samchain/econo-pairs-v1 huggingface dataset:
This clarification also makes it possible to take account of any possible measurement bias in the price index, as well as inflation differentials within the euro area;  BIS Review 113/2007  3  -  the quantitative definition of monetary stability brings the Eurosystem’s strategic framework close to that of central banks that rely on inflation targeting, especially if a broad definition of the latter is accepted, such as that expressed by the term “flexible inflation targeting”. The big difference is in the use made of forecasts derived from econometric models, which play a predominant role in “pure” inflation targeting strategies, whereas they are only one component in the decision-making process of the Governing Council of the Eurosystem;  -  especially in the early days, we were confronted with substantial criticism regarding our definition of price stability, considered by many observers as too ambitious.

I wish to stress that this commitment was reaffirmed in Hamburg a few days ago by the whole G20, including the United States – and this is important as we need to preserve, in the words of the G20 Leaders’ Declaration, “an open and resilient financial system, grounded in agreed international standards”i . Regarding Basel III, I sincerely hope that we can reach a balanced agreement among Basel Committee members by next autumn. The vast majority of the Basel III framework has indeed already been agreed and is now largely implemented, notably in Europe since 2014 with the CRD IV package. The main outstanding point of discussion is, as you know, the so-called “output floor” which would apply to banks using internal models. The objective of Basel III is to lay the foundations for a strong, balanced and risk-sensitive international regulation, while reducing the undue variability of risk-weighted assets (RWAs). So we need a prudent but a  1  reasonable level of the output floor, combined with strengthened supervision of banks’ internal models – and Europeans made sensible proposals to achieve this. But should the output floor be set at too high a level, the consequences in terms of the reduction of risk sensitivity and the increase in capital requirements would be unacceptable: for example, a 75% output floor would affect half of international banks. It would de facto result in creating a “Basel IV” framework based on the standardised approach.
Taken together, the reforms are expected to result in wider product offerings and delivery channels, service quality improvements, greater market transparency, and more differentiated pricing that is reflective of risk. 4  BIS central bankers’ speeches  This will help risk managers for whom the decision to purchase insurance is increasingly driven by wider considerations which go beyond just the intention to transfer risk. Significant advancements in risk management practices and financial innovations have substantially broadened the actions that risk managers can take to control risks. For many companies, insurance solutions are no longer viewed as the only, or even the most important, way to reduce risk exposures. The insurance reforms will allow the industry to better respond to changing demand drivers. Importantly, it will also create opportunities to build stronger partnerships between corporate risk managers, insurance companies and insurance brokers in elevating risk management practices more generally. This includes a wider role envisaged for the industry in providing risk advice to clients, and initiatives to advance the quality and coverage of risk information that is useful to risk managers across a broad spectrum of areas, such as information on hazard exposure, demographic changes and technological risks. Conclusion In conclusion, maintaining that delicate balance between extreme risk aversion and wellreasoned risk taking, which is essential for businesses to grow and prosper, will always involve difficult judgements. We should be careful to ensure that advancements in risk management practices are serving to sharpen, and not blunt, such judgements.

Minouche Shafik: A new heart for a changing payments system Speech by Ms Minouche Shafik, Deputy Governor for Markets and Banking of the Bank of England, Bank of England, London, 27 January 2016. *  *  *  I would like to thank Andrew Hauser, Chris Salmon, Ankita Mehta, Grellan McGrath, Toby Davies and John Jackson for their comments. The Bank at the heart of the payment system Sometime around 1770, just a few yards from where we are sitting tonight, two of the commercial banks’ so-called “Walk Clerks” congregated at the Five Bells Tavern for lunch, weary after a morning spent visiting each of their competitors in the City of London. 1 They reflected disconsolately on their increasingly impossible task of exchanging ever-rising numbers of paper cheques at each individual bank and settling ever-larger outstanding balances. The idea occurred to one of them that they might encourage all of their colleagues – for each bank had such Clerks – to join them for lunch at the Five Bells every day, where instead of their tiring morning tours they could carry out a much speedier, more reliable exchange of cheques. Thus a clearing system for the City of London was born, from which many of the UK’s modern payment systems descend. From the start, the Bank of England has stood at the very heart of this system. Historically, banks had settled their net obligations to one another in coin. But coins were an inefficient settlement asset, being difficult and risky to transport.
For others, the message is perhaps that the crypto world and its technologies are a very long way from influencing, let alone changing, the way financial services, including payments, are delivered at scale in the real world. It is, as I said earlier, very difficult to predict which technologies will be successful and when and how they might begin to change the way we do things. The bursting of the dot.com bubble in the early years of this century did not herald the end of the development of internet commerce though it took longer than its original enthusiasts imagined and emerged in a very different form, dominated by big tech platforms. Our work on a digitally native pound is driven by the trends we now see both specifically in payments, including the reducing role of cash, and more generally in the increasing digitalisation of daily life. It is motivated by two primary concerns. First, that in a world in which new, tokenised forms of money emerge, enabled by new technology, we remain able to ensure that all forms of money that circulate in the UK are robust, interchangeable without loss of value and denominated our unit of account – the pound sterling. Physical cash plays a role in ensuring that, at present, all forms of commercial bank money in the UK have to be redeemable in cash - Bank of England money - on demand in cash and without loss of value.

