This article explores the effects of the political reactions to the 2007–2009 financial crisis on the monetary system. It chimes in with the view that shadow banks create ‘shadow money’, i.e. private substitutes for bank deposits. The article analyses how the three main forms of shadow money – money market fund shares, overnight repurchase agreements and asset-backed commercial papers – were affected by the short-term government intervention and medium-term regulation during and after the 2007–2009 financial crisis in the United States. The analysis reveals that the measures taken between 2007 and 2014 integrated some shadow money forms in the public money supply. In the year after the Lehman collapse, the initially private shadow money supply was either publicly backstopped or de-monetised as it had broken par to bank deposits. The public backstops took on the form of emergency facilities established by the Federal Reserve and guarantees proclaimed by the Treasury. Those backstops imply that the public institutional framework to protect bank deposits was extended to some forms of shadow money during the crisis. This tendency has continued in post-crisis regulation. Accordingly, the 2007–2009 financial crisis has triggered a paradigmatic change in the monetary system, attributable to the political decisions of US authorities.
2016 | ‘EU, US and ASEAN Actorness in G20 Financial Policy‐Making. Bridging the EU Studies – New Regionalism Divide’ (with Kilian Spandler), Journal of Common Market Studies
This article compares the European Union’s (EU) actorness in foreign financial policy to that of the US and ASEAN. It thus contributes to the dialogue between EU studies and the New Regionalism by putting it […]
2019 | ‘Private Debt as Shadow Money? Conceptual Criteria, Empirical Evaluation and Implications for Financial Stability’
Following the 2007-9 Financial Crisis, scholars have come to perceive the financial structures that faced a run at the time as ‘shadow banking system’. According to this narrative, the shadow banking system does on series […]
2016 | ‘European Monetary Integration and the Public-Private Money Divide. Can Post-Crisis Reforms Harmonize Private Money Creation in the Eurozone?’
Based on the conceptual framework of the ‘Money View’, this paper argues that European monetary integration until the Eurocrisis only focused on harmonizing public money on a supranational level while neglecting private credit money creation. […]