Monetary policy and risk taking. Bruegel Working Paper 2010/00, February 2010

We assess, through VAR evidence, the effects of monetary policy on banks’ risk exposure and find the presence of a risk-taking channel. A model combining fragile banks prone to risk mis-incentives and credit constrained firms, whose collateral fluctuations generate a balance sheet channel, is used to rationalize the evidence. A monetary expansion increases bank leverage. With two consequences: on the one side this exacerbates risk exposure; on the other, the risk spiral depresses output, therefore dampening the conventional amplification effect of the financial accelerator. Keywords: monetary policy, bank behavior, leverage, financial accelerator.

Asset-backed securities: The key to unlocking Europe's credit markets? Bruegel Policy Contribution 2014/07, 24 July 2014

The European market for asset-backed securities (ABS) has all but closed for business since the start of the economic and financial crisis. ABS (see Box 1) were in fact the first financial assets hit at the onset of the crisis in 2008. The subprime mortgage meltdown caused a deterioration in the quality of collateral in the ABS market in the United States, which in turn dried up overall liquidity because ABS AAA notes were popular collateral for inter-bank lending. The lack of demand for these products, together with the Great Recession in 2009, had a considerable negative impact on the European ABS market. The post-crisis regulatory environment has further undermined the market. The practice of slicing and dicing of loans into ABS packages was blamed for starting and spreading the crisis through the global financial system. Regulation in the post-crisis context has thus been relatively unfavourable to these types of instruments, with heightened capital requirements now necessary for the issuance of new ABS products. And yet policymakers have recently underlined the need to revitalise the ABS market as a tool to improve credit market conditions in the euro area and to enhance transmission of monetary policy. In particular, the European Central Bank and the Bank of England have jointly emphasised that: “a market for prudently designed ABS has the potential to improve the efficiency of resource allocation in the economy and to allow for better risk sharing... by transforming relatively illiquid assets into more liquid securities. These can then be sold to investors thereby allowing originators to obtain funding and, potentially, transfer part of the underlying risk, while investors in such securities can diversify their portfolios... . This can lead to lower costs of capital, higher economic growth and a broader distribution of risk” (ECB and Bank of England, 2014a). In addition, consideration has started to be given to the extent to which ABS products could become the target of explicit monetary policy operations, a line of action proposed by Claeys et al (2014). The ECB has officially announced the start of preparatory work related to possible outright purchases of selected ABS1. In this paper we discuss how a revamped market for corporate loans securitised via ABS products, and how use of ABS as a monetary policy instrument, can indeed play a role in revitalising Europe’s credit market. However, before using this instrument a number of issues should be addressed: First, the European ABS market has significantly contracted since the crisis. Hence it needs to be revamped through appropriate regulation if securitisation is to play a role in improving the efficiency of resource allocation in the economy. Second, even assuming that this market can expand again, the European ABS market is heterogeneous: lending criteria are different in different countries and banking institutions and the rating methodologies to assess the quality of the borrowers have to take these differences into account. One further element of differentiation is default law, which is specific to national jurisdictions in the euro area. Therefore, the pool of loans will not only be different in terms of the macro risks related to each country of origination (which is a ‘positive’ idiosyncratic risk, because it enables a portfolio manager to differentiate), but also in terms of the normative side, in case of default. The latter introduces uncertainties and inefficiencies in the ABS market that could create arbitrage opportunities. It is also unclear to what extent a direct purchase of these securities by the ECB might have an impact on the credit market. This will depend on, for example, the type of securities targeted in terms of the underlying assets that would be considered as eligible for inclusion (such as loans to small and medium-sized companies, car loans, leases, residential and commercial mortgages). The timing of a possible move by the ECB is also an issue; immediate action would take place in the context of relatively limited market volumes, while if the ECB waits, it might have access to a larger market, provided steps are taken in the next few months to revamp the market. We start by discussing the first of these issues – the size of the EU ABS market. We estimate how much this market could be worth if some specific measures are implemented. We then discuss the different options available to the ECB should they decide to intervene in the EU ABS market. We include a preliminary list of regulatory steps that could be taken to homogenise asset-backed securities in the euro area. We conclude with our recommended course of action.

