samchain/econo-pairs-v1 huggingface dataset:
However, in crisis situations the banks sometimes do not want to borrow, as this could signal that they have financial problems, as was the case in the United States during the financial crisis 20082009. Former Fed Governor Ben Bernanke says that the unwillingness to borrow from the Fed could have been reduced if they had a larger balance sheet. If the banks had had substantial deposits and larger loans with the Fed and thus been in the habit of having transactions with the Fed during normal circumstances, the stigma of borrowing in a crisis situation could have been alleviated. Among European banks, unwillingness to borrow from the ECB during the financial crisis was a much smaller problem than for the Fed. Bernanke points out that one possible reason for this could have been that the ECB had a larger balance sheet even prior to the crisis and that the banks in Europe therefore were used to making large transactions with the ECB. Increased supply of safe assets for the banks in the economy 50 The demand for safe and liquid assets with a short maturity has been huge around the world for a long period of time. This is often seen as one of the main reasons for the low global interest rates. If the Riksbank has a large balance sheet and  47 See Duffie and Krishnamurthy (2016) and Bertsch and Molin (2016). 48 The interbank market is one where the banks can borrow money from one another at short notice.

I would like to discuss the changes in the financial environment and how they affect our different areas of operation, but before I do so I shall talk about the Riksbank's main role in the financial system, namely to provide the Swedish economy with safe money that is easy and efficient to use. The Riksbank provides the economy with money that safe and simple to use Money is needed so that we can buy and sell goods and services. If we are to have confidence in money, and want to use it, it needs to be both safe and easy to use. This requires in turn financial stability, price stability and smoothly-functioning payment systems. Let me describe how the Riksbank tries to create the right conditions. If we start with money being safe, this means that one can rely on money representing a particular value in goods and services, and that it will retain this value until the day one wants to redeem it for goods and services. The pieces of paper that we issue have no value in themselves, but function as a form of evidence that someone has produced something of value. 2 In the academic literature there is, for instance, a branch known as ‘monetary economics’ or in its modern form, ‘new monetarist economics’ 3, which looks into why money arises and under what conditions it retains its value.
One is that it could jeopardise central bank’s credibility by giving rise to accusations of financial and fiscal dominance. A second side effect is that maintaining a larger balance sheet than necessary increases the Eurosystem’s exposure to credit and duration risk. The probability and extent of net losses are significantly higher the larger the amount of long-term fixed-rate assets the central bank holds on its balance sheet. [7] A third side effect relates to the functioning of financial markets. The APP, together with the pandemic emergency purchase programme (PEPP), has left a visible footprint in euro area financial markets. The Eurosystem’s outright holdings of euro area sovereign bonds currently amount to more than a third of the outstanding market (Slide 3). Mobilised collateral for longer-term refinancing operations further increases the encumbrance of government bonds through monetary policy operations. As a result, the “scarcity premium” that market participants must pay to obtain these assets has often been considerable, both in the repo and the bond market (Slide 4). [8] The inception and expansion of the Eurosystem’s securities lending facility have been able to partly alleviate these strains. [9] Yet, in times of heightened uncertainty, when the demand for safe and liquid assets rises sharply, market conditions tend to visibly deteriorate. Last year’s surge in market volatility is a case in point.

However, the IMF has become considerably more open in recent years, and today material on almost all activities is available, not least on the IMF’s website (www.imf.org). A second example is the issue of capital account liberalisation. Besides working for opening up the capital account in many countries, we strive for the long-term goal of giving the IMF a clearer mandate to regulate issues relating to the international capital market. A third issue where we have been active is developing a body of rules for how private creditors are to contribute to the financing of countries’ finance requirements in crisis situations. The increased attention in the media about the IMF and the World Bank has arisen during a period when the functioning of these organisations and their mandate have been discussed intensively internally as well. The growth of private capital markets has resulted in many countries no longer requiring financing from the IMF. At the same time, the need to build institutions, regulation and coordination is increasing, not least in the financial sphere. Some radical groups have argued that the IMF should be abolished, or considerably reduced in size. Others believe that the organisation should take on more responsibilities, such as within areas concerning the labour market, the environment and money laundering. Sweden is among those who believe that the IMF can only be an efficient organisation if its mandate is kept relatively narrow. The IMF shall work with financial stability, and in particular macroeconomic issues.
Zeti Akhtar Aziz: Sasana Kijang – Malaysia’s centre for central banking and financial collaboration and cooperation Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the launch of Sasana Kijang, Kuala Lumpur, 14 September 2011. *  *  *  It is my honour and great pleasure to welcome you to the official opening of Sasana Kijang. Today we are also honoured by the presence of Yang Amat Berhormat, the Prime Minister of Malaysia to officiate the launch of Sasana Kijang. Sasana Kijang began with a vision to have a centre for the development of thought leadership and for the promotion of greater regional and international collaboration in Central Banking and finance. Sasana Kijang is also an integral part of the initiatives that have been undertaken by Bank Negara Malaysia in the modernisation and transformation of our Central Bank. These have involved the introduction of new legislation and governance arrangements, the increased leverage on technology, the adoption of new practices in the management of talent, work arrangements and corporate culture, as well as the new institutional arrangements that facilitate our cooperation and collaboration with other monetary authorities and regulators in other parts of the world. The global economic and financial landscape is currently at an important turning point, as we transition to a fundamentally changed future. The challenges facing us in this environment are manifold. We therefore want to have the skills for this future – to be well equipped to effectively manage our future.

