samchain/econo-pairs-v1 huggingface dataset:
Early on in the crisis the value of collateral deteriorated so dramatically that even the primary unsecured form of lending – interbank lending – ceased to function. Precautionary hoarding of liquidity brought about a complete seizure of many segments of the market for credit. At the same time, panic sales of assets made market liquidity disappear. Market liquidity is high when traders can easily find a price, and that price is very close to what every other trader pays for the same asset at the same time. In early October 2008 the market simply couldn’t find a value for many of those securities that had been so highly priced only a few weeks before. While available collateral was sharply down-priced, the economy-wide equity capital, which is largely valued by the market, evaporated in a matter of hours. Equity capital is what backs up unsecured money market transactions. This partly explains why the unsecured market seized up alongside the repo market. While collateralised finance can accelerate a generalised loss of confidence, it provides the guardians of stability with one more instrument of defence. In late 2008 the ECB increased its collateralised lending to compensate for the withdrawal of private lending in inter-bank transactions. To ease banks’ liquidity and balance sheet constraints, in particular, we have broadened the list of assets that we consider eligible as collateral in our refinancing operations. This has liquified a large fraction of our counterparties’ assets, which had become illiquid in the tense market conditions following the failure of Lehman.

For example, Adrian and Shin (2008) demonstrate that the balance sheets of US broker/dealers expand when monetary policy is accommodative. 6 Similar evidence is provided for the US repo market by Gorton and Metrick (2009), who found that activity started to increase significantly from 2001 – that is, at a time when monetary policy in the US was relatively loose following the bursting of the dot-com bubble. 7 Acharya and Schnabl (2010) provide similar evidence related to the asset-backed commercial paper (ABCP) market. 8 In summary, if the process that has been set in motion under the aegis of the G20 has the potential to place a whole new segment of finance under regulatory scrutiny and oversight, the new collateral-based finance can give a central bank stronger influence over financial and macroeconomic conditions more broadly. 5. Monetary policy in a high-debt environment  I mentioned earlier that collateral is likely to play a growing role in the functioning of capital markets. Demand for collateral is thus likely to increase. But, given the collapse of securitisation activity during the crisis, we could imagine that the current decline in the creation of securitised assets might become a permanent feature of the new landscape. There will be fewer ABSs created out of bank books. Sovereign debt will certainly be widespread. It will probably replace ABSs in the collateralisation of secured lending. Unlike in the past, the risk characteristics of this type of debt instrument will be more graduated than was considered possible only few years ago.
This suggests fiduciary concerns still may not course through the banking bloodstream as freely and easily as would be ideal. They help explain why that Great Divide remains so wide. The Bank of England itself has an important role to play in this public education effort. Decisions made on interest rates in the economy and on credit provision by banks have an important bearing on the general public’s financial decision-making. To that end, one of the Bank’s strategic priorities over the next few years is to increase public awareness of the Bank’s thinking and actions, using new methods such as videos, cartoons and social media, to help the general public’s financial decision-making. 41  For more details on the Open University’s ‘You and your money: personal finance in context’ modules see http://www.open.ac.uk/courses/modules/db123. 42  For example, Zingales (2015). 43  For further details, please see https://www.gov.uk/government/news/cma-wants-banks-to-work-harder-fortheir-customers. 44  For further details, please see http://www.fasterpayments.org.uk/about-us/. 10  BIS central bankers’ speeches  (b)  Creating “purpose” in banking  Regulation and education can only take us so far. Culture cannot be regulated or educated; it has to be inculcated among financial firms themselves. As social identity theory reminds us, it is the sociology and psychology of banking and bankers that needs to change, as much as their finances. In thinking about how best to achieve that re-orientation, it is worth returning to the two dimensions of trust – personalised and generalised. In banking, both have been casualties. How best are they to be restored?

