dunnettreader + risk-systemic   48

Gary Gorton
Mobile Collateral versus Immobile Collateral
Gary Gorton, Tyler Muir
NBER Working Paper No. 22619
Issued in September 2016
NBER Program(s):   AP   CF   DAE   EFG   ME
In the face of the Lucas Critique, economic history can be used to evaluate policy. We use the experience of the U.S. National Banking Era to evaluate the most important bank regulation to emerge from the financial crisis, the Bank for International Settlement's liquidity coverage ratio (LCR) which requires that (net) short-term (uninsured) bank debt (e.g. repo) be backed one-for-one with U.S. Treasuries (or other high quality bonds). The rule is narrow banking. The experience of the U.S. National Banking Era, which also required that bank short-term debt be backed by Treasury debt one-for-one, suggests that the LCR is unlikely to reduce financial fragility and may increase it.
NBFI  NBER  financial_stability  risk_management  collateral  financial_economics  capital_markets  bad_regulation  leverage  financial_system  risk-systemic  paywall  money_market  banking  paper  financial_regulation  BIS 
october 2016 by dunnettreader
Centre for the Study of Existential Risk - Cambridge
The Centre for Study of Existential Risk is an interdisciplinary research centre focused on the study of human extinction-level risks that may emerge from technological advances. We aim to combine key insights from the best minds across disciplines to tackle the greatest challenge of the coming century: safely harnessing our rapidly-developing technological power. Our current major research projects include Managing Extreme Technological Risk (supported by the Templeton World Charity Foundation) and Extreme Risks and the Global Environment (supported by the Grantham Foundation), as well as our Blavatnik Public Lecture series and the Hauser-Raspe workshop series
website  risk  risk-systemic  risk_assessment  risk_management  risk-mitigation  environment  climate  technology  innovation-risk_management  Innovation  robotics  AI  video 
august 2016 by dunnettreader
Hanson, Shleifer, Stein & Vishny - Banks as patient fixed-income investors (2015) | Andrei Shleifer - J of Fin Econ
Hanson, Samuel, Andrei Shleifer, Jeremy C Stein, and Robert W Vishny. 2015. “Banks as patient fixed-income investors.” Journal of Financial Economics 117 (3): 449-469.
We examine the business model of traditional commercial banks when they compete with shadow banks. While both types of intermediaries create safe “money-like” claims, they go about this in different ways. Traditional banks create money-like claims by holding illiquid fixed-income assets to maturity, and they rely on deposit insurance and costly equity capital to support this strategy. This strategy allows bank depositors to remain “sleepy”: they do not have to pay attention to transient fluctuations in the market value of bank assets. In contrast, shadow banks create money-like claims by giving their investors an early exit option requiring the rapid liquidation of assets. Thus, traditional banks have a stable source of funding, while shadow banks are subject to runs and fire-sale losses. In equilibrium, traditional banks have a comparative advantage at holding fixed-income assets that have only modest fundamental risk but are illiquid and have substantial transitory price volatility, whereas shadow banks tend to hold relatively liquid assets. -- downloaded via iPhone to DBOX
article  institutional_investors  banking  shadow_banking  NBFI  long-term  equity  liquidity  bond_markets  money_market  deposits  risk-systemic  investment  downloaded  asset_prices  insolvency  risk_management  capital_adequacy 
august 2016 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Liquidity Runs - April 2016
"We do not want to face Bear." Email from a Goldman employee to a hedge fund manager, March 11, 2008 ( Financial Crisis Inquiry Report , p. 288) Despite mixed…
Instapaper  financial_system  financial_crisis  liquidity  insolvency  financial_system-government_back-stop  contagion  clearing_&_settlement  risk_assessment  risk_management  risk-systemic  from instapaper
may 2016 by dunnettreader
Avinash Persaud - A blueprint for overcoming systemic risk | VOX, CEPR’s Policy Portal - 20 November 2015
As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk. -- downloaded as pdf to Note
books  financial_regulation  financial_crisis  risk-systemic  risk_shifting  risk_management  risk_assessment  leverage  hedging  capital_adequacy  shadow_banking  liquidity  risk_premiums  firesales  banking  banking-universal  credit_ratings  balance_sheet  international_finance  maturity_transformation  downloaded 
november 2015 by dunnettreader
Charles A.E. Goodhart, Enrico Perotti - Containing maturity mismatch | VOX, CEPR’s Policy Portal - 10 September 2015
In the last century, real estate funding by banks grew steadily. This column argues that the unprecedented expansion of banking in mortgage lending resulted in a high degree of maturity mismatch. The solution to this problem should focus on greater maturity matching, and not using insured deposits. One avenue to do so is by securitising mortgages with little maturity transformation. Another is to create intermediaries providing mortgage loans where the lender shares in the appreciation, while assuming some risk against the occasional bust. -- downloaded as pdf to Note
paper  banking  financial_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  markets-structure  real_estate  mortgages  liquidity  money_market  deposit_insurance  disintermediation  maturity_transformation  securitization  institutional_investors  bubbles  Minsky  downloaded 
september 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Bond market liquidity: should we be worried? — Money, Banking and Financial Markets
Our bottom line is this: resilience of intermediaries and resilience of markets are mutually reinforcing. With more resilient institutions, someone is more likely to stand ready to make a market in bonds – both Treasuries and corporates – so long as the rewards are adequate. Since the less liquid a market is, the higher the return to market making will be, the more likely it is that someone will step up to trade when price moves are large. Put another way, better regulation has removed the public subsidy to trading activity that banks and others were able to capture prior to the crisis, so making markets has become more expensive and prices may have to move more than before to attract stabilizing traders. But during those periods when liquidity is particularly valuable, the rewards should exceed these higher capital and liquidity costs. We worry less, not more, because enhanced capital and liquidity requirements are making intermediaries more resilient. Tags: Corporate bonds, Bond market, Liquidity, U.S. Treasury bonds, High-frequency trading, Contagion, Systemic risk -- really good on corporate bonds and links to recent studies on the Treasury market, especially after the flash crash in October 2014 -- downloaded pdf to Note
financial_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  markets-structure  HFT  liquidity  capital_adequacy  banking  broker-dealers  intermediation  corporate_finance  Dodd-Frank  downloaded 
august 2015 by dunnettreader
Financial Market Trends - OECD Journal - Home page | OECD
‌The articles in Financial Market Trends focus on trends and prospects in the international and major domestic financial markets and structural issues and developments in financial markets and the financial sector. This includes financial market regulation, bond markets and public debt management, insurance and private pensions, as well as financial statistics. -- links to the contents of each issue of the journal
journal  website  paper  financial_system  global_economy  global_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  international_finance  banking  NBFI  insurance  markets-structure  risk_assessment  risk_management  sovereign_debt  corporate_finance  corporate_governance  institutional_investors  pensions  consumer_protection  equity-corporate  equity_markets  debt  debt-overhang  leverage  capital_flows  capital_adequacy  financial_economics  financial_innovation  financial_system-government_back-stop  bailouts  too-big-to-fail  cross-border  regulation-harmonization  regulation-costs  statistics 
july 2015 by dunnettreader
Christian Thimann - The economics of insurance and its borders with general finance | VOX, CEPR’s Policy Portal 07/17/2015
What is insurance and where does insurance end?’, is a pressing question in international finance as global regulators are still pondering whether there can be systemic risk in insurance. This column argues that the challenge faced by regulators partly stems from terminological confusion between insurance activities and more general financial activities. -- downloaded pdf to Note
paper  financial_system  insurance  financial_regulation  financial_crisis  capital_markets  risk-systemic  international_finance  downloaded 
july 2015 by dunnettreader
Erlend W Nier, Tahsin Saadi Sedik - Capital flows, emerging markets and the global financial cycle | VOX, CEPR’s Policy Portal - 04 January 2015
Large and volatile capital flows into emerging economies since the Global Financial Crisis have re-invigorated efforts to unearth the determinants of these flows. This column investigates the interplay between global risk aversion (captured by the VIX) and countries’ characteristics. The authors also explore what policies countries should employ to protect themselves against the volatility of capital flows. The findings indicate that capital flows to emerging markets cannot be controlled without incurring substantial costs.
