samchain/econo-pairs-v1 huggingface dataset:
Prices for Norwegian exports, such as oil, gas, metals, minerals and fish, rose markedly, while prices for imported goods fell. In the seven years leading up to the financial crisis, the volume of mainland GDP expanded at an average annual rate of 3.4 per cent. Exactly ten years ago today, Norges Bank was charged with the task of setting the interest rate with a view to keeping inflation low and stable. At the same time, new fiscal policy guidelines, also known as the fiscal rule, were implemented, charting a course for petroleum revenue spending. Norway’s sovereign wealth fund, which is now called the Government Pension Fund Global, was designed to prevent fluctuations in oil prices from feeding through to the mainland economy. 2  BIS central bankers’ speeches  A decade of inflation targeting The inflation target for monetary policy provides a sound anchor for inflation expectations. Over the past decade, CPI inflation has varied to some extent. Underlying inflation has naturally been more stable, but has been both higher and lower than the target. If we look at the ten-year period as a whole, inflation has been 2 per cent, that is to say close to the target. BIS central bankers’ speeches  3  Still, over the past ten years, the conduct of monetary policy has been tested. During this period, we have gained insight into the functioning of the Norwegian economy under an inflation-targeting regime. Let me touch upon some of these insights.

Thomas Jordan: The Swiss National Bank’s monetary policy decision and assessment of the economic situation Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 10 December 2015. *  *  *  Ladies and gentlemen It is a pleasure for me to welcome you to the Swiss National Bank’s (SNB) news conference. I will begin by explaining our monetary policy decision and presenting our assessment of the economic situation. Fritz Zurbrügg will then speak about current developments in the area of financial stability. After that, Andréa Maechler will review the situation on the financial markets. Finally, we will – as usual – be pleased to take your questions. Monetary policy decision Let me begin with the inflation forecast and our monetary policy decision. Overall, the new conditional inflation forecast differs little from that of September. It indicates slightly higher inflation in the short term, and that inflation had already bottomed out in the third quarter. Owing to a slight deterioration in the outlook for the global economy, mediumterm inflation is somewhat lower than predicted in September. For the current year, inflation is forecast at –1.1%, a 0.1 percentage point rise on last quarter. For 2016, we still anticipate an inflation rate of –0.5%, and for 2017, the forecast is now at 0.3% instead of 0.4%.
In particular, there are policy decisions required in the following dimensions: (i)  eligibility (what collateral should be accepted, and what should not);  (ii)  valuations and haircuts (how much is the collateral worth? );  (iii)  what fees should apply, if any, and  (iv)  limits (how much diversification should we seek across the collateral delivered?). These are important questions for the banking system as a whole, and have presented new and complex risk management challenges for central banks over the past few years. It is on these issues that we focus in this paper.3 To start with, we briefly outline some of the main features of the Bank’s lending operations. The sterling monetary framework The Bank’s main activity in the sterling market prior to the financial crisis was via its shortterm repo open market operations (STR OMOs). Those regular weekly operations provided the banking system with the right level of reserves such that short-term market interest rates would remain close to Bank Rate set by the MPC.4 In addition, in order to reduce the size of weekly STR OMOs to a manageable size, the Bank undertook longer-term repo OMOs (LTR OMOs) of 3, 6, 9 and 12 months maturity. The remaining operation of note was the Standing Facilities in which a commercial bank could borrow from, or lend to the Bank overnight, albeit at a less attractive rate than Bank Rate.

