The Treasury basis trade exploits the price difference between Treasury bonds and futures. The trade is exposed to financing and liquidity risks that can affect market liquidity. This brief summarizes evidence on the size and extent of basis trading by hedge funds, and on whether these trades contributed to Treasury market illiquidity in March 2020. Timely intervention by the Federal Reserve in the Treasury and repurchase agreement markets may have limited the extent of spillovers that could affect financial stability.
The U.S. repo market, which is split among four markets, links a wide range of banks and nonbanks who lend and borrow short-term against securities pledged as collateral. This brief uses the OFR's collection of repo market data to highlight some basic facts about the two cleared repo markets. The broadness of cleared repo market participants underscores two increasingly important trends in U.S. financial markets. First, the rising importance of market-based finance among hedge funds and money market funds. Second, the global scope of U.S. financial markets, as a significant portion of net repo borrowing in cleared markets is by foreign banks. The diversity of institution types also means reference rates based on repo transactions represent a broad range of financial market participants.
The following Policy Brief proposes a qualitative analysis on the impact the COVID-19 pandemic and the current Italian crisis could have on the achievement of the 17 Sustainable Development Goals. The analysis considers all the 169 targets of the 2030 Agenda, in order to study, specifically, which will be the effects of the crisis concerning the three dimensions of sustainable development: economy, society and environment. The reflection emerging from this document attempts to understand for each Goal and target which could and can be the impacts of the pandemic, of the lockdown and of the overall economic crisis caused by the previous. The results presented in the Brief are based on the evolution of the crisis and on the decree-laws of the Italian government in order to contain it; nevertheless, those outcomes cannot be taken as final, considering the subsisting nature of the crisis, the still outstanding lockdown measures, and the absence of quantitative data related to the post-crisis.
Il presente Policy Brief intende esaminare il framework del sistema sanitario alla luce della crisi COVID-19, per analizzare nello specifico quelle che sono le cause che sottostanno alle enormi difficolta ed i limiti che l’Italia e l’Unione Europea stanno riscontrando nella battaglia contro la pandemia. Una breve analisi quantitativo-descrittiva delinea in che modo lo Stato italiano e l’Unione Europea intervengono nell’area della sanita. Ne emerge che l’Italia e un Paese ben preparato per fare fronte a pericoli del genere, non solo per quanto riguarda i finanziamenti e le performance della sanita, ma anche perche inserito in una piu ampia ottica internazionale, dotata di strumenti e framework validi – uno tra tanti l’Agenda 2030. Dunque, considerando che i finanziamenti e le policies in questione, seppur virtuose, non si sono rivelate pronte per affrontare lo shock sanitario imposto dalla pandemia, ora piu che mai diventa necessario rivedere i parametri riferiti alla sanita e al benessere utilizzati nel panorama nazionale ed internazionale, quali, ad esempio, l’Agenda 2030 per lo Sviluppo Sostenibile.
Nel seguente Policy Brief si propone un’analisi qualitativa dell’impatto che la pandemia COVID-19 e l’attuale crisi italiana da essa generata, potrebbero avere sul raggiungimento dei 17 Obiettivi di Sviluppo Sostenibile (SDGs – Sustainable Development Goals). Sono stati presi in considerazione tutti i 169 target contenuti nell’Agenda, analizzando quindi, nello specifico, gli effetti della crisi sulle tre dimensioni di sviluppo sostenibile: economica, sociale, ambientale. Le riflessioni che emergono nel presente documento cercano di comprendere per ciascun Goal e target quali potrebbero e possono essere gli effetti della pandemia, del lockdown e della crisi economica da essi generata. I risultati presentati nel documento si basano sull’andamento della pandemia e dei decreti attuati dal governo italiano per contrastarla fino a data odierna, 8 maggio 2020; tuttavia, tali outcomes non possono ancora definirsi definitivi, visto il carattere ancora sussistente della crisi, il lockdown ancora in essere, e l’assenza di dati quantitativi relativi al postcrisi.