Jean-Pierre Roth: Swiss outlook and global developments 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 Icon Roadshow Euro 2008, Frankfurt am Main, 17 March 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy looks back on a number of successful years during which it was a very active participant in the growth of the world economy. The export sector rapidly expanded its presence in the new markets, thereby making an important contribution to this development. What was remarkable was that the increased foreign activities were not detrimental to Switzerland as a production location. On the contrary, the Swiss location benefited overall. Reforms aimed at strengthening and opening up Switzerland as a business location have also made a substantial contribution to economic prosperity in recent years. The turbulence on the financial markets that erupted in mid-2007 is unlikely to leave the Swiss economy unscathed. The export sector, including the banks, will be affected by the slowdown in the international economy. An additional factor is the substantial rise in the value of the Swiss franc over the past few months against the euro and the US dollar. However, we are already in a position to learn quite a bit from the financial market turmoil.
But it is right to keep in mind that, if we drag our heels and delay furling our sails, it is not impossible that it will take very little in the way of rough seas to tumble us into something that could accurately be called a recession. And in that case, we would have only ourselves to blame. We must not let such a thing happen. Ladies and Gentlemen: We welcome the interest and amicability that you show in attending this meeting. In older times, it was considered appropriate for central banks to keep their distance, to be silent and even somewhat inscrutable, for that standoffishness was thought conducive to creating the image that the persons behind the banks had quasi-supernatural powers, that they possessed information available to no one else and could avail themselves of preternatural tricks and stratagems to address a wide variety of problems. But times have changed – and that is for the better. Central banks must not let down their guard. Their policies and aims should be clear, and their actions should be consistent with those policies and aims. The independence of the Central Bank of Iceland remains a cornerstone of its operations, and any responsible person should protect and fortify that independence. This does not mean that the Central Bank is above all criticism, of course. Actually, there are solid reasons for claiming that the independence enjoyed by the Bank justifies its being subjected to more incisive criticism than it should otherwise tolerate.

But at the same time as these changes were reported, the Bank announced the Board of Governors’ decision to raise the policy interest rate by 1.25 percentage points – to 15% – the largest single increase to date. That decision was the tangible manifestation of the  4  BIS Review 36/2008  serious message that the Bank considered it appropriate and necessary to communicate under the current conditions. The Board of Governors supported this decision by showing that the four-month-old inflation forecasts assuming an unchanged policy rate until the latter half of 2008 were not delivering the intended results. Inflation was higher than forecasts had projected, and inflation expectations were rising as well. In the same manner, demand was greater despite the more difficult operating environment faced by the banking system and the announcement that the credit supply was on the wane. The króna also depreciated more than was assumed in the forecasts in the November issue of Monetary Bulletin. That forecast assumed that such a development would be met with a policy rate hike, and though such forecasts are in no way binding for the Board of Governors, the Board’s message can be interpreted as implying a similar message. It pointed out that the real exchange rate of the króna was close to the lowest it has been in several decades. Such a low real exchange rate has never persisted for any length of time.
These included the migration of activity and risk to unregulated “shadow banks” (Adrian and Ashcraft (2012)); the hard-wiring of rating agency risk assessments into the regulatory engine (Edmonds (2016)); the payment of bank CEOs in common equity encouraging “gambling for resurrection” (IMF (2014)); and the implicit subsidies conferred on “too-big-to-fail” institutions, encouraging them to become larger and more complex and connected still (FSB (2013b)). Another example of these incentive effects came in the area of capital regulation. Whichever risk-weighting scheme is in place, it is likely to give rise to incentives to adjust asset positions to maximise profits. For example, if the regulatory constraint takes the form of a leverage ratio there are incentives to alter the composition of assets towards those with higher risk weights – though the evidence on such “risk-shifting” is mixed (Sheldon (1996), Furlong (1988)). Contrarily, if assets are risk-weighted and determined by banks’ internal models, there are incentives to lower modelled risk weights over time (Mariathasan and Merrouche (2014)). In short, when setting capital standards for banks, there is a two-sided incentive problem. 28  All speeches are available online at www.bankofengland.co.uk/speeches  28  Pre-crisis, both incentives were at play, albeit to differing degrees in different parts of the global financial system. In the US, where a leverage ratio was in operation and often the binding constraint, there were incentives for banks to seek higher-risk assets rather than expand balance sheets (Chart 20).