North Caucasus: the Russian Gordian knot. The key problems and conflicts in the region and the effect thereof on the future of Russia; Putin after re-election: The Kremlin's policy in Vladimir Putin's second term. OSW Study 16/2004

North Caucasus: North Caucasus is the most instable part of the Russian Federation: since the early 90's, there has been going on the military conflict in Chechnya, which is gradually spilling over into the other republics of the region, terrorism seems to have occupied its regular position in the political life of Caucasus, organized crime is flourishing, the tension persists there and military incidents and attacks are breaking out every now and again. During the recent year, the destabilization of the region, which affects many fields of Russian political and social life, has grown to an alarming size. Putin after re-election: Vladimir Putin's first term as President was a period of submitting political, regional and economic lobbies to the Kremlin. The actions Putin has taken since being re-elected are aimed at consolidating the Kremlin's control over the political, economic and social spheres. Further liquidation of political and informational pluralism, an increase of the ruling group's control over state and private property, and an intensification of state propaganda aimed at generating social support for the Kremlin's initiatives have all proceeded apace. These processes reinforce authoritarian tendencies and strengthen the emerging monocentric political system, with the President's strong domination over political, economic and social life.

Agricultural and Rural Capital Markets in the EU Candidate Countries: Croatia, the Former Yugoslav Republic of Macedonia and Turkey. Factor Markets Working Paper No. 8, October 2011

This paper analyses agricultural and rural capital factor markets in the three European Union candidate countries: Croatia, the Former Yugoslav Republic (FYR) of Macedonia and Turkey. Aggregate capital market indicators and their dynamics, and factors driving agricultural and rural capital markets are analysed and compared in these countries. In general, agricultural and rural capital markets show similarities with general capital market developments, but agricultural and rural capital markets are facing specific credit constraints related to agricultural assets and rural fixed asset specificities, which constrain their mortgages and collateral use. Credit market imperfections have limited access to the investment credits necessary for the restructuring of small-scale individual farms. Government transfers are used to differing extents in the candidate countries, but generally tend to increase over time. Remittances and donor funds have also played an important role in agricultural and rural economy investments.

Answering the Call of the European Court of Justice in Eurofoods a Proposed Package of Due Process Rights with a View Toward the 2012 Revision of the European Insolvency Regulation. IES WORKING PAPER 3/2011

This paper anticipates the 2012 revision of the European Insolvency Regulation, which is the sole Union legislation on the subject of cross border insolvency proceedings. The paper first describes the historical background of the Regulation. The salient point of the historical discussion is that the Regulation is the product of forty years of negotiation and arises from a historical context that is no longer applicable to current economic realities, i.e. it provides for liquidation, not reorganization, it doesn’t deal with cross border groups of companies, and it lacks an effective mechanism for transparency and creditor participation. The paper then reviews the unique hybrid jurisdictional system of concurrent universal and territorial proceedings that the Regulation imposes. It looks at this scheme from a practical viewpoint, i.e. what issues arise with concurrent proceedings in two states, involving the same assets, the same creditors, and the same company. The paper then focuses on a significant issue raised by the European Court of Justice in the Eurofoods case, i.e. the need to comply with fundamental due process principles that, while not articulated in the Regulation, lie at the core of Union law. Specifically, the paper considers the ramifications of the Court’s holding that “a Member State may refuse to recognize insolvency proceedings opened in another Member State where the decision to open the proceedings was taken in flagrant breach of the fundamental right to be heard.” In response to the Court’s direction, this paper proposes a package of due process rights, consisting principally of an accessible, efficient and useful insolvency database, the infrastructure of which already exists, but the content and use of which has not yet been developed. As part of a cohesive three part due process package, the paper also proposes the formation of cross border creditors' committees and the establishment of a European Insolvency Administrator. Finally, on the institutional level, this paper proposes that the revision of the Regulation and the development of the insolvency database not only need to be coordinated, but need to be conceptualized, managed and undertaken, not as the separate efforts of diverse institutions, but as a single, unified endeavor.

