samchain/econo-pairs-v1 huggingface dataset:
Since the U.S. is still a net importer of petroleum, this development has provided substantial benefits, with our oil import bill down by about a ½ percentage point of GDP. That represents a significant boost to real disposable income for households. The degree to which this energy dividend supports household spending will depend, though, on how much is spent versus saved. While I am relatively optimistic about the growth outlook for 2015, I also must acknowledge that there are some significant downside risks. In particular, the roughly 15 percent appreciation of the exchange value of the dollar since mid-2014 is making U.S. exports more 2  BIS central bankers’ speeches  expensive and imports more competitive. My staff’s analysis concludes that an appreciation of this magnitude would, all else equal, reduce growth of real GDP by about 0.6 percentage point over this year. Some of the recent softness in indicators of manufacturing activity is likely a reflection of this development. Additionally, the decline in energy prices, while helping to support household spending, will adversely impact business investment. The support to growth from rapidly rising U.S. oil production almost certainly will fade due to the oil price decline. Now, with prices sharply lower, U.S. oil exploration and drilling activity is falling off very sharply, and this will undoubtedly exert a meaningful drag on economic activity. Turning to the inflation outlook, the data continue to come in below the FOMC’s objective of a 2 percent annualized rate for the personal consumption expenditures (PCE) deflator.

They have clearly demonstrated their will to take action when necessary. But governments are also intervening to bolster banks’ solvency and soundness. In this context and in order to ensure that national measures for dealing with the crisis are consistent, the international community is taking a collective stand. The G7 plan of action is a major step forward. It sets out clear principles to be applied by the whole international community – in particular the IMF’s International Monetary and Financial Committee – with a view to giving structure to national actions. It expounds the following principles: •  taking decisive action to prevent the failure of financial institutions;  •  taking all necessary steps to unfreeze credit and money markets;  •  ensuring that banks and other major financial intermediaries can raise capital as needed;  •  ensuring that national deposit insurance and guarantee programmes are robust;  •  ensuring accurate valuation and transparent disclosure of assets, as well as consistent implementation of high quality accounting standards. Thanks, in particular, to France’s leading role in discussions, Europe is organising itself.
Eva Srejber: How the Riksbank's financial assets are managed Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, at the Handelsbanken, Stockholm, 25 April 2006. References and diagrams to the speech can be found on the Sveriges Riksbank website, www.riksbank.com. *  *  *  Let me begin by thanking you for the invitation to come here and speak about the Riksbank’s financial asset management. The reason that I wish to take up this question is that, as you know, we recently changed the currency allocation in our foreign exchange reserve. This change is part of the general review of financial asset management that has been under way at the Riksbank for some time. In order to avoid any confusion with regard to what lies behind overall changes in our financial asset composition, it is important to explain the principles for our asset management. On a general plane, the Riksbank does not differ from other asset managers. Like them, we endeavour to generate earnings for our owner, in our case the general government. It is instead the way our management is limited that makes the Riksbank, like other central banks, different. Central banks exist ultimately to carry out a number of tasks crucial to the economy, which are linked to monetary and exchange rate policy and the functioning of the payment system. For us at the Riksbank it means that we are to ensure that inflation is low and to promote the safe and efficient functioning of the payment system.

In response to the wider environment, constant adaptation is needed both of the architecture itself and the institutions within it, such as the IMF. In terms of our quest for financial stability, this focuses specifically on sovereign debt, crisis prevention and resolution. Progress has been made since the Asian Crisis, but significantly more is needed to build on the emerging elements of the exceptional access framework, and the Fund’s lending-into-arrears policy, but also Collective Action Clauses, and the recently devised Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets. In using the matrix to categorise sources of threat there are of course a number of ways one could cut the cake. Credit exposure to emerging sovereign debtors for example can appear in the “credit” and “international architecture” boxes. iii)  Activities  Now we can move to the rows. To use the matrix as a location device to focus our efforts, decide on deliverables and enhance our resource allocation, we need to create the “boxes” by considering the types of activity we could undertake to address each main source of threat – the rows. a)  Assessment of Threats  Firstly we need to evaluate threats to the system. We need a process of data collection and assessment to analyse information and market intelligence from multiple sources. This “horizon scanning” enables us to get early warning of how and where threats could appear. We cannot do all this without knowing how markets work.
No one knew how large the losses would be and whether the reserve capital would suffice. Funding ran short. Because what financiers in the market would want to give loans to a bank that appears unsteady? And who would want money in an account in this bank? I am sure you will remember the pictures of the queues outside Northern Rock’s branches in the United Kingdom. To restore confidence, the state and the taxpayers in many countries had to inject capital and go in as owners of the banks. This would not have been necessary if the banks had held more capital when the dark storm clouds gathered in summer 2007. The Basel Committee has taken note of this. The current capital requirements are being raised substantially. If I may go into technical details, the new regulations require that the  BIS Review 159/2010  3  banks should have a Tier 1 capital corresponding to at least 6 per cent of their assets, or more correctly their risk-adjusted assets. The risk adjustment means that for each asset one recalculates the value, depending on whether the value of the asset can be regarded as certain. One sign of this might be, for instance, that the value of the asset has varied a lot. The higher risk an asset is believed to entail, the more capital needs to be allocated. At present, the minimum requirement for Tier 1 capital is only 4 per cent of the total riskweighted assets.

