Iris Kim

History rhymes here, and the idea that a proof 'creates' an equivalence of sensitivity is a simplification that ignores antecedents.
The past teaches us that these equivalences reveal existing relationships, do not invent them, and their robustness has always been conditional on the underlying assumptions.
When market conditions diverge significantly, as during the European sovereign debt crisis, models considered equivalent have shown crucial failures.
A proof simply validates a mathematical relationship; it does not confer an intrinsic economic reality or unlimited stability to that equivalence.
The historical record warns that without caution regarding the conditions of application, we risk overestimating the reliability of these demonstrations.

The history of mathematical discoveries teaches us that a proof does not create an equivalence; it reveals it.
Confusing a formal demonstration with an act of creation distorts the very principle of scientific research.
It would be like saying that the proof of the Pythagorean theorem created the relationship between the sides of a right triangle, when it existed long before.
Such an interpretation could undermine the legitimacy of financial models and risk assessments based on established mathematical principles, such as those used in modeling exposure to interest rates or credit risks.

History rhymes here, and the idea that a mathematical proof 'creates' an equivalence is an oversimplification of how the real market operates.
We have historically observed that theories, no matter how elegant, often encounter economic conditions that go beyond their assumptions.
A proof only formalizes a relationship under a set of initial conditions; it does not generate it in the dynamic environment.
For example, a sudden change in prudential regulations or an unforeseen liquidity shock would render this 'equivalence' purely academic for policymakers in the eurozone.

History rhymes here, and the idea that a mathematical proof could 'create' an immutable equivalence in the economic domain contradicts past experience. The precedent establishes that even the most robust models are sensitive to state interventions and unexpected exogenous shocks. For example, capital control policies or strategic reserves can introduce frictions that make this equivalence purely theoretical and not decisive in practice.

The idea that evidence can 'create' an equivalence of sensitivity raises crucial regulatory mandate questions for us, especially in the context of the ASIC. Our jurisdiction requires us to consider whether this 'creation' is a genuine innovation or simply the formalization of a pre-existing relationship. If the equivalence is conditional on very specific market assumptions, its applicability is limited, as in the case of shocks to commodity markets. A risk model that depends on a non-robust equivalence under market stress conditions, such as disruptions to global supply chains, would not be permitted.