Selected Outside Research
Columbia/BPI Annual Bank Regulation Research Conference, Call for papers
The Bank Policy Institute and Columbia University’s School of International and Public Affairs invite the submission of papers for our annual research conference on bank regulation. The purpose of the conference is to bring together academics, market participants, and policymakers to discuss the latest research on the design and effectiveness of bank regulation.
The deadline to submit a detailed abstract or completed paper is November 15, 2025. Please send your submissions by email to sipa_conf@columbia.edu.
Authors of accepted papers will be notified by January 1, 2026.Learn more: Columbia/BPI Annual Bank Regulation Research Conference, Call for papers
Stablecoin-Related Yields: Some Regulatory Approaches
Most regulations prohibit stablecoin issuers from paying interest directly to holders, but there is less consensus on whether third-party platforms (exchanges, trading venues) can offer remuneration (yields) on stablecoin balances. This article reviews current practices with respect to stablecoin yields, the associated risk concerns, and the current regulatory approaches in the U.S. and other national jurisdictions. It identifies three key risk areas. The first is consumer protection, including that users may be unaware of their potential exposure to losses should the platforms fail. The second is financial stability. Yields could accelerate “runs” on stablecoins when returns disappoint, potentially spreading to banks that provide stablecoin services or hold reserves. The third comprises conflicts of interest. In particular, platforms combining custody, lending, and other services may face incentive misalignments in the absence of the regulatory safeguards required in traditional finance contexts. The article also comments on regulatory approaches. Its core message is that regulation must cover both issuers and service providers comprehensively, for which reason the U.S. approach currently is lacking.
Stablecoin-Related Yields: Some Regulatory Approaches
Underwater: Strategic Trading and Risk Management in Bank Securities Portfolios
With rapidly rising interest rates during 2022-23, banks experienced sharply increasing interest rate risk. This paper investigates how large US banks managed their securities positions during this stress period and provides insights into financial and regulatory frictions that may inhibit de-risking activities. The study documents little active risk management by banks: trading volume was unusually low; banks generally didn’t sell long-duration bonds to rebalance; and they did not significantly increase qualified interest-rate hedges. The discussion identifies two key frictions explaining this inertia: loss aversion (disposition effect) and hedging costs. For example, banks were 3.5 times more likely to sell bonds at par and 8.5 times more likely to sell at premium versus underwater bonds.
Underwater: Strategic Trading and Risk Management in Bank Securities Portfolios
Recycling Risk: Synthetic Risk Transfers
This paper documents and analyzes trends in the use of synthetic risk transfers (SRTs) as a global capital-management tool. The discussion reviews the benefits of SRTs to issuers and investors and the conditions under which SRTs offer regulatory capital relief to banks. Benefits include balance-sheet optimization, concentration-risk management, and headroom for additional lending; for investors, SRTs offer tailored credit exposure and yield. The paper also highlights potential systemic vulnerabilities accompanying the market’s rapid growth, including interconnectedness, leverage, opacity and data gaps, maturity mismatch, rollover risk, and legal/operational complexity that can weaken effective risk transfer. The analysis has implications for supervisory priorities, such as tracking risk transfer, monitoring investor leverage, and improving disclosure and reporting.
Recycling Risk: Synthetic Risk Transfers
The Complementary Effects of Financial Education and Payday Lending Regulations on Financial Inclusion
This paper investigates the potential link between state-mandated high-school personal finance coursework and financial inclusion, with explicit attention to how effects may vary in relation to state payday lending restrictions. Using eight waves of the FDIC National Survey of Unbanked and Underbanked Households (2009-2023), exposure to personal finance coursework is associated with a lower probability of being unbanked. While effects arise in both payday lending regulatory environments, magnitudes are larger where payday lending is more firmly restricted. This suggests an interplay between personal finance education mandates and consumer financial protection regulation.
Incomplete Pass-Through in Mortgage Markets
The FHFA’s May 2023 reshuffling of conforming mortgage upfront guarantee fees naturally raises the question of what share of these cost changes gets passed through to mortgage borrowers. This study analyzes the loan pricing effects of these fee changes. The results point to incomplete pass-through rather than one-for-one pricing changes, with some of the response taking the form of tighter origination policies. Origination effects were particularly evident in borrower segments where fees rose. Small-balance loans were the outlier, showing near-zero price pass-through and greater sensitivity in rejections. Responses also varied by business model: banks reduced GSE execution and substituted toward non-GSE channels or balance-sheet holdings, whereas nonbanks’ securitization patterns were largely unchanged.
Incomplete Pass-Through in Mortgage Markets
The Rise of Sponsored Service for Clearing Repo
Unlike dealer-to-dealer repos, dealer-to-client trades cannot be cleared and settled through the usual central clearing services. This is because the client is not a direct clearing member. The Fixed Income Clearing Corporation’s (FICC) Sponsored Service product is emerging as the main channel by which dealer-to-client repo trades can gain to access central clearing. To gain this access, clients must become sponsored members of FICC and dealers must become sponsoring members. This post examines the sponsored trades segment of the repo market using confidential OFR data from 2020-2024. The analysis documents that sponsored trades now represent 29.5% of cleared repo volume, split between sponsored lending (dominated by money market funds) and sponsored borrowing (dominated by hedge funds). Both types of trading activities more than doubled in volume since mid-2022. They are expected to play an increasing role, with SEC rule amendments driving a large migration of dealer-to-client Treasury repo into central clearing. The analysis also highlights trade-offs for dealers relying on this channel: dealers gain balance-sheet netting benefits but face higher margining costs and retain client performance risk.
