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.

Staff discussion papers

Understanding the Time Variation in Exchange Rate Pass-Through to Import Prices

Staff Discussion Paper 2017-12 Rose Cunningham, Min Jae Kim, Christian Friedrich, Kristina Hess
In this paper, we analyze the presence of time variation in the pass-through from the nominal effective exchange rate to import prices for 24 advanced economies over the period 1995–2015. In line with earlier studies in the literature, we find substantial heterogeneity in the level of exchange rate pass-through across countries.

The Role of Central Banks in Promoting Financial Stability: An International Perspective

Staff Discussion Paper 2016-15 Rose Cunningham, Christian Friedrich
The 2007–09 global financial crisis has led policy-makers around the world, including central banks, to refocus their efforts to promote financial stability. As part of this process, central banks became quite active in supporting financial stability in a variety of ways, such as publicly sharing their assessments of financial system vulnerabilities and risks and helping to strengthen regulation, supervision and macroprudential measures.

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Staff working papers

Stress Relief? Funding Structures and Resilience to the Covid Shock

Staff Working Paper 2023-7 Kristin Forbes, Christian Friedrich, Dennis Reinhardt
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.

The Countercyclical Capital Buffer and International Bank Lending: Evidence from Canada

Staff Working Paper 2021-61 David Xiao Chen, Christian Friedrich
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.

Monetary Policy Independence and the Strength of the Global Financial Cycle

Staff Working Paper 2020-25 Christian Friedrich, Pierre Guérin, Danilo Leiva-Leon
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.

Macroprudential FX Regulations: Shifting the Snowbanks of FX Vulnerability?

Can macroprudential foreign exchange (FX) regulations on banks reduce the financial and macroeconomic vulnerabilities created by borrowing in foreign currency? To evaluate the effectiveness and unintended consequences of macroprudential FX regulations, we develop a parsimonious model of bank and market lending in domestic and foreign currency and derive four predictions.

The Dynamics of Capital Flow Episodes

Staff Working Paper 2016-9 Christian Friedrich, Pierre Guérin
This paper proposes a novel methodology for identifying episodes of strong capital flows based on a regime-switching model. In comparison with the existing literature, a key advantage of our methodology is to estimate capital flow regimes without the need for context- and sample-specific assumptions.

Monetary Policy and Financial Stability: Cross-Country Evidence

Staff Working Paper 2015-41 Christian Friedrich, Kristina Hess, Rose Cunningham
Central banks may face challenges in achieving their price stability goals when financial stability risks are present. There is, however, considerable heterogeneity among central banks with respect to how they manage these potential trade-offs.

Does Financial Integration Increase Welfare? Evidence from International Household-Level Data

Staff Working Paper 2015-4 Christian Friedrich
Despite a vast empirical literature that assesses the impact of financial integration on the economy, evidence of substantial welfare gains from consumption risk sharing remains elusive. While maintaining the usual cross-country perspective of the literature, this paper explicitly accounts for household heterogeneity and thus relaxes three restrictive assumptions that have featured prominently in the past.

Global Inflation Dynamics in the Post-Crisis Period: What Explains the Twin Puzzle?

Staff Working Paper 2014-36 Christian Friedrich
Inflation dynamics in advanced countries have produced two consecutive puzzles during the years after the global financial crisis. The first puzzle emerged when inflation rates over the period 2009-11 were consistently higher than expected, although economic slack in advanced countries reached its highest level in recent history.

Capital Flows and Macroprudential Policies - A Multilateral Assessment of Effectiveness and Externalities

Staff Working Paper 2014-31 John Beirne, Christian Friedrich
This paper assesses the effectiveness and associated externalities that arise when macroprudential policies (MPPs) are used to manage international capital flows. Using a sample of up to 139 countries, we examine the impact of eight different MPP measures on cross-border bank flows over the period 1999-2009.

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Bank publications

Bank of Canada Review articles

May 14, 2015

Inflation Dynamics in the Post-Crisis Period

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.

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Journal publications

  • “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.
  • "Global inflation dynamics in the post-crisis period: What explains the puzzles?"
    Economic Letters, 142, 31-34, May 2016.
  • "Financial integration and growth - Why is Emerging Europe different?"
    (with I. Schnabel and J. Zettelmeyer), Journal of International Economics, 89(2), 522-538, 2013.