December 2020

Post n°196
Published on 12/24/2020

By Valère Fourel, Julien Idier, Valerio Scalone and Aurore Schilte

Unlike the fictitious scenarios used in standard prudential stress test exercises (see post "Bank stress tests: tools for prudential analysis – Episode 1"), the Covid-19 crisis represents an unprecedented adverse scenario. This is an opportunity to draw the first lessons from it: (i) on the resilience of the banking system, as observed for the time being, and (ii) on the improvement of stress-test tools in the light of this experience.

Chart 1: Loss of GDP in the stress tests and during recent crises (pp)
Chart 1: Loss of GDP in the stress tests and during recent crises (pp)
Post n°195
Published on 12/22/2020

By Valère Fourel, Julien Idier, Valerio Scalone and Aurore Schilte

In order to protect banks from macroeconomic and financial shocks, prudential authorities use a range of risk analysis tools, among them stress tests. What are they? What purpose do they serve? This blog post answers these questions and is accompanied by a second post on the “real-life” stress placed on banks by the Covid-19 crisis.

Chart 1: Steps in a bottom-up bank stress-test exercise.
Chart 1: Steps in a bottom-up bank stress-test exercise.
Post n°194
Published on 12/18/2020

Digital technologies are often seen as a potential vector for the third industrial revolution. This blog exploits a unique survey by the Banque de France to measure firms’ digitalisation and determine its potential impact on productivity. The use of technologies, which has been stimulated by the Covid-19 crisis, could facilitate and reinforce the economic rebound.

Chart 1: Use of ICTs and digital technologies in manufacturing in 2018
Chart 1: Use of ICTs and digital technologies in manufacturing in 2018 Sources: Survey of factor utilisation degrees and FIBEN (Banque de France). Scope: Firms for which at least one establishment belongs to the manufacturing sector and with at least 20 employees.
Post n°193
Published on 12/15/2020

Even though the Fed does not have an explicit financial stability objective extending beyond its supervisory responsibilities, the public speeches of Fed officials reveal that there is a relationship between the higher proportion of speaking time on financial stability topics and more accommodative monetary policy. Financial stability became a topic of concern in Fed speeches especially around the global financial crisis.

Chart 1. Main topics covered in Fed speeches
Chart 1. Main topics covered in Fed speeches Source: Istrefi, Odendahl, Sestieri (2020). The chart shows the proportion of six topics extracted from the Fed speeches for the period 1997 to 2018. The topic proportions displayed are annual averages.
Post n°192
Published on 12/10/2020

By Chloé Zapha

Collective restructuring proceedings could be improved in order to deal effectively with ailing firms. Speeding up the process of corporate debt restructuring - starting with the safeguard procedure - could help as many firms as possible to recover.

Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown
Chart 1: fewer receivership proceedings have been initiated than in previous years since the beginning of lockdown Source: France Stratégie (data from the BODACC, calculations by Cros, Epaulard and Zapha)
Post n°191
Published on 12/08/2020

Second prize-winning blog in the 2020 Eco Notepad Challenge - By Eugenie Ribault

The lack of waste management remains as harmful to the environment as civil aviation or merchant shipping. Financing these sectors, particularly in developing countries, remains complex: waste recovery is not profitable. How can these difficulties be overcome? What are the long-term benefits, locally and for the planet? This post explores some avenues including alcohol and tobacco taxes as a source of transitional funding.

Source: © Kelly Lacy, Bangladesh, 2015
Post n°190
Published on 12/03/2020

1st prize-winning blog in the 2020 Eco Notepad Challenge - by Mathilde Salin et Louis Daumas

Less than a generation lies ahead of us to carry out the bulk of the changes needed to attenuate climate change. Such a rapid transition will imply the loss of a significant share of the physical, human and financial capital accumulated in carbon-intensive sectors. We need to acknowledge this loss and look at ways of making it tolerable.

An example: Propagation of stranded assets in the extractive sector
An example: Propagation of stranded assets in the extractive sector Sources: authors and Cahen-Fourot et al. 2019. Note: Stranded assets (forced capital under-employment) in the fossil extractive sector will directly or indirectly lead to asset stranding in sectors downstream.