Banks at the Service of the Economy? European Policy Brief No. 17, November 2013

This Policy Brief discusses a few simple measures to improve both the commercial and investment banking landscapes, with or without formal separation. Covering deposits with quality collateral would make them safer and would help create an easier guarantee and resolution mechanism at the larger eurozone level. Strong central counterparties and transparency requirements would improve market mechanisms and market discipline in capital markets and investment banking. Specific governance measures would also help improve the financial sector. Finally, a better control of bank solvency, together with improved capital market transparency and accessibility, should encourage the progressive deleveraging of commercial banks, and enhance the long term funding of the economy by capital markets.

The EU regime on biofuels in transport: Still in search of sustainability. Egmont Paper No. 68, July 2014

Like other regions of the world, the EU is developing biofuels in the transport sector to reduce oil consumption and mitigate climate change. To promote them, it has adopted favourable legislation since the 2000s. In 2009 it even decided to oblige each Member State to ensure that by 2020 the share of energy coming from renewable sources reached at least 10% of their final consumption of energy in the transport sector. Biofuels are considered the main instrument to reach that percentage since the development of other alternatives (such as hydrogen and electricity) will take much longer than expected. Meanwhile, these various legislative initiatives have driven the production and consumption of biofuels in the EU. Biofuels accounted for 4.7% of EU transport fuel consumption in 2011. They have also led to trade and investment in biofuels on a global scale. This large-scale expansion of biofuels has, however, revealed numerous negative impacts. These stem from the fact that first-generation biofuels (i.e., those produced from food crops), of which the most important types are biodiesel and bioethanol, are used almost exclusively to meet the EU’s renewable 10% target in transport. Their negative impacts are: socioeconomic (food price rises), legal (land-grabbing), environmental (for instance, water stress and water pollution; soil erosion; reduction of biodiversity), climatic (direct and indirect land-use effects resulting in more greenhouse gas emissions) and public finance issues (subsidies and tax relief). The extent of such negative impacts depends on how biofuel feedstocks are produced and processed, the scale of production, and in particular, how they influence direct land use change (DLUC) and indirect land use change (ILUC) and the international trade. These negative impacts have thus provoked mounting debates in recent years, with a particular focus on ILUC. They have forced the EU to re-examine how it deals with biofuels and submit amendments to update its legislation. So far, the EU legislation foresees that only sustainable biofuels (produced in the EU or imported) can be used to meet the 10% target and receive public support; and to that end, mandatory sustainability criteria have been defined. Yet they have a huge flaw. Their measurement of greenhouse gas savings from biofuels does not take into account greenhouse gas emissions resulting from ILUC, which represent a major problem. The Energy Council of June 2014 agreed to set a limit on the extent to which firstgeneration biofuels can count towards the 10% target. But this limit appears to be less stringent than the ones made previously by the European Commission and the European Parliament. It also agreed to introduce incentives for the use of advanced (second- and third-generation) biofuels which would be allowed to count double towards the 10% target. But this again appears extremely modest by comparison with what was previously proposed. Finally, the approach chosen to take into account the greenhouse gas emissions due to ILUC appears more than cautious. The Energy Council agreed that the European Commission will carry out a reporting of ILUC emissions by using provisional estimated factors. A review clause will permit the later adjustment of these ILUC factors. With such legislative orientations made by the Energy Council, one cannot consider yet that there is a major shift in the EU biofuels policy. Bolder changes would have probably meant risking the collapse of the high-emission conventional biodiesel industry which currently makes up the majority of Europe’s biofuel production. The interests of EU farmers would have also been affected. There is nevertheless a tension between these legislative orientations and the new Commission’s proposals beyond 2020. In any case, many uncertainties remain on this issue. As long as solutions have not been found to minimize the important collateral damages provoked by the first generation biofuels, more scientific studies and caution are needed. Meanwhile, it would be wise to improve alternative paths towards a sustainable transport sector, i.e., stringent emission and energy standards for all vehicles, better public transport systems, automobiles that run on renewable energy other than biofuels, or other alternatives beyond the present imagination.