paper  emerging_markets  capital_flows  capital_markets  global_system  international_finance  global_financial_cycle  financial_crisis  Great_Recession  capital_controls  volatility  contagion  risk-systemic 
july 2015 by dunnettreader
Anton Korinek - Going against the flow: Dealing with capital flows to emerging markets | VOX, CEPR’s Policy Portal - 22 December 2010
Capital flows to emerging markets are controversial territory. This column argues that they create externalities that make the recipient economies more vulnerable to financial fragility and crises. It adds that policymakers can make their economies better off by regulating and discouraging the use of risky forms of external finance – in particular short-term dollar-denominated debts
paper  emerging_markets  capital_flows  capital_markets  global_system  international_finance  global_financial_cycle  financial_crisis  Great_Recession  capital_controls  volatility  contagion  risk-systemic  risk-mitigation 
july 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Dodd-Frank: Five Years After — Money, Banking and Financial Markets - June 2015
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory… Very good roundup of the holes that are left, the inability to force a coherent inter-agency approach to key risk regulation areas (e.g. the Financial Stability Oversight couldn't force the SEC to write adequate Money Market Funds reg, making it even worse than before the crisis), and the areas where regs are excessively complex, costly etc -- so they either won't do the job (and regulators will wind up making ad hoc exceptions because they're not workable) or their going to get gamed. Basically comes down to the age-old problem of regulation by institutional form rather than by function. The financial crisis was the best chance we had to rationalize the system, and Paulson had Treasury working on a proposal to do just that, but it got trashed when the financial system blew up and everybody was battling for narrow interests in a crisis atmosphere with inflamed populist politics -- only thing positive was finally getting rid of OCC. I do think they're unnecessarily suspicious of the new consumer protection agency -- given that a full overhaul wasn't possible, somebody needs to be responsible for looking out for consumers, since the main regulators are focused on financial risk issues at the institutional or system level.
Instapaper  US_economy  US_politics  financial_regulation  financial_crisis  Fed  SEC  banking  capital_markets  government_agencies  risk  risk-systemic  risk_management  NBFI  shadow_banking  money_market  institutional_investors  consumer_protection  leverage  capital_adequacy  inter-agency  liquidity  arbitrage  markets-structure  intermediation  financial_instiutions  financial_system-government_back-stop  from instapaper
june 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - An Open Letter to Bill McNabb, CEO of Vanguard Group - May 2015
Dear Mr. McNabb, We find your WSJ op-ed (Wednesday, May 6) misleading, short-sighted, self-serving, and very disappointing. Vanguard has been in the forefront… No kidding! Appaling that the money market fund industry has been allowed to reach such insane size while providing money-equivalents for all investors/savers that can't hold up in an incipient panic. If the government is going to be forced to, effectively, provide deposit insurance, at least the amounts should be capped and transparent and the risks properly priced. That the SEC couldn't get its act together on NNFs is the most glaring evidence of regulatory capture in the whole sorry mess.
financial_system  financial_regulation  financial_crisis  shadow_banking  NBFI  money_market  financial_system-government_back-stop  SEC  regulatory_capture  risk-systemic  liquidity  asset_management  asset_prices  from instapaper
may 2015 by dunnettreader
Video - Robert C. Merton (2014) : Measuring the Connectedness of the Financial System: Implications for Systemic Risk Measurement and Management
Abstract -- Macrofinancial systemic risk is an enormous issue for both governments and large asset pools. The increasing globalization of the financial system, while surely a positive for economic development and growth, does increase the potential impact of systemic risk propagation across geopolitical borders, making its control and repairing the damage caused a more complex and longer process. (..) . The Financial Crisis of 2008-2009 and the subsequent European Debt Crisis were centered around credit risk, particularly credit risk of financial institutions and sovereigns, and the interplay of the two. The propagation of credit risk among financial institutions and sovereigns is related to the degree of “connectedness” among them. The effective measurement of potential systemic risk exposures from credit risk may allow the realization of that risk to be avoided through policy actions. Even if it is not feasible to avoid the systemic effects, the impact of those effects on the economy may be reduced by dissemination of that information and subsequent actions to protect against those effects and to subsequently repair the damage more rapidly. This paper applies the structural credit models of finance to develop a model of systemic risk propagation among financial institutions and sovereigns. Tools for applying the model for measuring connectedness and its dynamic changes are presented using network theory and econometric techniques. Unlike other methods that require accounting or institutional positions data as inputs for determining connectedness, the approach taken here develops a reduced-form model applying only capital market data to implement it. Thus, this model can be refreshed almost continuously with “forward-looking” data at low cost and therefore, may be more effective in identifying dynamic changes in connectedness more rapidly than the traditional models. This new research is still in progress. (..) In particular, it holds promise for creating endogenously specified stress test formulations. The talk closes with some discussion of the importance of a more integrated approach to monetary, fiscal and stability policies so as to better recognize the unintended consequences of policy actions in one of these on the others.
video  financial_system  financial_economics  financial_crisis  risk-systemic  networks-financial  networks-information  macroprudential_policies  macroprudential_regulation 
may 2015 by dunnettreader
The strategic under-reporting of banks’ risk - Taylor Begley, Amiyatosh Purnanandam, Kuncheng Zheng | VOXEU - 08 May 2015
A key regulatory response to the Global Crisis has involved higher risk-weighted capital requirements. This column documents systematic under-reporting of risk by banks that gets worse when the system is under stress. Thus banks’ self-reported levels of risk are least informative in states of the world when accurate risk measurement matters the most.
