Podcast: Macro Waves
Climate change puts balance sheets at risk 6/28/2019

Climate change puts at risk the balance sheets of numerous actors, such as households, companies and the public sector. The first episode of this series of podcasts sets the general framework, William De Vijlder is going to remind us what a balance sheet is and how climate change can impact it. The second episode will focus on households and the third one on companies. In the fourth and last episode William De Vijlder will explain how climate change is impacting the balance sheet of the public sector.

TRANSCRIPT // Climate change puts balance sheets at risk : June 2019


More Podcasts

On the Same Theme

Retail and recreation: the impact of social distancing and lockdown measures on mobility trend 11/20/2020
Customer traffic flows fell sharpest in the countries that were hit hardest by the second wave of the pandemic and that implemented full lockdowns, according to Google mobility reports...
Announcement of vaccine cuts tail risk 11/13/2020
The announcement that a Covid-19 vaccine that is under development is highly effective caused major reactions in financial markets, reflecting a feeling that the growth outlook has changed. The prospect of a vaccine offers hope that in the medium run activity will normalise, but the positive impact on growth will take time to materialise. Clearly, the view that better times are ahead of us very much depends on the horizon one takes. However, decisions of households and businesses not only depend on expected growth of income and profits but also on the distribution around the growth forecast. The prospect of a vaccine reduces the probability of very negative outcomes and this reduction in uncertainty should eventually contribute to a pick-up in growth.
Fiscal policy takes centre stage (and will stay there) 11/9/2020
Market action last week largely reflected expectations of how the result of the US elections would shift the balance between fiscal and monetary stimulus. Federal Reserve Chair Powell insisted on the need for more fiscal policy support but also hinted that, if need be, more monetary easing would occur. In the UK a coordinated approach has been adopted. The Bank of England will increase its purchases of government bonds and the government will prolong its income support for employees being out of work. Fiscal policy will remain centre stage for many years to come.
Manufacturing holding up well, services under pressure 11/9/2020
The composite PMI saw a big improvement in India, for the second month in a row, and to a lesser degree in the US and China. In these 3 countries, the index is at its highest level of the past 11 months. The euro area countries saw a mixed performance. Significantly better in Ireland, slightly better in Germany but weaker in France, Italy and for the euro area as a whole. There was a big drop in the UK...
The stop-start recovery 11/2/2020
Activity was already slowing before the new lockdown measures and the latter will act as an additional brake. We are living in a stop-start economy. The contraction of activity should be more limited than in March-April. The measures are less strict for economic activity, businesses are better prepared and exports should benefit from a more dynamic business environment, in particular in Asia, compared to what happened in spring.The stop-start recovery should also have negative consequences that go beyond the near term. Uncertainty may last for longer which entails increased risk of bigger scars like a rise in long-term unemployment or corporate bankruptcies. It may intensify disinflationary forces and increases the burden on public finances. It will also take more time until the pre-pandemic activity level will be reached.
The stairway of public indebtedness 10/23/2020
For a large sample of developed economies, government debt as a percentage of GDP has been on a rising trend over the past 40 years. High public sector debt weakens the resilience of the economy to cope with interest rate and growth shocks. This calls for embarking, at some point in time, on a fiscal consolidation. Clearly, now is not the time. The economy is still recovering from the Covid-19 shock and the outlook remains highly uncertain. Nor is there any urgency, considering the very low interest rates. However, the absence of urgency in the near term should not make us forget about the necessity to act at a later stage. Otherwise, the resilience of the economy would weaken further. It would also represent a bet that in every downturn, central bank QE will come to the rescue.
A temporary relaxation of leverage standards 10/19/2020
On 16 September, the Single Supervisory Mechanism (SSM) for the euro zone announced the temporary exclusion of reserves with the Eurosystem from the calculation of leverage ratios at major banks. Similar relaxations had been introduced a few months earlier in the USA, Switzerland and the UK. The exceptional measures taken by public authorities to bolster liquidity have resulted in a significant expansion of banks’ balance sheets. Fearing that leverage requirements could hamper the transmission of monetary policy and affect banks’ abilities to lend to the economy, first regulators and then supervisors have temporarily relaxed such requirements. With little prospect of central banks reducing their balance sheets (and therefore automatically central bank reserves) in the short term, the exclusion of reserves from leverage exposure might be required for a lengthy period. In the USA, where the relaxation of the requirement has gone further than in the euro zone (temporary exclusion of Treasury securities in addition to reserves, lasting deduction of reserves for custodial banks*), it allowed a marked improvement in leverage ratios at the very big banks in Q2 2020. Granted, the measure of leverage exposure used in calculating scores for systemic importance has not changed. However, targeted measures to rationalise balance sheets, by the end of 2020 or 2021, could help avoid an increase in G-SIB capital surcharges. * Banking organisations predominantly engaged in custody, safekeeping and asset servicing activities
Supply-side policy for a post-Covid-19 world 10/16/2020
The Covid-19 pandemic will have profound longer-term consequences. Certain industries will benefit, directly or indirectly, whereas others will suffer.The idea of thriving industries full of new opportunities and others struggling to survive reminds us of Schumpeter’s creative destruction. Such a process can entail huge costs in the short run. Research shows the key role played by active labour market programmes. More broadly, economic policy not only needs to focus on the demand side but also, and increasingly, on the supply side so as to avoid that the pandemic acts as a lasting drag on growth.
Will companies use better cash flows to invest? 10/9/2020
A key question in assessing the pace of the recovery in coming quarters is what will happen to corporate investment. Financial analysts are expecting profits of US companies to increase. If confirmed, we can expect better cash flows which, based on historical relationships, should lead, with some delay, to a rise in capital formation by companies. However, there is a possibility that companies which have seen a pandemic-induced rise in indebtedness would prefer to use their extra cash to pay back debt. Cash flow uncertainty is another factor that could weigh on the willingness to invest.    
PMI: services sector is suffering again from the pandemic 10/9/2020
The PMI data for September saw diverging trends, between sectors and geographies. The composite PMI has been stable in the US in September after rebounding the month before. In the euro area however, the jump in July was shortlived and after the sharp drop in August, September saw another decline, leaving the PMI just above the 50 threshold...

ABOUT US Three teams of economists (OECD countries research, emerging economies and country risk, banking economics) make up BNP Paribas Economic Research Department.
This website presents their analyses.
The website contains 2569 articles and 664 videos