Volcanic explosivity index

• Abstract
  We evaluate the effects of contagion and common exposure on banks? capital through
  a regression design inspired by the structural VAR literature and derived from the balance
  sheet identity.
• Contagion can occur through direct exposures, fire sales, and market-based
  sentiment, while common exposures result from portfolio overlaps.
• First, we document that contagion varies in time, with the highest levels
  around the Great Financial Crisis and lowest levels during the pandemic.
• Our new framework complements
  traditional stress-tests focused on single institutions by providing a holistic view of systemic risk.
• While existing literature presents various contagion narratives, empirical findings on
  distress propagation - a precursor to defaults - remain scarce.
• We decompose systemic risk into three elements: contagion, common exposures, and idiosyncratic risk, all derived from banks? balance sheet identities.
• The contagion factor encompasses both sentiment- and contractual-based elements, common exposures consider systemic
  aspects, while idiosyncratic risk encapsulates unique bank-specific risk sources.
• Our empirical analysis of the Canadian banking system reveals the dynamic nature of contagion, with elevated levels observed during the Global Financial Crisis.
• In conclusion, our model offers a comprehensive lens for policy intervention analysis and
  scenario evaluations on contagion and systemic risk in banking.
• This
  notion of systemic risk implies two key components: first, systematic risks (e.g., risks related
  to common exposures) and second, contagion (i.e., an initially idiosyncratic problem becoming
  more widespread throughout the financial system) (see Caruana, 2010).
• In this paper, we decompose systemic risk into three components: contagion, common exposures, and idiosyncratic risk.
• First, we include contagion in three forms: sentiment-based contagion, contractual-based
  contagion, and price-mediated contagion.
• In this context,
  portfolio overlaps create common exposures, implying that bigger overlaps make systematic
  shocks more systemic.
• With the COVID-19 pandemic starting
  in 2020, contagion drops to all time lows, potentially related to strong fiscal and monetary
  supports.
• That is, our
  structural model provides a framework for analyzing the impact of policy interventions and
  scenarios on different levels of contagion and systemic risk in the banking system.
• This provides a complementary approach to
  seminal papers that took a structural approach to contagion, such as DebtRank Battiston et al.
• More generally, the literature on networks and systemic risk started with Allen and Gale
  (2001) and Eisenberg and Noe (2001).
• The matrix is structured as follows:
  1

  In our model, we do not distinguish between interbank liabilities and other types of liabilities.

• In other words, we can and aim to estimate different degrees
  of contagion per asset class, i.e., potentially distinct parameters ?Ga .
• For that, we build three major
  metrics to check: average contagion, average common exposure, and average idiosyncratic risk.
• N i j

  et ,
  Further, we define the (N ?K) common exposure matrix as Commt = [A

  (20)

  et ]diag (?C
  ?L

  such that average common exposure reads,
  average common exposure =

  1 XX
  Commik,t .

• N i j

  (22)

  20

  ? c ),

  The three metrics?average contagion, average common exposure, and average idiosyncratic risk?provide a comprehensive framework for understanding banking dynamics.

• Figure 4 depicts the average level of risks per systemic risk channel: contagion risk, common exposure, and idiosyncratic risk.
• Figure 4: Average levels of contagion (Equation (20)), common exposure (Equation (21)), and idiosyncratic risk
  (Equation (22)).
• The market-based contagion is the contagion due to
  investors? sentiment, and the network is an estimate FEVD on volatility data.
• For most of
  the sample, we find that contagion had a bigger impact on the variance than common exposures.

• But the world will likely pass that threshold within a decade, and global warming is showing little sign of slowing.
• The world is already facing natural disasters of epic proportions as temperatures rise.
• The only known method able to quickly arrest this temperature rise is climate engineering.
• Both strategies would reflect a small amount of sunlight back to space to cool the planet.

• One of the largest concerns for many countries when it comes to climate change is national security.
• Could climate engineering help reduce the national security risks of climate change, or would it make things worse?

The massive problem of climate change

• Since the industrial revolution, humans have put about 1.74 trillion tons of carbon dioxide into the atmosphere, largely by burning fossil fuels.
• Countries could pull carbon dioxide out of the atmosphere and lock it away, a process called carbon dioxide removal.
• As long as the amount added is larger than the amount removed, droughts, floods, hurricanes, heat waves and sea level rise, among numerous other consequences of climate change, will keep getting worse.

Who might try climate engineering and how?

• Various government research arms are already gaming out scenarios, looking at who might decide to carry out climate engineering and how.
• Climate engineering is expected to be cheap relative to the cost of ending greenhouse gas emissions.
• However, a single country or coalition of countries witnessing the harms of climate change could make a cost and geopolitical calculation and decide to begin climate engineering on its own.

Creating risks for neighbors raises conflict alarm

• So, a climate engineering project in one country is likely to affect temperature and rainfall in neighboring countries.
• Some studies show that a moderate amount of climate engineering would likely have widespread benefits compared with climate change.
• Once climate engineering is deployed, countries may be more likely to blame climate engineering for extreme events such as hurricanes, floods and droughts, regardless of the evidence.
• On top of that, the physical effects of climate engineering depend on who is doing it and what they’re doing.

What’s next?

• It’s hard to say whether climate engineering would create more conflict, or if it could defuse international tensions by reducing climate change.
• At the United Nations Environment Assembly in March 2024, African countries called for a moratorium on climate engineering, urging all precaution.
• Put simply, climate engineering is a technology that can’t be ignored, but more research is needed so policymakers can make informed decisions.

Ben Kravitz receives funding relevant to this work from the National Oceanographic and Atmospheric Administration and the National Science Foundation. Tyler Felgenhauer receives funding relevant to this work from the National Science Foundation and from Resources for the Future.

• The Rental pass NFT will augment the gaming experience of its game, Meta Cricket League, and the passes will become the primary way for gamers to rent game NFTs.
• The game runs on Aptos , one of the leading blockchains in terms of security and cost efficiency.
• The synergy that Jump.trade has established with Aptos is one of the biggest milestones in its quest to create a holistic and interoperable gaming ecosystem.
• The partnership between Jump.trade and Aptos has the potential to transform the intensity of user interest in Web3 and its possibilities.

• Furthering their work together, the Church and World Food Program USA today announce they have jointly contributed $4.3 million to help construct and support an emergency response logistics hub in Barbados.
• The Church made an initial $2 million grant to World Food Program USA for the construction of this much-needed hub, with World Food Program USA contributing an additional $2.3 million to support its completion.
• Millions of people served over 10 years of collaboration between the Church and the United Nations World Food Programme.
• Within a warehouse, emergency food will be temporarily stored and managed before dispatching it to an affected country.