Articles and Speeches on Financial Stability

Central Banks and Crisis Management

Joseph G. Haubrich
Annual Report 2007, Federal Reserve Bank of Cleveland (2008).

Fostering financial stability is a key role of a central bank. The Federal Reserve Bank of Cleveland’s 2007 Annual Report reviews lessons from past financial crises that may help guide policymakers as they respond to future challenges.

Systemic Banking Crises

O. Emre Ergungor. Federal Reserve Bank of Cleveland, Policy Discussion Paper no. 9 (2005).

Systemic banking crises can have devastating effects on the economies of developing or industrialized countries. This Policy Discussion Paper reviews the factors that weaken banking systems and make them more susceptible to crises.

Umbrella Supervision and the Role of the Central Bank

Joseph G. Haubrich and J.B. Thomson
Federal Reserve Bank of Cleveland, Policy Discussion Paper no. 11 (2005).

Deregulation and financial consolidation have led to the development of financial holding companies-allowing commercial banking, insurance, investment banking, and other financial activities to be conducted under the same corporate umbrella-and the Federal Reserve has been named supervisor of the consolidated enterprise. This Policy Discussion Paper will show that there likely are economies of scope between the Fed's inherent central-banking responsibilities and those of an umbrella supervisor and that these duel roles benefit both the Fed and functional regulators.

Umbrella Supervision

Joseph G. Haubrich and J.B. Thomson
Federal Reserve Bank of Cleveland, Economic Commentary (2005).

Deregulation and financial consolidation have led to the development of financial holding companies-allowing commercial banking, insurance, investment banking, and other financial activities to be conducted under the same corporate umbrella-and the Federal Reserve has been named supervisor of the consolidated enterprise. This Commentary explains the increasing importance of an umbrella supervisor amid the sea of regulatory agencies, and why the Fed may be the best natural choice, both practically and conceptually, to assume the role.

Risk Management and Financial Crises

Joseph G. Haubrich
Federal Reserve Bank of Cleveland, Economic Commentary (2001).   

Some financial failures occur when people don’t understand the risks they take. Others are simply bad luck. But the most important cases happen when private risks have an extra social aspect.

Effective Supervision and the Evolving Financial Services Industry

Jerry L. Jordan.  Federal Reserve Bank of Cleveland, Economic Commentary (2001).

Technology, market consolidation, international competition, and new legislation are changing the face of the financial services industry. How are the agencies responsible for ensuring the safety and soundness of our financial system responding?

Financial Crises and Market Regulation

Jerry L. Jordan
Federal Reserve Bank of Cleveland, Economic Commentary (1999). 

Financial crises typically arise from risk mismanagement by governments. Usually with the most sincere and honorable of intentions, governments seek to reduce or eliminate the exposure to risk of some constituent. But risk cannot be eliminated, it can only be redistributed.

Evolution in Bank Supervision

Edward J. Stevens
Federal Reserve Bank of Cleveland, Economic Commentary (2000).

Banking supervision must keep pace with technical innovations in the banking industry. The international Basel Committee on Banking Supervision currently is reviewing public comments on its proposed new method for judging whether a bank maintains enough capital to absorb unexpected losses. This Economic Commentary explains how existing standards became obsolete and describes the new plan.

The Future of Banking Supervision

Jerry L. Jordan
Federal Reserve Bank of Cleveland, Economic Commentary (1996).

A prediction by Cleveland Federal Reserve Bank President Jerry Jordan that bank regulatory agencies will change the way they supervise banks in the coming years, making greater use of market forces to discipline individual banks’ behavior, and paying more attention to the functioning of the financial system as a whole.