samchain/econo-pairs-v1 huggingface dataset:
I think it’s pretty safe to say – after one reads the newspaper on any given day – that we may be at a low point of confidence and trust between the public and the financial sector – with a series of high profile events over the past 18 months that raise issues of both basic compliance with laws and regulations and of governance and culture in firms and in the system more broadly. Culture can be a complex topic – and I know it’s one that firms are spending a lot of time thinking through and trying to figure out how to ensure a strong culture. As we are thinking about it, we’re asking ourselves a series of questions – and I thought I’d share a couple of these with you as food for thought on this topic. Culture starts at the top of the organization – “the tone at the top” •  Do the directors/CEO set the right tone for behavior at the organization? •  Is there effective challenge and debate at the board meetings/committee meetings? BIS central bankers’ speeches  5  •  Do personalities interfere/get too big within the company for effective risk management? •  What’s the dialogue like between supervisors and the firm? In a strong risk culture, incentives within the firm set the right expectations for behavior. •  How are audit and supervisory findings handled? •  Does the performance management system reward both good behavior and punish bad behaviors or lapses?

But one thing I’m certain of is that a lot has changed in those five years – and much of it for the positive in terms of addressing some of the key weaknesses that led to the crisis. Where progress has been made I thought I’d start first by reflecting on several areas where we’ve seen progress. Importantly, the balance sheet repair that was necessary is underway. •  Banks are building capital – both the quantity and the quality of capital have improved markedly in the past several years. For example, by some measures, the largest banks in the U.S. have more than doubled capital levels over the past four years. •  Banks are also building liquidity, and liquidity levels far exceed those that most firms had going into the crisis in 2008. •  While progress on both fronts is somewhat uneven across jurisdictions, there are efforts underway, including through such mechanisms as the Basel rulemaking process and EU initiatives, to continue to make bank balance sheets more resilient to stress in the future. In the area of recovery and resolution, with the second round of plans in for the largest firms (and the first round in or due shortly for the remaining firms), a lot of learning has happened through this process.
Given this, there is a lot of international work on trying to alleviate the consequences for the economy when the banking system is subject to shocks. For instance, several countries have developed a framework within the Financial Stability Board (FSB) for how banks in distress can be wound up without too much impact on taxpayers. This framework has been introduced through an EU directive into Swedish legislation in the act on resolution. I welcome these standards. But in addition to these standards regarding resolution, it is important that we conduct global crisis prevention work that reduces the risks that banks will suffer problems. And as I mentioned, this work is largely done within the scope of the Basel Committee. Why are globally-harmonised capital requirements a good idea? Much of the Basel Committee's more than forty years of work has concerned capital levels in the banks, and for good reasons. Then as now, our assessment is that wellcapitalised banks benefit financial stability and contribute to a positive development in society. Banks that are well-capitalised are more resilient to losses and have greater capacity to obtain market funding during times of financial unease. In other words, the risk of a financial crisis declines if the banks are well-capitalised. Up until the end of the 1980s, the regulatory frameworks for banks’ capital levels were relatively different in different countries. In many areas, the existing capital requirements were considered outdated and in need of revision.

Sweden’s special requirements need to be reviewed  Source: Sveriges riksbank  Without saying anything about what a future floor for risk-weighted assets may look like, I will simply assume in my example that no bank’s risk-weighted assets may be less than 75 per cent of what they would have been if the Basel Committee's standardised methods had been used. I would like to point out that this 75 per cent should not be seen as an indication of any future calibration of a floor for riskweighted assets. I have chosen this figure because 75 per cent lies between the 60 and 90 per cent that the Basel Committee mentioned in its consultation document in March 2016.4 Given this assumption, our most recent calculations indicate that the major banks’ aggregated risk-weighted assets would increase from the current SEK 2,800 billion to around SEK 4,500 billion. This would mean an increase in the current risk-weighted assets of more than 50 per cent. If, and I would like to emphasise if, Sweden retains its national special requirements in the future, the banks’ CET 1 capital requirements will increase by more than 50 per cent, or around SEK 300 billion. This would of course be a significant increase from the current capital requirement levels.
Since the summer of 2007, the total value of our £ notes in circulation has risen from £ to £ Again, I believe this is a pattern seen in the high denomination notes of other currencies. Chart 5 shows the same story, but this time expressing it in terms of the contribution of each denomination to overall growth. The yellow contribution shows the role of the £ This strikes me as pretty good prima facie evidence that there has been an increase in demand for banknotes as a store of value. BIS Review 162/2009  3  So far, I have told the story of trends in demand for banknotes over the last forty years in terms more of the macroeconomics of demand for notes as central bank money. Now I want to turn to the more micro elements of banknote use. The first thing to say here, as Chart 6 illustrates, is that over the last twenty years there has been a major change in the method of distributing banknotes to the public. At the start of the 1990s there were under 20,000 ATMs in the UK, whereas now the number is over 60,000. Since the beginning of the current decade, the major growth has been among the independent ATM deployers, as opposed to financial institution operated machines. 4  BIS Review 162/2009  And as Chart 7 shows, ATM withdrawals now account for around 70% of all cash acquisitions by individuals in the UK, compared with 25% in the early 1990s.

