samchain/econo-pairs-v1 huggingface dataset:
How the banking and financial system operates will clearly have an impact on the way in which climate risk is managed or reduced. The HKMA, in support of the mission to reduce climate risk and to achieve sustainable finance, would like to launch three sets of measures. Green and Sustainable Banking 3. In September 2017, I announced seven measures that the HKMA would undertake to bring Hong Kong into the new era of Smart Banking. The main objective of the Smart Banking Initiatives is to promote financial innovation, better customer experience and financial inclusion. What I am going to propose today is to enlarge the ambit of this exercise to “Smart and Sustainable Banking”. We all appreciate the damages and economic losses caused by increased frequency and ferocity of natural disasters arising from global warming and climate change. The increased risk of business disruption and adverse impact on collateral value of properties also pose real threat to the banking system. So it is now time for the HKMA and the banking industry to take a more proactive approach to manage climate risk by pursuing “Green and Sustainable Banking”. The HKMA will soon issue guidance to the banks in Hong Kong that a three-phased approach will be taken to promote Green and Sustainable Banking: Phase I – this will entail the development of a common framework to assess the existing baseline of individual banks in order to establish how “green” they are currently.

The baseline assessment would include the environmental risk of a bank’s lending and other businesses. In this Phase, the HKMA will need to work with the industry to develop a ___ (a) common framework, drawing on the latest international standards and best practices. The HKMA will also, in collaboration with the relevant international bodies, such as the International Finance Corporation (IFC), provide capacity building and training programmes to banks in Hong Kong for better understanding of the green principles and methodology in undertaking the baseline assessment. Phase II – once we have completed the baseline assessment of banks in Hong Kong in Phase I, the HKMA will engage the industry and other relevant stakeholders in a 1/3  BIS central bankers' speeches  (b) consultation on the supervisory expectation or requirement on Green and Sustainable Banking going forward. The key objective of this Phase is to set tangible deliverables for Hong Kong’s banking industry to become “greener” and “more sustainable”. Phase III – once the deliverables have been set, the next Phase is Implementation, (c) Monitoring and Evaluation. The success of this Phase depends crucially on appropriate measurement of the “greenness” of the banks and the timely disclosure of progress or the lack of it. 4. With the support of the banking industry, I expect Phase I could be completed within around 12 months’ time from now. Responsible Investment 5. In the past few years, there has been a significant shift in mind-set amongst asset owners on Green and ESG investments.
BIS Review 126/2009  5  Chart 1 – The Bank of England’s balance sheet  Liabilities £ billions  Other liabilities Short-term open market operations, drain  300 Lehm an  APF Phase II  Reserve Balances Foreign currency public securities issued  250  Cash ratio deposits Notes in circulation  200  150  100  Assets  50  £ billions 0 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Mar-09 Jun-09 Sep-09 LehmDec-08 an APF Phase II Other assets 300 Loan to APF Longer-term sterling reverse repo  250  Short-term open market operations, lending Ways and Means advances to HM Government  200  Bonds and other securities acquired via market transactions 150  100  50  0 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09  6  BIS Review 126/2009  Chart 2 – Gilt yields  Feb IR Pub.

The Asset Purchase Facility also pays interest at Bank Rate to the Bank of England on the loan used to buy the assets. At present, the average coupon on the purchased gilts is around 5%, which substantially exceeds Bank Rate at 0.5%. Consequently the net interest income of the Fund is positive. But international accounting principles dictate that the assets on the balance sheet of the Asset Purchase Facility are also marked to market. Since gilt prices are highly sensitive to movements in discount rates, it is quite plausible that falls in the prices of gilts as a result of any future increase in discount rates will leave the Asset Purchase Facility accounts in deficit overall. The question is: Does this matter? At first sight, any loss on the Asset Purchase Facility would represent a cost to the taxpayer, given the Treasury indemnity. But of course the gilts held in one part of the public sector, the Asset Purchase Facility, are just a liability of the rest of the public sector. In the accounts for the rest of the public sector, there must therefore be  2  The ECB has undertaken no such purchases of government debt, while the Federal Reserve’s purchases of US Treasuries represent a much smaller fraction of the market. BIS Review 126/2009  3  offsetting interest flows, as well as corresponding capital gains or losses, at least if those accounts were also to be marked to market.
On top of that, the marginal/average adjustment for rentals to which I referred earlier would have tended to raise the realised real rate even further, because the prices influencing business decisions probably fell by more than the CPI. In sum, what started as a headline real rate of 3.3% ended up as a rate well in excess of 10½%. Businesses would have been affected by the factors responsible for the difference between these figures, but would not have been able to anticipate all of them. If we move on to April this year, the position is rather different. The backward-looking real rate, which tends to be the one which most people take as their guide when clamouring about oppressive monetary policy, is indeed high at 8.9% - again taking 12-month HIBOR as the base. But because expectations are that prices are now going to move up rather than down, the forward-looking measure, based on consensus forecasts (from the private sector) of what the published CPI will show, yields much less, 5.6%. In addition, the marginal/average adjustment may now have turned the corner, since business decision-takers may be facing prices that will rise by more than the recorded CPI, in which case real interest rates will now be perceived as lower than 5.6%. Perceptions may still be of a figure which is above the 3-4% range, which is often regarded as a global norm; but perceptions vary, and there may be some who visualise a lower figure.