This, if applied to ‘real world’ assets, like equities, could offer a substantial improvement in the efficiency of financial market infrastructure and reduce risks by enabling instant settlement – T plus now[5]. There are of course risks in such integration as I mentioned earlier, whether it happens organisationally or technologically. The Bank of England is working with the FCA and the Treasury to set up a regulatory ‘sand box’ for developers to explore whether and how those risks can be managed to the level of assurance we expect from the current system[6] So my third reason for bringing the activities of the crypto world within the relevant regulatory frameworks is to foster innovation. This may appear counter intuitive to those who see regulation as opposed to innovation. But, as I have said before, ‘people do not fly in unsafe aeroplanes’. Innovation may start in unregulated spaces. But it will only be developed and adopted at scale within a framework that manages risks to existing standards. And by holding innovative approaches, using technological advance, to the same standards as existing approaches we can ensure that the benefits of new technology and new business models actually flow form innovation rather than from regulatory arbitrage. This in turn, determines the answer to the second question of ‘how’ regulation should be extended to these areas. The guiding principle should be ‘same risk, same regulatory outcome’.
Despite the strong demand for Swiss francs and the low interest rates in Switzerland, we can see that, overall, volume on the Swiss franc bond market has barely changed. In contrast to the situation in other countries, the level of debt has not risen, even though financing conditions have been favourable. Swiss franc assets have become less attractive in the eyes of investors, especially those from abroad. This suggests that investors have placed only a modest portion of their newly acquired Swiss francs in Swiss franc securities. Thus, monetary policy measures have also been transmitted to the Swiss franc capital market. At the same time, we observe that the way in which investors hold their additional Swiss franc positions has changed. It appears that instead of holding Swiss franc deposits, they are increasingly making use of derivatives in order to hedge foreign currencies. The growing share of hedged foreign currency assets held by Swiss pension funds seems to confirm this picture. Given this situation, the SNB is maintaining its expansionary monetary policy, which continues to be based on two key elements: a negative interest rate (–0.75%) on sight deposits at the SNB and our willingness to intervene in the foreign exchange market as necessary. This policy aims to stabilise price developments and support economic activity. The weakening of the Swiss franc in recent months has helped to reduce, to some extent, the significant overvaluation of the Swiss franc in recent months. Nevertheless, the currency remains highly valued.

