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Security Threats, American Pressure, And The Role Of Key Personnel: How Nato’S Defence Planning Process Is Alleviating The Burden-Sharing Dilemma, John R. Deni

Books, Monographs & Collaborative Studies

In 2017, for the first time since the end of the Cold War, none of the capability targets identified in NATO’s quadrennial NATO Defence Planning Process (NDPP) were left on the negotiating table. Previously, capability targets were identified by the alliance’s secretariat, but they remained unfilled as allies failed to assume responsibility for them.

This monograph examines the 2014–18 iteration of the NDPP, which represented a stunning turnaround in transatlantic burden sharing. The analysis reveals a combination of factors—the changed threat environment, political pressure from Washington, and the role of “policy entrepreneurs” working within NATO—best explain the alliance’s success in …

Lessons Learned: Lorie Logan, Mercedes Cardona

Journal of Financial Crises

Lorie Logan is executive vice president in the Markets Group of the Federal Reserve Bank of New York, the System Open Market Account (SOMA) manager pro tem for the Federal Open Market Committee (FOMC), and head of Market Operations, Monitoring, and Analysis (MOMA).

Lessons Learned: Donald Kohn, Maryann Haggerty

Journal of Financial Crises

Kohn, an economist, is a 40-year veteran of the Federal Reserve System. He served as a member of the Board of Governors, and was vice chair, from 2002-2010, which included the years of the global financial crisis (GFC).

The United Kingdom's Asset-Backed Securities Guarantee Scheme (U.K. Gfc), June Rhee

Journal of Financial Crises

The key structures of housing finance in the UK in the years leading up to the global financial crisis of 2007-09 consisted of retail deposits, secondary market funding and wholesale interbank lending. Although retail deposits were the major funder of UK mortgages, secondary market funding, which included covered bonds and residential mortgage-backed securities (RMBS), accounted for 31% of UK mortgage lending in 2006. In 2007, the collapse of the U.S. subprime mortgage market triggered a financial shock, and the shock quickly traveled beyond national borders. Regardless of differences in the UK mortgage market, investors’ concern over the prospects of the …

The United Kingdom's Credit Guarantee Scheme (U.K. Gfc), Christian M. Mcnamara

Journal of Financial Crises

The September 15, 2008, bankruptcy of Lehman Brothers resulted in a collapse of wholesale funding markets that threatened the ability of UK financial institutions to continue funding themselves. By the end of the month, two leading UK banks—HBOS and Bradford & Bingley—had to be rescued, and there was a real risk that the entire financial system could collapse. Faced with the need to stabilize the system, UK regulators on October 8 introduced a package of measures that included a £250 billion Credit Guarantee Scheme (the Guarantee Scheme) aimed at providing banks with access to needed funding. Under the Guarantee Scheme, …

Sweden's Guarantee Scheme (Sweden Gfc), Lily S. Engbith, Kevin Kiernan

Journal of Financial Crises

Although Sweden was not as directly impacted by the Global Financial Crisis as some other economies, Lehman Brothers’ bankruptcy on September 15, 2008, prompted Swedish authorities to take preemptive measures to protect domestic banks and financial institutions. One such program, announced on October 20, 2008, and implemented on October 29, 2008, was designed to preserve credit extension to businesses and households through what became known as the Swedish Guarantee Scheme. Per the terms of the Scheme, new short- and medium-term debt of maturities ranging from 90 days to five years issued by eligible banks would be guaranteed by the Swedish …

The Spanish Guarantee Scheme For Credit Institutions (Spain Gfc), Lily Engbith

Journal of Financial Crises

Given Spanish banks’ heavy investment in the housing and construction markets in the lead-up to the global financial crisis (GFC), the collapse of the subprime mortgage market and Lehman Brothers’ bankruptcy on September 15, 2008, impelled the government to implement stabilization measures to calm, recapitalize, and restructure its domestic banking sector. The Spanish Guarantee Scheme for Credit Institutions (the Guarantee Scheme) was one of the first interventions to be enacted, announced by Spain’s Ministry of Economy and Finance on October 13, 2008, by Royal Decree-Law 7/2008 on “Urgent Economic and Financial Measures in relation to the Concerted Action Plan of …

The Portuguese Guarantee Scheme (Portugal Gfc), Julia A. Arnous

Journal of Financial Crises

By October 2008, Portuguese banks’ access to liquidity was severely restricted due to strains in international wholesale markets. On October 12-13, 2008, the Portuguese government notified the European Commission of a guarantee scheme intended to promote solvent credit institutions’ access to liquidity as part of the European policy response to the acute financial crisis aiming to achieve and maintain financial stability. Under the scheme, the Portuguese government guaranteed financing agreements and banks’ issuance of non-subordinated short- and medium-term debt. To obtain a guarantee under the Scheme, banks paid a fee based on the maturity of the debt and a risk …