United Kingdom: Sheppard, D (1971), The growth and role of UK financial institutions 1880-1962, Methuen, London; Billings, M and Capie, F (2007), 'Capital in British banking', 1920-1970, Business History, Vol 49(2), pages 139-162; BBA, published accounts; FPC core indicators and Bank calculations  Notes: (a) US data show equity as a percentage of assets (ratio of aggregate dollar value of bank book equity to aggregate dollar value of bank book assets). SNL data from 1996 on, based on accounting definition of equity. (b) UK data on the capital ratio show equity and reserves over total assets on a time-varying sample of banks, representing the majority of the UK banking system, in terms of assets. Prior to 1970 published accounts understated the true level of banks' capital because they did not include hidden reserves. The solid line adjusts for this. 2009 observation is from H1. Data from 2010 onwards is based on the simple leverage ratio published by the FPC (as of September 2017) as one of its core indicators for the countercyclical capital buffer. (c) Change in UK accounting standards. (d) International Financial Reporting Standards (IFRS) were adopted for the end-2005 accounts. The end-2004 accounts were also restated on an IFRS basis. The switch from UK GAAP to IFRS reduced the capital ratio of the UK banks in the sample by approximately 1 percentage point in 2004.
Price increases are, of course, conditioned by many other factors, such as the economic situation, the fiscal stance, wage formation and so on. But inflation is a monetary phenomenon and in the longer run the Riksbank, by controlling the supply of money in a wide sense, can also control its value in terms of inflation. The perception that the primary task of a central bank should be to maintain price stability can be said to have won general acceptance. In that low, stable inflation helps to improve the functioning of markets, it seems reasonable that, indirectly, monetary policy also promotes economic growth and employment. In their economic decisions, households and firms have one less source of uncertainty - inflation - to worry about. The inability of monetary policy to affect long-term employment and the fact that it should focus on maintaining price stability does not mean that its capacity to condition production and employment in the short run can not sometimes be used for stabilising activity. Monetary policy can contribute to an economic recovery in so far as this is feasible without jeopardising price stability.

oil prices in the risk scenario stand at $ a barrel in 2018–2019, and fall to this level by the end of 2017. We have updated some internal parameters. They will be published today in the Monetary Policy Report. We have kept those predictions in the scenario with growing oil prices, at $ there have also been some minor revisions but general trends remain unchanged. In essence our estimates have not changed since last December. RBC Media Holding’s QUESTION: Two questions, please. First. You have cited many factors which favour the rate cut, but the significance of constraining factors remains relatively unclear. Do they include uncertain fiscal policy and reshuffles in the Ministry of Economic Development? Could you please repeat what prevents you from reducing the rate more rapidly and why the rate of reduction is 0.25 pp – is this a new norm? And question two. Economists say that the key rate is losing significance in terms of the economy, i.e. businesses are watching it less closely. Do you see any considerable difference between 9.75% and 9.5%? How important is the key rate at this time? ELVIRA NABIULLINA: Indeed, we took into account many positive factors as we made the decision to cut the rate, however inflation risks still persist. We consider them more likely to be medium-term than shortterm risks. Monetary policy takes effect with a lag of six to nine months, therefore when in making a decision we have to bear in mind its effects not only this year, but also in 2018.
However, the finding that policy should respond more gradually in the face of uncertainty is not a general one. For example, Söderström (2002) suggests that there is uncertainty about monetary policy’s ability to return inflation in the medium term, that may call for a pre-emptive response. BIS central bankers’ speeches  3  2. Consider all of the outcomes  In the presence of uncertainty, it is wise not to put all of one’s eggs in one basket, but rather to hedge against undesirable states of the world. That is something that market participants know well, and it means that financial asset prices reflect not only what is thought to be the most likely outcome, but also the full range of other possible outcomes and the probabilities attached to them. So what is implied by a literal interpretation of markets – including government bond and interest rate swap markets – is not necessarily a true reflection of what participants expect is going to happen. 5 For example, at the time we were producing the November Inflation Report, the market yield curve implied the first increase in Bank Rate would come in March 2017, and that it would reach 1¼% by the end of 2018. A literal interpretation of this would suggest that in 33 of the coming 36 months the majority of MPC members would have to return home to their respective dinner tables reporting they voted for no change in Bank Rate.