Case Study 6: Stabilization measures of 2012 Mr. Chairman, the next illustration I want to present to you is one of the clearest examples of policy co-ordination between fiscal and monetary policy. That was the stabilization package of 2012, which was introduced by the MoF and the CB from February to April 2012, in response to the pressure on the balance of payments, high imports, high credit growth and pressure on the exchange rate. As we all know, to deal with that growing tension, the Central Bank increased the policy interest rates, allowed the exchange rate to be more flexible and placed a 18% credit ceiling upon banks’ lending. In tandem, the Government imposed higher duties on the import of vehicles and a few other commodities, and increased the administratively determined prices of petroleum products. These measures were implemented in a carefully planned out and logical sequence. As a consequence, the desired stability within the economy was achieved quickly, with the Balance of Payments returning to positive territory, and the exchange rate stabilizing. In fact, this new situation enabled the Monetary Board to relax the monetary policy tightening cycle that commenced in February 2012, as early as in December 2012. This joint exercise therefore shows how quickly and effectively, a coordinated fiscal and monetary policy could deliver results, instead of the implementation of stand-alone monetary or fiscal policies, which usually take a long time to impact the economy, thus resulting in to the entire economy having to suffer from tight policies for longer periods of time.
It is too soon to say yet, but we should be prepared to push harder for further standardization should the desired degree of standardization that we are striving for not materialize. 2  BIS central bankers’ speeches  I also worry that implementation of the Principles for Financial Market Infrastructures could falter over time. This could happen for several reasons. In particular, we should recognize that there is a tension between the profit motive of for-profit CCPs and full compliance with the PFMIs. Put simply, some CCPs will prefer to avoid the full costs of compliance. In other words, there will always be a risk of a race to the bottom, which we must continually push against. In this respect, the effort could also falter if countries were to fail to enact the relevant legislation and policies to put the PFMIs in practice. For the global system to be robust, the requirements for CCPs will need to be enforced across the different geographic regimes. I am also worried about fragmentation. In particular, I worry about the proliferation of TRs and CCPs geographically – in some cases in each of the major asset classes. In the case of CCPs, fragmentation would bring two costs. First, the netting benefits would be reduced and, second, the system would be more complex. In an ideal world, I would prefer very few, very robust CCPs, rather than a proliferation of many, less robust CCPs. But whether that is what we will get is unclear to me at this point.

These institutions are just devices to achieve an end – less risk, more robustness and greater transparency. In the end, we will need to assess our progress on OTCD reforms against those broader qualitative metrics. Thank you very much for your kind attention. BIS central bankers’ speeches  3
Ardian Fullani: Overview of Albania’s banking sector Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the end-year reception, organized by the Albanian Association of Banks, Tirana, 23 December 2011. *  *  *  Dear bank executives, Dear participants, This end-year event with the Albanian Association of Banks, turned into a tradition of communication between the banking sector and the Bank of Albania, provides an excellent opportunity to make a short resume of the results achieved by this sector in this year as well as to identify its challenges in the upcoming year. The banking sector managed to finish off 2011 successfully. Its role in supporting Albania’s economic activity was crucial, while prudence was made to guarantee its financial soundness. In this regard, the supervisory role of the Bank of Albania has provided an extraordinary contribution. Banking supervision has been proactive and preventive by creating, at the same time, the necessary space for flexible banking activity management. Amendments to the law “On banks in the Republic of Albania”, a number of amendments to the banking regulatory framework as well as the physical interaction through on-site inspections have contributed to enhanced immunity and dampened negative effects generated by the global crisis. The Bank of Albania has periodically conducted stress tests on specific banks to ensure that the banking sector’s security and functionality is never put in doubt.

Dear bank executives, More than three years on from the crisis start, global economy’s perspective to leave this crisis behind remains unclear. Nonetheless, this is about a gradual and long process. Overall, financial institutions, in Europe and beyond, continue to face with the following:   High uncertainties as regards exposure value in sovereign debt securities;    Difficulties to ensure liquidity in wholesale markets;    Reduction of crediting volume and tightening of its terms to fund the domestic economy;    Higher capital requirements arising mainly from new regulatory rules by supervisory authorities. The need to reduce investment risk in sovereign debt is accompanied by huge efforts on fiscal consolidation in many countries, especially in Europe. Hence, EU economic growth expectations, including those for countries that had, insofar, posted above-average economic growth, were markedly down. It appears that the best solution for this situation will come only as a result of various countries’ ability to undertake, at this point, vital social and economic reforms as well as to provide financial support so that, on the one hand, financial stability is maintained and, on the other hand, private enterprises are provided with some relief, thus affecting their future economic development expectations. Albania’s economy maintained its positive growth rates during this period, to absorb external shocks. This flexibility is a precious characteristic that will continue to support the country’s economic development and buffer effects from various shocks, even in the future.
In the worst case scenario, it is even conceivable that the funds needed to provide such support would exceed our country’s financial resources. The lion’s share of the burden from the measures taken to stabilise the Swiss financial centre was borne by the SNB. For this reason, it has been a staunch advocate of addressing and remedying the “too big to fail” issue. The SNB has always stressed the need for a political decision in this regard. In November 2009, the Federal Council appointed a commission of experts, whose mandate is to formulate possible approaches for resolving the “too big to fail” issue. The SNB is represented by its Vice President, Thomas Jordan. The commission published its interim report last week. The report proposes measures in the areas of capital, liquidity, risk diversification and organisational structure. These measures are designed, first, to be preventative, reducing the likelihood of failure by a systemically important institution. Second, they should minimise the cost to the economy as a whole, in the event that a failure nevertheless occurs. The aim is to remove the need for renewed state intervention in the event of a crisis. The report by the commission of experts represents an important milestone in the “too big to fail” debate. The SNB supports the direction proposed by the commission. It shares the commission’s view that it is necessary to establish a legal basis which will allow special requirements to be imposed on systemically important banks.