That may call for the financial sector to seek new ways to define and communicate its purpose, its contribution to wider society, to act as an antidote to the short-term demands of shareholders and executives. Yet it would be easy, too easy, to point the finger at finance alone. For this Great Divide exists not just between the financial elites, but between elites generally and wider society. It is not just bankers who have suffered a loss of public trust. In varying degrees, this is also true of big business, government and, yes, politicians and central banks. These lessons for bankers may be relevant to some of us in this room too. The role of finance in society Let me start by discussing why closing the trust deficit in finance matters to the economy and to society. Whisper it quietly, but a large and well-functioning financial sector is an essential foundation for a growing and well-functioning economy. That is not an ideological assertion from the financial elite; it is an empirical fact. Most of the time and in most countries, finance is a growth-booster not a growth killer. 4 The economic textbooks do not get everything right, but on this they are clear and compelling. Banks and capital markets help finance investment by companies. And that, we know, is the seed-corn of future growth. 5 They also help insure against risk by companies and households. And that, we know, is the seed-corn of stability.
Asian monetary co-operation Indeed, this survey, focusing on six characteristics of Asian finance, represents, to me at least, a rather unhappy state of affairs. Asian finance is in a fragmented state, understandably though, given the many currency jurisdictions present, each adhering to the Asian tradition of minding one’s own business. To be sure, the desire to pursue and maintain financial openness, in view of the potential and demonstrated benefits to growth and development, is still strong. But many have become weary, worried, cautious or shocked to varying degrees by the experience of financial globalisation that came  4  BIS Review 66/2004  with financial openness and intensified by the revolution in information technology. From a regional perspective, it does seem that Asian finance is organised in such a way that, instead of harnessing its financial strength to its advantage, it finds itself in a position of vulnerability to financial instability. It is with this sentiment that I turn now to the subject of Asian monetary co-operation. Some would argue that the fragmented state of Asian finance, to the extent that it is an issue, is merely a reflection of the diversity of Asia, in terms of history, geography, culture, stages of economic development, size distribution, political structure, degree of economic and financial openness, etc. Indeed, Asia is a very heterogeneous group of economies. In the richest economy, per capita GDP, if this is an appropriate measure of richness, is about 180 times that of the poorest.

I very much hope that I can convince you today why this is so. As I shall demonstrate later, the financial significance of Asia is indisputable. Yet, in many parts of Asia, financial intermediation, which is so important to promoting economic growth and development, remains elementary. There is I think an urgent need for Asia to harness its substantial financial resources for promoting growth and development but also for minimising Asia’s vulnerability to financial instability. With financial globalisation, the ability of Asia to get this right has significant implications for global finance. I also hope that I can, at the same time, raise your interest in some of the specific monetary and financial issues that we are tackling, in the region as a whole and in individual economies, with a special emphasis on China, including Hong Kong, where I come from. Asian finance Let me begin with a description of Asian finance, as I see it. There are six characteristics I would like to draw your attention to. The first is the financial significance of Asia. As I mentioned earlier, this is phenomenal. It is easy to appreciate this by pointing to some impressive numbers, such as those relating to the amount of foreign reserves held by Asian economies and the amount of portfolio and foreign direct investments going into, or coming out of, Asia. Indeed, there are seven economies holding foreign reserves in excess of $ billion and all seven of them are in Asia1.
From a broader perspective, the introduction of the PEPP – and the subsequent increase of its initial envelope in early June – led to a period of gradual easing of financial conditions in the euro area, not only for sovereign debt, but also other market segments such as corporate debt. In addition, according to analysis by the Banco de España, the PEPP is having a markedly favourable impact on GDP growth and inflation in the euro area.1 Against the current backdrop of uncertainty surrounding the pandemic’s severity and duration, the best contribution that economic policy can make is to instil confidence and certainty. When it comes to monetary policy, this means ensuring accommodative financial conditions for all economic agents for as long as necessary. In view of how the pandemic 1  See Aguilar et al. (2020). 4  is unfolding and its economic effects, we clearly need more time (and the attendant volume) now than we projected just a few months ago (as you know, the PEPP runs until June 2021). Further, as was true of the first wave, it is highly likely that the second wave’s economic impact will be uneven across the various euro area countries, aside from the fact that the general government fiscal position is also very different. Therefore, retaining the PEPP’s flexibility is essential to head off problems of financial fragmentation that hinder the transmission of our monetary policy. In addition to the PEPP, another instrument that may be recalibrated in the near term are our TLTROs.

