samchain/econo-pairs-v1 huggingface dataset:
Bank deposits may currently be giving a negative real return, but as research by the Bundesbank also shows, negative real returns on bank deposits is the norm, not the exception in Germany.5 But savers are not the only sector potentially affected by negative rates. Low and negative rates depress net interest margins for banks since lending rates fall, but there is a floor to deposit rates caused by the effective lower bound. To date, ECB staff estimates show the impact of our policy measures has been net positive for banks.6 Net interest margins have certainly been compressed, but that has been offset by a greater flow of lending as economic activity is higher, lower incidence of non-performing loans, again due to lower servicing costs and greater levels of activity, and revaluations of fixed income portfolios. Over time, the revaluation effects will fade and the squeeze on net interest margins may intensify. Future expected profitability may also suffer if banks react to lower overall returns by extending riskier loans, which in turn may sour. Overall, potential negative side effects from low rates on banking sector profitability are likely to intensify the longer they are used, which is precisely why they are envisaged as short-term measures. But our unconventional measures are not the only headwind for financial sector profitability in the euro area.7 The overhang of non-performing loans from the financial and sovereign debt crises continue to weigh on banks’ profits.

For households, there have been mixed signals from recent surveys, although in most cases their level had also remained elevated relative to historical averages. For instance, the Citi/YouGov indicator of household expectations of inflation in five to ten-years’ time has risen, but the Bank’s Inflation Attitudes Survey for expectations of inflation in five years has fallen back from earlier on in the year. For businesses, data from the Bank’s Decision Maker Panel survey for September was published yesterday and it showed that firms’ expectations for inflation three years ahead had risen further to 4.8 per cent, from 4.2 per cent in August[8]. A market-based measure of longer term inflation expectations I have put particular emphasis on is the two-year swap rate for inflation, five years ahead. This was because it was on a sustained upwards trend through 2021 and peaked at 4.7% in March 2022. I took some encouragement from its subsequent fall back into the early summer but it picked up again  through August. It has been caught up in the wider market turbulence and in the often illiquid markets of the last fortnight it has been very volatile from day to day. This makes it impossible to get a clean read of the recent trend, but in level terms it still remains well above its longer term average, more so than is the case for the Euro area, whereas the equivalent measure for the US remains around its longer term average (Chart 8).
impose a negative interest rate on banks’ sight deposits held at the SNB if the deposits exceeded a certain exemption threshold. On 15 January 2015, the SNB discontinued the minimum exchange rate relative to the euro and simultaneously lowered the negative interest rate due to take effect on 22 January to −0.75%. Page 6/13  The role of the interest rate on banks’ sight deposits at the SNB In the years leading up to the Global Financial Crisis a so-called structural liquidity deficit prevailed in the banking systems of many countries, including Switzerland. Since the SNB did not pay interest on banks’ sight deposits at the SNB, banks held as little excess liquidity as possible in the form of sight deposits in an environment of positive interest rates. During this period, the SNB steered money market interest rates via the price and quantity of its daily money market operations, which were conducted in the secured segment of the money market in the form of repo transactions. For instance, if the SNB wished to induce a decline in money market rates, it provided more liquidity and reduced its repo rate. This setup changed with the Global Financial Crisis. Many central banks initially responded to the unfolding crisis by lowering policy rates. Subsequently, they launched asset purchase programmes (‘quantitative easing’) or – as was the case with the SNB – conducted foreign exchange market interventions.