The Rise of Sponsored Service for Clearing Repo
Crypto Investor Waves since 2017: What Retail Investor Behavior Reveals about Digital Asset Adoption
This JPMorgan Chase Institute report examines retail cryptocurrency investment patterns from January 2017 to May 2025, based on checking account and self-directed investment account data from JPMorgan Chase. The report documents that 17% of active checking account customers invested in crypto assets, with recent upticks coinciding with new all-time highs in bitcoin prices in March and November 2024. Via the investment channel, investors have increasingly used crypto-tracking ETFs to add cryptocurrency to their portfolios—some without any prior direct holdings through crypto platforms. The analysis indicates that crypto holdings remain concentrated among young men, who are about twice as likely to have such investments as same-aged women. However, the gender gap in involvement has narrowed over time. The median size of direct investments is relatively small, at less than a week’s worth of income, and among crypto ETF holders, the median allocation is less than 5% of total assets.
Crypto Investor Waves since 2017: What Retail Investor Behavior Reveals about Digital Asset Adoption
Do Automated Valuation Models Reinforce Disparities in Home Values?
This study offers new evidence on racial disparities in property value estimates provided by automated valuation models (AVMs). In contrast to previous studies that assess bias at the neighborhood level, this study evaluates AVM errors at the individual homeowner level using property records data and a statistical imputation method to estimate homeowners’ race based on surnames and geographic location. The analysis, which is specific to Atlanta and Memphis, finds that AVMs generate significantly larger valuation errors for Black homeowners compared to white homeowners, even within the same neighborhoods. Two sources of AVM bias are identified: biased training data—inputs like comparable sales prices and property conditions—that incorporate past discrimination into predictions, and algorithmic design: optimizing for overall accuracy implicitly prioritizes the largest racial group. The study also offers proposed policy solutions, such as including more detailed property-level information, improved transparency in models, clearer regulatory guidelines, and continued independent research.
Do Automated Valuation Models Reinforce Disparities in Home Values?
Examining the Relationship Between Loan Pricing and Credit Risk
Banks price credit risk by setting higher loan interest rates, which serve as compensation for higher credit losses. This paper examines bank pricing of jumbo residential mortgages and credit cards in relation to borrower, financial institution, and regional credit risk factors using loan-level, supervisory Y-14M data. Beyond confirming expected risk relationships such as to the mortgage loan-to-value ratio and borrower credit score, the analysis also finds geographic risk is priced: regions with higher delinquency see slightly higher credit-card APRs, with greater regional sensitivity for mortgages compared to cards. Aggregate bank level effects also are indicated: institutions with higher average net charge-offs report higher average interest and fee income; a 1 percent increase in average net charge-offs is associated with a 0.6 percent increase in average interest and fee income. At very high expected risk, rate increases flatten, consistent with pricing limits and non-price adjustments.
Examining the Relationship Between Loan Pricing and Credit Risk
Chart of the Month
The above chart shows the total notional value of crypto derivatives outstanding (futures and perpetual contracts). On October 10, Coinglass recorded a record $19.2 billion in crypto derivative liquidations. The notional value of derivatives outstanding subsequently fell by around $40 billion. Liquidations on DeFi lending applications were also substantial but smaller in value. For example, liquidations on the largest DeFi lending application, Aave, totaled $180 million.
Featured BPI Research
Should Banks Hold Capital for an Asteroid Strike?
This blog post challenges the notion that a convergence of extreme climate events could trim euro-area output by about 5%, a claim recently expressed by a senior ECB official. This notion derives from a “Disasters and Policies” climate stress scenario developed by the Network for the Greening of the Financial System (NGFS) that posits severe macroeconomic effects of such extreme events. The post explains that the NGFS scenario stacks 24 “once-in-50-year” hazards across six regions over 2026-2027. Under independence the implied return period of the total scenario would be on the order of 1041 years. Even allowing for correlations among the various extreme events, with generous tail dependence, the joint likelihood of these occurring is less than a civilization-ending asteroid. Moreover, the underlying translation from hazards to economic and financial losses is insufficiently transparent to validate expectations of a resulting global depression.
Should Banks Hold Capital for an Asteroid Strike?
Conferences & Symposiums
11/6/2025 – 11/7/2025
New Perspectives on Consumer Behavior in Credit and Payments Markets Conference – 2025
Federal Reserve Bank of Philadelphia
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11/6/2025 – 11/7/2025
Annual Bank of Canada Economic Conference
Bank of Canada, Ottawa
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1/7/2025 – 11/8/2025
14th Annual Fixed Income and Financial Institutions Conference
University of South Carolina, Columbia, SC
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11/12/2025
The 2025 U.S. Treasury Market Conference
Federal Reserve Bank of New York
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11/14/2025
AMEC Symposium on The Economic Implications of Heightened Uncertainty
Federal Reserve Bank of New York
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11/20/2025 – 11/21/2025
2025 Financial Stability Conference
Federal Reserve Bank of Cleveland
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11/21/2025 – 11/22/2025
69th Economic Conference: The U.S. Economy in a Changing Global Landscape
Federal Reserve Bank of Boston
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11/24/2025 – 11/24/2025
4th CEMLA/Dallas Fed Financial Stability Conference
Federal Reserve Bank of Dallas, San Antonio Branch
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11/25/2025 – 11/26/2025
24th Annual FDIC Bank Research Conference
Arlington, VA
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12/17/2026
FX Market Structure Conference
Federal Reserve Bank of New York
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1/2/2026
19th Annual Day Ahead Conference on Financial Markets and Institutions: Announcement and Call for Papers
Federal Reserve Bank of Philadelphia
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