Companies were cautiously optimistic in the first half of the year, but summer saw a postponement of investment and recruitment decisions. Confidence loss slowed economic growth, easing inflationary pressures. In November and December, we thus lowered the interest rates to an all-time low. 3. Under normal circumstances, changing interest rates alone would have sufficed to influence prices and economic activity. Unfortunately, the crisis proved extensive  BIS central bankers’ speeches  1  enough to disrupt the functioning of the monetary policy transmission mechanism. The ability of commercial banks to issue loans to companies and households was thus significantly reduced. This compelled us to take various non-standard measures, starting from August. We supported the securities market in order to prevent paralysation of the activities of banks; we continued the unlimited provision of liquidity loans to banks; we offered banks three-year loans on highly favourable conditions; we expanded the list of eligible collaterals for liquidity loans, and lowered the minimum reserve requirement from 2% to 1% at the end of the year. 4. Looking back, it has to be admitted that the annual growth in consumer prices was faster than expected, amounting to 2.7%. Inflation picked up mostly due to the price growth of commodities. This is confirmed by core inflation remaining below 1.5%. Inflation expectations are also in line with our long-term goal. [THE PRICE OF CRISIS-TIME MONETARY POLICY FOR CENTRAL BANKS] 1. These bold and crucial steps came with a price – the risks inherent in the central banks’ balance sheets have increased.
Starting from 1994, the Treasury’s annual use of short-term advances is to be reduced gradually over five years from 15 to 3 percent of each year’s incremental budget appropriations. By 1998, the Treasury will be entitled to short-term advances totalling not more than 3 percent of that year’s incremental budget appropriations over the previous year. In addition to that, the Treasury and the Central Bank have signed a seven-point protocol to cooperate in fighting inflation. The official aim of this accord is also to give the Central Bank more independence. So, an important development towards the full independence of the Central Bank has been initiated, as required in the Maastricht Treaty. However, we have been in the process of preparing a new Central Bank law in parallel with the same institutions in the EU. The work has already been done and we are ready to submit it to the government if and when the political environment is appropriate. On the other hand, in addition to the already installed electronic payments clearing system, the CB has signed a contract to develop and install a modern national securities settlement system. The new system will allow the Bank to increase the efficiency with which government securities can be traded on the capital markets and ensure that the payments system will match the standards of those in the EU and other western nations. The new system will also be capable of being connected to the BIS Review 105/1997  -3TARGET network.