The CRF, which was set up at the end of March 2020, and the loan guarantees provided by the Swiss federal government have together contributed significantly towards ensuring the continued supply of credit and liquidity to small and medium-sized enterprises. One of the instruments that has been reactivated is US dollar swap lines between central banks. These swap lines, which were established in late 2007 during the Global Financial Crisis, were used to counter a sharp rise in US dollar funding costs. 1 Finally, the SNB resumed monetary policy repo transactions in the Swiss  1  US dollar swap lines have been operational since 2007. From spring 2012 until early March 2020, there was no demand in the US dollar auctions conducted by the SNB. Page 2/13  franc money market, after a hiatus of eight years, with the aim of keeping secured short-term Swiss franc money market interest rates close to the SNB policy rate. The focus of today’s speech relates to this last point – to the role of the money market in the implementation of our monetary policy. Why did we choose to shine a spotlight on the money market? The role of the money market For one thing, examining the workings of the money market is in keeping with the original aim of this event.
In order to support confidence, it is essential for governments to continue implementing structural reforms, to build further on the progress made in fiscal consolidation, and to proceed with financial sector restructuring. With regard to the liquidity situation of banks, counterparties have so far repaid € billion of the € billion obtained in the two three-year longer-term refinancing operations (LTROs) settled in December 2011 and March 2012. In net terms, this implies that, of the increase in the outstanding volume of bank refinancing through the ECB’s monetary policy operations of around € billion between mid-December 2011 and early March 2012, about € billion have now been repaid. These repayments reflect improvements in financial market confidence over the last few months and receding financial market fragmentation. We are closely monitoring conditions in the money market and their potential impact on the stance of monetary policy and the functioning of the transmission of our monetary policy to the economy. Our monetary policy stance will remain accommodative with the full allotment mode of liquidity provision. Let me now explain our assessment in greater detail, starting with the economic analysis. The GDP outcome for the fourth quarter of 2012 was weak, with Eurostat’s second estimate indicating a contraction of 0.6% quarter on quarter. The decline was largely due to a fall in domestic demand but also reflected weak exports. As regards 2013, recent data and indicators suggest that economic activity should start stabilising in the first part of the year.

Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 7 March 2013. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council. Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. HICP inflation rates have declined further, as anticipated, and fell below 2% in February. Over the policy-relevant horizon, inflationary pressures should remain contained. The underlying pace of monetary expansion continues to be subdued. Inflation expectations for the euro area remain firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. Overall, this will allow our monetary policy stance to remain accommodative. Available data continue to signal that economic weakness in the euro area has extended into the beginning of the year, while broadly confirming signs of stabilisation in a number of indicators, albeit at low levels. At the same time, necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. Later in 2013 economic activity should gradually recover, supported by a strengthening of global demand and our accommodative monetary policy stance.
Together with existing legislation that applies stays domestically, the ISDA agreement means that over 90% of the dealer banks’ OTC bilateral trading activity will be covered by either contractual or statutory stays. The second initiative is yet more significant. It is a proposal for a common international standard on the total loss absorbing capacity that globally systemic banks must have.6 It will ensure that shareholders and creditors who benefit in the normal course of business also absorb losses when banks fail. It will establish a level playing field between global systemic banks, while taking into account differences in national resolution regimes. It will set clear roles for home and host regulators in a resolution. And it will give host nations the confidence that they won’t again be side-swiped by the failure of a large foreign bank. It will ensure globally systemic banks finally have the quantum of total loss absorbing capacity that minimises the costs of an unsafe banking system. And, by removing the implicit subsidy that systemic banks have long enjoyed, it will re-establish market discipline. This proposal will of course be subject to public consultation and comprehensive impact assessments. Markets and rating agencies are already adjusting to the determination of authorities to end too big to fail. Credit ratings for globally systemic banks have been downgraded to reflect the much lower probability of state support.

The IMF concluded its latest Article IV Report noting that financial regulation and supervision here is “among the best globally and…a frontrunner in implementing global regulatory reforms”.25 Trust can be sustained only if all countries follow the example of Singapore to implement standards consistently, fully and in a timely way. To provide confidence that full and consistent implementation is taking place, the FSB will support that with rigorous and transparent peer reviews and implementation monitoring. We are providing clear and simple reporting, through the work chaired by Ravi Menon in our Standing Committee on Standards Implementation. In my letter to G20 Leaders last week, I provided that Committee’s latest findings of our monitoring process, in a simple summary with report card. 24  Chart 14, from Haldane (2014), shows the correlation between national savings and investment. That correlation had reached zero just before the crisis, suggesting that the global financial system was fully integrated. However, this has now reversed sharply. Sapir and Wolff (2013) document the home bias in equity markets even within the euro area. 25  IMF (2014b). BIS central bankers’ speeches  11  From next year, the FSB will further enhance this reporting, through an annual reporting process on implementation. This will seek to highlight both shortcomings and good practice, and will seek to assess whether reform measures are having unintended effects and must therefore be adjusted. The FSB’s work will include focus in particular on the effects in emerging markets.
4  BIS Review 68/2010  Risk Premium Indicators 5-Year CDS Rate Changes*  EMBI+ 900  5.5  Turkey Brazil S.Africa Hungary S.Korea  4.5 3.5  EMBI+ Turkey 800 EMBI+  700 600 500 400  2.5  300  1.5  200  0210  1009  0609  0209  1008  0608  1007  0210  1209  1009  0809  0609  0409  0209  1208  1008  0808  *Rate changes with base August 2008 (equals 1 on August 29, 2008). Source: Bloomberg, CBRT. 0208  100  0.5  Source: Bloomberg. 13. However, an important point that needs to be highlighted is that risk indicators for the Turkish economy have exhibited a more favorable performance compared to that of other emerging market economies especially since the height of the crisis during the final quarter of 2008. This development not only implies the soundness of the Turkish financial structure, but also indicates that our economy has gained resilience and strength against global crises compared to previous periods. 14. Turkey’s CDS rating changed dramatically at the end of 2009. Medium to long-term forecasts for Turkey were revised positively, many investors increased the weight of Turkish assets in their portfolios, and more importantly, prominent credit-rating agencies upgraded Turkey’s credit rating. There may be some credit upgrades in the upcoming period, in case a fiscal discipline backed by structural reforms is achieved and maintained.