paper  financial_system  financial_regulation  financial_crisis  capital_adequacy  risk-systemic  banking  Basle 
may 2015 by dunnettreader
Filippo Occhino - Debt-Overhang Banking Crises | Cleveland Fed - Dec 2014
WP 14-25 -- This paper studies how a worsening of the debt overhang distortion on bank lending can explain banking solvency crises that are accompanied by a plunge of bank asset values and by a severe contraction of lending and economic activity. Since the value of bank assets depends on economic prospects, a pessimistic view of the economy can be self-fulfilling and can trigger a financial crisis: If economic prospects are poor, bank asset values decline, the bank risk of default rises, and the associated debt overhang distortion worsens. The worsening of the distortion leads to a contraction in bank loans and a decline in economic activity, which confirms the initial pessimistic view. Signals of the existence of systemic risk include: a rise in the volatility and the presence of two modes in the probability distribution functions of the returns of bank-issued bonds and of portfolios of bank-issued bonds and equities; and a surge in the correlation between bank-issued bond returns. Macroprudential policy should limit the sensitivity of bank balance sheets to the aggregate economy and to the financial sector, using investment restrictions, capital requirements, and stress tests. In the event of a crisis, policy options include reducing the above sensitivity with commitments and guarantees, stimulating the economy, and restructuring bank capital and ownership. -- didn't download -- wonder if he uses Minsky
paper  banking  financial_crisis  leverage  deleverage  economic_growth  risk-systemic  business_cycles  bank_runs  capital_markets  bond_markets  macroprudential_regulation  macroprudential_policies  volatility  default  firesales  FDIC  Fed  demand-side  credit  business-forecasts  Minsky  financial_economics 
may 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz -The mythic quest for early warnings — Money, Banking and Financial Markets - April 2015
Reviews a number of stress indexes developed since the financial crisis -- most show a good way of indicating where we are at any one time, and several may be useful in crisis management for identifying institutions with liquidity vs insolvency problems, but none tell us where we're going **--** Where does this leave us? Our answer is that we have yet another reason to be skeptical of time-varying, discretionary regulatory policy. In an earlier post, we noted that the combination of high information requirements, long transmission lags and significant political resistance made it unlikely time-varying capital requirements will be effective in reducing financial vulnerabilities. Our conclusion then, which we reiterate now, is that the solution is to build a financial system that is safe and resilient all of the time, since we really never know what is coming. That means a regulatory system based on economic function, not legal form, with sufficient capital buffers to guard against all but the very worst possibilities. In the end, a financial system that relies on an early warning indicator of imminent financial collapse seems destined to fail. -- copied to Pocket
financial_system  financial_regulation  financial_crisis  capital_adequacy  capital_markets  NBFI  information-markets  information-asymmetric  risk  risk-systemic  risk_management  Great_Recession  global_governance  banking  bank_runs  liquidity  Pocket 
april 2015 by dunnettreader
Andrew W. Lo, Thomas J. Brennan - Do Labyrinthine Legal Limits on Leverage Lessen the Likelihood of Losses?: An Analytical Framework - Texas Law Review, Vol. 90, No. 7, 2012 :: SSRN
Andrew Lo - Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL); National Bureau of Economic Research (NBER) *--* Thomas J. Brennan - Northwestern University School of Law. **--** A common theme in the regulation of financial institutions and transactions is leverage constraints. Although such constraints are implemented in various ways — from minimum net capital rules to margin requirements to credit limits — the basic motivation is the same: to limit the potential losses of certain counterparties. However, the emergence of dynamic trading strategies, derivative securities, and other financial innovations poses new challenges to these constraints. We propose a simple analytical framework for specifying leverage constraints that addresses this challenge by explicitly linking the likelihood of financial loss to the behavior of the financial entity under supervision and prevailing market conditions. An immediate implication of this framework is that not all leverage is created equal, and any fixed numerical limit can lead to dramatically different loss probabilities over time and across assets and investment styles. This framework can also be used to investigate the macroprudential policy implications of microprudential regulations through the general-equilibrium impact of leverage constraints on market parameters such as volatility and tail probabilities. -- Pages in PDF File: 36 -- Leverage, Liquidity, Financial Regulation, Capital Requirements, Macroprudential Policies, Net Capital Rules -- downloaded pdf to Note
article  SSRN  financial_system  financial_regulation  financial_crisis  markets-structure  banking  NBFI  shadow_banking  leverage  capital_adequacy  liquidity  capital_markets  money_market  derivatives  arbitrage  macroprudential_policies  macroprudential_regulation  risk-systemic  financial_innovation  bank_runs  downloaded 
april 2015 by dunnettreader
Reading About the Financial Crisis: A 21-Book Review by Andrew W. Lo :: SSRN
Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL); National Bureau of Economic Research (NBER) -- The recent financial crisis has generated many distinct perspectives from various quarters. In this article, I review a diverse set of 21 books on the crisis, 11 written by academics, and 10 written by journalists and one former Treasury Secretary. No single narrative emerges from this broad and often contradictory collection of interpretations, but the sheer variety of conclusions is informative, and underscores the desperate need for the economics profession to establish a single set of facts from which more accurate inferences and narratives can be constructed. -- Pages in PDF File: 41 -- Keywords: Financial Crisis, Systemic Risk, Book Review -- downloaded pdf to Note
paper  SSRN  reviews  books  economic_history  21stC  Great_Recession  financial_crisis  financial_system  financial_regulation  financialization  capital_markets  banking  NBFI  shadow_banking  regulation-enforcement  rent-seeking  fraud  debt  debtors  housing  securitization  derivatives  bank_runs  banking-universal  Glass-Steagal  risk_management  risk-systemic  financial_economics  global_system  global_imbalance  capital_flows  institutional_investors  institutional_economics  bubbles  Minsky  downloaded 
april 2015 by dunnettreader
CDP - About us
CDP works to transform the way the world does business to prevent dangerous climate change and protect our natural resources. We see a world where capital is efficiently allocated to create long-term prosperity rather than short-term gain at the expense of our environment.

Evidence and insight is vital to driving real change. We use the power of measurement and information disclosure to improve the management of environmental risk. By leveraging market forces including shareholders, customers and governments, CDP has incentivized thousands of companies and cities across the world’s largest economies to measure and disclose their environmental information. We put this information at the heart of business, investment and policy decision making.