In particular, attention should be paid to what could be done to capitalize on the recent stabilization in house prices to improve access to mortgage credit and to foster competition in mortgage origination to ensure a more complete pass-through of low secondary mortgage rates to households. Indeed, if balance sheet dynamics are more important and frictions around housing more powerful than we initially understood, then there should be strong payoff to policies that ease them. At the same time, Congress and the White House should take steps that reduce the short-term and long-term uncertainty over fiscal policy. Currently, households and businesses face elevated short-term uncertainty as to what will happen to tax and spending policies in 2013 and how this will affect the economic outlook. I believe this is restraining hiring and investment today. BIS central bankers’ speeches  7  But families and businesses also face long-term uncertainty about how the country’s fiscal challenges will be addressed. Providing greater clarity about the scope and terms of Social Security and Medicare must be helpful, especially in correcting those expectations that are unduly pessimistic. On this score, Social Security is particularly noteworthy.
According to MMSR data, euro area government bonds represent more than 80% of the collateral used. Second, the supply of safe private collateral is necessarily scarce12, while the supply of safe public collateral has fallen on account of both a decline in net issuance and the downgrades in sovereign credit ratings. For example, the share of euro area bonds rated AAA by at least two rating agencies has fallen from levels around 60% before the great financial crisis to around 20% today. In other words, safe debt is in short supply and debt in long supply is less safe.13 This is also why the Governing Council’s decision of 26 October, when it decided to extend the horizon of its asset purchases by another nine months, and to reduce the pace of monthly purchases to € billion, emphasised the contribution of the stock of acquired assets, together with forthcoming reinvestments, to providing continued monetary support. 6 / 10  BIS central bankers' speeches  Financial regulation and repo market activity Asset purchases are not the only factor affecting supply and demand conditions in cash and repo markets. This brings me to the second part of my remarks. As you know, a number of liquidity regulations affecting banks, such as the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR), require banks to hold a sufficient quantity of high-quality liquid assets.

We are also working on the inclusion of these risks in the stress test methodology for the Spanish financial sector. In sum, banks and supervisors alike are moving along this path, which poses all sorts of challenges. For instance, it is in no way straightforward to envisage these risks as part of the commonly used valuation and measurement methodologies. Moreover, there are cultural factors hampering their inclusion, which calls for involvement from the uppermost levels of organisations. And, above all, one of the main challenges is the lack of information, which enormously hinders further progress. Allow me briefly to refer to these valuation-based aspects and the absence of data. Traditionally in finances there is a tendency to value investments exclusively from the standpoint of economic return. The classic focus of study in finances would be cash flows; once capitalised or discounted, these enable us to compare different investment options. From a theoretical standpoint, responsible investment reminds us that we should not value and compare different investments looking solely at an Excel chart. Rather, we should perhaps look at variables that are not directly monetisable in the expected return on each investment. Measuring this “non-monetisable” return is clearly not straightforward. The approach being followed focuses on the measurement of “impact”. For example, environmental sustainability has for some time used measurements that take “footprints”, be they carbon, hydric, environmental, etc.
3  But we won’t get there through compliance and risk management alone. We also need businesses – your businesses – to grab the opportunities presented by a post-LIBOR world to meet customer needs in better, safer ways. In the rest of my remarks I want to cover three main topics. First, I want to summarise the business problem LIBOR was originally designed to solve – and how the world has changed since then. Second, I want to sketch some of the opportunities that a post-LIBOR world may bring – and thus why there is a business, as well as a risk, imperative to shift. And, third, I want to explain some steps we at the Bank of England are taking to de-risk our own LIBOR-related business. Why LIBOR once made business sense – and what’s changed LIBOR’s origins date back to the syndicated loan market of the late 1960s. Risky borrowers from developing or emerging markets were looking to raise large sums, in dollars, at term. But the most plausible lenders – US banks – faced two problems. First, rapidly-rising inflation and short term interest rates made it risky to fix the interest rate on such loans for the full term. And, second, caps on deposit rates under ‘Regulation Q’ made it hard for US-domiciled banks to raise the necessary funding. In their place, banks in London – often US-owned, but unencumbered by onshore borrowing limits – formed themselves into ‘syndicates’ to take slices of floating rate, dollar-denominated loans, funded by short-term, offshore dollar deposits.

