Brian P Sack: Dollar asset markets – prospects after the crisis Remarks by Mr Brian P Sack, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Financial Markets Association ACI 2010 World Congress, Sydney, 26 March 2010. These remarks were presented via video conference from New York. *  *  *  Introduction The recent financial crisis provided global capital markets with the most significant stress event that they have faced in many decades. For U.S. asset markets, this episode revealed a wide range of outcomes in terms of their ability to function though a period of stress. Some markets demonstrated remarkable liquidity and an unparalleled status as a safe haven for investors; others simply fell apart as investors shied away from illiquid assets with too much complexity and opacity and too much exposure to counterparty risk. Indeed, for many of the markets involved in the intermediation of credit in the U.S. financial system, the crisis revealed structural deficiencies that made the system unstable. Once revealed, this instability required an immediate and forceful policy response to limit the damage. As certain markets ground to a halt, policymakers took extraordinary actions to mitigate the damage to the broader financial system and, ultimately, to the real economy. Those actions, which included a range of liquidity facilities launched by the Federal Reserve and by central banks around the world, proved effective and brought the financial system back from the brink of a complete meltdown.
Research tells us with a high degree of confidence that: •  In the Northern Hemisphere the last 30 years have been the warmest since AngloSaxon times; indeed, eight of the ten warmest years on record in the UK have occurred since 2002; 3  •  Atmospheric concentrations of greenhouse gases are at levels not seen in 800,000 years; and  •  The rate of sea level rise is quicker now than at any time over the last 2 millennia. 4  Evidence is mounting of man’s role in climate change. Human drivers are judged extremely likely to have been the dominant cause of global warming since the mid-20th century. 5 While natural fluctuations may mask it temporarily, the underlying human-induced warming trend of two-tenths of a degree per decade has continued unabated since the 1970s. 6 While there is always room for scientific disagreement about climate change (as there is with any scientific issue) I have found that insurers are amongst the most determined advocates for tackling it sooner rather than later. And little wonder. While others have been debating the theory, you have been dealing with the reality: •  Since the 1980s the number of registered weather-related loss events has tripled; and  •  Inflation-adjusted insurance losses from these events have increased from an annual average of around $ in the 1980s to around $ over the past decade. 7  The challenges currently posed by climate change pale in significance compared with what might come.