Clarity is also needed concerning liquidity commitments to off-balance sheet vehicles, and the magnitude of assets that may be  BIS Review 3/2008  3  re-intermediated back onto the balance sheets of euro area financial institutions. The process of improving clarity, which started when Q3 2007 financial statements became available, will be advanced further when institutions publish their annual audited accounts for 2007 as a whole. Given the uncertainties, the adjustment process in the financial system in the coming period may be challenging, and we have to be prepared to the materialisation of risks at any time. That being said, there are mitigating factors, including a broadly favourable economic outlook, the largely sound balance sheets of households and firms, and the generally sound capital positions of core financial firms. This should not, however, provide any grounds for complacency given the heightened uncertainties. In a fluid environment where financial system conditions may unexpectedly change, prudence is of the essence both for policymakers and financial institutions. Concerning the role of financial institutions and supervisory authorities in coping with the financial turmoil, I would submit three observations. First, given the underlying factors of the financial stress, and in order to re-establish confidence within the financial system, it is crucial to promote a widespread consistent valuation of complex structured products as well as an adequate disclosure by banks of all their exposures, in particular related to the US subprime mortgage sector.
I am therefore not particularly worried that the situation in the credit derivatives market could cause serious problems for financial stability. The important thing is that the systemically-important banks manage exposures to their counterparties – that is, that they take sufficient collateral, they have sensible limits and they are capable of managing potential liquidity problems. But the Riksbank will, of course, continue to follow developments and act to ensure that the risks I have mentioned today are managed properly. With regard to Sweden, the direct impact of credit derivatives on risk in the bank sector is currently small. But I assume that we will see increased activity among the Swedish banks, partly because the banks’ customers are calling for it and partly to manage the risks in their own balance sheets. The new capital adequacy rules may well contribute to this. It is therefore important that the Swedish banks report their management of credit derivatives in a way that makes both the trade and the total credit risk transparent. Here there is room for further development. So don’t forget credit derivatives – they will continue to increase in importance. And don’t forget that they are essentially insurances, neither simpler nor more complicated than a normal home insurance. Thank you. 6  BIS Review 24/2007

This is a reflection of the unusual and difficult economic conjuncture that we have been going through, combined with the challenge of determining the scale and nature of, for instance, loan forbearance. This is particularly evident in areas like commercial property lending where there is a hump of loan refinancing to come and a quite sharp tiering of performance among assets. Second, the euro area, and the possible impact of disorderly break-up, should that happen (and in saying this, I offer no view on whether it will happen), could have a sizeable impact on many banks. But here the FPC faces another very difficult judgement, namely what scale of so-called tail risk – the losses from low probability but high impact events – do we wish to see covered in the capital held now by banks? In other words, how much insurance should come from capital providers? The broad answer is a lot, but that does not tell us how much,  BIS central bankers’ speeches  3  and in the limit there are utterly catastrophic risks for which it is not sensible to hold capital as the answer. Third, when we look at the low market value of some banks relative to their book value, how much of this should we attribute to lending margins being considerably lower than they were expected to be? Net interest margins are squeezed in the current environment.
True Finance – Ten years after the financial crisis Speech given by Mark Carney Governor of the Bank of England Chair of the Financial Stability Board  Economic Club of New York 19 October 2018  I am grateful to Alice Carr, James Benford and Clare Macallan for their assistance in preparing these remarks, and to Paul Brione, Chris Ford, Alex Michie, Harry Jackson and David Nicholls for background research and analysis. 1 All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  I. INTRO Last week, global financial policymakers gathered in Bali for the Annual Meetings of the IMF and World Bank. These meetings came a decade after the global financial crisis, two decades after the Asian crisis, and three decades after the Latin American debt crisis. Anyone spot a pattern? Despite the past decade of financial reform, many are asking whether anything has really changed. I am going to argue today that such weary fatalism is at odds with reality. That the radical programme of G20 reforms has made the global financial system safer, simpler and fairer. That these measures are creating a system that can serve households and businesses in bad times as well as good. That true change is creating true finance, a system that can deepen financial inclusion, better meet the needs of ageing populations and help fund the transition to a low carbon economy.