While the shift in foreign worker policy is necessary to allow for a more efficient allocation of resources and a more productive workforce, the latter will take time to come to fruition. During this transitional phase, business costs are likely to rise somewhat as a result of tight labour market conditions, before productivity gains catch up to offset the cost increases. In the short term, the prices of some consumer services – especially those with high labour content – can rise and indeed, have increased in the early months of this year. 2  BIS central bankers’ speeches  Reflecting these considerations, the tighter monetary stance adopted by MAS in April 2012 was a calibrated move to facilitate the ongoing supply-side adjustments, while anchoring inflation expectations. The policy stance was aimed at keeping the economy on an even keel with GDP growth expected to come in at 1–3% this year. We expect that headline and core inflation will ease gradually through the year, but along a somewhat elevated trajectory. Over time, the cumulative appreciation of the exchange rate will temper the pace of price increases in the economy. MAS is firmly committed to our objective of price stability over the medium term, even as productivity improvements arising from the significant economic restructuring will help to prevent higher costs from fuelling strong price increases. To ease the immediate burden of price and cost pressures faced by households and businesses during this period of transition, the government has implemented a wide-ranging package of relief measures.
It is a question of dampening these debt and price increases using macroprudential or fiscal policy measures, but also fundamental reforms on the housing market to generate a sustainable and improved balance between supply and demand. But if the Riksbank is so concerned, shouldn’t it then reconsider its policy and raise the interest rate? I hope that it has become clear during my discussion here that I think there are solid and convincing reasons to pursue the policy the Riksbank is currently pursuing, but I would like to repeat them briefly in any case. The inflation target has been a nominal anchor in the Swedish economy and a major reason behind the favourable economic development over the past two decades. For some time now, following the long period of inflation falling below the target, there have been signs that confidence in the inflation target has begun to falter. The Riksbank’s main task is to maintain confidence in the target – a task it does not share with any other authority. The repo rate is a blunt tool when trying to curb increases in household debt and housing prices as it influences so much else in the economy. A considerably higher rate would likely be needed in order to have a substantial effect, but then inflation and growth would be dampened, quite extensively in the worst case scenario. Neither low inflation nor weaker growth would contribute to a sustainable rise in the interest rate level.

Conclusion I think it is quite clear that the banking industry can no longer afford to continue conducting business as usual and ignore the issues that I have highlighted. The banking industry must take stock of the external challenges it faces today, including a very difficult economic environment, the impact of evolving technologies and the shift in customer expectations. It must focus on winning customer loyalty, providing value, operating efficiently and resiliently, and attracting the right talent. In addition, the enabling institutions such as educators and regulators need to provide the necessary support if the industry is to succeed in this transformative journey. The industry is clearly at a crossroads and needs to make proactive decisions now to remain relevant in the future. There are two paths that the industry can take. If the banking industry continues to operate the way it has in the past, ignoring the many challenges that it faces today, it would lose its dominant position. Competition Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 19 -  will increase from different institutions such as telecom operators, technology companies and FinTech firms, and customers will flock to these solutions, as we have already seen in some markets. Banks, as a result, will be pushed to the fringes of the industry, if not removed altogether. But if the industry manages to evolve, then the picture could be different.
This was far from the market consensus and the actual figures, given that the Spanish economy ended 2010 with a growth rate of 0.6%. Further, the haircuts applied to assets were most notable: 28% in the case of housing, 50% in that of uncompleted housing and 62% in that of land prices. In addition, a fall in net operating income of 40% was assumed, one of the most severe for all the countries involved in the exercise. Let me insist on the rigor of our stress testing, as some have broadly criticised the test because some banks from other countries were given a seal of approval only to collapse a few months later. Not only we tested all the banks but the information published by Spanish banks for the stress test was more detailed than that of the other countries. Our aim was to enable analysts and investors to check the stress test for themselves and know what volumes of problem exposures and expected portfolio losses were involved. As a result of the measures mentioned (greater disclosure, amended regulatory framework for savings banks and progress in restructuring), Spanish banks, not only the leading ones  2  BIS central bankers’ speeches  but also a large number of medium-sized banks and savings banks, were once again able to re-fund themselves on international wholesale markets, although the cost of funds continued to reflect the sovereign risk premium.