We hold the largest collection globally of self reported climate change, water and forest-risk data. Through our global system companies, investors and cities are better able to mitigate risk, capitalize on opportunities and make investment decisions that drive action towards a more sustainable world.
website  Lon  risk_management  risk-systemic  climate  climate-adaptation  institutional_investors  disclosure  water  energy  energy-markets  industry  supply_chains  sustainability  corporate_governance  green_finance  green_economy 
march 2015 by dunnettreader
Peter Lee - Lack of secondary market liquidity exacerbates sell-off | Euromoney magazine - Oct 17 2014
Lack of secondary market liquidity exacerbates sell-off by As equity markets have sold off and investors rushed into risk-free bonds, even supposedly liquid US treasuries have seen prices gapping. As volatility rises and investors focus on grim fundamentals, they see a broken bond-market structure. Amid the market turbulence this week as investors panicked about slowing growth in Europe and around the world, equity markets sold off sharply and panic-buyers drove down 10-year US treasury yields, market sources reported surprisingly thin liquidity, even in benchmark US government bonds. With dealers unwilling to position risk ahead of Fed stress tests and amid heightened regulatory reporting requirements on Volcker rule compliance, even in the supposedly most liquid bond markets prices gapped around.
capital_markets  bond_markets  banking  markets-structure  liquidity  financial_regulation  Volker_Rule  NBFI  shadow_banking  asset_prices  risk-systemic  risk_management  uncertainty  volatility 
november 2014 by dunnettreader
Thorsten Beck, W Wagner, PR Lane, D Schoenmaker, E Carletti, F Allen - CEPR Report summary: Cross-border banking in Europe | VOX, CEPR’s Policy Portal - 20 June 2011
...a new CEPR report analysing key aspects of cross-border European banking. (..) policy reforms in micro- and macro-prudential regulation and macroeconomic policies are urgently needed for Europe to improve its efficiency and reduce its risk. -- compared to previous experiences, cross-border banking itself played a relatively positive role during the crisis – especially for countries in C & E Europe that rely heavily on foreign banks. Rather, the crisis has been exacerbated by an inadequate response of regulators (..)a misalignment of regulatory incentives and a lack of an appropriate resolution framework on both national and supra-national level. -- we study whether cross-border banking flows in the EU create risk concentrations that may amplify financial vulnerabilities. ... it is key to evaluate this issue not only at the level of the individual countries, but also at the EU-level. (..) we find that the structure of the large banking centres in the EU tends to be well balanced. C & E European countries are highly dependent on a few W European banks, and the Nordic and Baltic (is) interwoven without much diversification. At the system-level, the EU – in contrast to other regions – is poorly diversified (plus) overexposure to the US. (..) [given need to manage systemic risks in setting macro policy] requires a partial reversal from strict inflation targeting (..) even though financial stability is an important prerequisite for effective monetary policy. (..) One such risk [that cross-border banks are prone to is] that in times of crisis, the prices of assets may no longer reflect fundamental values (especially under) mark-to-market accounting. (..) (our recommendations focus) on solutions at the European – rather than the national – level. (..)the only real alternative to this is to require cross-border banks to organise themselves as a string of national stand-alone subsidiaries, which foregoes the significant benefits of having a single market in the EU. -- downloaded pdf to Note
report  EU  Eurozone  financial_system  financial_regulation  financial_crisis  risk-systemic  banking  cross-border  regulation-harmonization  macroprudential_policies  macroprudential_regulation  macroeconomics  fiscal_policy  taxes  corporate_tax  shadow_banking  downloaded  EF-add 
november 2014 by dunnettreader
Thorsten Beck, W Wagner, PR Lane, D Schoenmaker, E Carletti, F Allen - CEPR Report: Cross-Border Banking in Europe: Implications for Financial Stability and Macroeconomic Policies (June 2011) | VOX, CEPR’s Policy Portal
This CEPR report argues that policy reforms in micro- and macro-prudential regulation and macroeconomic policies are needed for Europe to reap the important diversification and efficiency benefits from cross-border banking, while reducing the risks stemming from large cross-border banks. Among the wishlist is removing tax preferences for debt over equity. -- see related VoxEU bookmark to executive summary as a VoxEU article -- downloaded pdf to Note
report  EU  Eurozone  financial_system  financial_regulation  financial_crisis  risk-systemic  banking  cross-border  regulation-harmonization  macroprudential_policies  macroprudential_regulation  macroeconomics  fiscal_policy  taxes  corporate_tax  shadow_banking  downloaded  EF-add 
november 2014 by dunnettreader
Nassim Nicholas Taleb, et al - The Precautionary Principle (with Application to the Genetic Modification of Organisms) | arxiv.org - Oct 2014 [1410.5787]
Nassim Nicholas Taleb, Rupert Read, Raphael Douady, Joseph Norman, Yaneer Bar-Yam -- Abstract -- We present a non-naive version of the Precautionary (PP) that allows us to avoid paranoia and paralysis by confining precaution to specific domains and problems. PP is intended to deal with uncertainty and risk in cases where the absence of evidence and the incompleteness of scientific knowledge carries profound implications and in the presence of risks of "black swans", unforeseen and unforeseable events of extreme consequence. We formalize PP, placing it within the statistical and probabilistic structure of ruin problems, in which a system is at risk of total failure, and in place of risk we use a formal fragility based approach. We make a central distinction between 1) thin and fat tails, 2) Local and systemic risks and place PP in the joint Fat Tails and systemic cases. We discuss the implications for GMOs (compared to Nuclear energy) and show that GMOs represent a public risk of global harm (while harm from nuclear energy is comparatively limited and better characterized). PP should be used to prescribe severe limits on GMOs. -- see summary from arxiv Medium blog, saved via Instapaper
paper  risk  uncertainty  risk-systemic  biology  genetics  agriculture  GMOs  probability  precautionary_principle  risk-mitigation  global_system  EF-add 
october 2014 by dunnettreader
Jonathan Nitzan - Global Capital: Political Economy of Capitalist Power (YorkU, Graduate Seminar, Fall Term, 2014-15) | bnarchives
The seminar has two related goals: substantive and pedagogical. The substantive purpose is to tackle the question of capital head on. The course explores a spectrum of liberal and Marxist theories, ideologies and dogmas – as well as a radical alternative to these views. The argument is developed theoretically, historically and empirically. The first part of the seminar provides a critical overview of political economy, examining its historical emergence, triumph and eventual demise. The second part deals with the two ‘materialistic’ schools of capital – the liberal theory of utility and the Marxist theory of labour time – dissecting their structure, strengths and limitations. The third part brings power back in: it analyses the relation between accumulation and sabotage, studies the institutions of the corporation and the state and introduces a new framework – the capitalist mode of power. The final part offers an alternative approach – the theory of capital as power – and illustrates how this approach can shed light on conflict-ridden processes such as corporate merger, stagflation, imperialism and Middle East wars. Pedagogically, the seminar seeks to prepare students toward conducting their own independent re-search. Students are introduced to various electronic data sources, instructed in different methods of analysis and tutored in developing their empirical research skills. As the seminar progresses, these skills are used both to assess various theories and to develop the students’ own theoretical/empirical research projects. -- Keywords: arms accumulation capital capitalism conflict corporation crisis distribution elite energy finance globalization growth imperialism GPE liberalism Marxism military Mumford national interest neoclassical neoliberalism oil ownership peace power profit ruling class security stagflation state stock market technology TNC Veblen violence war -- syllabus and session handouts downloaded pdf to Note
