Saturday, May 18, 2019

How Central-Bank Interest-Rate Policy Is Destabilizing Banks | Justin Murray

A brief conceptual overview of how Federal Reserve established interest rates impact banks.



How Central-Bank Interest-Rate Policy Is Destabilizing Banks | Justin Murray: Broadly speaking, banks operate under the concept of maturity transformation. Banks take short-term – less than one year – financing vehicles, such as customer deposits, and use that to finance long-term – more than one year – returns.

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