Liquidity Provision and Collateral Haircuts in Payments Systems

Central banks play a pivotal role in well-functioning payments systems by providing liquidity via collateralized lending. This article discusses the role of collateral and haircut policy in central bank lending, as well as the distinguishing features of the central bank’s policy relative to private sector practices. It presents a model that explicitly incorporates the unique role of central banks in the payments system and argues that central banks must consider how their haircut policies affect the relative price and liquidity of assets, the market’s asset allocation, and the likelihood of participants to default. Furthermore, under extraordinary circumstances, there is a rationale for the central bank to temporarily reduce haircuts or broaden the list of eligible collateral to mitigate the shortage of liquidity in the market.

A Model of Tiered Settlement Networks

This paper develops a model of settlement system to study the endogenous structure of settlement networks, and the welfare consequences of clearing agent failure. The equilibrium degree of tiering is endogenously determined by the cost structure and the information structure. The degree of tiering is decreasing in the fixed cost of operating the second-tier network and the availability of public credit history. Furthermore, the welfare effects of clearing agent failure can be decomposed into operational inefficiency and the loss of private information.Payment, clearing, and settlement systems

Central Bank Haircut Policy

We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral. Setting a haircut therefore involves balancing the trade-off between relaxing the liquidity constraints of agents on one hand, and increasing potential inflation risk and distorting the portfolio choices of agents on the other. We argue that the optimal haircut is higher when the central bank is unable to lend exclusively to agents who actually need liquidity. Finally, for an unexpected drop in the haircut, the central bank can be more aggressive than when setting a permanent level of the haircut.Payment, clearing, and settlement systems; Central bank research; Monetary policy implementation; Financial system regulation and policies; Financial services

Disentangling phonological well-formedness and attestedness

Disentangling the roles of phonological well-formedness and lexical attestedness in phonotactic processing has proven challenging. In this study, we present results from a passive listening ERP study showing that English speakers exhibit distinct neural responses to CCVC nonce words according to the phonological well-formedness and attestedness (in English) of the onset cluster. Clusters with poor sonority sequencing evoked an N400 effect compared to those without poor sonority sequencing, regardless of whether the well-formed clusters were attested in English. In contrast, unattested clusters, regardless of whether they were well-formed or ill-formed in terms of sonority sequencing, evoked a late positivity compared to attested clusters. The results suggest that listeners first perform a phonological analysis on potential words before submitting them to a lexical search

Toxicity of Carbon Nanotubes and its Implications for Occupational and Environmental Health

This viewgraph document reviews the sources of Nano particles in the environment, the structure and properties of Carbon Nanotubes (CNTs), the physical characteristics of CNT materials, pulmonary and other health concerns of exposure to CNTs. The toxicity of CNT in rodents is summarized and some natural, and man-made sources of CNTs are shown. CNTs are electrically and thermally conductive, fibrous, biopersistent and very complicated in structures. The factors affecting toxicity of CNTs are more than size and surface area

A report on the 3-D acoustic working group meeting at Long Beach, MS July 7-8, 1988

At the request of ONR Code 11250A, the Woods Hole Oceanographic Institution (Dr. James F. Lynch) convened a workshop to bring together a group of acoustic and ocean modelers to review and discuss 1. the state of development and the need for three-dimensional numerical acoustic research propagation and scattering models; 2. the interfacing of acoustic models with available oceanographic data and ocean model outputs. The workshop was hosted by the Institute for Naval Oceanography (Dr. Ching-Sang Chiu) at Long Beach, MS on July 7-8, 1988. This report summarizes the research presentations and the recommendations made by the group. The workshop was an initial attempt to promote the interaction between the ocean and acoustic modeling communities. This interaction between the communities is essential to the development of truly interactive basic research acoustic and ocean models. We anticipate more workshops of such nature to be held in the future. The findings and recommendations generated by these workshops are expected to have a strong impact on the direction of future three-dimensional modeling research in both acoustics and oceanography .Funding was provided by the Office of Naval Research under contract Number N00014-88-K-0363

Deleterious effect of suboptimal diet on rest-activity cycle in Anastrepha ludens manifests itself with age.

