samchain/econo-pairs-v1 huggingface dataset:
If an effective global resolution regime with clearly defined ex ante characteristics were to turn out to be a bridge too far, national authorities may have to fall back on a subsidiarization model, in which global firms would have to establish subsidiaries on a country-by-country basis each with their own capital and liquidity buffers. Such a regime would require greater capital and liquidity as the banks would lose the significant risk diversification benefits gained from operating in many different countries. Such a regime would also presumably make it more difficult for these firms to provide financial services seamlessly to multinational corporations, global asset managers, and others that operate on an international basis. Even in this scenario, however, it would be important to ensure that national resolution regimes could interact with each other in a coherent manner. To sum up, my view is that we live in a globalized world both with respect to the macro-economy and the financial system. But too often we set macroeconomic policy and regulatory policy at a national level, and miss important opportunities to coordinate and make the global economic and financial system stronger overall. We need to understand where greater global perspective is required and we need to apply that perspective consistently across jurisdictions in a timely manner. If we don’t do this, we won’t achieve all the benefits that are possible from global specialization and we will continue to run significant risks with respect to financial stability. Thank you for your kind attention. 4  BIS central bankers’ speeches

Pricing in different forward markets currently gives a slightly divided picture of what direction prices will take. The oil price has risen more than expected and forward rates imply that it may remain at a higher level. At the same time, the world market price for certain foods and metals has fallen in recent weeks, for instance, the price of wheat, meat and aluminium. However, the price of some other foods, such as rice, has risen recently. …but we must nevertheless take a stance But regardless of whether the international price impulses are temporary or more lasting, they must not be allowed to push up inflation permanently! In my opinion, the risk of this has increased in that inflation expectations have risen during the autumn. According to Prospera’s survey in April, however, expectations have fallen slightly. The National Institute of Economic Research’s Consumer Tendency Survey also indicates that households’ inflation expectations have been adjusted downwards since the February report. But expectations are still a little too high, particularly in the longer term. And this was one reason why I voted to hold the repo rate unchanged at 4.25 per cent at our most recent meeting. Other important factors behind my stance were that, according to our forecast, inflation will overshoot the target for a good while to come, at the same time as growth remains fairly robust. Weighing together these factors also indicated that the interest rate may need to remain at its current level for some time to come.
To make loans more accessible for small and medium-sized businesses. Underdeveloped competition and banking systems hit small and medium-sized businesses. QUESTION from Bloomberg: Two questions, if I may. Question one. The Bank of Russia had several options before this 13 / 14  BIS central bankers' speeches  meeting: to maintain the key rate, to cut it by 25 bp or to cut it by 50 bp. How unanimous was the decision to reduce the rate by 25 bp? Did anybody want to keep the rate unchanged? And, question two. As long as non-monetary policy-related questions have already been asked, may I also have one? According to Novaya Gazeta, roughly $ billion was withdrawn from Russia in 2011–2014 under the so-called Moldova scheme, whereby money was withdrawn under court rulings. The Moldavian party claims that Russia did not assist but in fact impeded the investigation. Was the Bank of Russia aware of this, and were you monitoring it somehow or countering cash withdrawals in any way? Thank you. ELVIRA NABIULLINA: Thank you very much. Indeed, we discussed different options about whether to keep the key rate or reduce it, we analysed the pace of reduction, all the economic data and our forecast. The final decision to cut the rate by 0.25 pp was unanimous. As far as the Moldova scheme is concerned, it was one of the first dubious transactions we countered. We almost eliminated it and revoked licences from banks actively involved in the Moldova scheme.

