Financial markets are increasingly pricing the redistribution risk embedded in unfunded fiscal expansions, driving up government borrowing costs, yet the general public remains significantly misinformed about debt levels and understands little about the fiscal trade-offs that lie ahead, creating a dangerous gap between market discipline and democratic accountability.

Two recent studies converge on a striking conclusion: rather than democratizing global finance, stablecoin adoption may paradoxically concentrate economic power while creating unprecedented challenges for monetary policy, financial stability, and international cooperation.

New research shows a counterintuitive tradeoff in stablecoin design between price stability and panic runs. Also, will stablecoins or tokenized deposits dominate the future financial system?

A recent working paper demonstrates that high aggregate corporate leverage amplifies the effect of monetary policy on investment at the macro level, while another reveals that firms’ reliance on either bank loans or bonds determines how strongly their investment responds to different types of policy shocks.

Recent research reveals that changes in interest rates have complex, opposing effects on bank liquidity—while higher rates can reduce the risk of corporate credit line drawdowns, they simultaneously increase the risk of destabilizing deposit outflows, especially when preceded by large-scale quantitative easing.

Moody’s recent downgrade of U.S. government debt has intensified calls for a new approach to fiscal policy, with leading analyses urging Congress to move beyond symbolic rules and instead commit to consistent, data-driven deficit reduction—either through regular, moderate adjustments or credible plans for larger, timely corrections.

A new theoretical model suggests cryptocurrencies can improve welfare by curbing non-benevolent governments’ inflation-driven rent extraction, while another working paper warns that as crypto markets are evolving fast, Bitcoin cross-border flows could become the new channel for the transmission of global spikes in risk aversion.

Recent research introduces a high-frequency index that disentangles the drivers of sovereign yield divergence in the euro area and explores the mechanisms and policy responses to yield fragmentation, offering fresh evidence on how central bank actions shape financial integration and stability in the euro area.

President Trump’s recent executive order banning central bank digital currency while promoting crypto-friendly legislation, has sparked a debate about its implications for the Federal Reserve and U.S. financial policy.