Maryse Farhi

A crise financeira e o global shadow banking system

The financial crisis triggered by increasing default rate, real estate devaluation and financial asset depreciation combined with U.S. subprime mortgages brought about the debate over the framework of the U.S. and international financial systems, their potential systemic risks, and their regulatory and supervisory mechanisms. A great variety of financial institutions which were poorly regulated and badly supervised changed into the counterpart of the credit risk transfer from the banking system and started to hold increasing risks. This paper deals with the interaction of these financial institutions, including a description of some features of the major stage in this process - the so-called over-the-counter (OTC) market - and the use of financial innovations which amplified the crisis. It also aims to clarify the need for improvements in terms of regulation and supervision considering the complexity and opacity of these institutions and markets.

A arquitetura do sistema financeiro internacional contemporâneo

This paper discusses some features of financial institutions and instruments which originated the financial crisis triggered by increasing default rate, household real estate and financial asset depreciation combined with U.S. subprime mortgages. The first part presents major crisis events in a chronological order. The second part describes the interconnection of the institutions and markets which engendered a global shadow financial system. The third part focuses on an overview of measures taken by government authorities and large banks to bring about possible solutions for the global financial crisis.

Foreign Exchange Derivatives and Financial Fragility in Brazil

Foreign Exchange (FX) rates have always been at the core of emerging countries crisis. FX derivatives have a heightened potential to allow hedging risks, mitigating the crisis, or to exacerbate its depth due to leveraged bets that turn sour. Brazil stands out among the emerging countries. FX derivatives are market suitable because the greater liquidity and depth of its organized segment in comparison with both the FX spot market and the FX over-the- counter market. Thus, the first dollar future contract has become the locus of formation of the Brazilian Real/USD exchange rate. This and other specific features of the FX derivatives in Brazil have reinforced their dual role (hedge and speculation) and their macroeconomic impacts. This study focuses on those impacts after the 2007/2008 international financial crisis, although a brief retrospective analysis, since the adoption of the Real Plan in 1994, is necessary for the understanding of the crucial role of FX derivatives in Brazil.

Macroeconomic theory in the aftermath of the crisis: mainstream and new Keynesianism

The failure of mainstream macroeconomics to provide a suitable set of instruments to understand and fight against the economic crisis has triggered a debate among the dominant theoretical tendency, on its own foundations and on the macroeconomic policy that should be implemented after the crisis. The aim of this paper is to investigate to what extent the crisis affected mainstream macroeconomic theory and policy guidelines. We argue that new Keynesians did not pass unharmed by the crisis, themselvesacknowledging the need to adapt their models through the incorporation of new variables and ideas. The main change is the recognition of the non-neutrality of the financial system, which calls into question monetary policy guided by one instrument, the short-term interest rate, and by one target, the inflation rate, which would be insufficient to simultaneously lead to a stable and near potential output growth whilemaintainingthe stability of the financial system.