"Central Banking in an Era of Quantitative Easing"

This paper compares central banking in the era of Bagehot's Rule (1873) and the current era of quantitative easing (QE) and zero (or near-zero) interest rate policy (ZIRP) to suggest that our analytical frameworks need updating. It also proposes some rules for emerging-market central banks to follow today. Bagehot's Rule—that in a financial crisis, the central bank should lend freely against good collateral, and at market interest rates—can no longer apply in an age when the gold standard has been abandoned, hard budget constraints have disappeared, and the national perspective of central banks limits their ability to regulate a shadow banking system that is global in nature. Central banks in reserve currency countries have used QE and ZIRP because the political will to stem excess consumption and raise taxation is lacking. Central banks in emerging markets might avoid the domestic collective-action traps that the deficit countries have fallen into by applying a systems-wide analytical perspective. This would involve privileging diversity, imposing a strict limitation on concentration, the promotion and regulation of the commons, and increased taxation.Bagehot's Rule; Quantitative Easing; Zero Interest Rate Policy; System-Wide Analysis to Central Banking Policies

East Asian Capital Markets Integration - Steps Beyond ABMI

finance, development, institutions

Importance of risk management

Financial crises ; Risk management

Risk management and stable financial structures

Conventional development economics has focused mainly on generating economic growth by mobilizing savings and allocating them wisely among investment opportunities. Savings (external and domestic) were to be mobilized through tax incentives, income, and interest rate policies. Their allocation often involved direct government intervention in the investment process. After the disastrous results of the 1980s, the new wisdom is to let the private sector generate growth, while the government provides the regulatory and supervisory framework for competitive markets, ensures the existence of level playing fields, and removes obvious cases of moral hazard. But the private sector working under an inappropriate financial structure may do no better than the government in making right investment choices for long-term growth. So governments (which in a financial crisis are responsible for all national debts) should have an effective national risk management strategy, with an understanding of the national balance sheet, and the necessity of a stable financial structure for steady long-term economic growth. The authors argue that it is not only how much investment is mobilized and allocated but also how investments are financed that matters for an economy's long-term growth. Finance and development are inextricably linked with risk management (both at the sectoral and national levels). Development is a function not just of promoting the right industries and allocating capital for the high-return investments (asset management) but also of choosing the right financial structure (liability management) - and of the related risks arising from the liability mix chosen. The authors argue that one of the ingredients of the East Asian success is prudent risk management by these governments. They present five rules for national risk management, concluding, among other things, to: (a) establish fiscal discipline and price stability as the anchor of overall financial stability; (b) encourage asset diversification through industrialization and export orientation, financed by foreign direct investment; (c) avoid sectoral imbalances, such as excessive domestic or external borrowing, including the development of instruments and institutions to absorb shocks; (d) establish strong institutional capacity to assess and contain systemic risks; and (e) when the above conditions are not adequately met, retain some policy measures to handle the risk.Environmental Economics&Policies,Financial Intermediation,Public Sector Economics&Finance,Banks&Banking Reform,Economic Theory&Research

A numerical and experimental study on the factors that influence heat partitioning in disc brakes

yesTo investigate the heat partition on a vehicle disc brake, a small scale test rig with one contact interface was used. This allowed the disc/pad contact temperatures to be measured with fast-response foil thermocouples and a rubbing thermocouple. Based on the experimental conditions a 3D symmetric disc brake FE model has been created. Frictional heat generation was modelled using the ABAQUS finite element analysis software. The interface tribo-layer which affects heat partitioning was modelled using an equivalent thermal conductance value obtained from the authors¿ previous work. A 10 second drag braking was simulated and the history and distribution of temperature, heat flux multiplied by the nodal contact area, heat flux leaving the surface and contact pressure was recorded. Test rig and FE model temperatures were compared to evaluate the two methods. Results show that heat partitioning varies in space and time, and at the same time contact interface temperatures do not match. It is affected by the instantaneous contact pressure distribution, which tends to be higher on the pad leading edge at the inner radius side. They are also affected by the thermal contact resistance at the components contact interface.IMech

Interface temperatures in friction braking

YesResults and analysis from investigations into the behaviour of the interfacial layer (Tribolayer) at the friction interface of a brake friction pair (resin bonded composite friction material and cast iron rotor) are presented in which the disc/pad interface temperature has been measured using thermocouple methods. Using a designed experiment approach, the interface temperature is shown to be affected by factors including the number of braking applications, the friction coefficient, sliding speed, braking load and friction material. The time-dependent nature of the Tribo-Iayer formation and the real contact area distribution are shown to be causes of variation in interface temperatures in friction braking. The work extends the scientific understanding of interface contact and temperature during friction braking