Systemic Risk Centre

Last updated
Systemic Risk Centre
Other name
SRC
Established 2012
Director Jon Danielsson, Jean-Pierre Zigrand
LocationLondon, United Kingdom Flag of the United Kingdom.svg
Affiliations London School of Economics, University College London,
Website www.systemicrisk.ac.uk

The Systemic Risk Centre (SRC) is a research centre in London, hosted at the London School of Economics [1] and dedicated to the study of systemic risk and the development of policies for addressing the effects of financial crises.

London Capital of the United Kingdom

London is the capital and largest city of both England and the United Kingdom. Standing on the River Thames in the south-east of England, at the head of its 50-mile (80 km) estuary leading to the North Sea, London has been a major settlement for two millennia. Londinium was founded by the Romans. The City of London, London's ancient core − an area of just 1.12 square miles (2.9 km2) and colloquially known as the Square Mile − retains boundaries that follow closely its medieval limits. The City of Westminster is also an Inner London borough holding city status. Greater London is governed by the Mayor of London and the London Assembly.

London School of Economics public research university in London, United Kingdom

The London School of Economics is a public research university located in London, England, and a constituent college of the federal University of London. Founded in 1895 by Fabian Society members Sidney Webb, Beatrice Webb, Graham Wallas, and George Bernard Shaw for the betterment of society, LSE joined the University of London in 1900 and established its first degree courses under the auspices of the University in 1901. The LSE started awarding its own degrees in 2008, prior to which it awarded degrees of the University of London.

In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market. It is also sometimes erroneously referred to as "systematic risk".

Contents

The SRC is funded by the Economic and Social Research Council (ESRC) and was founded in 2012. Its funding was renewed for another five years in 2018. [2]

Economic and Social Research Council one of the Research Councils in the United Kingdom

The Economic and Social Research Council (ESRC) is one of the seven Research Councils in the United Kingdom. It receives most of its funding from the Department for Business, Energy and Industrial Strategy, and provides funding and support for research and training work in the social sciences and economics, such as postgraduate degrees.

The SRC finds that the underlying driver of financial crisis is endogenous risk, described in the SRC Magazine. [3] [4]

Endogenous risk

Endogenous risk is a type of Financial risk that is created by the interaction of market participants. It was proposed by Jon Danielsson and Hyun-Song Shin in 2002.

Organization

The SRC has two directors, Jon Danielsson and Jean-Pierre Zigrand, staff of eight researchers and faculty from the London School of Economics (LSE) and the University College London (UCL).

Jon Danielsson Icelandic economist

Jon Danielsson is an economist teaching at the London School of Economics and active in domestic and international policy debates. He received his PhD in the economics of financial markets from Duke University in 1991.

UCL is a public research university located in London, United Kingdom. It is a constituent college of the federal University of London, and is the third largest university in the United Kingdom by total enrolment, and the largest by postgraduate enrolment.

Research

The Centre's main research activities are divided into four different areas:

  1. Endogenous Risk
  2. Amplification Mechanisms
  3. Policy Responses
  4. Identifying Risk

SRC Research is disseminated through events, workshops, seminars and published materials – in particular, through a discussion paper series, an events programme and System Risk's youtube channel. The SRC organized a joint event with the International Monetary Fund on Macroprudential Stress Test and Policies: A Framework. [5] SRC director Jean-Pierre Zigrand was appointed in April 2017 as the UK head of global financial research project to analyse high frequency financial data. [6]

International Monetary Fund International organisation

The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., consisting of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world." Formed in 1944 at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had SDR477 billion.

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Hyun-Song Shin South Korean economist

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References