Stephan Luck on What History can Teach Us about Financial Stability

**David Beckworth** (0:02)
Welcome to Macro Musings, where each week we pull back the curtain and take a closer look at the most important macroeconomic issues of the past, present, and future. I am your host, David Beckworth, a senior research fellow with the Mercatus Center at George Mason University. I'm glad you decided to join us.
Our guest today is Stephan Luck. Stephan works at the New York Federal Reserve Bank and has written widely on financial stability and recently released, along with his co-authors, a sweeping historical study of US bank runs that covers a long sweep of history in the 19th and 20th century. He joins us today to discuss this work and its implications for financial stability today, as well as some of his other work on stable coins and their German hyperinflation. Stephan, welcome to the podcast.

**Stephan Luck** (0:55)
Thank you so much, David. It's really a pleasure to be here. I'm of course a huge fan of your show, which I consider really a massive public good, a super interesting show and really an honor to be here to talk to you.

**David Beckworth** (1:06)
Well, thank you for listening and thank you for coming on. Now, we recently met at the Wharton Financial Regulation Conference that Peter Conte Brown and others hosted, and you had a great presentation, which is really what led to you coming on here.
As it turns out, Stephan, your co-author on that paper is a previous guest as well, Emil Werner. We discussed his paper with you, which I didn't realize. So you have been on the show already in spirit, number one. And I'll also mention you technically been on the podcast already as well because during that podcast recording we did at the Wharton FinReg Conference, Peter and I went back and forth, and we did Q&A, and you were like the first or second question, I believe, at there. So if you recognize his voice, folks, because you've heard him before on the podcast.

**Stephan Luck** (1:54)
I guess I should really say it's good to be back on the show.

**David Beckworth** (1:58)
Yes. Yes, indeed. Now you've written some really fun, fascinating, and important pieces on the history of banking in the US, particularly this question, is it solvency, is it liquidity? What really causes bank failures? Do bank runs really matter as much as some have led us to believe? We're going to talk about that and then your other historical work on the national banking system and its implications for the conversations today over stablecoins. As listeners of the show know, we've talked a lot about the Genius Act, the future of stablecoins, and so Stephan has insights there as well for us. Then finally, we'll talk about, again, some German hyperinflation time permitting, because you have a super fascinating piece on that as well. Again, folks, this is why you go to conferences. You meet interesting people like Stephan. They had a nice dinner, I think, the night before the conference.
Probably everything we're going to talk about today, we talked over dinner. So this is why I love going to conferences to meet interesting people like Stephan. Now, Stephan, tell us a little bit about yourself. How did you get into this field? Yeah.

**Stephan Luck** (3:00)
So let me sort of just, I work at the Federal Reserve Bank of New York. I'm an economist in the Federal Reserve System. And let me just sort of put it out there that we have a disclaimer that everything I'll be talking about will be my personal views and not necessarily those of the Federal Reserve Bank of New York.
Let me sort of start where I am right now in my career and then tell you a little bit how I got there. So I'm an economist in the Federal Reserve System, is really I consider to be one of the most interesting and exciting jobs they can have as a PhD economist. So my job description sort of has two parts to it. Sort of my daytime job, which is I think a lot about current policy issues and sort of how to help policymakers around the Federal Reserve System and here in Federal Reserve Bank in New York to kind of make key policy decision that the Federal Reserve System takes. So just give you one example, one concrete example, what I do in my daytime here is, I coordinate briefings together with my colleagues here at the research group, but also colleagues in the supervision and in the markets group. I guess from the markets group, you had some really two of my colleagues in your show before, Alan and Roberto, some really great episodes. So we do these briefings for our president, John Williams, and these briefings are around issues of financial stability, monetary policy implementation, financial conditions, and the broader economic developments that are happening. So this part of my job is operating at a relatively fast pace, so deliverable to do by the end of the day, end of the week, end of the month, and certainly our life here gravitates around the FYMC cycle.