Christian Friedrich is a Senior Research Advisor in the Financial Stability Department at the Bank of Canada. His primary research interests include international banking and finance, macroprudential regulation, and monetary policy. Previously, Christian was the Director of the Financial Studies Division in the Financial Stability Department and a Research Advisor in the International Economic Analysis Department. He holds a Ph.D. in International Economics from the Graduate Institute in Geneva, Switzerland.
In 2023, the share of Canadian banks’ foreign assets and liabilities amounted to around 50%. While Canadian banks engage domestically mostly with households and non-financial corporations, their most common counterparties abroad are non-bank financial institutions.
Funding structures affected the amount of financial stress different countries and sectors experienced during the spread of COVID-19 in early 2020. Policy responses targeting specific vulnerabilities were more effective at mitigating this stress than those supporting banks or the economy more broadly.
We examine the impact of the CCyB on foreign lending activities of Canadian banks. We show that the announcement of a tightening in another country’s CCyB leads to a decrease in the growth rate of cross-border lending between Canadian banks and borrowers in that other country.
We propose a new strength measure of the global financial cycle by estimating a regime-switching factor model on cross-border equity flows for 61 countries. We then assess how the strength of the global financial cycle affects monetary policy independence, which is defined as the response of central banks' policy interest rates to exogenous changes in inflation.
Inflation rates in advanced economies experienced two consecutive puzzles during the period following the global financial crisis—unexpectedly high inflation from the end of 2009 to 2011 and unexpectedly low inflation from 2012 to the middle of 2014. We investigate these developments in two ways. First, we show that accounting for inflation expectations by households explains a significant share of the inflation puzzles at the international level. Second, we find that, for Canada, elevated competition in the retail sector is also important for understanding inflation dynamics in the post-crisis period.
“Countercyclical Capital Regulation and International Bank Lending – Evidence from Canada” (with D. Chen), 2023, Journal of International Money and Finance, 139.
“Stress relief? Funding Structures and Resilience to the Covid Shock” (with K. Forbes and D. Reinhardt), 2023, CRNYU Special Issue, Journal of Monetary Economics, 137, 47–81.
“Macroprudential FX Regulations: Shifting the Snowbanks of FX Vulnerability?” (with T. Ahnert, K. Forbes, and D. Reinhardt), 2021, Journal of Financial Economics, 140(1), 145-174.
"The Dynamics of Capital Flow Episodes" (with P. Guérin), Journal of Money, Credit and Banking, 52(5), 969-1003, 2020.
"Monetary Policy and Financial Stability: Cross-Country Evidence" (with K. Hess and R. Cunningham), Journal of Money, Credit and Banking, 51(2-3), pages 403-453, 2019.
"International Monetary Policy Transmission through Banks in Small Open Economies" (with S. Auer, M. Ganarin, T. Paligorova and P. Towbin), IBRN Special Issue, Journal of International Money and Finance, 90, 34-53, 2019.
"Macroprudential Policies, Capital Flows, and the Structure of the Banking Sector" (with J. Beirne), Journal of International Money and Finance, 75, 47-68, 2017.
"Financial integration and growth - Why is Emerging Europe different?" (with I. Schnabel and J. Zettelmeyer), Journal of International Economics, 89(2), 522-538, 2013.
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