The Polish Guarantee Scheme (Poland Gfc), Manuel Leon Hoyos

Journal of Financial Crises

Faced with the global financial crisis of 2007–2009, Poland implemented a scheme of State support for financial institutions. In view of a potential global credit crunch, it aimed at improving short- and medium-term liquidity of domestic financial institutions. The scheme came into force on March 13, 2009, and was approved by the European Commission under European Union State Aid rules on September 25, 2009. The scheme enabled the Ministry of Finance, on behalf of the State Treasury, to provide support in the form of Treasury guarantees on newly issued bank debt and the exchange of Treasury bonds for less liquid …

The Dutch Credit Guarantee Scheme (Netherlands Gfc), Lily Engbith

Journal of Financial Crises

As fallout from the global financial crisis intensified in October 2008, governments around the world sought to implement stabilization measures in order to calm and protect their domestic markets. While not directly exposed to the subprime mortgage crisis, the Kingdom of the Netherlands announced the creation of the Dutch Credit Guarantee Scheme (the Guarantee Scheme) on October 13, 2008, to boost confidence in interbank lending markets and to ensure the flow of credit to Dutch households and companies. In establishing this program, the Dutch State Treasury Agency of the Ministry of Finance (DSTA) committed €200 billion to support the issuance …

The State Guarantee Of External Debt Of Korean Banks (South Korea Gfc), Lily S. Engbith

Journal of Financial Crises

Following the Lehman Brothers bankruptcy of September 15, 2008, a number of foreign governments enacted stabilization measures in order to bolster their currencies and inject much-needed liquidity into domestic markets. As part of its effort, the Korean Ministry of Strategy and Finance announced a series of government interventions that included a three-year guarantee of foreign debt issued (including extensions of maturity) by domestic banks between October 20, 2008, and June 30, 2009. This opt-in program was introduced as a preemptive step in ensuring that Korean financial institutions would retain competitive access to external funding in the wake of the global …

Ireland's Credit Institutions (Eligible Liabilities Guarantee) Scheme (Ireland Gfc), Claire Simon

Journal of Financial Crises

Following the failure of Lehman Brothers in September 2008, Irish banks found themselves unable to roll over their significant foreign borrowings on the interbank lending market. With the banks facing a liquidity crisis, the Irish government decided to issue a blanket guarantee of all liabilities of six banks through the Credit Institutions Financial Support Scheme (CIFS). As the crisis worsened, and it became clear that Irish banks were facing a solvency—not just liquidity—crisis, the Irish government was forced to provide additional support to the financial system, which took the form of capital injections and a national asset management company for …

The Italian Guarantee Scheme (Italy Gfc), Lily Engbith

Journal of Financial Crises

The collapse of Lehman Brothers on September 15, 2008, and its severe impact on global credit markets impelled governments around the world to enact stabilization measures to calm and protect their domestic economies. The Italian Republic, while not directly affected by the US subprime mortgage crisis, preemptively implemented emergency procedures and programs to ensure the stability of their banking system. Announced with the passage of Decree-Law No. 157 on October 13, 2008, and legally enforced under Law 190/2008 of December 4, 2008, the Italian Guarantee Scheme (the Guarantee Scheme) was aimed at protecting institutions whose interbank lending abilities had the …

The Hungarian Guarantee Scheme (Hungary Gfc), Alec Buchholtz

Journal of Financial Crises

In the midst of the global financial crisis, in October 2008, the Magyar Nemzeti Bank (MNB), the Hungarian national bank, noticed a selloff of government securities by foreign banks and a large depreciation in the exchange rate of the Hungarian forint (HUF) in foreign exchange (FX) markets. Hungarian banks experienced liquidity pressures due to margin calls on FX swap contracts, prompting the MNB and Minister of Finance to seek assistance from the International Monetary Fund (IMF), the European Central Bank (ECB) and the World Bank. The IMF and ECB approved Hungary’s requests in late 2008 to create a €20 billion …

French Liquidity Support Through The Société De Financement De L’Economie (Sfef) (France Gfc), Everest Fang

Journal of Financial Crises

After the collapse of the Lehman Brothers in September 2008, financial panic and uncertainty intensified in Europe. In France, banks faced a widespread confidence crisis driven by fear that they were exposed to the US subprime market. In response, on October 13, 2008, the French government passed the “loi de finances rectificative pour le financement de I'économie.” This provided for the establishment of the Société de Financement de l’Economie Française (SFEF), a special purpose vehicle (SPV) jointly owned by the State and a group of banks and responsible for refinancing major French credit institutions. The SFEF raised funds on the …

