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Financial Markets and News About the Coronavirus (Vox EU, 8 min read) During the early stages of the pandemic, markets overreacted to ‘uninformative news’. Fed announcements in March provided a structural break. After that, markets became more ‘normal’ in pricing future disease incidence. This suggests an additional benefit of monetary policy. [Bullish bonds]
Monetary Policy and Intangible Investment (IMF, 25 page read) Monetary policy does not affect businesses linearly. Firms with more intangible assets respond less to monetary policy shocks compared to those with tangible investments. This is because they have less collateral and so are not as affected through the credit channel.
Financial Intermediation and Technology: What’s Old, What’s New? (IMF, 25 page read) Technological change in the financial industry is accelerating. Innovations in information and communication are allowing start-ups to disrupt the industry. How is this changing the traditional bank business model? Read our weekly Deep Dive to find out.