The euro recovered, on a trade-weighted basis, after having fallen to an eightyear low in July. It appreciated against the US dollar, the Japanese yen, the pound sterling and – to a lesser extent – the Swiss franc. In the US, the Federal Reserve embarked on a third round of asset purchases, intervening in the market to buy agency mortgage-backed securities. Equity markets initially registered distinct gains. The S&P 500 stock market index, for example, climbed 10% between mid-June and mid-September. This was followed, however, by a consolidation phase from October onwards, which reflected the high levels of uncertainty persisting in the market environment. This uncertainty is largely connected to the emergency policy measures in Greece and Spain, the deterioration in the global economic outlook, and the looming ‘fiscal cliff’ in the US. Government bonds perceived as safe benefited from this, with yields persisting at extremely low levels. Against this backdrop, it is notable that the volatility of risky investments has continued to decline. The VIX index, which measures implied volatility on the US stock market, and which is based on option prices, is virtually back down to the level last seen prior to the outbreak of the financial crisis in 2007. A very similar picture emerges from implied volatilities on the foreign currency and bond markets. The low volatilities are due to comparatively low demand for options to hedge price movements.
In the 2008 crisis, we saw redemptions from property funds reach more than one half of assets under management. Many of you saw the consequences – firesales of assets, magnifying the market downturn. Open-ended property funds now have 80% more assets under management than they did on the eve of the crisis. So the growing importance of funds offering short notice redemption and investing not just in property but in other potentially illiquid markets too, is a focus of regulators in the UK and internationally. The Bank of England, along with the FCA, is looking closely at the ways these funds might contribute to broader instability. And it’s in part thanks to working closely with you that we’re alert to this. By working together, our nurturing of resilience can keep up with nature’s inevitable fight back. We can together create an environment that gives you the best chance of success. Whether you succeed will be down to you. But one thing is for sure. Your success is important to everyone. For its part, the Bank of England is committed to ensuring the financial system serves you – the real economy. That’s why, here at Guildhall, in 23 days’ time, we’re hosting an Open Forum to bring together policymakers, financial market users, academics, and wider society. The aim is to chart the way for financial markets so that they serve their users and contribute to prosperity. 4  BIS central bankers’ speeches  You can sign up on our website. Please do.

Alex Brazier: Nurturing resilience to the financial cycle Speech by Mr Alex Brazier, Executive Director for Financial Stability Strategy and Risk of the Bank of England, at the Property Investor’s Banquet, London, 19 October 2015. *  *  *  I am grateful to Martin Arrowsmith, Oliver Burrows, Neil Crosby, Kishore Kamath, Magda Rutkowska and Robert Sturrock for their assistance in preparing these remarks. My Lord Mayor, Lady Mayoress, Ladies and Gentlemen. It is a great honour to join you this evening. It’s clear why you are celebrating. A crane-filled skyline to the City. New office space completion in Central London: a ten-year high; More than thirty schemes underway: a twenty-year high; And transactions that are near a record high. Half of them financed by capital attracted from overseas. Commercial property is punching well above its weight in attracting capital to Britain. Those capital inflows are helping to sustain steady growth while our major trading partners lag behind. So your industry is contributing to the livelihoods of people up and down the country. But while that’s true in the good times, it’s true in the bad times too: when commercial real estate catches a cold, the whole economy starts to shiver. It’s not just that the construction industry suffers and jobs are lost, or that banks are injured, impairing their lending to the rest of the economy. It’s that small businesses see their own property fall in value – assets that are vital to secure their borrowing.
This can lead to haircut spirals in which higher haircuts lead to forced asset sales, increased volatility and still higher haircuts. These sources of instability create the risk of a cascade – of firms moving rapidly from the situation represented in Figure 1 to that shown in Figure 2. Once the firm’s viability is in question and it is does not have access to an insured deposit funding base, the next stop is often a full-scale liquidity crisis that often cannot be stopped without massive government intervention. Fortunately, there are ways to mitigate the risk of a cascade. First, we can require that financial intermediaries hold more capital. This would push the probability distribution to the right in Figure 2. With sufficient additional capital, the probability of insolvency could be reduced to a low enough level that liquidity providers would not run. Higher capital requirements work to reduce the risk of liquidity runs, but potentially at the cost of making the process of financial intermediation much more expensive. In particular, a requirement that firms must hold more capital increases intermediation costs. Moreover, banks may respond to higher capital requirements by taking on greater risk. If an increase in risk-taking were to occur, the movement of the probability distribution to the right in Figure 2 might be offset by an increase in the degree of dispersion. Thus, higher capital requirements might not necessarily be sufficient to push all of the probability distribution above zero. Second, regulators could require greater liquidity buffers.