In Japan, monetary policy announcements resulted in significantly improved investor sentiment, with the Nikkei stock index climbing by 80% between November 2012 and May 2013 on the back of a strongly depreciated yen and the ensuing higher profit expectations of Japanese companies. In the positive risk climate, investments perceived as secure have lost value. A prominent example is gold: The dollar price per fine ounce of gold had risen in 2011 to a high of USD 1,900. Currently, it is approximately a quarter lower. Government bonds perceived as secure have also fallen in value, even though their yields are still very low. This also applies to Confederation bonds. While the yield on ten-year Confederation bonds, for example, has significantly increased since the low point of last December, at around 0.8% it is still extremely low. Movements in the Swiss franc exchange rate matched this risk-friendly market environment. Since January, the euro/Swiss franc exchange rate has moved further away from the minimum rate of CHF 1.20, and at times, values were recorded which were last seen in Spring 2011, in other words, before the introduction of the minimum exchange rate. On a trade-weighted basis, however, the Swiss franc has remained largely unchanged since the beginning of the year. The favourable developments on the financial markets, which have persisted over a lengthy period, were the result of a reduction in extreme risks.
15  See also Blume, M. (2000), The structure of the U.S. equity markets, Rodney L. White Center for Financial Research, paper 17-00, The Warton School, University of Pennsylvania. BIS Review 5/2002  7  conclusion at present could be that certain tendencies that were evident in the United States may also have been present in Sweden. How can households’ risks be reduced? Besides calling for more knowledge about what actually happened while the IT bubble was growing, the course of events raises what is perhaps the more important question of what can be done to provide more support in the future for long-term saving by households. It is essential for society in general that stock markets function properly. At the same time, households need an adequate return on their savings and should be in a position to identify and manage different types of risk. Basically, this is a matter of education. Over the years, the Swedish Share Promotion Association and the Swedish Shareholders Association have done much to improve people’s knowledge of these matters. Information that is prompt, up-to-date, correct and relevant is likewise crucial. The new technology is inundating us with information but more does not necessarily mean better. It follows that households must be helped to interpret the information and pick out what matters most. An import role in this respect is played by independent analysts and consultants, not to mention media. These agents can see through and criticise corporate managements that are unduly optimistic or provide information selectively.

Saving regularly in particular shares or a mutual fund reduces the problem of timing but experience shows that the inputs should be spread over a long period. Another approach involves using various methods to assess when the stock market is high or low; as I need hardly point out to such an experienced assembly, this is not exactly easy. Diagram 1 Real earnings on shares, bonds and bank savings 8  7,0  7,2  7 6 5 3,5  4  3,2  2,9 2,4  3 2 1 0 Shares  Bonds  USA 1802-1998 13  Bank savings  Sweden 1918-1998  All three diagrams come from Bäckström, U. (2000), Tankar om aktiesparande (‘Thoughts about saving in shares’) Ekerlids Förlag, Stockholm.
Technology does not only manifest itself in web and wires, but also in the rarefied area of financial engineering, with advanced mathematical models and complex equations developed to price new derivative products. These have become useful instruments for hedging purposes and for offloading and allocating risks to those who have the appetite and capacity to take them on. 22. But these developments have brought dangers and anxieties as well as benefits and convenience. The Y2K episode – though it was well managed and ultimately uneventful – underlined how dependent we have become on the technology created over the last decade or so, and how irreversible that technology is. More recently, and now that the Y2K anxiety has been overcome, the rapid development of e-banking has underlined other concerns about privacy, security, risk management, customer protection – even about the very nature of banking – in a borderless world. The dangers posed by innovative financial products hardly need to be laboured in a place that has been very much at the brunt of their more destructive forces in recent years. 23. What can a monetary authority do in the face of such difficulties? I have referred already to the drastic measures taken in 1998, and more than enough has been said on that matter elsewhere. In the field of regulation and supervision, we need to ensure that we keep pace with the rapid 5  BIS Review 114/2000  developments going on, so that anxieties about e-money and e-banking – real or imagined – are properly addressed.

