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Interconnectedness: Building Bridges between Policy and Research

Conference

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Interconnectedness: Building Bridges
between Research and Policy


May 8-9, 2014

The International Monetary Fund (IMF) in collaboration with the Institute for New Economic Thinking (INET) and the Deutsche Bundesbank are hosting a two-day conference on financial networks at the IMF’s Headquarters in Washington, D.C on May 8-9, 2014.

The financial crisis has highlighted the need to better understand the role of financial interconnectedness in creating systemic risk and macroeconomic instability. Financial interconnectedness is broadly understood as referring to direct and indirect exposures from various asset markets and players. Interconnectedness based on interbank exposures has been most studied, but other sources of shock propagation based on securities and state-contingent exposures are also important. Systemic risk can arise through these linkages so that the failure or distress of one or more entities can have negative spillovers throughout the financial system and the real sector, domestically and across borders. The global financial crisis has led to an overhaul of the regulatory framework and has prompted regulators and supervisory authorities to develop new models and tools for analyzing interconnectedness and its implications for systemic stability. Indeed, one of the fundamental characteristics that make financial players systemically important is their degree of interconnectedness. While the crisis has spurred a large body of academic work on financial networks, many challenges remain.

Against this backdrop, the International Monetary Fund (IMF) in collaboration with the Institute for New Economic Thinking (INET) and the Deutsche Bundesbank are hosting a two-day conference on financial networks at the IMF’s Headquarters in Washington, D.C. The event will bring together leading academics and senior policy-makers for an intensive dialogue on the implications of financial interconnectedness for systemic risk and financial stability. By hosting this event, the IMF aims to provide a unique forum for information-sharing and coordination between the academic and policy communities, with a view to strengthening the resilience of its membership to spillovers while also influencing the areas where more research is needed to support policy.

Conference attendance is by invitation only (Please email interconconf@imf.org if you are interested in attending. Due to capacity constraints, note that we will not able to accommodate all requests.) The conference will start on Thursday, May 8 at 9:00 a.m. and will conclude on Friday, May 9 at 2:00 p.m. with a high-level panel discussion followed by lunch. Invited attendees are required to present photo identification on entering the IMF at 1900 Pennsylvania Avenue, N.W., Washington D.C.


Conference Agenda

May 8-9, 2014
IMF HQ2 Conference Hall 1, Washington, D.C.

Thursday, May 8, 2014

8:45–9:00am

Arrival/Registration

9:00-9:15am

Opening Remarks

Olivier Blanchard (Economic Counsellor and Director, Research Department, IMF)

9:15–9:45am

Interconnectedness and Financial Stability

Joseph E. Stiglitz (Columbia University and INET)

9:45–10:25am

Session 1: Financial Networks in OTC and Interbank Markets

Chair: Ben Craig (Deutsche Bundesbank)

Paper: Trading Partners in the Interbank Lending Market
Authors: Gara Afonso (NY Fed), Anna Kovner* (NY Fed), Antoinette Schoar (MIT)
Discussant: Peter Hoffmann (ECB)

10:25–10:50am

Coffee Break

10:50am–12:10pm

Session 2: Financial Networks in OTC and Interbank Markets

Chair: Stijn Claessens (IMF, Research Department)

Paper: A Network View on Interbank Liquidity
Authors: Silvia Gabrieli (Banque de France) and Co-Pierre Georg* (Deutsche Bundesbank)
Discussant: Robin Lumsdaine (American University)

Paper: EffIciency and Stability of a Financial Architecture with Too-Interconnected-to-Fail Institutions
Author: Michael Gofman* (Wisconsin)
Discussant: Mila Gemansky Sherman (UMass Amherst)

12:10–1:10pm

Lunch (By invitation, HQ2 Conference Hall 2)

1:10–3:10pm

Session 3: Welfare Implications of Financial Networks

Chair: Giovanni Dell’Ariccia (IMF, Research Department)

Paper: Mandatory Disclosure and Financial Contagion
Authors: Fernando Alvarez (Chicago) and Gadi Barlevy* (Chicago Fed)
Discussant: Tariq Roukny (Université Libre de Bruxelles)

Paper: Intermediation in Networks
Authors: Mihai Manea* (MIT)
Discussant: Fernando Vega-Redondo (Bocconi)

Paper: Bilateral Trading in Networks
Authors: Daniele Condorelli* (Essex) and Andrea Galeotti (Essex)
Discussant: Ben Craig (Deutsche Bundesbank)

3:10–3:30pm

Coffee Break

3:30–5:30pm

Session 4: Financial Networks and Systemic Risk

Chair: Ratna Sahay (IMF, Monetary and Capital Markets Department)

Paper: Intermediation and Voluntary Exposure to Counterparty Risk
Authors: Maryam Farboodi* (Chicago Booth)
Discussant: Livio Stracca (ECB)

Paper: Financial Networks and Contagion
Authors: Matthew Elliott (Caltech), Benjamin Golub* (Harvard), Matthew O. Jackson (Stanford)
Discussant: Benjamin Tabak (Universidade Catolica de Brasilia and Federal Senate)

Paper: How Likely is Contagion in Financial Networks?
Authors: Paul Glasserman (Columbia), H. Peyton Young* (Oxford)
Discussant: Brenda González-Hermosillo (IMF, Monetary and Capital Markets Department)

5:30–7:00pm

Reception/Dinner (By invitation, HQ2-02B-300G)

Friday, May 9, 2014

9:00–10:30am

Session 5: Interconnectedness in Policy Work

Chair: Brenda Gonzalez-Hermosillo (IMF, Monetary and Capital Markets Department)

Paper: Addressing Interconnectedness: Concepts and Prudential Tools
Authors: Nicolas Arregui, Mohamed Norat, Antonio Pancorbo, Jodi Scarlata (IMF)
Presenter: Mohamed Norat (IMF, Monetary and Capital Markets Department)

Paper: Sweden and the Global Banking System: Network Links and Vulnerabilities
Presenter: Eugenio Cerutti (IMF, Research Department)

Paper: Crisis Transmission in the Global Banking Network
Authors: Galina Hale (San Francisco Fed) , Tümer Kapan (Fannie Mae), Camelia Minoiu (IMF, Research Department)
Presenter: Camelia Minoiu (IMF, Research Department)

10:30–11:30am

Session 6: The Present and Future Role of Financial Networks

Paper: The Present and Future Role of Financial Networks
Authors: Stefano Battiston (University of Zürich), Co-Pierre Georg (Deutsche Bundesbank), Joseph E. Stiglitz (Columbia University and INET)
Presenter: Stefano Battiston (University of Zürich)

11:30–11:45am

Coffee Break

11:45am–1:00pm

Closing Panel

Chair: José Viñals (Financial Counselor and Director, IMF, Monetary and Capital Markets Department)

Panelists:
Claudia Buch (Halle Institute for Economic Research)
Sujit Kapadia (Bank of England)
Nellie Liang (Board of Governors of the Federal Reserve System)
Patricia Mosser (Office of Financial Research)
Sanjay Sharma (RBC Capital Markets)
Joseph E. Stiglitz (Columbia University and INET)

1:00–2:00pm

Lunch (By invitation, HQ2 Conference Hall 2)

Conference organizers
  • Stefano Battiston (University of Zürich)
  • Co-Pierre Georg (Deutsche Bundesbank)
  • Brenda Gonzalez-Hermosillo (IMF)
  • Camelia Minoiu (IMF)