Jean-Pierre Roth: Switzerland – a platform for global business Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Forum de l'Economie vaudoise, Lausanne, 14 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Within the past ten years, Switzerland has become a genuine platform for global economic operations. From here, the international markets are being worked systematically, and an ever-growing part of our economic performance is now attributable to investment activity abroad. This is a welcome development since it allows us to keep high value-added jobs in Switzerland. However, it also involves some risk because the international mobility of production has increased. Consequently, the general conditions which help to keep Switzerland attractive as a business location must be maintained. This platform for global economic operations has given us a role outside the European Union and the euro area. Thus we have chosen to face the challenge of globalisation instead of the challenge of European integration. Our path may be demanding, but it is also promising! BIS Review 101/2007  1
PLATFORM FOR DISCUSSION Speaking note  SPEAKER:  Anita Angelovska Bezhoska, Governor  DATE:  5-7 September 2018  LOCATION:  Vienna, Austria  NATIONAL BANK OF THE REPUBLIC OF MACEDONIA info@nbrm.mk www.nbrm.mk   INVESTMENT AND FINANCE, CHALLENGES FOR THE CESEE REGION This Speaking note was prepared for the EUROFI Financial Forum, 2018, organised in association with the Austrian EU Council Presidency  Contributors to the note: Ana Mitreska, Biljana Jovanovikj, Tanja Jakimova and Neda Popovska Kamnar Department: Monetary Policy and Research  1  Investment and Finance, Challenges for the CESEE Region  1. Investment in CESEE – historical perspective and recent developments The investment in spurring growth and supporting productivity and efficiency of an economy is a well-known principle. The larger the investments, the higher the potential to grow. Yet, the investment function is dependent on many factors such as expectations of investors, the already existing capital stock, the general business environment, the level of demand, technological progress, the possibility to invent and innovate, the leverage level, and the access to finance. Before the outburst of the global crisis, investment was an important growth driver in the CESEE region, though the growth was not sufficient to provide for stronger capital accumulation. Notwithstanding the heterogeneity among countries, prior to the crisis, investment was an important contributor to the overall growth, supported by large capital inflows, which propelled the productivity of the economies, as well.

As they stand, the current technical proposals put forward for consultation by the Basel Committee do not respect this commitment: they must therefore be revisited. Second, we should be careful not to oversimplify the regulatory framework and loose the risk sensitivity. Adjustments to the internal models approach should not amount to imposing the standard approach on all, either explicitly, or implicitly by applying poorly calibrated “output floors”. *** Let me conclude with some words on the strengths of the Paris financial centre itself: robust banks and insurance companies, a dynamic asset management industry, strong financial market infrastructures, a highly skilled labour force. And you can be assured of three points: 1. First, French authorities, including the Banque de France, attach utmost importance to making sure Paris is one of Europe’s strongest financial centres. This is crucial for employment, for investment, as well as for the strength of the euro area economy as a whole. 2. In addition, we are already making every effort to build an innovation ecosystem: through the recent and efficient ACPR-AMF cooperation on FinTechs; through our support for the development of new tools – such as ESNI on securitization and Euro GC+ on repos, or our upcoming project to test interbanking information sharing processes based on blockchain technology; and also through our partnerships with many French universities renowned for their excellence and their Masters in Finance. 3.
I invite distinguished guests, ladies and gentlemen to explore the gallery exhibition to honour the life and achievements of this great man, Governor Ismail Ali, our first Malaysian central bank governor. 3/3  BIS central bankers' speeches

In principle, households and companies could be granted access to digital central bank money via both a token-based and an account-based system. Broad access to digital central bank money would call the existing two-tier banking system into question. Instead of being the banker to the banks, as it is today, the SNB would act like a commercial bank, taking on the role that is currently played by the private sector. Moreover, broad access to digital central bank money could pose a threat to financial stability. Switching over from bank deposits to digital central bank money is easier than changing to physical banknotes. In a crisis situation, this could increase the risk of a bank run. Thus, overall, the implementation of this proposal would have far-reaching consequences not just for banks, but also for the entire financial system. These fundamental concerns would argue against opening up access to digital central bank money to all households and companies. Furthermore, cashless payments in Switzerland are already reliable, secure and efficient and the system is continuously being updated and refined. So from that standpoint, too, access to digital central bank money for all households and companies, whether in the form of Swiss franc tokens or sight deposits, would bring virtually no advantages. Now let’s turn to the second potential area of application for state-issued digital tokens: digital token money exclusively for financial market participants.