bibliography  syllabus  capital_as_power  international_political_economy  political_economy  economic_theory  liberalism  neoliberalism  neoclassical_economics  Keynesian  Marxist  capital  capitalism  social_theory  power-asymmetric  globalization  financial_system  financial_regulation  risk-systemic  international_finance  finance_capital  financialization  production  distribution-income  distribution-wealth  inequality  MNCs  corporations  corporate_finance  corporate_ownership  corporate_control_markets  economic_growth  economic_models  imperialism  military  military-industrial_complex  IR_theory  ruling_class  class_conflict  energy  energy-markets  MENA  accumulation  accumulation-differential  capital_markets  public_finance  profit  investment  technology  elite_culture  elites-self-destructive  capitalism-systemic_crisis  Veblen  Mumford  downloaded  EF-add 
october 2014 by dunnettreader
Bichler, Shimshon and Nitzan, Jonathan - The Asymptotes of Power - Real-World Economics Review. No. 60. June 2012. pp. 18-53 | bnarchives
Article workup of earlier conference paper -- This is the latest in a series of articles we have been writing on the current crisis. The purpose of our previous papers was to characterize the crisis. We claimed that it was a 'systemic crisis', and that capitalists were gripped by 'systemic fear'. In this article, we seek to explain why. The problem that capitalists face today, we argue, is not that their power has withered, but, on the contrary, that their power has increased. Indeed, not only has their power increased, it has increased by so much that it might be approaching its asymptote. And since capitalists look not backward to the past but forward to the future, they have good reason to fear that, from now on, the most likely trajectory of this power will be not up, but down. The paper begins by setting up our general framework and key concepts. It continues with a step-by-step deconstruction of key power processes in the United States, attempting to assess how close these processes are to their asymptotes. And it concludes with brief observations about what may lie ahead. -- Keywords: capitalization distribution power, systemic crisis -- Subjects: BN Money & Finance, BN Conflict & Violence, BN Distribution, BN Resistance, BN Power, BN Region - North America, BN Business Enterprise, BN Capital & Accumulation, BN Value & Price, BN Class, BN Crisis -- downloaded pdf to Note, also Excel data sheet
article  international_political_economy  capital_as_power  financial_system  international_finance  global_economy  global_system  ruling_class  transnational_elites  elite_culture  elites-self-destructive  globalization  power-asymmetric  Great_Recession  financial_crisis  finance_capital  financialization  distribution-income  distribution-wealth  profit  labor_share  risk-systemic  inequality  plutocracy  1-percent  conflict  violence  class_conflict  neoliberalism  corporate_citizenship  systems-complex_adaptive  systems_theory  grassroots  opposition  democracy  democracy_deficit  accumulation  capitalization  US_politics  US_economy  political_economy  political_culture  economic_culture  elites  rebellion  failed_states  property_rights  business-and-politics  business-norms  economic_growth  fear  data  capitalism-systemic_crisis  downloaded  EF-add 
october 2014 by dunnettreader
Sunanda Sen - The Meltdown of the Global Economy: A Keynes-Minsky Episode? - Working Paper No. 623 | Levy Economics Institute | September 2010
The paper begins with some theoretical concerns relating to factors that could trigger a crisis similar to the global economic crisis that began in 2008. The first concern relates to the deregulated financial institutions and the growing uncertainty that can be witnessed in these liberalized financial markets. The second relates to financial engineering with innovations in these markets, simultaneously providing cushions against risks while generating flows of liquidity that remain beyond the conventional sources of bank credit. Interpreting the role of uncertainty, one can observe the connections between investment and finance, both of which are subject to changes in the state of expectations. The initial formulation can be traced back to Keynes’s General Theory, where liquidity preference is linked to asset prices and new investments. The Keynesian analysis was reformulated in 1986 by Minsky, who introduced the possibility of sourcing external finance through debt, which further adds to the impact of uncertainty. Minsky’s characterization of deregulated financial markets considers the newfangled sources of nonbank credit, especially with the involvement of banks in the securities market under the universal banking model. As for the institutional arrangements that provide for profits on transactions, financial assets bought and sold in the primary market as initial public offerings of stocks are usually transacted later, in the secondary market, where these are no longer backed by physical assets.In the upswing, finance creates a myriad of financial claims and liabilities, and thus becomes increasingly remote from the real economy, while innovations to hedge and insulate assets continue to proliferate in the financial market, especially in the presence of uncertainty. The paper looks especially at the US. This is appended by a stylized account of the turn of events in terms of a theoretical model that highlights the role of uncertainty in the process. -- Associated Program: Monetary Policy and Financial Structure -- downloaded pdf to Note
paper  economic_theory  financial_crisis  bubbles  Great_Recession  financial_system  finance_capital  financialization  financial_innovation  banking  financial_regulation  derivatives  risk  risk-systemic  uncertainty  expectations  capital_markets  NBFI  intermediation  speculative_finance  securitization  Glass-Steagal  investment  investors  asset_management  real_economy  real_estate  Keynes  liquidity  Minsky  credit  debt  deleverage  leverage  asset_prices  banking-universal  disintermediation  money_market  Ponzi_finance  IPOs  secondary_markets  fragility  resilience  downloaded  EF-add 
october 2014 by dunnettreader
Coppola Comment: Debt hysteria - September 30, 2014
The global debt glut described in the Geneva 16 report, and the global saving glut described by Bernanke, are the same thing. The authors note that growth has been slowing in developed countries since 1980. Indeed it has - and during that time capital ownership and indebtedness have been increasing in tandem, as we might expect since they are opposite sides of the same coin. The report cites numerous analyses that show high debt levels - public AND private - tending to impede growth as resources that could have been turned to productive investment are spent on debt service. Secular stagnation is as much a consequence of over-indebtedness as it is of excess capital. -- When the private sector is highly indebted, saving can take the form of paying off debt. If the government runs a surplus, therefore, it impedes deleveraging in the private sector, and may even force some sectors (typically the poor) to increase debt. Reducing the sovereign debt not only reduces saving in the private sector, it comes at the price of continued and possibly rising indebtedness. The report rightly notes that transferring debt from the private to the public sector, as the US has done, isn't deleveraging. But transferring it back again isn't deleveraging either. And as transferring it back again is likely only to be possible with extensive sovereign guarantees (the UK's Help to Buy, for example), whose debt is it really, anyway? Reports such as this, that look on debt as a problem and ignore the associated savings, fail to address the real issue. The fact is that households, corporations and governments like to have savings and are terrified of loss. Writing down the debt in which people invest their savings means that people must lose their savings. THIS is the real "shock, horror". This is what people fear when they worry about a catastrophic debt default. This is what the world went to great lengths to prevent in 2008. The problem is not the debt, it is the savings.
