Carbon Pricing
What is the best way to address climate change? If too much carbon is released in the air, how can emissions be reduced? By regulating corporations or by imposing costs on consumers in the form of a carbon tax? Moreover, even if a solution is found, not all nations, and not all people within nations, will agree on how to tackle the problem. In the words of Professor Barry Rabe, author of Can We Price Carbon? “Compelling ideas from economics do not necessarily suspend the laws of politics.” On May 4, 2023, Jessica Green, professor of political science at University […]
Heated Exchange
Climate-related natural disasters are increasing in frequency and severity and costs. Since climate change is not equal across countries, how does a country’s exchange rate respond to such shocks? Furthermore, is it possible to build an economic model to predict future changes? On April 6, 2023, Galina Hale, professor of economics at the University of California at Santa Cruz, delivered a webinar about the effect of climate change on exchange rates. This was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. She reported results from […]
Transforming Healthcare
Great strides have been made in medical treatments, pharmaceuticals and drug therapies, and patient recordkeeping – many of them by for-profit companies. How has the recent advent of Covid-19 shaped these developments? Last week, Pfizer was the first to announce a Covid-19 vaccine candidate. What new financial opportunities await? Three panellists convened on November 17, 2020, to discuss the transformation of healthcare, in a webinar sponsored by the Canadian Association of Alternative Strategies & Assets (CAASA). CAASA is a trade association representing alternative investment managers, service providers, and investors. The panel was moderated by Dr. Ted Witek, Health Care Advisor […]
Shadow Banking in China
Shadow banking has enjoyed extraordinary growth over the past decade, especially in the emerging markets of China. The implications were discussed in the webinar “Shadow Banking: Standing at the Precipice?” sponsored by the Global Association of Risk Professionals (GARP) on August 6, 2019. Cindy Li, a Greater China analyst of the Federal Reserve Bank of San Francisco, was the second of two speakers at the one-hour GARP webinar. She said the shadow banking system in China has evolved to a fairly large group of powerful competitors, but that has led to “a build-up of risk” as China’s economic growth slows down. First, […]
Standing at the Precipice?
What is shadow banking, and are the associated risks being properly mitigated? A summary of issues can be found in the webinar “Shadow Banking: Standing at the Precipice?” sponsored by the Global Association of Risk Professionals (GARP) on August 6, 2019. Fabio Natalucci, Deputy Director, Monetary and Capital Markets Department of the International Monetary Fund (IMF), was the first of two speakers at the one-hour webinar. He began by explaining that the shadow banking system prefers to be thought of in “less sinister” terms as “non-bank financial intermediaries” that provide services similar to, but outside of, the regular banking system. He described […]
Geopolitical Risk
What’s with Russia and cyber-hacking? How did it happen, and why? Geopolitical risk threatens the very fundamentals of market stability and the world order. The Global Association of Risk Professionals treated its members to a “big picture” risk topic during the webinar on November 1, 2017. Former senior US intelligence officer Jack Thomas Tomarchio, who is now a principal with the Agoge Group, LLC, described the current geopolitical risk due to Russian cyber-attacks. “Russia was declared to be responsible for leaks at the Democratic National Convention in 2016,” Tomarchio said. “The DNC is supposed to be neutral, but the leaks […]
Currency Option Trading Strategies
Throughout 2015 currency volatility has been increasing, even among established currencies such as the Swiss franc. Persistent exchange rate volatility can be an especially serious problem for currencies of emerging economies. Central banks often intervene by using foreign exchange reserves to purchase and sell foreign currency directly in the spot market. This relies on the continuous accumulation of foreign exchange reserves, which may be very difficult for emerging economies. How, then, can the central banks of such nations best manage currency fluctuations? In 2007-8, when the Colombian peso exchange rate was volatile, the Colombian central bank tried various strategies in […]
When Data Is Sparse. Part 2
It’s difficult to model sovereign credit risk for emerging markets using structural models such as the Merton model because “calibration is always an issue,” said Rob Stamicar, Senior Director of Research in Multi-Asset Class Risk Management at Axioma, continuing a theme during the second half of his webinar on December 2, 2014. During the first half, he showed how the probability of default can be used as a common link among the asset classes of interest (bonds, swaps, and equities). In the second half, he focused more on sovereign credit risk. Calculation of sovereign risk could be done directly, “but […]
When Data Is Sparse. Part 1
When modelling risk in emerging markets, are you hampered by sparse data? “Relationships between different asset classes can help measure the sovereign risk in emerging markets,” said Rob Stamicar, Senior Director of Research in Multi-Asset Class Risk Management at Axioma. He was sole presenter at a webinar on December 2, 2014, sponsored by the Global Association of Risk Professionals. When modelling global multi-asset class portfolios, “aggregation can be challenging,” said Stamicar, because the FX rates must also be taken into consideration—the subject for another day. His talk focussed on three asset classes: equity, fixed income, and credit portfolios. Infrequent data, […]
Europe: Is the worst over? Part II.
“Deleveraging takes a long time, and it is painful,” said Philippe Ithurbide, Global Head of Research, Analysis and Strategy at Amundi Asset Management. In the second part of his presentation to the CFA Society Toronto on November 19, 2013, he discussed solutions to European financial difficulties. Deleveraging must be helped along in order to shorten the time and reduce negative socioeconomic impacts. “Never in history have we seen the deleveraging of all the players at the same time.” “Banking credit is faltering everywhere in the euro zone,” said Ithurbide. Euro zone bank credit is still highly fragmented by nation, with […]