs, academicians, students, and research professionals.

Here, experts assess the role of central banks in responding to the recent financial crisis and in preventing future crises. The contributors focus on monetary policy, the new area of macroprudential policy, and issues of exchange rates, capital flows, and banking and financial markets.

The G-20 Data Gaps Initiative has called for the IMF to develop standard measures of tail risk, which we identify in this paper with systemic risk. To understand the conditions under which tail risk is present, it is first necessary to develop a measure of what constitutes a systemic stress, or tail, event. We develop such a measure and uses it to assess the performance of eleven near-term systemic risk indicators as ‘early’ warning of distress among top financial institutions in the United States and the euro area. Two indicators perform particularly well in both regions, and a couple of other simple indicators do well across a number of criteria. We also find that the sizes of institutions do not necessarily correspond with their contribution to spillover risk. Some practical guidance for policies is provided.