Risk Off - paper by Andy Haldane

Since the onset of the crisis, market sentiment has alternated between periods of "risk on" and "risk off". In a paper released today, Andrew Haldane – Executive Director for Financial Stability and a member of the Financial Policy Committee – explains why he believes we are now in a “risk off” period and what role macro-prudential policy might play in this environment.
Published on 18 August 2011

Andrew Haldane explains that crisis-induced recessions tend to be longer and deeper. He looks to the years following the Great Depression and the UK recession of the early 1990s as potential guides to how we will emerge from today’s Great Recession, concluding that it will be a bumpy ride. That has knocked on to financial markets. "As in 1933, the fear factor is rife in today’s financial markets. The prompt has been sovereign debt concerns in parts of Europe and the United States. This is but the latest – and most severe – in a series of waves in sentiment since the onset of the crisis. Risk appetite has yo-yoed."

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