The Circular Economy can be seen in a broader NEXUS framework, in which the relationships between the CE transition, the decarbonization transition, and the bioeconomy transition are at the core of sustainability strategies and policies. The CE can save large amounts of energy in ‘closing the material loops’ (recycling), but the net effects of business models in the ‘slowing down’ and ‘narrowing’ loops (e.g. sharing economy) can be uncertain depending on technologies or systemic effects. Energy production within the CE loops is still much based on virgin biomaterials, which can have more value in innovative non-energy uses (e.g. green chemistry), while the production of energy from waste arising from ‘closing the loops’ is limited also as a consequence of EU policies. Before the EGD, there was a weak integration between energy and the CE within the EU legislation. The EU-level definitions of CE criteria for funding business suffers for a ‘material circularity’ bias, which gives little attention to energy production from CE loops. However, CE and energy are increasingly connected within the EGD. The concepts of CE and ‘CE business models’ are increasingly holistic. Direct surveys indicate that this approach prevails in practice and firms adopt CE strategies that involve energy management and materials in an integrated way. The energy industry shows a mounting interest in the CE, both as an internal management approach and as a source of new market opportunities. Approaches and initiatives from major market players are heterogeneous and largely based on the appropriation of specific innovative businesses. The measurement of CE inside the companies is still challenging, and this issue must be addressed in front of the future adoption of ‘CE criteria’ by European policies and the financial system. The development of ‘integrated’ CEenergy business models can be needed to get the opportunities arising from the increasing CEenergy integration expected from the EGD.
Land–sea interaction dynamics are physiologically regulated by an exchange of matter (and energy) between the anthropic system and the natural environment. Therefore, the appropriate management of land–sea interaction (LSI) contexts should base on those planning approaches which can holistically support coastal development, such as Maritime Spatial Planning (MSP) and Climate Adaptation Planning (CAP). One of the main limiting factors for this integration is the fragmentation of existing databases and information sources, which compose the territorial knowledge framework. Investigations have sought to address the representation and assessment of “wicked” and interconnected coastal problems. The present research focuses on the production of the necessary information to fill sectorial knowledge gaps and to merge the available data into a single framework. The research methodology is based on remote sensing assessment techniques and is designed to be replicated in other coastal areas to integrate CAP and MSP. The output maps are a result of the empirical application of the integration of the assessment techniques and are meant to support local decision-making processes. The result aims at illustrating and highlighting the relationships between climate change impact vulnerabilities their spatial relation to marine resources and maritime activities. This can support effective actions aimed at environmental and urban protection, the organization of the uses of the sea and adaptation to climate impacts. The application of the assessment techniques is developed on a case study in the north Adriatic Basin. The Gulf of Trieste constitutes a representative case study for the Mediterranean Basin due to its transboundary nature. The relationship and the ongoing projects between Slovenia and Italy make the case study an interesting context in which to test and train the proposed integrated planning approach. Therefore, the study investigates local vulnerability to climate impacts, i.e., Urban Heat Island (UHI) and urban runoff, and the existing relationship between the urban fabrics and the marine environment.
On March 11th 2020, the European Commission presented one of the European Green Deal’s (EGD) main blocks: the Circular Economy Action Plan (CEAP). The Commission recognised that the ambitious environmental objectives, the transition towards a regenerative growth model, and the decoupling of economic growth from resource use need to be adequately supported and identified a strategy to upscale the circular-economy approach from the front-runners to the mainstream economic players. Such a strategy is presented as the main instrument to achieve these goals, as it would contribute significantly to ensuring the long-term competitiveness of the European Union. The plan, in particular, aims at guaranteeing the regulatory framework implementation, the maximisation of the business opportunities that the transition provides and the minimisation of the burdens and the obstacles on people and businesses. This action, together with all the others included in the European Green Deal, represents a pivotal step in meeting the Paris Agreement goals.
After the adoption of the 4th Circular Economy Package by the European Commission, become very important that cities use the resources circularly. In the last century, urbanization and consumption model have built unlimited cities and societies. Without considering the finite resources, the paradigm of the linear economy (production-consumption-waste) has built unsustainable cities and societies. Urban Metabolism and Circular Economy are interesting approaches that can help planners and decision-makers to re-think and re-design future cities and their relations whit rural and peri-urban areas. Understanding how flows of materials and energy shaping urban space, society, and governance system is the first step to construct cities able to close the cycles and become sustainable and resilient also in face to the climate change challenge.
