Market liquidity and banking liquidity: linkages, vulnerabilities and the role of disclosure.

During the course of 2007, global financial markets went through noticeable periods of turbulence. In particular, complex credit markets suffered a marked set-back. Oddly, turmoil in these fairly new markets contributed to severe liquidity shortages in short-term money and interbank markets, triggering repeated large-scale monetary interventions by central banks worldwide. Recent events have thus demonstrated that banks are considerably intertwined in fi nancial markets; dependent on and exposed to them as regards liquidity. The aim of this article is to better understand this complex relationship and to frame relevant aspects of the latest fi nancial market turmoil accordingly. In particular, we explore the mechanics of a market liquidity crisis and its impact on individual banks’ liquidity, as well as possible spillovers to other banks. These dynamics of course raise a number of policy issues. Here, we focus on the role that greater disclosure to markets on banks’ liquidity situation itself could play as a market-stabilising device. In summary, global banks have increasingly integrated into capital markets and in terms of both funding and asset liquidity rely considerably on functioning, liquid financial markets. This is particularly visible in the shift towards secured lending transactions; growth of the securitisation market; the broadening of collateral to encompass complex products with shifting levels of market liquidity; and the rise in committed credit or liquidity lines to sponsored special purpose vehicles (SPVs) and corporates. While some of the recent developments in fi nancial market liquidity can be attributed to technological progress, importantly, more temporary factors resulting from an environment of low interest rates have accelerated market liquidity beyond sustainable levels. While, per se, banks’ ability to “liquify” assets represents a positive development which should help mitigate the fundamental liquidity risk that banks face, increased sensitivity with respect to market liquidity risk has also created new vulnerabilities with respect to sudden reversals of market liquidity. Importantly, adverse circumstances could trigger a combined increase in demands on liquid assets via margin requirements and activation of credit lines and reduced liquidity of assets and related market funding sources. The severe loss of liquidity in asset-backed securities markets and its repercussions on global interbank markets during 2007 provide a vivid illustration of the channels that link market liquidity to banks’ funding and asset liquidity and of the wider externalities of idiosyncratic liquidity shocks. How can these risks be addressed? Together with active liquidity management, disclosure may represent one tool through which such vulnerability may be reduced. A large literature exists on the merits of transparency in banking. Greater transparency should alleviate refi nancing frictions related to asymmetric information. When information problems are however deeper and concern aggregate uncertainty, improved disclosure on credit fundamentals may be less effective to restore confidence. Instead, better information on liquidity itself may be necessary. We explore the current availability of information on banks’ liquidity and funding risks. Overall, information appears to be limited –failing to disclose in a comprehensive and comparable way the underlying dynamics of liquidity demands and funding sources. But liquidity is volatile and banks are subject to inherent liquidity mismatches. Can greater disclosure in this area ever be a useful tool to reinforce market discipline in a systemically stabilising fashion? While this question merits serious reflection, the 2007 market events have shown that current information gaps are large and need addressing.

Quantum initial condition sampling for linearized density matrix dynamics: Vibrational pure dephasing of iodine in krypton matrices

This paper reviews the linearized path integral approach for computing time dependent properties of systems that can be approximated using a mixed quantum-classical description. This approach is applied to studying vibrational pure dephasing of ground state molecular iodine in a rare gas matrix. The Feynman-Kleinert optimized harmonic approximation for the full system density operator is used to sample initial conditions for the bath degrees of freedom. This extremely efficient approach is compared with alternative initial condition sampling techniques at low temperatures where classical initial condition sampling yields dephasing rates that are nearly an order of magnitude too slow compared with quantum initial condition sampling and experimental results.Comment: 20 pages and 8 figure

Non-adiabatic Effects in the Dissociation of Oxygen Molecules at the Al(111) Surface

