Regulating Systemic Risk: Towards an Analytical Framework

The global financial crisis demonstrated the inability and unwillingness of financial market participants to safeguard the stability of the financial system. It also highlighted the enormous direct and indirect costs of addressing systemic crises after they have occurred, as opposed to attempting to prevent them from arising. Governments and international organizations are responding with measures intended to make the financial system more resilient to economic shocks, many of which will be implemented by regulatory bodies over time. These measures suffer, however, from the lack of a theoretical account of how systemic risk propagates within the financial system and why regulatory intervention is needed to disrupt it. In this Article, we address this deficiency by examining how systemic risk is transmitted. We then proceed to explain why, in the absence of regulation, market participants cannot be relied upon to disrupt or otherwise limit the transmission of systemic risk. Finally, we advance an analytical framework to inform systemic risk regulation

Recent advances in electronic structure theory and their influence on the accuracy of ab initio potential energy surfaces

Recent advances in electronic structure theory and the availability of high speed vector processors have substantially increased the accuracy of ab initio potential energy surfaces. The recently developed atomic natural orbital approach for basis set contraction has reduced both the basis set incompleteness and superposition errors in molecular calculations. Furthermore, full CI calculations can often be used to calibrate a CASSCF/MRCI approach that quantitatively accounts for the valence correlation energy. These computational advances also provide a vehicle for systematically improving the calculations and for estimating the residual error in the calculations. Calculations on selected diatomic and triatomic systems will be used to illustrate the accuracy that currently can be achieved for molecular systems. In particular, the F+H2 yields HF+H potential energy hypersurface is used to illustrate the impact of these computational advances on the calculation of potential energy surfaces