First, by communicating a change in outlook and the bias of monetary policy, inducing an important decline in market rates at all horizons. Then, in January 2009, with a clearer assessment of the reduced inflationary pressures, the MPR was lowered by 100 basis points. Later, with the evidence of alleviated inflationary pressures and a sharp contraction in demand, the Central Bank decided to cut the MPR by 250 basis points at both its meetings of February and March. The monetary easing process continued and completed 775 basis points in seven monthly meetings, bringing the MPR to 0.50% in July 2009, the minimum level deemed adequate for a normal functioning of money markets (figure 6). In addition, the Central Bank also announced that the MPR would be held constant at this minimum level for a prolonged period of time. In order to strengthen the commitment to this announcement, which goes beyond the regular monthly MPR setting, the Bank adopted some non-conventional monetary policy measures, extending the overnight liquidity facility for banks at the MPR to 180-day term through a term liquidity facility (Facilidad de Liquidez a Plazo, FLAP). The extraordinary liquidity measures provided during the crisis extinguished in mid 2010 and their withdrawal did not generate stress in the money market. The shift to a countercyclical policy stance was also taken forcefully on fiscal policy. In January 2009, the government announced a sizable fiscal stimulus package, amounting to $ billion for that year, equivalent to 3% of GDP.
To this end, we need to speed up international work under the aegis of the FSB. Highest priority should be given to the finalisation of the FSB recommendations on stablecoins and other crypto-assets, in cooperation with other international standard-setting bodies (CPMI, BCBS, FATF). The second priority should be to regulate the interconnection between the traditional financial system and the crypto-asset market in a secure way. The timely and faithful implementation of the Basel standards on the prudential treatment of banks' crypto-asset exposures, published in December 2022, will be key from that perspective. The development of crypto-asset based services in banks must take place within a prudent framework that limits the risks for financial stability. Consequently, the enforcement of prudential standards should strictly take into account the developments of interconnections between crypto-assets and regulated entities, such as banks. Lastly, two new issues will require a global regulatory response. DeFi is the first one: its use of public blockchains and its global reach make it difficult to allocate  3/4  BIS - Central bankers' speeches  responsibilities and impose strong regulatory requirements such as in MiCA. But the FSB is working on it: it has already published a report on DeFi's vulnerabilities and policy work is in progress. Second, we need to address challenges raised by worldwide crypto conglomerates. The FSB has also initiated work on this type of crypto-asset service providers to identify and monitor the risks associated with the concentration of their activities.

To conclude, let me just stress that it is not clear to me what is going to be the future of the crypto ecosystem and the shape that the financial landscape will eventually take as a result. Market forces will decide. But what is clear to me is that, for the crypto ecosystem to overcome the confidence crisis it is currently facing, and to develop on a sustainable basis, a confidence prone regulatory and supervisory framework is needed. Central banks have an important role to play in helping develop that framework, and in facilitating a very much needed convergent and coordinated framework at the international level. Thank you for your attention. 4/4  BIS - Central bankers' speeches
The operational target of monetary policy shall be annual consumer price inflation of close to 2.5 per cent over time. Low and stable inflation is now the guiding principle behind interest rate setting in most western countries. New Zealand was the first country to introduce an inflation target at the end of the 1980s. Many other countries have since followed suit. But even though inflation targeting is a relatively new phenomenon, the idea is not new. As early as the beginning of the 1900s, the Swedish economist Knut Wicksell proposed that the interest rate should be used to keep the value of money – the price level – stable. 8  7  Finn E. Kydland and Edward C. Prescott (1977): “Rules Rather than Discretion: The Inconsistency of Optimal Plans”, Journal of Political Economy, 85, nr. 3, pp. 473–491. 8  Knut Wicksell (1907): “The Influence of the Rate of Interest on Prices”, Economic Journal, XVII, pp. 213–220. BIS Review 109/2010  5  The shift in the Norwegian economy, combined with a generous dose of good luck, has resulted in two “golden decades”. The major structural reforms have led to more efficient use of labour and other resources. Developments in the Norwegian economy have been fairly stable. Unemployment has been low. We have also had luck on our side over the past decade. Prices for Norwegian export goods, such as oil and gas, metals, minerals, fish and freight, rose sharply.