global_imbalance  global_economy  international_political_economy  international_finance  savings  investment  institutional_investors  debt  debt-restructuring  debtors  credit  creditors  equity  equity-corporate  sovereign_debt  default  risk  risk-systemic  inflation  austerity  economic_growth  stagnation  OECD_economies  emerging_markets  banking  capital_markets  capital_adequacy  government_finance  leverage  deleverage  property_rights  pensions  interest_rates  Evernote 
october 2014 by dunnettreader
Rhodium Group » American Climate Prospectus: Economic Risks in the US - Risky Business Project Report - June 24, 2014 (updated August)
Trevor Houser, Robert Kopp, Solomon Hsiang, Michael Delgado, Amir Jina, Kate Larsen, Michael Mastrandrea, Shashank Mohan, Robert Muir-Wood, DJ Rasmussen, James Rising, and Paul Wilson -- The US faces a range of economic risks from global climate change — from increased flooding and storm damage, to climate-driven changes in crop yields and labor productivity, to heat-related strains on energy and public health systems. The American Climate Prospectus (ACP) provides a groundbreaking new analysis of these and other climate risks by region of the country and sector of the economy. By linking state-of-the-art climate models with econometric research of human responses to climate variability and cutting edge private sector risk assessment tools, the ACP offers decision-makers a data driven assessment of the specific risks they face. The ACP is the result of an independent assessment of the economic risks of climate change commissioned by the Risky Business Project. In conducting this assessment, RHG convened a research team, co-led by climate scientist Dr. Robert Kopp of Rutgers University and economist Dr. Solomon Hsiang of the University of California, Berkeley, and partnered with Risk Management Solutions (RMS), the world’s largest catastrophe-modeling company for insurance, reinsurance, and investment-management companies. The team’s research methodology and draft work was reviewed by an Expert Review Panel (ERP) composed of leading climate scientists and economists, acknowledged within the report. The ACP was released on June 24, 2014 alongside a Risky Business summary -- American Climate Prospectus: Economic Risks in the United States (complete report, updated August 2014, 23.2 mb)
US_economy  climate  risk  risk-systemic  risk-mitigation  climate-adaptation  insurance  downloaded  EF-add 
september 2014 by dunnettreader
Edward J. Kane -The Flummery of Capital-Requirement Repairs Since The Crisis | The Institute for New Economic Thinking - September 16, 2014
Government safety nets give protected institutions an implicit subsidy and intensify incentives for value-maximizing boards and managers to risk the ruin of their firms. Standard accounting statements do not record the value of this subsidy and forcing subsidized institutions to show more accounting capital will do little to curb their enhanced appetite for tail risk. This paper proposes new accounting and ethical standards that would reclassify the legal status of the financial support a firm receives from the safety net and record it as an equity investment. The purpose is to recognize statutorily that a safety net is a contract that promises to deliver loss-absorbing equity capital to firms at times when no other investors will. The explicit recognition of the public's stakeholder interest in economically, politically, and administratively difficult-to-unwind firms is a first and necessary step toward assigning to their managers enforceable fiduciary duties of loyalty, competence, and care towards taxpayers. These duties are meant to parallel those that managers owe to shareholders, including the right to share in the firm’s profits and to receive information relevant for assessing their investment. The second step in this process is to change managerial behavior: to implement and enforce a series of requirements and penalties that can lead managers to measure and record on the balance sheet of each subsidized firm – as a special class of equity – the capitalized value of the safety-net subsidies it receives from its “taxpayer put.” -- and by defining a class of particularly vexing acts of safety-net arbitrage as criminal theft. -- downloaded pdf to Note
paper  law-and-economics  law-and-finance  corporate_governance  financial_system-government_back-stop  too-big-to-fail  financial_regulation  subsidies-financial_institutions  fiduciaries  accounting  risk-systemic  risk-mitigation  financial_crisis  bailouts  leverage  capital_adequacy  Basle  downloaded  EF-add 
september 2014 by dunnettreader
Eyes on Trade: A Deal Only Wall Street Could Love | Public Citizen - December 2013
Last week, US financial regulators took a step toward reining in some of the Wall Street risk-taking that led to the financial crisis by finalizing the Volcker Rule, designed to stop banks from engaging in risky, hedge-fund-like bets for their own profit. But this week, EU and US trade negotiators could move in the opposite direction, pursuing an agenda that could thwart such efforts to re-regulate Wall Street. Negotiators from both sides of the Atlantic are converging in Washington, D.C. this week for a third round of talks on the Trans-Atlantic Free Trade Agreement (TAFTA). What is TAFTA? A “trade” deal only in name, TAFTA would require the United States and EU to conform domestic financial laws and regulations, climate policies, food and product safety standards, data privacy protections and other non-trade policies to TAFTA rules. We profiled recently the top ten threats this deal poses to U.S. consumers. One area of particular concern is how TAFTA's expansive agenda implicates regulations to promote financial stability. Here's a synopsis. -- professionally done eviseration with lots of links
US_politics  US_economy  US_foreign_policy  Obama_administration  Congress  trade-policy  trade-agreements  EU  EU-foreign_policy  international_political_economy  global_governance  international_finance  financial_regulation  Transatlantic_Trade_and_InvestmentPartnership  FDI  banking  capital_markets  NBFI  shadow_banking  asset_management  derivatives  leverage  risk-systemic  financial_crisis  central_banks  macroprudential_regulation  too-big-to-fail  regulation-harmonization  cross-border  MNCs  tax_havens  investor-State_disputes  law-and-finance  administrative_law  race-to-the-bottom  lobbying  big_business  EF-add 
september 2014 by dunnettreader
TTIP: EU proposal will weaken regulation of banks | Corporate Europe Observatory - July 2014
A leaked document shows the EU Commission is spearheading a campaign for the interests of the financial sector at the negotiations with the US on a free trade and investment agreement (TTIP). The result could endanger reforms made since the financial crisis, and invoke another era of risky deregulation. The EU is going for a trade deal with the US that will weaken financial regulation on both sides of the Atlantic. That is the conclusion of Corporate Europe Observatory (CEO) and SOMO after taking a close look at the leak of a confidential EU proposal tabled at the negotiations by the European Commission in March 2014. The document follows long discussions between the EU and the US about whether the Transatlantic Trade and Investment Partnership (TTIP) is to include a specific mechanism on financial regulation. So far, the US has declined, allegedly out of fear that such a mechanism would weaken existing financial regulation and prevent future such reforms. -- downloaded pdf of leaked negotiating document to Note
Transatlantic_Trade_and_InvestmentPartnership  EU_governance  EU-foreign_policy  financial_regulation  regulation-harmonization  banking  derivatives  NBFI  shadow_banking  capital_markets  risk-systemic  international_political_economy  international_finance  trade-agreements  trade-policy  downloaded  EF-add 