Second, a set of resolutionrelated reforms are intended to limit the consequences to the financial sector if a failure by such an institution still were to occur. Given the limited time on this panel, I will not review in detail the post-crisis comprehensive capital and liquidity framework that the Federal Reserve has put in place. However, from the perspective of addressing too big to fail, it is important to highlight the Federal Reserve rule finalized this year that imposes risk-based capital surcharges on the handful of U.S. global systemically important banking organizations (GSIBs). Under this framework, a GSIB’s riskbased capital surcharge will reflect the degree to which its failure would impact the financial system. In effect, the risk-based capital surcharge confronts each U.S. GSIB with the choice to either reduce its systemic footprint or instead to hold more capital. The policy approach to too big to fail recognizes, of course, that we can reduce but cannot completely eliminate the possibility of a large financial institution’s failure. Therefore, a second aim of our post-crisis reforms has been to limit the adverse consequences that would result if a large financial institution were to fail. That is, large financial firms need to be capable of being successfully resolved without creating unacceptable collateral damage to the rest of the financial system and to the economy.
Second, at the time of the action, the FPC did not have powers of direction in relation to borrower focussed macro-prudential risks. The Committee’s powers of direction were confined to bank capital. The FPC’s actions in 2014 took the form of recommendations to the PRA and FCA under the Committee’s general recommendation powers. In response to a request from the Chancellor of the Exchequer to review its powers in relation to the housing and mortgage market and advise on whether any changes were necessary, later in 2014 the Committee recommended that it be given the power of direction in relation to debt to income and loan to value.23 Parliament approved these new powers for the owner-occupier market in 2015. Conclusion  There has, since the crisis, been a lively and often intense debate about the most appropriate allocation of macro-prudential responsibilities and powers between authorities in different jurisdictions. There is also currently a debate in train about the powers and responsibilities of central banks in different fields, including macro-prudential policy. That is a subject for another, probably longer, speech. I would only point out that no matter how responsibilities are organised, there needs to be some mechanism for assessing and addressing the macro prudential risks that can flow from borrower balance sheets. And that if this responsibility is allocated to a technocratic as opposed to a political authority, it is particularly imperative that there is maximum transparency and accountability around that authority’s approach and justification for action.

(a) The 2018 H2 counterfactual for stock LTI ratios takes the 2018 H2 distribution shown in Chart 3 and removes the estimated impact of FPC policy on the flow of new lending to date. The impact of FPC policy is estimated with a combination of model outputs and analysis of trends in high LTI lending over time. Assessing what could have happened if we had not introduced these policies, or if the macro environment was different, is more difficult. But we can use the models to look at some counterfactuals, the ‘what ifs’ – modelling the stock under different macroeconomic scenarios and assumptions about lender and borrower behaviour and FPC policy.22 House prices and mortgage activity have been relatively subdued over the past 5 years – with house price and income growth slightly lower than the central forecast prior to the introduction of housing tools in 2014 and markedly fewer housing transactions than we were expecting. So the policy impact – both costs and benefits – have been relatively small to date. What would mortgage indebtedness look like if the policy hadn’t been there: if house prices, and activity, had followed the paths they actually followed but the FPC policies had not been in place? We can estimate the distribution of LTI in the stock of borrowers today if the 22  See Levina et al (2019) for more detail on methodology. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  policies had not been in place.
8  BIS central bankers’ speeches  To summarize, I am very uncomfortable with calls to raise our policy rate sooner than later. I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals. And I think we should plan for our path of policy rate increases to be shallow in order to be sure that the economy’s momentum is sustainable in the presence of less accommodative financial conditions. I look forward to the day when we can return to business-as-usual monetary policy, but that time has not yet arrived. References Aaronson, Daniel, Luojia Hu, Arian Seifoddini and Daniel G. Sullivan, 2014, “Estimating and forecasting trend labor force participation,” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 38, forthcoming. Aaronson, Daniel, and Andrew Jordan, 2014, “Understanding the relationship between real wage growth and labor market conditions(pdf),” Chicago Fed Letter, Federal Reserve Bank of Chicago, No. 327, October. Aaronson, Daniel, and Daniel G. Sullivan, 2001, “Growth in worker quality(pdf),” Economic Perspectives, Federal Reserve Bank of Chicago, Vol. 25, Fourth Quarter, pp. 53–74. Acemoglu, Daron, and David H. Autor, 2011, “Skills, tasks and technologies: Implications for employment and earnings,” in Handbook of Labor Economics, Orley Ashenfelter and David Card (eds. ), Vol. 4B, Amsterdam: Elsevier / North-Holland, pp. 1043–1171. Autor, David H., 2011, “The unsustainable rise of the disability rolls in the United States: Causes, consequences, and policy options,” National Bureau of Economic Research, working paper, No. 17697, December.