Activity patterns and sleep-wake cycles are among the physiological processes that change most prominently as animals age, and are often good indicators of healthspan. In this study, we used the video-based high-resolution behavioral monitoring system (BMS) to monitor the daily activity cycle of tephritid fruit flies Anastrepha ludens over their lifetime. Surprisingly, there was no dramatic change in activity profile with respect to age if flies were consistently fed with a nutritionally balanced diet. However, if flies were fed with sugar-only diet, their activity profile decreased in amplitude at old age, suggesting that suboptimal diet affected activity patterns, and its detrimental effect may not manifest itself until the animal ages. Moreover, by simulating different modes of behavior monitoring with a range of resolution and comparing the resulting conclusions, we confirmed the superior performance of video-based monitoring using high-resolution BMS in accurately representing activity patterns in an insect model

Pulmonary Toxicity Studies of Lunar Dust in Rodents

NASA has been contemplating returning astronauts to the moon for long-duration habitation and research and using it as a stepping-stone to Mars. Other spacefaring nations are planning to send humans to the moon for the first time. The surface of the moon is covered by a layer of fine dust. Fine terrestrial dusts, if inhaled, are known to pose a health risk to humans. Some Apollo crews briefly exposed to moon dust that adhered to spacesuits and became airborne in the Lunar Module reported eye and throat irritation. The habitable area of any lunar landing vehicle or outpost would inevitably become contaminated with lunar dust. To assess the health risks of exposure of humans to airborne lunar dust, we evaluated the toxicity of Apollo 14 moon dust in animal lungs. Studies of the pulmonary toxicity of a dust are generally first done by intratracheal instillation (ITI) of aqueous suspensions of the test dust into the lungs of rodents. If a test dust is irritating or cytotoxic to the lungs, the alveolar macrophages, after phagocytizing the dust particles, will release cellular messengers to recruit white blood cells (WBCs) and to induce dilation of blood capillary walls to make them porous, allowing the WBCs to gain access to the alveolar space. The dilation of capillary walls also allows serum proteins and water entering the lung. Besides altering capillary integrity, a toxic dust can also directly kill the cells that come into contact with it or ingest it, after which the dead cells would release their contents, including lactate dehydrogenase (a common enzyme marker of cell death or tissue damage). In the treated animals, we lavaged the lungs 1 and 4 weeks after the dust instillation and measured the concentrations of these biomarkers of toxicity in the bronchioalveolar lavage fluids to determine the toxicity of the dust. To assess whether the inflammation and cellular injury observed in the biomarker study would lead to persistent or progressive histopathological changes, a similar study was conducted to microscopically examine rat lung tissue and the associated lymph nodes for lesions, including fibrosis, 1 or 3 months after the instillation. The results from this ITI study led us to select two concentrations (20 and 60 mg/cu m) for an inhalation study, in which rats were exposed to lunar dust 6 h daily for 4 weeks (5d/wk). Similar biochemical and histopathological assessments were carried out in these rats 1 day or 1, 4, or 13 weeks after the dust exposure. Rats exposed to lunar dust by ITI or inhalation showed effects indicating that the dust is moderately toxic. The data will be useful to establish safe exposure limits for astronauts working in a lunar habitat and also help engineers designing dust mitigation systems for lunar vehicles and habitats

Correlated Light Scattering by a Dense Distribution of Condensation Droplets on a Window Pane

An analytical model of the scattering structure factor for an assembly of noninteracting hard disks has recently appeared in the literature [Phys. Rev. A 42, 5978-5989 (1990)]. We employ this model to calculate correlated light scattering by monodispersions and binary mixtures of condensation droplets on a window pane. We find that an area fraction of f greater-than-or-equal-to 0.6 is required for producing the near-forward direction scattering suppression and that a moderately wide polydispersion of droplet sizes is capable of producing the experimentally observed bright ring of colored light