B.  Thailand’s outlook and BOT’s monetary and financial policies  Ladies and Gentlemen, Like the rest of emerging Asia, the Thai economy appears to soften in the near- term. On top of export recovery that could be more delayed, the vital contribution from domestic spending is also viewed to lessen. Part of this, of course, reflects a natural reversion to a more normal pace of growth following unusually strong growth last year. More specifically, the boost from the first-car scheme dissipated sooner than expected. Household debt, which has risen fast and is now in the ballpark of 80 percent of GDP, starts to weigh on durable and semi-durable purchases visibly. And businesses also seem to postpone investment awaiting better economic conditions at home and abroad. In light of these factors, the Bank of Thailand projected GDP growth to be around 4 percent this year, a downward revision from a more bullish view we had earlier. But I would like to note that this is still a reasonable growth amid weak external environments, coupled with the fact that consumption has become somewhat overstimulated already. Looking ahead, fundamentals of the economy remain sound overall. Monetary and fiscal conditions will continue to be supportive. And despite some delay, contribution from exports is also bound to improve as the global economy gains a firmer footing.
Dimitar Radev: Review of Bulgaria's economy and banking system Banker's Day' speech by Mr Dimitar Radev, Governor of the Bulgarian National Bank, to the Association of Banks in Bulgaria, Sofia, 5 December 2017. * * * Dear Colleagues, Dear Members of Parliament, Dear guests, First of all, I would like to thank you for the invitation – on my behalf and on behalf of my colleagues in the BNB Governing Council. We are delighted to be with you this evening. The passing year 2017 was good both for the economy and for the banking system in Bulgaria. Perhaps, this has been the first year for a long time, in which there is more optimism than pessimism. The economy is developing at better rates than we anticipated early this year. The fiscal position is solid. The banking sector is in a very good state. Capital adequacy and liquidity ratios are above the average levels for the European Union. For a second consecutive year this sector’s profits nearly reach the highest historical levels. Lending continues to increase. We see a long-term downward trend in non-performing loans. We also have positive results from the accomplishment of the BNB’s main priorities. Generally, the measures adopted after the asset quality review and the stress test last year are being implemented successfully. The efficiency of banking supervision is improving and all independent observers of the developments in our banking sector point up this progress.

Timothy F Geithner: Further investments to strengthen the financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Economic Club of Washington, Washington, 9 February 2005. *  *  *  Good evening. I am honored to be here. It’s good to be back in Washington and to have a chance to talk with such a distinguished group. Much of our nation’s financial history and the history of our central bank is a story of contest for influence and over ideas between political leaders in Washington and the financial center of New York. I think it is important that ideas shuttle back and forth between our cities, and I am pleased to have a chance to share a few tonight. My overall argument this evening is this. We face a delicate balance between genuinely positive near-term economic conditions, and some fundamental challenges. If we are to increase the likelihood of continued strong growth in living standards, we should use this time of relative prosperity to address the imbalances that hang over our economy. Even with good policy choices, and with considerable luck, these imbalances will take time to unwind. During this time we face some risk of a more volatile and less benign overall financial environment. This makes it important that we continue to invest in making our financial system stronger and more resilient. Markets now reflect a fairly positive view about overall economic prospects.