The Guarantee Scheme For Bank Funding In Finland (Finland Gfc), Lily Engbith

Journal of Financial Crises

As the global financial crisis raged in October 2008, its severe impact on global credit markets impelled governments to enact stabilization measures to calm and protect their domestic economies. The Republic of Finland, though not directly affected, designed preemptive interventions to mitigate disruption to its financial system. Among them was the Guarantee Scheme for Bank Funding in Finland (the Guarantee Scheme), announced on October 22, 2008, and implemented on February 12, 2009, which aimed to support banks and mortgage institutions with their short- and medium-term financing needs. Under the program, the Finnish State Treasury made up to €50 billion available …

Denmark's Guarantee Scheme (Denmark Gfc), Keni Sabath

Journal of Financial Crises

The international financial system had been experiencing challenges for almost a year before the crisis truly manifested in Denmark during the Summer of 2008 with the sudden demise of Roskilde Bank, Denmark’s eighth largest bank. As more Danish banks became distressed in the fall of 2008 after the collapse of Lehman Brothers, the government determined that it was necessary to intervene in the banking sector through actions such as taking over and winding up distressed banks, giving guarantees to back up the sector, and providing capital injections and liquidity support. This paper focuses on the two different types of guarantee …

The Canadian Lenders Assurance Facility (Canada Gfc), Claire Simon

Journal of Financial Crises

Following a meeting of Group of Seven leaders in October 2008, the Canadian Minister of Finance announced the creation of a new Canadian Lenders Assurance Facility (CLAF). The facility enabled federally regulated deposit-taking financial institutions to access government insurance of up to three years on newly issued senior unsecured wholesale debt. This mirrored similar programs in other countries to ensure that Canadian financial institutions were not competitively disadvantaged in the wholesale debt market at a time when most developed countries were guaranteeing their banks’ debt. This competitive disadvantage never materialized, and the facility was allowed to expire on December 31, …

The Belgian Credit Guarantee Scheme (Belgium Gfc), Aidan Lawson

Journal of Financial Crises

Much like other developed economies during the global financial crisis, Belgium faced substantial systemic stress to its large and heavily concentrated financial system. To combat these mounting pressures, the Belgian government launched a wide-ranging, opt-in state debt guarantee program in a concerted effort to instill confidence and stymie the fear of runs in its financial sector. The debt guarantee scheme, pursuant to which eligible institutions could issue government-guaranteed debt, was originally put into place on October 15, 2008, and retroactively covered liabilities entered into from October 9, 2008, to October 31, 2009, with a maximum maturity of three years. It …

Bank Debt Guarantee Programs, Christian M. Mcnamara, Greg Feldberg, David Tam, Andrew Metrick

Journal of Financial Crises

One of the hallmarks of the global financial crisis of 2007-09 was the rapid evaporation of the non-deposit, wholesale funding many financial institutions had become increasingly reliant upon in the years leading up to the crisis. In the aftermath of the Lehman Brothers bankruptcy, governments became increasingly concerned about even fundamentally sound institutions’ ability to access necessary funding. In response, beginning in October 2008, authorities across the globe began introducing guarantee programs enabling institutions to issue debt that would be backed by a guarantee from the government in exchange for a guarantee fee. While the specific details of these programs …

Denmark's Loan Bills Temporary Credit Facility (Denmark Gfc), Keni Sabath

Journal of Financial Crises

The loan bills temporary credit facility was first implemented in May 2008, before the Global Financial Crisis had truly hit Denmark. It continued to be utilized as part of a broader effort to increase interbank lending after the collapse of Lehman Brothers in September 2008. The objective of the loan bills scheme was to facilitate lending among financial institutions. Each week, loan bills could be pledged as collateral for a seven-day loan from Denmark’s central bank, Danmarks Nationalbank. One banking institution could borrow from another institution by issuing a loan bill, and the institution buying the bill could raise liquidity …

Denmark's Excess-Capital Temporary Credit Facility (Denmark Gfc), Keni Sabath

Journal of Financial Crises

During the interbank market freeze following the Lehman Brothers collapse in September 2008, Denmark’s central bank, Danmarks Nationalbank, used a series of unconventional monetary policy instruments to increase market liquidity. One such action included the introduction of the excess-capital temporary credit facility, also known as the solvency scheme. Under this facility, credit lines from Danmarks Nationalbank could be provided to banks and mortgage-credit institutions on the basis of their excess capital adequacy, calculated as the difference between their base capital and their capital need. The purpose of this facility was to ease the tight liquidity situation by providing access to …