Italian Abstract: Le citta sono i luoghi in cui si riflettono le principali sfide ed opportunita dei giorni nostri. Quelle che chiamiamo Citta intelligenti, Citta circolari e Citta sostenibili non sono altro che tre varianti non sovrapponibili di uno stesso progetto, volte ad includere ambiti e strumenti diversi per uno sviluppo urbano di tipo sostenibile. Tuttavia, considerata la non unitarieta delle loro definizioni, cosi come degli strumenti di valutazione per misurarne caratteristiche e limiti, appare ancora incerta la possibilita di classificare in un unico appellativo quelle che auspichiamo essere le Citta del futuro. Per integrare le tre tipologie di citta e superare le dualita esistenti tra innovazione tecnologica, crescita socio-economica e resilienza ecologica, e necessaria una stretta collaborazione tra governance e comunita, supportata da un appropriato sistema di infrastrutture e sensibile al fattore umano delle cities. English Abstract: Cities are the places where the main challenges and opportunities of our times are reflected. Those which we call Smart Cities, Circular Cities and Sustainable Cities are just three different variants within the same project which is designed to include different areas and tools for sustainable urban development. However, given the non-uniformity of their definitions and of the evaluation tools to measure their characteristics and limitations, the possibility of classifying them as Cities of the Future is still uncertain.In order to integrate these three types of cities and to overcome the existing duality between technological innovation, socio-economic growth and ecological resilience, a closer collaboration between governance and community, supported by an appropriate infrastructure system, is required.
The financial system operates through complex networks that operational failures can disrupt. Some network structures are more resilient to random failures, for example, from natural disasters. Others are more resilient to targeted incidents, such as hacks. This brief illustrates how network analysis can be used to better understand possible risks to financial stability from such disruptions, and possible defenses.
This brief describes confidential data from the Securities and Exchange Commission's Form PF that give insights not previously available about the activities of private equity funds. The data allow regulators to monitor trends such as increased borrowing by the companies in which private equity funds invest or shifts in funds' investments. These trends may signal broader changes in the financial system.
The Basel III banking accord introduced the concept of capital buffers -- extra capital cushions on top of regulatory capital minimums -- to absorb unexpected shocks. These buffer requirements are now phasing in for U.S. banks. Federal Reserve officials are considering including these buffers in bank stress tests. With such a change, some banks will need to hold more capital to pass stress tests. However, another potential change would permit banks to use static balance sheets (that is, balance sheets unchanged from the prior period) in stress tests, which could make the tests less effective.
The repurchase agreement (repo) market is a major source of short-term funding in the financial system. Many repo transactions between dealers are centrally cleared. This brief, using data from the OFR's interagency bilateral repo data collection pilot, finds economic benefits for dealers in expanding central clearing to transactions between dealers and nondealer clients, but increased risks to the central counterparty.
We provide aggregate statistics on U.S. dealers' bilateral repurchase agreements and economically equivalent securities lending activities. The data were collected from the U.S.-affiliated securities dealers of nine bank holding companies under a voluntary pilot program run by the Office of Financial Research (OFR) and the Federal Reserve System with input from the Securities and Exchange Commission. We found that the majority of this activity involves the delivery or receipt of U.S. Treasuries, with equities a distant second. The most common maturity is one day. Finally, rates are widely dispersed across asset classes.
The Dodd-Frank financial reform law required federal regulators to remove credit rating references from their regulations. Regulators have responded by substituting definitions of creditworthiness, requiring regulatory models, and hiring third parties other than rating agencies to set credit standards. Each approach has challenges.
This brief introduces a three-layer map to illustrate how the circulation of short-term funding, collateral, and assets may spread financial stability risks throughout the U.S. financial system. Potential vulnerabilities and contagion paths emerge as large banks, hedge funds, central clearinghouses, and other market participants become increasingly interconnected.
This brief uses the latest available data to show that U.S. banks remain among the most systemically important, while the systemic importance scores of Chinese banks increased the most. Also with this brief, the OFR introduces an online interactive chart to help users compare the 30 global systemically important banks, or G-SIBs. Regulators will begin phasing in capital surcharges on G-SIBs this year.