september 2014 by dunnettreader
Sovereign ratings investigation - ESMA’s assessment of governance, conflicts of interest, resourcing adequacy and confidentiality controls (February 2013) | Esma
This report summarises the findings of the ESMA general investigation into sovereign credit ratings issued by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s which took place between February and October 2013, as indicated in its Credit Rating Agencies (CRAs) 2013 Supervision and Policy Work Plan. ESMA describes the observed deficiencies and main concerns while also identifying a number of good practices in the following areas: • the role of senior management and other non-rating functions in the rating process and the actual or potential conflicts of interest which could arise; • the actual or potential conflicts of interests generated by the involvement of sovereign analysts in research and publication activities; • confidentiality of sovereign rating information and controls in place prior to publication of ratings (including IT and access controls to confidential information); • timing of publication of sovereign ratings, including timely disclosure of rating changes; • monitoring of the adequacy and expertise of resources dedicated to sovereign ratings; • preparation of rating committees; and • definitions of roles and responsibilities among different analytical functions. ESMA’s investigation revealed shortcomings in the sovereign ratings process which could pose risks to the quality, independence and integrity of the ratings and of the rating process. As of the date of this document, ESMA has not determined whether any of the observations made in this report constitute serious possibilities of facts likely to constitute infringements of the CRA Regulation. -- didn't download
report  EU  ESMA  financial_system  financial_regulation  international_finance  sovereign_debt  rating_agencies  conflict_of_interest  internal_controls  risk-systemic 
september 2014 by dunnettreader
ESMA website section - Market Infrastructure - Central Counterparties | ESMA
EMIR introduces a harmonised set of organisational, business conduct and prudential requirements for clearing service providers. CCPs interpose themselves between counterparties to a derivative contract, becoming the buyer to every seller and the seller to every buyer. In doing so, CCPs become the focal point for derivative transactions thus increasing market transparency and reducing the risks inherent in derivatives markets. National securities regulators are responsible for the authorisation of EU-based CCPs. For each EU-based CCP a college of supervisors will be established made up of relevant national regulators and ESMA. A non-EU CCP needs to be recognised by ESMA to offer clearing services to EU customers. Prior to recognition the EC must adopt an implementing act determining, amongst other issues, that the legal and supervisory arrangements of the relevant non-EU country imposes legally binding requirements which are equivalent to those contained in Title IV of EMIR. For some jurisdictions ESMA has assessed whether non-EU country legislation meets the EMIR standard through ESMA technical advice to the EC on which to base its decision. ESMA does not actively supervise non-EU CCPs, but following recognition defers to the non-EU CCP’s home supervisor to undertake the day-to-day supervision. ESMA’s role in this respect is that of a standard-setter who further clarifies the CCP provisions under EMIR.
website  EU  EU-law  ESMA  financial_system  financial_regulation  international_finance  market_integration  risk-systemic  derivatives  infrastructure-markets  markets-structure  clearing_&_settlement  liability  regulation-harmonization  regulation-enforcement  cross-border  law-and-finance 
september 2014 by dunnettreader
ESMA website section - Trade repositories | Esma
Trade repositories (TRs) centrally collect and maintain the records of derivatives. They play a central role in enhancing the transparency of derivative markets and reducing risks to financial stability. Under EMIR, ESMA has direct responsibilities regarding the registration, supervision and recognition of TRs based outside the EU. EU-based TRs need to be authorised, and third country (non-EU) based TRs which are doing business in the EU need to be recognised by ESMA, in order for counterparties to use them for their EMIR reporting requirements. Once registered, the TR will be supervised by ESMA in order to ensure that it complies on an on-going basis with all EMIR requirements, thereby enabling regulators to access to data and details of derivative contracts in order for them to fulfil their respective missions. Besides supervising TRs, ESMA also acts as a standard-setter by further detailing the EMIR provisions regarding TRs.
website  EU  ESMA  financial_system  financial_regulation  derivatives  markets-structure  market_integration  risk-systemic  infrastructure-markets  cross-border 
september 2014 by dunnettreader
ESMA website section - Markets/ Post-trading and Settlement (SFD, CSDR, T2S) | ESMA
ESMA’s main roles in the post-trading area are implementing regulations on the EU’s markets infrastructure (EMIR) and central securities depositories (CSDR), co-ordinating issues such as settlement discipline and Target2-Securities (T2S), and providing information on the Settlement Finality Directive (SFD). **--** Section 1 - Clearing and reporting (EMIR), which covers ** Trade reporting ** Trade repositories (TRs) ** OTC derivatives and clearing obligation. ** Central Counterparties (CCPs) ** Non-financial counterparties (NFCs) ** Third (non-EU) countries **--** Section 2 - Settlement (SFD, CSDR, T2S), which covers ** Central securities depositories regulation (CSDR) ** Settlement Finality Directive (SFD) ** Target2-Securities (T2S)
website  EU  ESMA  financial_system  financial_regulation  risk-systemic  capital_markets  money_market  OTC_markets  clearing_&_settlement  markets-structure  infrastructure-markets  payments_systems  cross-border  NBFI  derivatives  equity-corporate  debt  macroprudential_regulation 
september 2014 by dunnettreader
Steven Maijoor, ESMA Chair, Keynote Speech - IBA Conference on the Globalisation of Investment Funds (Paris June 2014) | ESMA
A keynote address to the International Bar Association's 25th Annual Conference on the Globalisation of Investment Funds. The speech focused on concentrated on potential financial stability risks linked to the phenomenon of "too big to fail" and the fund management industry and also on policy developments affecting the fund management industry. **--* Excerpt -- "Addressing potential systemic risks in asset management will be an important part of our work going forward. As we develop our insights into the risks in the industry, it is clear that asset management has a specific profile that sets it apart from banking and other financial activities. This implies that the lens through which we see stability risks in banking and insurance, might not be the right one for asset management. Our proposal in this debate, therefore, is that in addition to looking at individual institutions, we must include in our analysis the very different types of activities of the asset management sector and their interdependence with systemic risks in the wider financial market." -- downloaded pdf to Note
speech  EU  ESMA  financial_system  financial_regulation  risk-systemic  capital_markets  money_market  financial_crisis  liquidity  intermediation  NBFI  shadow_banking  asset_management  banking  insurance  investors  concentration-industry  too-big-to-fail  bailouts  cross-border  regulation-harmonization  contagion  downloaded  EF-add 
september 2014 by dunnettreader
