Covariant bi-differential operators on matrix space

A family of bi-differential operators from C^\infty\big(\Mat(m,\mathbb R)\times\Mat(m,\mathbb R)\big) into C^\infty\big(\Mat(m,\mathbb R)\big) which are covariant for the projective action of the group $SL(2m,\mathbb R)$ on \Mat(m,\mathbb R) is constructed, generalizing both the \emph{transvectants} and the \emph{Rankin-Cohen brackets} (case $m=1$)

Credit risk management and financial stability.

The International Banking and Finance Institute (IBFI) of the Banque de France organised its sixth International Monetary Seminar on the subject of “Credit risk management and financial stability” from 7 to 11 June 2004. This seminar, opened by Governor Christian Noyer, brought together forty five representatives from central banks in developed and emerging countries and from international organisations (such as the Bank for International Settlements and the European Central Bank), as well as twenty speakers from central banks, international institutions and the private sector. The first two days of the seminar were devoted to conferences on: • risks and sources of macro-financial vulnerability, the latest developments on credit risk transfer markets and the presentation of the findings of the cross-sectoral survey on credit derivatives in France; • the technical, financial and legal aspects of securitisation and credit risk management; • the presentation of the French and European experiences with respect to the role of central banks in rating companies and their contribution to financial stability; • bad debts and their impact on financial stability (case of Japan); • Basel II, a prudential framework which better reflects credit risk, and the effect of ratings on market dynamics; • lastly, the macro-financial consequences of risk transfers from the perspective of financial interdependence. Over the next two days, participants attended two workshops on the subjects of “Basel II, credit risk provisioning and accounting standards” and “Credit risk management and its macro-financial consequences”. These gave rise to intensive and fruitful discussions on the following four points: 1. identification of the sources of risk or financial vulnerability 2. credit risk assessment 3. credit risk management 4. implications for economic policy This article summarises the debates held in the workshops and the round table discussions on the last day.

A primer on the subprime crisis.

The catalyst of the current financial turmoil has been the losses on the subprime mortgage market. However, the low quality of these partly collateralised housing loans was known for a while and the default on subprime mortgages largely expected. Therefore, how to account for the fact that an expected shock on a small segment of the US mortgage market turned into a major financial crisis, causing the near-collapse of the Commercial Paper and of the interbank lending markets, that is to say of two of the most liquid financial markets? Banks have transferred risks to special entities, the so-called “conduits”, SIV (Special Investment Vehicles) and SPV (Special Purpose Vehicles). Such a practice gave the false impression that credit risk was transferred from banks outside the financial system. This was indeed not the case. The funding needs associated in particular with backup lines of credit for off-balance sheet vehicles generated pressures on the the interbank markets and led central banks to massively intervene. The roots of the current turmoil are therefore of a deeper and structural nature. For that reason, it is necessary to assess, from a longer term perspective, what are the main consequences of the recent structural changes on financial markets in order to have a good grasp on the current financial market dynamics and clarify what is meant nowadays by liquidity.

Valuation and fundamentals.

The aim of this article is not to provide a comprehensive overview of the financial crisis that began a year ago. This has already been done quite extensively and in a neat way, in particular by Borio (2008), Brunnermeier (2008), Crouhy et al. (2008) and Calomiris (2008) among others, who all describe and analyse the numerous triggers and mechanisms through which the crisis unfolded and spread to the main developed financial markets. Instead, we would like to focus on what we believe is one of the core issues of this crisis and which has not been addressed yet: valuation. Valuation is at the interplay between market dynamics, economic behaviour, accounting standards and prudential rules. The multiple, and even systemic –as far as the current episode is concerned–interactions between all these elements, associated with the inability of market participants to value complex financial instruments in illiquid/stressed markets, have resulted in a fi nancial meltdown that is already considered by many observers as the worst financial crisis since the Great Depression.

Fish embryo multimodal imaging by laser Doppler digital holography

A laser Doppler imaging scheme combined to an upright microscope is proposed. Quantitative Doppler imaging in both velocity norm and direction, as well as amplitude contrast of either zebrafish flesh or vasculature is demonstrated.Comment: Signal Recovery and Synthesis, Jul 2014, Seattle, United States. (Optical Society of America), OSA Technical Digest (online) 2014, paper JTu4A.7., Imaging and Applied Optics 2014, http://www.opticsinfobase.org/abstract.cfm?URI=SRS-2014-JTu4A.

Price Stability and the ECB'S monetary policy strategy

This paper focuses on the price stability objective within the framework of the single monetary policy strategy. It starts by reviewing what this objective, which is common to all central banks, means. Second, this paper focuses exclusively on the anchoring of short- to medium-term inflation expectations (Part 2). Several measures show that this anchoring is effective. A 'two-pillar' small structural macro-economic model framework is used to analyze the impact that this anchoring of expectations has on the determination of the short- to medium-term inflation rate. From this point of view, observed inflation in the euro area seems to be in line with the theory and the ECB's action seems to be very effective. Third, we focus on the other aspect of monetary stability: the degree of price-level uncertainty and the anchoring of inflation expectations in the medium to long term. Even though this assessment is more difficult than it is in the short to medium term, since we only have a track record covering 6 years, various indicators from the theoretical analysis paint a fairly reassuring picture of the effectiveness of the device used by the ECB.European Central Bank • Inflation • Monetary policy