Retain flexibility  Of course one can never know exactly what the future holds. So when the time does come to raise Bank Rate, it will be important to retain the flexibility to change course if needs be, either by tightening policy more quickly than originally envisaged or by being prepared to loosen again. Were it required to respond to unforeseen events, the MPC would have two tools at its immediate disposal: Bank Rate and QE. Past experience gives us a good dataset from which to gain an understanding of how changes in policy rates transmit to the economy. Based on a rich literature of international estimates over the period since inflation targeting began, the peak impact on inflation is generally estimated to occur with a lag of between 18 and 24 months, although it begins to  5  See Shafik (2015) and Broadbent (2015) for more on this issue. 6  Though should proposed legislation pass, the number of MPC meetings per year will reduce from 12 to 8, in line with the recommendations of the Warsh Review (Warsh, 2014)  7  The market curve represents the mean of the priced distribution of interest rates. Consideration of risks can cause this whole distribution to move relative to true expectations. Risks can also affect the shape of the distribution, though Dison and Elliot (2015) found that the shape of the distribution is currently being heavily influenced by the proximity of Bank Rate to the effective lower bound.
Another way to calculate Texas’ contribution to job creation is to lop off those states that have continued losing jobs and consider only those that have positive growth in employment these past two years. Using this metric, Texas has accounted for 29.2 percent of job creation since the recession ended. These are the facts. You may select whichever metric you wish. Regardless, it is reasonable to assume Texas has accounted for a significant amount of the nation’s employment growth both over the past 20 years and since the recession officially ended. This raises the obvious question – what kind of jobs are being created in Texas? Here are two charts that might help you form an opinion. BIS central bankers’ speeches  3  The first provides a breakdown of employment growth by sector since the recession ended, listing each employment sector by its weight in the employment mix of Texas. The most jobs have been created in the educational and health services sector, which accounts for 13.5 percent of Texas’ employment. The second-most jobs have been created in the professional and business services sector, which accounts for 12.5 percent of the Texas workforce. The mining sector, which includes support activities for both mining and oil and gas, employs 2.1 percent (yes, two-point-one percent) of Texas’ workers. In the second chart, you will see that these jobs are not low-paying jobs.

2  All speeches are available online at www.bankofengland.co.uk/speeches  2  In effect the benefits of deep and liquid markets – ease of price discovery, minimisation of basis risk, tight bid/offer spreads – have outweighed the fact that Libor may not be a perfect match to users’ underlying needs. Whilst users of Libor clearly benefit from this concentration of liquidity, the flipside is that it makes the adoption of alternatives to Libor a very challenging task. These network effects are reinforced by market convention, accounting practices, and the frictional costs of changing firms’ systems and risk models. And use of Libor is perpetuated by the need to hedge and manage legacy positions. Overall, there is substantial inertia in the use of Libor. The case for change The financial system’s Libor dependency matters for two reasons. First, as I have argued, in many applications users would be better served by a near risk-free rate: the bank credit component of Libor is in these cases neither necessary nor appropriate. Derivatives markets in particular could be more effective if there were liquidity in alternative reference rates. The prospect of improved market effectiveness might not, on its own, justify change. A second factor adds powerful impetus to the case for change. As the Governor emphasised, the truth is that the term deposit markets which underpin Libor fixings are no longer a liquid source of bank funding. Even a reformed Libor will need to rely on expert judgement to supplement transactional data. That is not a desirable state of affairs.