ESMA Working Paper 2 - The systemic dimension of hedge fund illiquidity and prime brokerage (June 2014) | ESMA
We analyse the potentially vulnerable and systemically relevant financial intermediation chain established by hedge funds and prime brokers. Our dataset covers the 306 largest global hedge funds and their prime brokers over the period July 2001 to December 2011. The study illustrates that hedge funds and prime brokers act as complementary trading partners in normal times. However, we observe that this form of financial intermediation may be severely impaired in times of market distress. This can be explained by the hoarding of liquid securities by prime brokers who are eager to avert runs by their clients. -- downloaded pdf to Note
paper  EU  ESMA  financial_system  financial_regulation  risk-systemic  capital_markets  money_market  financial_crisis  liquidity  intermediation  hedge_funds  markets-structure  NBFI  shadow_banking  OTC_markets  downloaded  EF-add 
september 2014 by dunnettreader
ESMA Working Paper 1 - Monitoring the European CDS market through networks: Implications for contagion risks (June 2014) | Esma
Based on a unique data set referencing exposures on single name credit default swaps (CDS) on European reference entities, we study the structure and the topology of the European CDS market and its evolution from 2008 to 2012, resorting to network analysis. The structural features revealed show bilateral CDS exposures describing growing scale-free networks whose highly interconnected hubs constitute both a strength and weakness for the stability of the system. The potential “super spreaders” of financial contagion, identified as the most interconnected participants, consist mostly of banks. For some of them net notional exposures may be particularly large relative to their total common equity. Our findings also point to the importance of some non-dealer/non-bank participants belonging to the shadow banking system. -- downloaded pdf to Note
paper  EU  ESMA  financial_system  financial_regulation  derivatives  markets-structure  risk-systemic  networks  networks-financial  capital_markets  NBFI  shadow_banking  OTC_markets  banking 
september 2014 by dunnettreader
Trends, risks and vulnerabilities in financial markets - Annual Reports and Working Papers | ESMA
In order to safeguard financial stability it is necessary to identify, at an early stage, trends, potential risks and vulnerabilities stemming from the micro-prudential level, across borders and across sectors. Thereby particular attention is paid to any systemic risk posed by financial market participants, failure of which may impair the operation of the financial system or the real economy. ESMA monitors and assesses such developments in the area of its competence and, where necessary, informs the European Parliament, the Council, the Commission, the other European Supervisory Authorities and the ESRB on a regular and, as necessary, on an ad hoc basis. In cooperation with the ESRB, ESMA also initiates and coordinates Union-wide stress tests to assess the resilience of financial market participants to adverse market developments, and ensures that an as consistent as possible methodology is applied at the national level to such tests. In order to perform its functions properly, ESMA conducts economic analyses of the markets and the impact of potential market developments. On this basis, ESMA produces annually two reports on risk, trends and vulnerabilities.
report  paper  EU  ESMA  financial_system  financial_regulation  banking  NBFI  capital_markets  money_market  risk-systemic  markets-structure  market_integration  cross-border 
september 2014 by dunnettreader
Network for Sustainable Financial Markets | Home
The Network for Sustainable Financial Markets is an International, non-partisan network of finance sector professionals, academics and others who have an active interest in long-term investing. We believe that the recurring crises recently experienced in our financial markets are not isolated incidents. Rather, this instability is evidence that the financial market system is in need of well thought-out reform so that it can better serve its core purpose of creating long-term sustainable value. Our primary concern today is not that reform efforts will result in the adoption of too much or too little regulation. Rather, we see the greatest peril as inappropriate regulation and governance reforms that fail to address the real causes of financial market instability. While increased transparency, better risk management, additional liquidity and other surface fixes might address the current symptoms, they are not enough to resolve underlying systemic problems. Delay will only make things worse since failure to deal with these deep-rooted design flaws can only mean repetitive, deepening crises with growing economic and social destabilisation. The time to act is now. The Network’s goal is to foster interdisciplinary collaboration on research and advocacy projects between market professionals, academics and other opinion-leaders. We seek to fill the gaps between existing initiatives, to engage on problems which have received attention but have not still been solved and also to involve many more opinion-shapers than has previously been the case. We also intend that the Network be time-limited – our ultimate goal is to embed the Network’s guiding principles into the approaches used by other entities involved in research and public policy, then dissolve. -- connected to Climate Bond Initiative
website  financial_system  financial_crisis  financial_regulation  financial_innovation  financial_sector_development  reform-finance  green_finance  investors  corporate_governance  corporate_finance  capital_markets  banking  international_finance  international_monetary_system  risk-systemic  standards-sustainability  disclosure  accounting 
september 2014 by dunnettreader
Alex Rosenberg - Paul Krugman’s Philosophy of Economics, and What It Should Be » 3:AM Magazine
All the New Classical economists need to defend the dominant “paradigm” in economics against Krugman and other dissenters are the tools he grants them—maximization and equilibrium. -- Rosenberg then goes into Keynes, Knight, Soros re uncertainty and reflexivity. Comes up with too strong a conclusion that since economics is an historical science, you can't make predictions. But there's a big difference between predictions of a long term outcome, or even a specific business cycle and yet have history-confirmed principles that, e.g. fiscal policy should be countercyclical or that a balance sheet recession is unlikely to push prices up, and monetary policy loses traction so it's not going to generate inflation, or a monetary union without a fiscal union and consolidated banking regulation is likely to blow up. Worse, Rosenberg is reiterating the false myth that the Keynesian thinking couldn't explain the 1970s and the New Classicals could. History contradicts the macro implications of EMH, Ricardian equivalence, RBC, etc. Actually it was Friedman monetarism that "explained" the 1970s, and when Friedman theory was attempted in the 1980s it had to be abandoned since it simply didn't work. The New Classicals were initially along for the monetarism ride and consolidated ideologically in academia by ignoring real world failures, which were relatively unimportant during the Great Moderation which they claimed to have produced or at least understood.
economic_history  intellectual_history  economic_theory  macroeconomics  microfoundations  neoclassical_economics  Keynesian  political_economy  philosophy_of_social_science  methodology  monetarism  monetary_policy  fiscal_policy  causation-social  mechanism  systems_theory  complexity  risk-systemic  uncertainty  probability 
september 2014 by dunnettreader

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