The first point is how the Fund can improve its surveillance by focusing on how best to reduce the likelihood of crises in emerging markets, in particular, how to help emerging markets better cope with the challenge of the next crisis. The second is our view that the Fund’s surveillance and its works on crisis resolution should recognize the usefulness of national and regional self-insurance efforts that are being pursued by a growing number of countries. And the third is our suggestion that the Fund’s works on crisis prevention and crisis resolution can benefit from a clear separation of these two functions in terms of duties, responsibilities, and decisionmaking, so as to achieve greater effectiveness and accountability. To begin, the consensus seems to be that the Fund has not been doing a good-enough job on crisis prevention and crisis resolution. This is evidenced by a string of financial crises in emerging markets that had happened, which does not reflect well on the Fund’s surveillance mechanism. In addition, dissatisfactions were expressed in the Fund’s perceived lack of consistency and coherence in its approach to crisis resolution, in the shortcomings of its program design and conditionality, and most importantly, in the way political pressure from the major economies were allowed to influence the program content and decisions. In the Thai case, our own experience with IMF involvement was not dissimilar.
We will receive further clues as to the current state of the economy before the next monetary policy meeting in April and will then review how this new information affects monetary policy. As I said earlier, in the slightly longer term the Riksbank’s latest forecast is that there will be a gradual recovery in the euro area and the global economy following a weaker 2012. This will of course affect Sweden too. It is expected that resource utilisation will increase, the rate of wage increases will accelerate and underlying inflation will gradually rise as growth improves. The latter is illustrated in Figure 6. BIS central bankers’ speeches  7  Figure 6. Gradually rising inflationary pressures The CPI, CPIF and CPIF excluding energy, annual percentage change 5  5 CPIF excluding energy CPIF  4  4  CPI  3  3  2  2  1  1  0  0  -1  -1  -2  -2 06  08  10  12  14  Note. The CPIF is the CPI with a fixed mortgage rate. Sources: Statistics Sweden and the Riksbank  Low real repo rate for some time to come We will need to gradually tighten monetary policy when inflationary pressures and resource utilisation increase. The Riksbank’s repo-rate path from February therefore indicates repo-rate increases during the course of 2013 and 2014. Nevertheless, this forecast still means that monetary policy will remain highly expansionary in the years ahead.

While there is a consensus about these positive effects, experience has shown that financial openness modifies the balance of risks at the macroeconomic level: •  first, it may reduce some risks, for instance, by decreasing the correlation between investment and savings;  •  second, it may nevertheless increase other risks: for instance, greater competition in the banking system may prompt strong credit growth with a loosening of credit standards, as domestic banks try to maintain their profits and market shares;  •  third, it may even create new risks, for instance through financial contagion, if risk appetite for emerging markets suddenly reverses, given the prominent role played by hedge funds in cross-border investments and the sudden shifts in their asset allocations. In this regard, the Banque de France recently published a special issue of its Financial Stability Review devoted to Hedge Funds, which may be of interest to the RBI (www.banque-france.fr). In contrast with the French experience which took place in the 1980s, the Indian process of financial liberalisation takes place in a context of intense globalisation and accelerated innovation. It is gradual but successful and it is no surprise that India was one of the first countries to participate voluntarily in the IMF Financial Stability Assessment Program (FSAP). In my view, the progressive and transparent character of this process is fundamental to guarantee that a country reaps the full benefits of its integration into the world economy.
If refinancing activity declines, leading to a decrease in gross issuance, our purchases could exceed these levels. Of course, the pace of asset purchases is not strictly limited by the amount of new mortgage origination, as market participants can also deliver older securities into TBA contracts. As the pace of MBS issuance evolves, the Desk will continue to watch the market functioning indicators discussed above, with a particular emphasis on the market’s ability to settle further purchases. Conclusion Overall, I believe the Desk has effectively and efficiently carried out the FOMC’s directive to purchase additional Treasury securities and agency MBS in a transparent fashion that achieves the FOMC’s policy objectives, supports orderly market functioning, and obtains competitive market prices. I also believe that the Federal Reserve’s balance sheet policies have been effective in easing financial conditions, particularly with respect to making historically low borrowing costs available to existing and prospective American homeowners, as well as lowering interest rates to spur business investment and household spending. To achieve our policy mandate, we rely on your continued ongoing and active participation in our operations both for your own accounts and for the accounts of your customers, consistent with your role as primary dealers. We will continue to implement the FOMC’s  12  The Desk also purchases dollar roll contracts when implied financing rates are sufficiently positive. Such operations occurred in December 2011. 13  See TMPG Best Practices.