This is necessitated by the still high sensitivity of inflation to oneoff factors, as well as its inertia and elevated inflation expectations. As they stabilise close to the target level of inflation, prices are expected to be less responsive to various short-term factors. These new conditions would see no need for additional tightening in the monetary policy stance to ensure that inflation holds near 4%. This conservative strategy in monetary policy may appear unattractive short-term; however it will enable us to deliver on a more sustainable result in the mid-term, that is, deliver on the objective to establish in Russia a low price and cost growth environment – such that favours both households and businesses, as well as the overall economy. Q&A for the Media QUESTION from Vedomosti: Given the Bank of Russia’s move to reduce the rate and its guidance that further rate reduction is not impossible in the second and third quarter, does that suggest that the Bank of Russia has launched a monetary loosening cycle? ELVIRA NABIULLINA: An easing cycle is understood as a process of sequential rate reduction, decided at each policy Board meeting. Having said that, we acknowledge that the sequence of rate cuts may be interrupted, though this would not run counter to an overall mid-term downward movement of the rate. We will move forward with care and precision. For the most part we will be largely guided by economic data as well as, certainly, by our forecasts.
While most all of my colleagues value the state-contingent argument, at last week’s meeting the majority of this year’s voters felt that a combination of factors – including an expectation that “economic growth over coming quarters [will] be modest and … the unemployment rate will decline only gradually”; that the housing sector “remains depressed”; and that a “slowing in global growth” and other factors, combined with an anticipation “that over coming quarters, inflation will run at levels at or below those consistent with the Committee’s dual  4  “Q&A: German Finance Minister Takes On Critics,” by Marcus Walker, William Boston and Andreas Kissler, Wall Street Journal, Jan. 29, 2012. 5  See the FOMC’s /20120125a.htm. 4  statement,  Jan.  25,  2012,  www.federalreserve.gov/newsevents/press/monetary  BIS central bankers’ speeches  mandate” – warranted a need for the committee to indicate it would likely maintain a significantly accommodative monetary stance for another three years. Second, the statement was accompanied by a first-ever release of the individual economic and interest-rate forecasts of all the policy meeting’s 17 participants. Mind you, these are not binding commitments. They are based on the assumption of “appropriate monetary policy” and are, despite the best of intentions, largely guesswork, especially looking out over a multiyear period.

When collated responses are then presented raw, and weighted by confidence. 28 A particularly famous example of good and clear communication of a complicated message is Feynman Diagrams, which are pictorial representations of the behaviour of subatomic particles. 24  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  2. Good practices need to become more widespread in the media  Good standards and practices are important given the vital role the media plays in any democracy and in mediating the views of experts – and they exist in many places. But the economics of the industry has created a dangerous trend where the unwillingness to pay for content means that financial pressures squeeze out higher quality reporting. Many news organisations have to rely on “native advertising” (whereby a product is promoted under the guise of a news story) to generate income. Perhaps as a result, trust in mainstream media has plummeted more than any other institution and is now distrusted in more than 80% of countries. 29  This has been exacerbated by the rise of fake news and the phenomenon of “false equivalence”  whereby, in the name of balanced reporting, news organizations give equal time to credible and less credible sources. How can producers of information and expertise balance the need for reliability with allowing different views to be heard? What is the balance between freedom of speech and the media’s duty to 30  inform? Few institutions value freedom of speech more than universities.
François Villeroy de Galhau: Central bank role to support a strong and sustainable growth in the medium and long term Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the global economic symposium “Reigniting Global Growth: Headwinds and Tailwinds”, co-hosted by The National Association for Business Economics (NABE) and the Organisation for Economic Cooperation and Development (OECD), Paris, 23 May 2016. *  *  *  Introduction Good evening ladies and gentlemen. It is a pleasure for me to be here this evening. A wellknown joke asks “how many central bank economists does it take to screw in a light bulb?” and answers “Just one – he holds the light bulb and the whole earth revolves around him”. By addressing the role of central banks in supporting growth, you may think I am taking a step too far my role as a central banker. But as you will see, my views are more modest. As we all know, growth in the long run is determined by real forces: the accumulation of physical capital, the development of new products and production techniques, the provision of public infrastructure, investment in education and skills and the efficient allocation of resources between alternative uses. Long run growth is not determined by anything nominal and thus it may seem odd to think that central banks play any role in supporting strong and sustainable growth in the medium and long term. Monetary policy is usually seen as the demand and supply side.

