Daily Current Affairs : 11th October 2022

Daily Current Affairs for UPSC CSE

Topics Covered

1. Economics Nobel
2. SCO RATS
3. Facts for Prelims – Map – Moldova

1. SCO -RATS

Context: Pakistan has been invited to the closing ceremony of the ongoing Joint Anti-Terror Exercise (JATE) within the ambit of the Shanghai Cooperation Organisation (SCO) being hosted by India, official and diplomatic sources confirmed.

Key highlights

• Pakistan delegation has been extended an invitation for the closing ceremony on the last day of JATE ‘Manesar Anti-terror 2022’.
• The National Security Guard (NSG) is hosting the multinational JATE “Manesar Anti-Terror 2022”, under the framework of the SCO Regional Anti-Terrorist Structure (RATS) at the NSG Manesar Garrison.
• India also participated in the RATS meet that Pakistan organised last year. An Indian delegation had participated in the closing ceremony of the two-week JATE-2021 hosted by Pakistan at the National Counter Terrorism Centre, Pabbi, in Khyber Pukhtunkhwa, in September 2021.
• The exercise is aimed at exchanging expertise, best practices and build synergy between the Counter Terrorism Forces of the SCO RATS member countries to enhance capabilities for conducting anti-terrorist operations and countering other security threats collectively.
• In May, counter-terror officials of Pakistan, Russia, China and four Central Asian countries met in Delhi under the structure as India assumed its role as Chairperson of the SCO-RATS mechanism in October 2021.
• JATE is an annual counter terrorist exercise held within the framework of the SCO RATS.
• Stage-1 of the exercise was conducted from July 27 to August 01, 2022 by the National Counter Terrorism Forces (NCTF) of SCO member countries in their respective territories.
• Stage-2 of the Exercise is being conducted from October 8 to 13 at NSG Manesar Garrison, in which eight representatives from NCTF of Republic of Kazakhstan, Kyrgyz Republic, Republic of Uzbekistan, Russian Federation and NSG of Republic of India are participating.
• The exercise will be witnessed by four “observers” from Executive Committee (EC) of RATS and one observer from State Committee for National Security of Tajikistan.

SCO Regional Anti-Terrorist Structure (RATS)

• The Agreement on the Regional Anti-Terrorist Structure as a permanent SCO body was signed during a meeting of the Council of Heads of SCO Member States on June 7, 2002, in St. Petersburg.
• Since its establishment, the Regional Anti-Terrorist Structure of the Shanghai Cooperation Organization (RATS) has made a significant contribution to the development of the Organization and became its pillar and a coordinating center for combating terrorism, separatism and extremism at the regional and global levels.
• The international influence of the RATS grows as years go by, and the organisation becomes a worthy example of multilateral cooperation aimed at achieving significant success in the field of security.
• During the evolvement of the RATS, the emphasis was on the development of the organizational and legal framework determining the principles and areas of cooperation, as well as ensuring the proper functioning of the working bodies of the RATS, namely the Council and the Executive Committee.
• As part of the rulemaking activities, the RATS developed SCO Conventions on Countering Terrorism and Extremism which were approved by the Council of the Heads of the SCO Member States, as well as regulations on practical cooperation between the competent authorities of the SCO member states in the field of security which establish forms, mechanisms and tools for their direct interaction in the field of combating terrorism, separatism and extremism.
• Within the RATS framework, with the Executive Committee as a coordinating body, the anti-terrorist capacity of the SCO member states is being developed, with joint practical events are organized and carried out.
• One of the most effective approaches to tackling this task is holding the annual joint antiterrorist exercises since 2006, providing practical training on response and interaction of competent authorities to neutralize terrorist threats and prevent terrorist attacks.
• Each exercise is based on real-life scenario to make it close as possible to the actual operational situation in the SCO space, taking into account the terrorists’ tactics.
• RATS platform provides a mechanism for interaction between the border services of the competent authorities of the SCO member states to address a separate area of ensuring the security of the SCO member states from transnational crimes associated with terrorism, such as illegal migration and trafficking of drugs, weapons, explosives, etc.