TMPG Best Practices encourage market participants who have amassed a particularly large position in the agency MBS market to manage that position mindful of the need to support market liquidity and to take care that sudden changes in trading strategies do not adversely impact liquidity or settlement.13 The Desk has consistently transacted in the dollar roll market when purchasing MBS to facilitate the orderly settlement of its purchases and will continue to do so as necessary to avoid deterioration in the liquidity of these contracts.14 So far, there seems to be little evidence that the current pace of purchases is straining the market’s ability to deliver securities to us. The current monthly pace is within the range seen during the Federal Reserve’s previous asset purchase programs, whether measured in par terms or when adjusted for duration risk. Treasury purchases make up only about 25 percent of monthly gross issuance of coupon securities, and current SOMA holdings are less than 20 percent of coupon Treasuries outstanding, although in some maturity sectors these percentages are significantly larger. The FOMC’s capacity to purchase MBS is somewhat more difficult to gauge, given the uncertainty around future mortgage origination discussed earlier. Since the beginning of the current purchase program in 2012, we have purchased nearly $ billion in MBS on average per month, including reinvestments. This translates into about 50 percent of monthly gross issuance, below the monthly purchase rate of roughly two-thirds during the first round of large-scale MBS purchases in 2009.
In our day-to-day work, be it the preparation and implementation of European regulations or the actual performance of supervision, we run into the problem of overcomplicated and unclear regulations. The modern theory of law accepts that laws conflict. I believe we reached this point in regulation long before the Great Depression. We have made no secret of the fact that we believe the weaknesses in the European banking sector laid bare by the financial crisis should be dealt with by enhancing supervision, i.e. its processes, institutions and culture, rather than by adding more regulations or hastily changing the existing ones. Yet the regulatory whirlwind we are currently experiencing is far from over. This naturally gives rise to a number of questions. Can we be sure that such regulations will not generate even more problems? How will institutions cover all the costs of implementing the changes to all the regulatory requirements, costs which, even worse, are often hard to predict? Might a situation arise where all financial institutions have implemented CRD, CRR, BRRD, MREL, LCR, NSFR, leverage and so on, but still have little prospect of making the profits demanded by investors? Might the incentive to do business in the banking sector be weakened? Are we contributing to a shift of business not only outside our countries, but, more dangerously, outside the regulated market? These fundamental questions are not prompted solely by the recently adopted or planned regulatory changes.

We also have doubts about the existing deposit insurance system of full cover up to EUR 100,000 adopted at the start of the financial crisis. At the time, this measure certainly helped calm the public and prevent runs on banks. However, we feel that the time has come to consider a return to normal, to reintroduce the system where depositors are not fully covered, at least with respect to non-SIFI banks. I think the question that forms the title of this conference is very topical and relevant. We believe that the time has come to pause and try to discuss these issues seriously. BIS central bankers’ speeches  1  As to costs, supervisory authorities are also incurring high costs. On the European scale, we are recruiting hundreds of new employees to be able to meet the challenges of applying the new regulations. Mandatory impact assessments have been introduced, but these often sound like unconvincing or formal justifications for a result known in advance: “There will be costs, but the benefits will outweigh them in the long run”. As to complexity, we have plenty of evidence that the current sectoral approach to regulation does not make our life as supervisory authorities any easier. We are often creating three parallel but materially identical sets of basic requirements for banks, insurers and investment firms.