From a Centralized to a Decentralized Global Economic Architecture: An Overview

This paper argues that calls for a New Bretton Woods system in the aftermath of the global economic crisis - similar to the remarkable 1944 Bretton Woods conference that led to the establishment of various international economic institutions - are unlikely to be answered. The likely scenario is that the centralized architecture from before the global economic crisis will evolve toward a more decentralized and multilayered global architecture where regional institutions are linked together to a "senior" global organization in a complementary manner by rules and regulations. The paper also highlights the new regional institutions that Asia needs to establish to contribute to this evolving global economic architecture

Citizen science: a new approach to advance ecology, education, and conservation

Citizen science has a long history in the ecological sciences and has made substantial contributions to science, education, and society. Developments in information technology during the last few decades have created new opportunities for citizen science to engage ever larger audiences of volunteers to help address some of ecology’s most pressing issues, such as global environmental change. Using online tools, volunteers can find projects that match their interests and learn the skills and protocols required to develop questions, collect data, submit data, and help process and analyze data online. Citizen science has become increasingly important for its ability to engage large numbers of volunteers to generate observations at scales or resolutions unattainable by individual researchers. As a coupled natural and human approach, citizen science can also help researchers access local knowledge and implement conservation projects that might be impossible otherwise. In Japan, however, the value of citizen science to science and society is still underappreciated. Here we present case studies of citizen science in Japan, the United States, and the United Kingdom, and describe how citizen science is used to tackle key questions in ecology and conservation, including spatial and macro-ecology, management of threatened and invasive species, and monitoring of biodiversity. We also discuss the importance of data quality, volunteer recruitment, program evaluation, and the integration of science and human systems in citizen science projects. Finally, we outline some of the primary challenges facing citizen science and its future.Dr. Janis L. Dickinson was the keynote speaker at the international symposium at the 61th annual meeting of the Ecological Society of Japan. We appreciate the Ministry of Education, Culture, Sports, Science and Technology in Japan for providing grant to Hiromi Kobori (25282044). Tatsuya Amano is financially supported by the European Commission’s Marie Curie International Incoming Fellowship Programme (PIIF-GA-2011- 303221). The findings and conclusions in this report are those of the authors and do not necessarily represent the views of the funding agencies or the Department of the Interior or the US Government.This is the final version of the article. It was first available from Springer via http://dx.doi.org/10.1007/s11284-015-1314-

How insurers differ from banks: a primer on systemic regulation

Abstract This paper aims at providing a conceptual distinction between banking and insurance with regard to systemic regulation. It discusses key differences and similarities as to how both sectors interact with the financial system. Insurers interact as financial intermediaries and through financial market investments, but do not share the features of banking that give rise to particular systemic risk in that sector, such as the institutional interconnectedness through the interbank market, the maturity transformation combined with leverage, the prevalence of liquidity risk and the operation of the payment system. The paper also draws attention to three salient features in insurance that need to be taken account in systemic regulation: the quasiabsence of leverage, the fundamentally different role of capital and the 'built-in bail-in' of a significant part of insurance liabilities through policy-holder participation. Based on these considerations, the paper argues that if certain activities were to give rise to concerns about systemic risk in the case of insurers, regulatory responses other than capital surcharges may be more appropriate. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior permission in writing of the publisher nor be issued to the public or circulated in any form other than that in which it is published. Requests for permission to reproduce any article or part of the Working Paper should be sent to the editor at the above address. This paper aims at providing a conceptual distinction between banking and insurance with regard to systemic regulation. It discusses key differences and similarities as to how both sectors interact with the financial system. Insurers interact as financial intermediaries and through financial market investments, but do not share the features of banking that give rise to particular systemic risk in that sector, such as the institutional interconnectedness through the interbank market, the maturity transformation combined with leverage, the prevalence of liquidity risk and the operation of the payment system. The paper also draws attention to three salient features in insurance that need to be taken account in systemic regulation: the quasi-absence of leverage, the fundamentally different role of capital and the 'built-in bail-in' of a significant part of insurance liabilities through policy-holder participation. Based on these considerations, the paper argues that if certain activities were to give rise to concerns about systemic risk in the case of insurers, regulatory responses other than capital surcharges may be more appropriate. Executive Summary The process of global regulation of systemically important financial institutions is still in full swing. Having completed the regulatory framework for systemically important banks, the Financial Stability Board (FSB) is turning to insurance companies. In 2013, the FSB designated nine insurance companies as systemically important, and it is now in the process of designing systemic regulation for the industry, supported by the International Association of Insurance Supervisors (IAIS). The framework that the FSB has established for insurers closely resembles its framework for banks, culminating in the design of capital standards and the calibration of capital surcharges. This parallel treatment of banks and insurers is also found in a number of important contributions on systemic risk in the academic literature. This paper challenges this approach. It focuses on the distinct business models and balance sheet structures, outlining the main differences and similarities between banks and insurers with regard to their interaction with the financial system. The paper identifies four differences and two similarities. It highlights that: banks are institutionally connected with each other through the interbank market, whereas insurers are stand-alone operators; banks engage in maturity transformation whereas insurers aim to match the duration of assets and liabilities; banks are inherently liquidity-short, whereas insurers are inherently liquidity-rich; and banks create money, credit and handle the payment system, which insurers do not. The two similarities are that both kinds of institutions are financial intermediaries and large-scale investors in financial markets. The differences underscore the fact that banks have a fundamentally different role within the financial system and systemic risk. They can be seen as operating in an "inner circle" of the financial system that is given by the banking system, whereas insurers operate in an "outer circle", connected to other financial institutions essentially through their financial market investments. The paper also highlights the fundamental differences between insurers and banks in terms of leverage, the role of capital and their capacity for loss absorbency -three critical issues for systemic regulation. Leverage is inherent in banking, but quasi-absent in insurance. Capital in banking plays an immediate role in case of stress to absorb shocks and retain funding capacity; in insurance, capital serves to ensure that the last policy-holders are paid. Loss absorbency for banks is essentially limited to equity, but for insurers an additional loss absorbency capacity exists in the form of participation by policy-holders, who may share part of asset fluctuations and potential losses. Based on this analysis, the paper raises the question of whether capital surcharges are an appropriate instrument for regulating insurers as they may be for banks. Whereas for banks, capital surcharges may be helpful in controlling leverage, raising buffers and augmenting shock absorption capacity, these effects are not prevalent in insurance. If certain issues were to give rise to systemic risk in insurance, other policy tools to address these concerns may be more appropriate.