The United Kingdom's Special Liquidity Scheme (Sls) (U.K. Gfc), Kaleb B. Nygaard

Journal of Financial Crises

Following the collapse of Bear Stearns Companies in early 2008, it became clear that there was no immediate prospect that the asset-backed securities (ABS) markets would start to operate as they had previously. Financial institutions relied heavily on ABS as collateral in the interbank lending market for funding and liquidity. The Bank of England (BoE) introduced the Special Liquidity Scheme (SLS) in April 2008 as a temporary measure to address the immediate liquidity problems facing the UK banking system at the time. Under the SLS, banks could exchange high-quality assets that had temporarily become illiquid for liquid UK Treasury bills. …

The United Kingdom's Corporate Bond Secondary Market Scheme (U.K. Gfc), Claire Simon

Journal of Financial Crises

In late 2008, at the height of the Global Financial Crisis, increased liquidity premia and risk aversion in the secondary market hindered companies’ ability to issue corporate bonds. In response, in January 2009, Her Majesty’s Treasury authorized the Bank of England to establish a facility to purchase commercial bonds through the Asset Purchase Facility. In March 2009, the Bank of England published details on the Corporate Bond Secondary Market Scheme, in conjunction with its quantitative easing program. Under the scheme, the Bank acted as a market maker of last resort in the secondary bond market, making regular purchases of a …

The United Kingdom's Secured Commercial Paper Facility (U.K. Gfc), Claire Simon

Journal of Financial Crises

In mid-2009, the Bank of England (Bank) opened the Secured Commercial Paper Facility (SCPF) as part of its larger Asset Purchase Facility (APF). Through the facility, the Bank offered to purchase secured commercial paper (SCP), a form of asset backed commercial paper, issued by approved programs from both dealers acting as principal in the primary market and after issue from secondary market holders. The facility was designed to establish the Bank as a ready buyer of SCP in the primary market and as a backstop purchaser in the secondary market. In extending the APF to include purchases of SCP, the …

The United Kingdom's Asset Purchase Program (U.K. Gfc), Ariel Smith

Journal of Financial Crises

On March 5, 2009, in the wake of the fallout from the Global Financial Crisis, the Monetary Policy Committee of the Bank of England announced a new, unconventional policy measure: quantitative easing. The MPC determined that simply cutting the Bank Rate in the face of a recession would not be enough to boost spending and increase inflation to meet the Bank’s goal of a 2% CPI-inflation target in the medium term. Rather, over the course of the next year, the Bank purchased £200 billion of assets—primarily gilts—in reverse auctions through a newly created Asset Purchase Program. After just under one …

Japan's Special Funds-Supplying Operations (Japan Gfc), Alec Buchholtz

Journal of Financial Crises

Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several measures in late 2008 to make liquidity available to nonfinancial corporations that were strapped for cash. In December 2008, the BOJ implemented special funds-supplying operations in order to provide unlimited liquidity to banks and other financial institutions so they could continue to fund nonfinancial corporations. The BOJ would provide one- to three-month loans against an equal value of eligible corporate debt at a rate …

Japan's Outright Purchases Of Commercial Paper (Japan Gfc), Alec Buchholtz

Journal of Financial Crises

Following the collapse of Lehman Brothers in September 2008, the global commercial paper (CP) market began to tighten as interest rates rose and investors sought more-liquid money market securities. The Bank of Japan (BOJ) introduced several operations in late 2008 to promote liquidity in the CP market. In January 2009, the BOJ began to purchase CP and asset-backed CP outright from banks and other financial institutions. The BOJ could purchase up to ¥3 trillion of CP with a residual maturity of up to three months, among other short-term securities, via 10 purchases of up to ¥300 billion each. The BOJ …

The European Central Bank's Covered Bond Purchase Programs I And Ii (Ecb Gfc), Ariel Smith

Journal of Financial Crises

In July 2009, the European Central Bank introduced a nonstandard measure to revitalize the European covered bond market, which at the time financed about one-fifth of mortgages in Europe. The market struggled after the collapse of Lehman Brothers as the global financial crisis intensified in 2008. Over the course of the program, which lasted 12 months, European central banks, collectively known as “the Eurosystem,” conducted direct purchases in both primary and secondary markets to a total of €60 billion of covered bonds. The Eurosystem held the purchased covered bonds until maturity and made them eligible for lending to counterparties as …

The European Central Bank's Securities Markets Programme (Ecb Gfc), Ariel Smith

Journal of Financial Crises

The Eurozone struggled during the escalation of the sovereign debt crisis in 2010. In order to aid malfunctioning securities markets, restore liquidity, and enable proper functioning of the monetary policy transmission mechanism, the European Central Bank (ECB) instituted the Securities Markets Programme (SMP) on May 9, 2010. This program enabled Eurosystem central banks to purchase securities from entities in Greece, Ireland, Portugal, Italy, and Spain. The program ended on September 6, 2012, and evaluations of its effectiveness are mixed.