The US Federal Reserve certainly bears its share of responsibility for the great inflation of the 2020s. But powerful political pressures from the left and overly-optimistic analyses of open-ended debt policy, not to mention genuine uncertainties about inflation and real interest rates, also played a very large role.
Skyrocketing food and energy prices, together with widening sovereign bond spreads, have placed balance sheets in emerging-market and developing economies under severe strain. To avoid disaster, the international community must urgently support bold debt restructuring.
Ralf R. Meisenzahl and Karen M. Pence | In response to immense strains in the asset-backed securities market in 2008 and 2020, the Federal Reserve and the U.S. Treasury twice launched the Term Asset-Backed Securities Loan Facility (TALF). TALF was an unusual crisis facility because it provided loans to a wide range of nonbank financial institutions. Using detailed loan-level data unexplored by…
Antulio N. Bomfim | Credit default swaps (CDS) are the most common type of credit derivative. This paper provides a brief history of the CDS market and discusses its main characteristics. After describing the basic mechanics of a CDS, I present a simple valuation framework that focuses on the relationship between conditions in the cash and CDS markets as well as an approach to mark to market…