And to protect the system from risks we think are low but prove not, banks are subject to a simple, minimum leverage ratio, which is robust to model risk. Regulation has made banks less complex and more focused. Business strategies that relied on high leverage, risky trading activities and wholesale funding are disappearing, as intended. Trading assets have been cut in half, and interbank lending is down by one-third.38 Not least due to new global liquidity standards, banks have changed their funding models and now hold substantially more liquid assets relative to the liabilities that can readily run. In the UK, such contingent liquidity has increased tenfold since the crisis. An anti-fragile system requires ending Too Big to Fail. But higher capital and liquidity requirements are necessary but not sufficient. Banks must also be able to fail without systemic consequences. A decade ago, large complex banks operated in a “heads I win tails you lose” bubble. They privatised profits in the run-up to the crisis before socialising the losses when the music stopped. The complete loss of confidence in private finance that crystallised in the autumn of 2008 could only be arrested by public support over the following year that totalled $ trillion in bail-outs, government guarantees of bank liabilities and special central bank liquidity schemes.
3 6/7  BIS central bankers' speeches  3 Potter, Gradual and Predictable: Reducing the Size of the Federal Reserve’s Balance Sheet, October 11, 2017. 4 See Potter, Implementing Policy with the Balance Sheet, November 6, 2017, for further discussion of lessons  from experience with balance sheet policy. 5 The maturity structure of the balance sheet was only loosely incorporated into the purchase plan. Purchases of  Treasury securities were targeted at maturity sectors; within each sector, specific issues were selected for purchase using a relative-value approach based on a spline fitted to market prices. Sack, Implementing the Federal Reserve’s Asset Purchase Program, February 9, 2011. Treasury securities acquired through reinvestment are purchased in proportion to issuance. Agency MBS purchases are distributed across instruments roughly in proportion to anticipated gross issuance of those securities at the time. Potter, The Implementation of Current Asset Purchases, March 27, 2013. 6 Early FOMC discussions of balance sheet normalization, then referred to as an “exit strategy,” were predicated  on an intention to return to, as put in the January 28, 2009, meeting transcript, “a more normal framework for conducting monetary policy,” which meant a return to an asset and liability structure closely resembling that which prevailed before the financial crisis. Normalization-related matters were discussed in the minutes to most of the FOMC’s 2009 meetings.

Even the Basel II regulations, which will come into force in 2007, provide scope for regarding mortgage bonds covered by legislation on secured bonds as more creditworthy than mortgage bonds not covered by such legislation. However, the Swedish market for mortgage bonds is already a large, liquid market that has functioned well since its deregulation at the end of the 1980s. It is the third-largest mortgage bond market in Europe, after the German and Danish markets. After the Swedish government, Swedish mortgage institutions are the largest issuers in both the money and bond markets in Sweden. As much as around 40 per cent of all lending to the non-bank public is mediated via mortgage institutions, which largely finance their activities by issuing bonds and certificates in the securities markets. The market is dominated by five mortgage institutions, which together account for around 99 per cent of all borrowing. The four largest mortgage institutions are subsidiaries of the four largest Swedish banks, while the fifth, SBAB, is state-owned. The mortgage institutions’ annual reports show that as much as around 30 per cent of securities borrowing is carried out abroad, which suggests that there was already considerable interest among foreign players before the legislation on secured bonds was proposed. However, there are considerable differences between the institutions.
To ensure that the banks’ capital really can cover losses, they must already today make certain adjustments in their equity on the basis of what actually exists on the asset side. The principles governing how to do this will now be tightened up. For example, deductions will have to be made directly from the Core Tier 1 capital, unlike today when either the total Tier 1 capital or the total capital base is adjusted. Nor will the banks be able to include assets that form the capital base in other financial institutions. The idea behind such a limitation is to counteract the domino effects that can arise if a bank goes bankrupt. Other important assets on the balance sheet that will require adjustment of the capital are goodwill and deferred tax assets. Another important change is that it will not be possible to include hybrid capital to the same extent as before. Innovative hybrid instruments with a so-called step up will, for example, be completely excluded from Tier 1 capital. The reason for this is that this relates to out-and-out rule arbitrage. Under the current regulations, it is not permitted to include dated debt instruments in the capital base. To get round this, the banks have issued securities with a socalled step up, where the interest rate rises if the security is not repurchased before a certain predetermined date.