Dear guests, The International Council of Museums was established in 1946. Every year, since 1977, the ICOM organises the International Museum Day, a worldwide event held on and around 18 May. In 1992, ICOM decided to choose a socially relevant theme for International Museum Day, each year. The theme chosen for 2017 is “Museums and contested histories: Saying the unspeakable in museums". Joining this worldwide celebrating day, in our museum, we have formulated it as “Interesting facts from the treasury: Art in Albanian Banknotes". And to say the unspeakable, we have invited today Mr Mark Bundy, a master of designing working for over 40 years at De La Rue, pioneers of banknote printing in the world. De La Rue is frequently heard by everyone visiting our museum, as it relates to the first company printing the Albanian banknote. Mr Bundy will show the unspeakable on the designing, techniques and art of conceiving the Albanian banknote, illustrated by photos and sketches. In the end, we invite you to explore our temporary exhibition on this topic and see the unspeakable through your own lens. 2/2  BIS central bankers' speeches
The outcome of these developments is that a new focus is being placed on deposit insurance in the post crisis period. Deposit insurance is now considered as an essential crisis management tool and an important instrument for orderly liquidation of an unsound financial institution. A well-designed deposit guarantee scheme largely supports financial stability and financial crisis resolution by mitigating risks of and maintaining trust in the 1/3  BIS central bankers' speeches  financial system. However, recalling one of the most important lessons we learned from the global financial crisis, despite the mandate given to any institution, no player can alone deal with a systemic crisis and the consequences of strong spillover effects and contagion risks. It is essential that each element of the safety net develops robust mechanisms that aim to resolve financial institutions and stabilize the financial system as smoothly as possible, minimizing the cost to the economy. Moreover, financial stability can only be preserved by a well-coordinated financial safety net, which is supported by a resilient legal framework, proper tools and instruments and careful contingency planning for each of its elements. The Bank of Albania has dedicated much of the past 10 years to integrating the lessons learned from the recent financial crises into a new regulatory framework. Our financial safety net is further aligned with international best practices, as we coordinate our roles as supervisory authority, lender of last resort and, recently, resolution authority as well.

Of course, the topic becomes more sensitive considering the current global financial complexity and its fast-changing landscape, and in view of the newly-acquired functions of the Bank of Albania and ADIA under the new law “On the recovery and resolution of banks in the Republic of Albania”. According to this law, the Bank of Albania has been assigned as the Resolution Authority, whereas the Albanian Deposit Insurance Agency is responsible for the administration of the resolution fund, which encompasses investing it in accordance with the policy approved by the Resolution Authority. Moreover, the law gives a new role to ADIA as an important partner in drafting resolution plans, as well as a new source of financing banks’ resolution, therefore increasing the pool of resources available to the Bank of Albania for resolving failing banks. So, to conclude, once again, thank you very much for the opportunity to speak to you today. It is a pleasure to have you here and I hope you enjoy the rest of your stay in Tirana. I wish you all a successful event! Thank you! 3/3  BIS central bankers' speeches