2 . Economics Nobel

Context: For significantly improving “our understanding of the role of banks in the economy, particularly during financial crises,” the Sveriges Riksbank Prize in Economic Sciences for 2022 was awarded to three American economists: Ben S Bernanke, Douglas W Diamond and Philip H Dybvi.

Key Highlights

• The Nobel Prize for Economics has gone to the three individuals for their role in research related to how banks function.
• Modern banking research clarifies why we have banks, how to make them less vulnerable in crises and how bank collapses exacerbate financial crises.
• The foundations of this research were laid by Ben Bernanke, Douglas Diamond and Philip Dybvig in the early 1980s. Their analyses have been of great practical importance in regulating financial markets and dealing with financial crises.
• The laureates’ insights have played an important role in ensuring that the crises did not develop into new depressions with devastating consequences for society.

Ben S Bernanke

• Through statistical analysis and historical source research, Bernanke demonstrated how failing banks played a decisive role in the global depression of the 1930s, the worst economic crisis in modern history.
• The collapse of the banking system explains why the downturn was not only deep, but also long-lasting.
• It added that the importance of well-functioning bank regulation is also understood thanks to this research.
• Interestingly, Bernanke was the head of the US central bank, the Federal Reserve, when the 2008 crisis hit, and was able to “put knowledge from research into policy.

Douglas W Diamond and Philip H Dybvi

• Both Diamond and Dybvig worked together to develop theoretical models explaining why banks exist, how their role in society makes them vulnerable to rumours about their impending collapse, and how society can lessen this vulnerability.
• These insights “form the foundation of modern bank regulation,”.
• The model captures the central mechanisms of banking, as well as its weaknesses.
• It is based upon households saving some of their income, as well as needing to be able to withdraw their money when they wish.
• That this does not happen at the same time for every household allows for money to be invested into projects that need financing.
• They argue, therefore, that banks emerge as natural intermediaries that help ease liquidity.
• But with massive financial crises that have been witnessed in history, particularly in the US, it is often discussed how banks need to be more careful about assessing the loans they give out, or how bailing out banks in crisis might turn out to be.

How does society resolve this mismatch?

• Diamond and Dybvig showed that these mismatches can best be solved by institutions constructed exactly like banks. “In an article from 1983, Diamond and Dybvig develop a theoretical model that explains how banks create liquidity for savers, while borrowers can access long-term financing,” states the Academy. They also explained that banks are able to resolve this conflict through the process of maturity transformation.
• “The bank’s assets have a long maturity, because it promises borrowers that they will not need to pay back their loans early. On the other hand, the bank’s liabilities have a short maturity; depositors can access their money whenever they want. The bank is an intermediary that transforms assets with long maturity into bank accounts with short maturity. This is usually called maturity transformation,” states the Academy.
• Together, the work for which Bernanke, Dybvig and Diamond have been recognised has also laid the foundation for modern bank regulations. Their work has been “crucial to subsequent research that has enhanced our understanding of banks, bank regulation, banking crises and how financial crises should be managed,” states the Academy.

3 . Facts for Prelims

Moldova

• Moldova, officially the Republic of Moldova is a landlocked country in Eastern Europe.
• It is bordered by Romania to the west and Ukraine to the north, east, and south.
• The unrecognised Russian puppet state of Transnistria lies across the Dniester on the country’s eastern border with Ukraine.
• Moldova’s capital and largest city is Chișinău.
• Due to a decrease in industrial and agricultural output following the dissolution of the Soviet Union, the service sector has grown to dominate Moldova’s economy and is over 60% of the nation’s GDP.
• Moldova is the second poorest country in Europe by GDP per capita.
• It also has the third lowest Human Development Index in Europe, ranking 80th in the world.