The ‘Visible Hand’ of the ECB’s Quantitative Easing. CEPS Working Document No. 407/May 2015

Quantitative easing à la ECB has produced so far an impact on long-term nominal rates through ex ante channels: signalling channels, term duration channels, and risk premia channels. The term duration channel will also lead to a lengthening of the average maturity of government debts, with possible implications for fiscal policy. The ECB’s determination to buy government bonds in a fragmented market with a low net supply may also produce an ex post impact, during the actual asset purchases, but less on nominal rates and more on financial plumbing, as recent volatility suggests. As the effects of scarce supply in collateral markets are felt, repo rates remain well below zero. Lower supply and limited re-usability of high quality collateral, capped by regulatory requirements, is a constraint on market liquidity and compresses dealers’ balance sheets. By keeping a depressed yield curve and asset prices high, QE may also accelerate the consolidation of both traditional and capital-market based (dealer) bank business models. What is less clear is how these changing business models will interact with the sharp rise of the asset management industry in the aftermath of the crisis, which raises questions about the implications for global collateral flows and deposit-like funding channels.

EU Naval Force EUNAVFOR MED sets sail in troubled waters. CEPS Commentary, 26 June 2015

Apprehending pirates in the Indian Ocean is one thing. Defeating the networks through which smugglers traffic migrants through North Africa is quite another. The European Union’s new naval force deployment in the Mediterranean - EUNAVFOR MED - drew criticism from international partners and the general public alike when plans for a “boat-sinking” operation were unveiled, raising fears about unacceptable levels of violence and collateral damage; a European version of Mexico’s drug war. Yet the problems of EUNAVFOR MED lie less in clumsy public diplomacy than in the perilous mismatch between its stated objectives and the absence of a clear strategy and mandate, and this creates both operational and political risks for member states. Phase 1 of the operation: surveillance and assessment, has begun with no legal mandate to carry out the crucial phases 2 and 3: seek and destroy, whose military planning and outcomes are undetermined. Despite these limitations, the naval force could nevertheless mark a turning point in the EU’s security narrative, because it means that the Union is finally addressing the threats to security and the humanitarian tragedies in its southern neighbourhood.

Unfinished business: the governance of the Economic and Monetary Union. Compendium of EPC publications on the future of the Euro

Europe is once again engulfed in crisis. The sheer scale of refugees coming daily is not only a major challenge for the transit and destination countries, it is also exposing distrust between member states (and vis-à-vis the EU institutions). It has also shown that there is an unwillingness to cooperate and compromise within the EU system, in part a collateral damage of the eurocrisis. With a continuing sluggish economy and high unemployment, external challenges such as the conflict in Ukraine and internal ones like the referendum on EU membership in the UK, the EMU crisis looks less urgent at this point, with an agreement with Greece preventing the disastrous consequences of a Grexit, at least for now.

Better Lesion Creation And Assessment During Catheter Ablation

Permanent destruction of abnormal cardiac tissue responsible for cardiac arrhythmogenesis whilst avoiding collateral tissue injury forms the cornerstone of catheter ablation therapy. As the acceptance and performance of catheter ablation increases worldwide, limitations in current technology are becoming increasingly apparent in the treatment of complex arrhythmias such as atrial fibrillation. This review will discuss the role of new technologies aimed to improve lesion formation with the ultimate goal of improving arrhythmia-free survival of patients undergoing catheter ablation of atrial arrhythmias.

Psychology of the common school subjects

"The following chapters are published preliminary to the preparation of a much more elaborate work along the same general lines." - Pref.

Heal the hurt child; an approach through educational therapy with special reference to the extremely deprived Negro child.

"Collateral reading": p. [599]-608.

Personnel management and industrial relations,

"Formerly Personnel and labor relations."

Homes for workmen; a presentation of leading examples of industrial community development.

Illustrated t.-p.