Other elements were:   fiscal policy – the management of public spending and revenues – was oriented towards full employment    credit regulation within limits specified in a separate credit budget    channelling of loans through state banks    regulation of cross-border capital movements    low nominal interest rates stipulated by the government authorities    a fixed, though adjustable, krone exchange rate    use of price regulation    an active business policy through state ownership and state grants and subsidies. The proposal to establish an incomes policy council did not receive support. There was just too much state control and coordination. Today, 40 years later, little remains of the management system that was built after the war. The structure was not sufficiently robust. Detailed management and regulation of the economy was not able to deliver sustainable growth and welfare. On the contrary, the result was poor efficiency and wide fluctuations in the Norwegian economy in the 1970s and 1980s. The wide fluctuations culminated in a credit boom in the mid-1980s, which was followed by a banking crisis and a deep recession with high unemployment at the end of 1980s and the beginning of the 1990s. The way the economy is organised has changed considerably over the past 20–25 years. It would therefore be incorrect to say that one economic model has applied to Norway through the postwar period.
Second, the legislative amendments must strike an appropriate balance between the rights of creditors and those of debtors, especially the socially excluded, and I should like to highlight the advisability of concentrating efforts in the field of social policies: a country as economically, socially and institutionally developed as Spain has sufficient resources to face up to and resolve the most dramatic and unacceptable situations of exclusion and need without affecting financial stability in the process. All these issues have been duly discussed in this Congress, which is why I shall focus on the situation of our banking system and on our economic outlook. BIS central bankers’ speeches  1  Role and situation of Spanish banks I should first like to highlight the crucial importance of banks in resource allocation and their role of intermediation between those supplying and demanding financing. Mass access to owner-occupied housing would be almost inconceivable without their intermediation. Mortgage lending is a very important segment of the financial intermediation in which credit institutions engage. As at December 2014, mortgage loans for house purchase extended by credit institutions to households amounted to slightly over € billion, more than 40% of total bank lending. The number of outstanding mortgage loans for house purchase is at present 5.8 million, a large percentage of which (82%) are at floating rates, which has allowed for the transmission of the Eurosystem’s more accommodative monetary policy to household financing conditions.

Our current forecast – which is scheduled for review in June, September and December – is for Spanish GDP to grow by 2.8% over the course of 2015, and by 2.7% in 2016. As to employment, the March figures reinforce our view that the unemployment rate should continue to fall, down to around 20% of the labour force by the fourth quarter of 2016. In Europe, the figures appear to support the view that the risks of deflation have been averted and that the economies of the Monetary Union and of the European Union as a whole are recovering and gaining momentum. If the Spanish economy is to benefit from these changes and likewise enjoy sustained higher growth, it will be essential to persevere with the reforms geared to adding market flexibility and boosting investment. Admittedly, however, the European and international financial context is unprecedented. The US exit from quantitative easing, with the interest rate rises that the markets expect, and the proliferation of negative interest rates on various financial and government debt markets, make for an unprecedented scenario that poses undoubted risks to financial stability with potentially highly volatile movements in financial asset prices. But if the risk of deflation in the euro area has finally been averted, and the US economic recovery continues apace, we may expect the financial markets to return to normal and yield curves to move back in step with normal, sustained economic growth. 4  BIS central bankers’ speeches
The breadth and engagement of the membership gives its standards credibility and creates peer pressure within the industry to promote adherence. 8  Canute, King of Denmark, England and Norway, 995-1035, reputedly set his throne by the sea shore and commanded the incoming tide to halt and not wet his feet and robes. Yet "continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person. Then the king leapt backwards, saying: 'Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.' 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Second, peer pressure within firms should reinforce standards and, more generally, the commitment to real markets. Most banks have codes of ethics or business principles. These are necessary but not sufficient not least because it isn’t reasonable to expect every trader to absorb their meaning or to translate them readily into live situations. But it is reasonable to expect them to use FMSB guidance to help recognise the differences between a real market and a rigged one. And it is essential that business cultures encourage everyone to call out market abuse when it occurs. Third, buyside pressure for proper behaviour is made easier by clear, practical standards.

Its key objective will be to pursue a broad-based transition from Libor to SONIA by 2021. Buy side firms, issuers, infrastructure firms and trade associations will be brought into the Group alongside banks and broker-dealers. We are under no illusions about the complexity of the task. Libor is embedded throughout the financial system in derivatives, loans, bonds and commercial contracts. 13  The Bank and FCA are committed to supporting UK market participants as they prepare for the transition. Reasserting London’s Leadership of Real Markets  To conclude, two years on from FEMR, by working together, we are making enormous progress. We are moving from markets that collapse when there is a shock from abroad to markets that are resilient. From markets where transactions occur in chat rooms to markets that are professional and open. From markets where few were accountable for anything to markets where everyone is responsible for their actions. The FMSB is playing an essential role in this transformation. When your standards are combined with more robust regulatory requirements, new compensation arrangements and the Senior Managers Regime, we are achieving what Canute could not. The tide of misconduct is going out, revealing the real markets working for the good of the people of the United Kingdom and the world. 12  To facilitate a smooth transition, the FCA has coordinated panel banks to support Libor until the end of 2021. See the Record of the September FPC meeting at http://www.bankofengland.co.uk/publications/Pages/Records/fpc/2017/record1710.aspx 13  9  All speeches are available online at www.bankofengland.co.uk/speeches  9