All indicators, from the matching process on the labour market to the reallocation of resources among firms, have shown how serious the shocks from the great recession have been, vindicating a large-scale and determined reaction of economic policy across the world. In this global economic policy reaction, it would be hard to argue that central banks have not done their share of the job. At the current juncture, however, all need to do their share. Focusing on the euro area, I am convinced that we would do much better with more growth-enhancing fiscal policies, especially in the member states that have fiscal space, and, at the same time, more ambitious structural reforms, especially in the member states that don’t have fiscal space. Indeed, this is probably the most subtle criticism of the active monetary policy currently undertaken by central banks: has it been an excuse for inaction by other public authorities, in particular structural reforms? Our answer cannot be to stop doing our own job but, drawing on the legitimacy given by our own actions, to strongly invite governments to do more. In particular in my own country, here in Paris, reforms are necessary, as I stressed in my recent Letter to the French President some days ago. But reforms are also possible. Yes, France too, like many of its successful European neighbours, is “reformable”. I thank you for your attention and wish you an excellent dinner. BIS central bankers’ speeches  5
4  BIS central bankers’ speeches  The tensions eased through various channels, among which the activity of CESCE, which bolstered the extension of guarantees and bonds to Spanish companies to participate in international tender procedures and projects. Regulation by the Banco de España The Banco de España, in the performance of its functions, lays down a series of accounting and prudential rules that determine the requirements made of banks in the pursuit of their activity. These rules comprise the regulatory implementation of Spanish legislation which, in turn, is determined by European regulations and by the agreements reached on the Basel Banking Supervision Committee. Let me begin with accounting regulations and, in particular, with the rules on country risk provisions, which are particularly significant in international trade transactions. In these financing operations there is, alongside the risk of commercial insolvency, so-called country risk, which includes, by way of sovereign risk, transfer risk (i.e. that it is not possible to meet debts abroad owing to a lack of currency or the legal impossibility of transferring currency) and other risks arising from international financial activity, such as expropriation and natural disasters. As what is involved is a risk other than habitual commercial risk, it requires a differentiated treatment under default provisioning rules.

This trajectory is all the more significant when compared with events in other developed economies and, in general, in the euro area as a whole, where export shares fell during the crisis. Our sound export performance has been underpinned both by gains in competitiveness and the pick-up in external demand, as well as by more structural factors, allowing us to expect this potential to continue and become more entrenched in the long run. The structural factors include the geographical diversification of exports of Spanish goods and services to emerging markets and the more export-oriented gearing of our companies, which is reflected in the increase over recent years in the number of Spanish companies competing on international markets. The re-directing of exports towards emerging markets has contributed significantly to these developments, thanks to the substantial dynamism of the demand for imports in those BIS central bankers’ speeches  1  countries. Indeed, their dynamism has compensated for the cyclical weakness in the developed countries, particularly in the euro area. The relative weight of goods exports to emerging countries has increased since 2007, coming to account for 30% of the total. The increases have been across the board, although particular mention may be made of Latin America, China and North Africa. However, the share of the developed countries has fallen on the same scale, owing to the loss in the weight of sales to the euro area, which at end-2013 stood slightly below 50%.
In addition, the rise in longer-term rates constrains economic activity – making it even more difficult to sustain an economic recovery. Moreover, once confidence begins to erode, it can do so very quickly. Even if a country were willing to pay higher interest rates, this path is not viewed as credible given the implications such rates have for future debt service costs and deficits. Put simply, to wait and see ultimately is likely to necessitate an even bigger fiscal adjustment. In addition, waiting for the market to say “no more” may mean losing discretion as to the timing and magnitude of fiscal tightening. It is very unlikely that the time when market sentiment turns most adverse would also be the most attractive time to have to tighten fiscal policy. Thus, there is a balancing act between solving the longer-term problem of needed fiscal consolidation and, at the same time, not tightening fiscal policy too soon or too abruptly so as to derail the nascent expansion. So what should be done? I believe that moving ahead earlier with a credible plan is preferable to waiting. I am not going to enter a political debate about whether the restraint should be more in the form of higher taxes or lower spending. However, I do believe, like most other economists, that fiscal consolidation that has the least negative impact on investment in physical and human capital is bound to be most effective. That is because fiscal capacity depends on economic capacity.

These firms are able to obtain funding on more attractive terms because debt holders expect that the government will intervene rather than allow failure. This creates an incentive to get large to achieve such status, not because it facilitates greater efficiency, but instead because the implicit government backstop enables the too-big-to-fail firm to achieve lower funding costs. Although the United States has an effective resolution mechanism for commercial banks, we do not yet have a good resolution scheme for large non-banking institutions or bank holding companies with large international operations. To address the too-big-to-fail problem, we need to develop a truly robust and credible resolution mechanism that allows for the orderly wind-down of any institution – regardless of its size – and that limits the contagion to the broader financial system. This will require not only domestic legislation, but also extensive work internationally to address a range of legal issues involved in winding down a major global firm. I want to emphasize how important it is that the incentives we embed within the regulatory apparatus for financial intermediaries encourage the type of behavior we seek – behavior consistent with safety and soundness and financial stability. For example, consider the efforts underway to standardize OTC derivatives and move the clearing of such trades to central counterparties (CCPs). These are good and worthwhile efforts.
2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  I see four main risks: 1. longevity risk - the risk that annuities to pensioners need to be paid for longer and therefore at a higher cost to the insurer because people live longer than expected; 2. market risk - the risk that asset returns are insufficient to pay the pensions: for example, because the insurer holds assets of shorter maturity than its liabilities, market interest rates fall and the insurer cannot afford to buy sufficient bonds to produce the income needed to meet its annuity obligations to pensioners; 3. credit default and downgrade risk - the insurer suffers losses because the assets in which it has invested default or downgrade; and, perhaps most importantly 4. management and governance risk - in the absence of regulation the owners and managers of an insurer may be incentivised to maximise their own short-term returns rather than managing the business in the long-term interest of the annuity holders. The interests of owners and managers are not necessarily aligned with those of the policyholders because owners share the benefits of taking more risk in a good outcome but have limited exposure to losses in a bad outcome because of their limited liability. Policyholders might be unable to monitor how an insurer is run because of the long-term and complex nature of pensions business.