The measured low initial sticking probability of oxygen molecules at the Al(111) surface that had puzzled the field for many years was recently explained in a non-adiabatic picture invoking spin-selection rules [J. Behler et al., Phys. Rev. Lett. 94, 036104 (2005)]. These selection rules tend to conserve the initial spin-triplet character of the free O2 molecule during the molecule's approach to the surface. A new locally-constrained density-functional theory approach gave access to the corresponding potential-energy surface (PES) seen by such an impinging spin-triplet molecule and indicated barriers to dissociation which reduce the sticking probability. Here, we further substantiate this non-adiabatic picture by providing a detailed account of the employed approach. Building on the previous work, we focus in particular on inaccuracies in present-day exchange-correlation functionals. Our analysis shows that small quantitative differences in the spin-triplet constrained PES obtained with different gradient-corrected functionals have a noticeable effect on the lowest kinetic energy part of the resulting sticking curve.Comment: 17 pages including 11 figures; related publications can be found at http://www.fhi-berlin.mpg.de/th/th.htm

Grain - A Java Analysis Framework for Total Data Readout

Grain is a data analysis framework developed to be used with the novel Total Data Readout data acquisition system. In Total Data Readout all the electronics channels are read out asynchronously in singles mode and each data item is timestamped. Event building and analysis has to be done entirely in the software post-processing the data stream. A flexible and efficient event parser and the accompanying software framework have been written entirely in Java. The design and implementation of the software are discussed along with experiences gained in running real-life experiments.Comment: Submitted to NIM

Molecular Dipolar Crystals as High Fidelity Quantum Memory for Hybrid Quantum Computing

We study collective excitations of rotational and spin states of an ensemble of polar molecules, which are prepared in a dipolar crystalline phase, as a candidate for a high fidelity quantum memory. While dipolar crystals are formed in the high density limit of cold clouds of polar molecules under 1D and 2D trapping conditions, the crystalline structure protects the molecular qubits from detrimental effects of short range collisions. We calculate the lifetime of the quantum memory by identifying the dominant decoherence mechanisms, and estimate their effects on gate operations, when a molecular ensemble qubit is transferred to a superconducting strip line cavity (circuit QED). In the case rotational excitations coupled by dipole-dipole interactions we identify phonons as the main limitation of the life time of qubits. We study specific setups and conditions, where the coupling to the phonon modes is minimized. Detailed results are presented for a 1D dipolar chain

C_2 in Peculiar DQ White Dwarfs

White dwarfs (WDs) with carbon absorption features in their optical spectra are known as DQ WDs. The subclass of peculiar DQ WDs are cool objects (T_eff<6000 K) which show molecular absorption bands that have centroid wavelengths ~100-300 Angstroms shortward of the bandheads of the C_2 Swan bands. These "peculiar DQ bands" have been attributed to a hydrocarbon such as C_2H. We point out that C_2H does not show strong absorption bands with wavelengths matching those of the peculiar DQ bands and neither does any other simple molecule or ion likely to be present in a cool WD atmosphere. The most straightforward explanation for the peculiar DQ bands is that they are pressure-shifted Swan bands of C_2. While current models of WD atmospheres suggest that, in general, peculiar DQ WDs do not have higher photospheric pressures than normal DQ WDs do, that finding requires confirmation by improved models of WD atmospheres and of the behavior of C_2 at high pressures and temperatures. If it is eventually shown that the peculiar DQ bands cannot be explained as pressure-shifted Swan bands, the only explanation remaining would seem to be that they arise from highly rotationally excited C_2 (J_peak>45). In either case, the absorption band profiles can in principle be used to constrain the pressure and the rotational temperature of C_2 in the line-forming regions of normal and peculiar DQ WD atmospheres, which will be useful for comparison with models. Finally, we note that progress in understanding magnetic DQ WDs may require models which simultaneously consider magnetic fields, high pressures and rotational excitation of C_2.Comment: ApJ in press. 8 pages emulateapj style, 1 figur

Distributed Relay Protocol for Probabilistic Information-Theoretic Security in a Randomly-Compromised Network