In addition, it has discontinued its purchases of Swiss franc bonds issued by private sector borrowers. Indeed, movements in the Swiss franc against the euro over the past few months have caused monetary conditions to tighten somewhat. Yet, overall, monetary policy is still expansionary. The three-month Libor remains at a low-water mark of 0.25%, and we continue to supply the banks with generous amounts of liquidity. Let me now turn to the outlook for 2010 and the monetary policy challenges ahead. IV. Outlook for 2010  The global economy has been in a phase of recovery since mid-2009. The SNB expects that this will continue, although the recovery is still exposed to risks and will vary greatly from region to region. BIS Review 59/2010  3  The greatest expansion will be seen in emerging Asia. The entire region will, in particular, benefit from the strong growth in Chinese domestic demand. In the industrialised economies, the recovery is still being driven by the expansionary monetary and fiscal policy measures adopted at the start of the crisis. At the same time, there are a number of factors weighing on growth prospects. High unemployment, growing sovereign debt and the deterioration in household wealth are likely to dampen private consumer spending in many economies. In addition, given the underutilisation of capacity and the tighter lending conditions, corporate investment seems unlikely to stage a strong recovery. Moreover, in a number of countries the situation in the real estate market, and hence the outlook for the construction industry, will remain difficult.
The Fund needs to make more of its presence at inter-governmental groups such as the G7 and the G20. And it needs to experiment with more flexible ways of exploring key policy issues with relevant groups of members, to add depth to the formal exchanges typical of large set-piece international gatherings. After a couple of years debate, the prospects for achieving meaningful reform now look promising, following the Fund’s Annual meetings in Singapore. The agenda for reforming surveillance includes a new focus on multilateral issues, including global financial issues and a new procedure for multilateral surveillance. The Managing Director has launched a first round of multilateral consultations on global imbalances. These are a potentially important innovation in the way the Fund interacts with key policymakers, but as they are still under way, I shall not comment further. Instead I want to focus on the other key area for reform, where there are some important outstanding issues. This is the work now in hand to clarify and update the operational guidance on surveillance, through a thorough review of the 1977 Decision and by designing a new annual remit for surveillance. This is aiming to provide a clear, up-to-date set of guiding principles, and a firmer operational foundation for surveillance. This matters because the Fund can only be effective in encouraging countries to fulfil their obligations if there is a clear and shared view of what those commitments are, and a coherent and transparent operational framework for assessing compliance.

•  The first characteristic, which has set us apart from other supervisors, has been our strong role in accounting rule-making for the banking sector in Spain. This has meant that the accounting rules for the banking sector take into account supervisory sensitivities, whilst being also consistent with IFRS. One example of this is the socalled “dynamic provision”, which we introduced in 2000. This allowed Spanish banks to build up a significant provisioning buffer in a transparent manner, to be used in bad times, when problem loans increase. In 2005, the Bank of Spain reformed the dynamic provision when adopting International Financial Reporting Standards. Despite the reform, banks kept the strong provisioning level set by the former rules, and today they face the current situation with a sound buffer of loan loss provisions (1.3% of total assets at the end of 2007, and this despite bad loans being at historically low levels). •  The second characteristic that has proved useful is the Bank of Spain’s prudent approach to bank regulation. One example has been our stance on off-balance sheet investment vehicles. We have not prohibited the development of investment vehicles, but we told banks that if they set up Special Investment Vehicles, these should be consolidated with the group, and therefore be subject to capital requirements and provisions. Under these conditions, no such vehicles were set up. As a consequence, the Spanish banking system has not been so seriously hit by the de-leveraging process as other systems that have a freer attitude towards these vehicles.