I am mindful here of the Financial Stability Board standard against mechanical reliance on ratings.7 “The goal of the FSB principles is to end mechanistic reliance on ratings provided by 7  http://www.fsb.org/work-of-the-fsb/policy-development/additional-policy-areas/reducing-reliance-on-credit-ratings/ 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  ECAIs by banks, institutional investors and other market participants by reducing the “hard wiring” of ECAI ratings in standards, laws and regulations and by providing incentives for firms to develop their own capacity for credit risk assessment and due diligence”  This standard does also say that  supervisors should closely check the adequacy of firms rating processes and guard against upward bias. That is what we seek to do. Turning to restructured equity release mortgages specifically, we developed our Effective Value Test (the ‘Test’) to help determine whether insurers appear to be taking an inappropriately large Matching Adjustment benefit. This followed very extensive engagement with industry and more widely, including discussion and consultation papers. We recently issued a follow-up consultation paper8 to provide greater clarity to insurers on, for example, how often they should calculate the Test and in what circumstances the PRA will update key parameters in the Test, such as the deferment rate. The consultation paper also proposes that firms would be asked to use the Test ‘in stress’ as a validation technique, to help provide assurance that their internal models are assessing appropriate capital requirements against risks from these assets.
Today, we see a clear light at the end of the tunnel and the tunnel is becoming wider and wider, making our journey more exciting and pleasant, but yet tough and adventurous. It is not only in cricket that we are excelling today. We are making our mark on many other areas as well. Let us then, as a region, take our rightful place in the League of Nations by showing that we can develop economically to reasonable levels quickly and in a sustainable manner. Our people are responding. Our people are becoming more conscious that better living standards are possible. They are increasingly showing that they are prepared to work towards that goal. Our collective work ethic and productivity standards are improving. Let us support and intensify these efforts and amplify the trends. Let us keep the momentum going. Let us implement, implement, and implement! Mr. Chairman, the Global Management Summit organized by you provides an excellent forum for all of us to learn from each other and shape our strategies. Let us use this opportunity to fine-tune our own knowledge and skills and move with confidence towards delivering sustainable growth to our economies and usher better lives for our people. That is my wish for all of us and I am certain that we would have the energy and the resilience to succeed. Thank you. BIS Review 29/2008  7

It not only creates a climate for higher economic activity over the medium term, but also reduces the economic and social inequalities caused by the asymmetric distribution of the costs of inflation among the various economic agents. 4  BIS Review 149/2010  Financial system stability and the role of central banks in banking supervision Ladies and Gentlemen, the design of prudential regulation plays an important role from a growth perspective. Supervision is the guardian of financial stability, which in turn crucially determines the capability of the financial system to allocate resources efficiently and absorb liquidity shocks. Financial crises can have a deep and protracted impact on economic growth, as illustrated by several episodes of financial instability that occurred in many countries. The contribution of prudential supervision to economic growth proceeds along two dimensions. From a preventive perspective, supervision has to ensure a continuous and comprehensive monitoring of all the potential threats to financial stability. The role of supervision is also crucial after the emergence of a crisis, in order to provide for a swift and ordered resolution. Supervisors can only be effective in these two respects if they are able to pay sufficient attention to systemic issues, namely the risk of contagion effects. Policy measures aimed at development of capital markets Ladies and Gentlemen, despite the threat of the recent global financial crisis, the Zambian financial sector is currently resilient. The level of liquidity is also high, spurred largely by tighter lending conditions as banks slowed down on lending to the private sector.