We introduce a simple, practical approach with probabilistic information-theoretic security to mitigate one of quantum key distribution's major limitations: the short maximum transmission distance (~200 km) possible with present day technology. Our scheme uses classical secret sharing techniques to allow secure transmission over long distances through a network containing randomly-distributed compromised nodes. The protocol provides arbitrarily high confidence in the security of the protocol, with modest scaling of resource costs with improvement of the security parameter. Although some types of failure are undetectable, users can take preemptive measures to make the probability of such failures arbitrarily small.Comment: 12 pages, 2 figures; added proof of verification sub-protocol, minor correction

Detection of interstellar CH_3

Observations with the Short Wavelength Spectrometer (SWS) onboard the {\it Infrared Space Observatory} (ISO) have led to the first detection of the methyl radical ${\rm CH_3}$ in the interstellar medium. The $\nu_2$ $Q-$branch at 16.5 $\mu$m and the $R$(0) line at 16.0 $\mu$m have been unambiguously detected toward the Galactic center SgrA$^*$. The analysis of the measured bands gives a column density of (8.0$\pm$2.4)$\times10^{14}$ cm$^{-2}$ and an excitation temperature of $(17\pm 2)$ K. Gaseous ${\rm CO}$ at a similarly low excitation temperature and ${\rm C_2H_2}$ are detected for the same line of sight. Using constraints on the ${\rm H_2}$ column density obtained from ${\rm C^{18}O}$ and visual extinction, the inferred ${\rm CH_3}$ abundance is $(1.3{{+2.2}\atop{-0.7}}) \times 10^{-8}$. The chemically related ${\rm CH_4}$ molecule is not detected, but the pure rotational lines of ${\rm CH}$ are seen with the Long Wavelength Spectrometer (LWS). The absolute abundances and the ${\rm CH_3/CH_4}$ and ${\rm CH_3/CH}$ ratios are inconsistent with published pure gas-phase models of dense clouds. The data require a mix of diffuse and translucent clouds with different densities and extinctions, and/or the development of translucent models in which gas-grain chemistry, freeze-out and reactions of ${\rm H}$ with polycyclic aromatic hydrocarbons and solid aliphatic material are included.Comment: 2 figures. ApJL, Accepte

NSAIDs for analgesia in the era of COVID-19

Globally, non-steroidal anti-inflammatory drugs (NSAIDs) are highly used to treat pain. With the rise of the COVID-19 pandemic, the safety of NSAIDs use has been called into question. These concerns are worthy of review. At present, there is no compelling data showing that NSAIDs worsen the severity of COVID-19 symptoms or increase one\u27s likelihood of contracting the illness. For patients in pain and without symptoms that could potentially be attributed to COVID-19 (cough, fevers/chills, lethargy, myalgias, anosmia and so on), NSAIDs should continue to remain a viable option to provide analgesia to patients in need

Relaxation paths for single modes of vibrations in isolated molecules

A numerical simulation of vibrational excitation of molecules was devised, and used to excite computational models of common molecules into a prescribed, pure, normal vibration mode in the ground electronic state, with varying, controlable energy content. The redistribution of this energy (either non-chaotic or irreversible IVR) within the isolated, free molecule is then followed in time with a view to determining the coupling strength between modes. This work was triggered by the need to predict the general characters of the infrared spectra to be expected from molecules in interstellar space, after being excited by photon absorption or reaction with a radical. It is found that IVR from a pure normal mode is very "restricted" indeed at energy contents of one mode quantum or so. However, as this is increased, or when the excitation is localized, our approach allows us to isolate, describe and quantify a number of interesting phenomena, known to chemists and in non-linear mechanics, but difficult to demonstrate experimentally: frequency dragging, mode locking or quenching or, still, instability near a potential surface crossing, the first step to generalized chaos as the energy content per mode is increased.Comment: 25 pages, 15 figures; accepted by J. Atom. Phys.