The Bank of Thailand continues to place great emphasis on strengthening the regulatory framework and our surveillance capability in order to carry out prompt actions to adequately assess and deal with emerging risks in the financial system. We also have regular dialogues with top management of banks to discuss financial and business conditions, risk management, and issues relating to broader economic and financial stability. In terms of international standards, Thailand is on track to adopting the Basel II framework starting end of this year. For the move to Basel II, banks are aligning their risk management practices to prepare for the increase in requirements. In addition, the new Financial Institutions Businesses Act, which came into effect this past August, has also empowered the Bank of Thailand to fully enforce consolidated supervision, carry out prompt corrective action, and strengthen the governance of boards and top management. Ladies and gentlemen, Let me now turn to my second topic today, that is the medium-term plan to strengthen the efficiency and financial infrastructure for the banking system under the Financial Sector Master Plan Phase II. During the past five years, and under Phase I of the Financial Sector Master Plan, considerable progress has been made in strengthening the banking system, through consolidation of financial institutions, under the “One Presence” policy. There has been voluntary merger and acquisitions, among local institutions as well as with foreign partnerships, leading to fewer but stronger players, enhanced capital base, improved risk  4  BIS Review 133/2008  management and operational efficiency.
More recently, on the Basle Supervisors’ Committee, I have been learning about the Year 2000 issues that confront bank supervisors around the globe. Scope Simply put, I do not think it would be possible to overstate the importance of the Year 2000 problem as an issue for the financial markets. Naturally, the tendency in these turbulent times is to focus on day-to-day concerns, and to leave future problems to be dealt with later. This tendency must be resisted strongly if we are to succeed in addressing the Year 2000 problem. I say this because the Year 2000 problem is an issue for every country, firm, organization, government agency, bank and piece of critical infrastructure in the world. If the Year 2000 problems that exist within software programs and embedded computer chips are not repaired by January 1, 2000, the affected systems will cease to function or will malfunction. Those firms that have checked for Year 2000 problems overwhelmingly have found that their systems were affected and would not have functioned normally in the Year 2000 without being fixed. Moreover, the efforts of firms around the world have demonstrated that while the extent of the Year 2000 problem varies, no country or sector is immune from it or can afford to ignore its impact. Financial sector organizations such as banks, securities firms and insurance companies are typically among the most highly affected organizations. National and local government systems and services are affected.

Critical infrastructure such as transport, water, power and telecommunications systems are also likely to be affected. Nearly all aspects of the economy in every country are therefore potentially at risk because of the widespread dependence on a country’s core infrastructure. The unprecedented scope of the Year 2000 problem means that a critical aspect of the issue is the management challenge. Substantial management resources are needed to coordinate the efforts to assess, repair, and test affected systems prior to the fixed deadline of BIS Review 85/1998  -2-  January 1, 2000. At the Federal Reserve, for example, we have created a number of management positions within our organization that are focused exclusively on different aspects of our Year 2000 preparations. A final point that underscores the need for urgent and sustained action is the increasing focus on the issue by the media, by the public and by market observers such as the rating agencies. Over the course of 1999, the extent of Year 2000 preparations by financial organizations will become the subject of ever more intensive scrutiny. As supervisors, therefore, we must do all we can to support the efforts of market participants to address the problem effectively, and to build confidence among others that this is being accomplished. While we must make it clear that supervisors cannot solve the problem, we can help mobilize others to take the necessary steps.
The appropriate level of risk is something we are currently discussing with firms. Liquidity horizon. Finally, we are aware of banks seeking out funding that matures just beyond the time horizon used to calculate regulatory liquidity requirements. These include the Liquidity Coverage Requirement’s (LCR) 30-day window. If a firm subject to the LCR accepts a deposit that can be withdrawn by giving less than 30 days’ notice, it has to hold a certain amount of high-quality liquid assets as insurance against the deposit being withdrawn during stress. As yields on high-quality liquid assets are relatively low, this can drag down profitability. But a bank can evade this by obtaining a deposit that matures after 30 days, since these deposits generate no requirement for counterbalancing high-quality liquid assets. I recently saw a term-sheet for an evergreen 35-day call account. In previous times, the market-standard notice period was one calendar month. Why the shift from one-month to 35 days? The traditional one-calendar-month call account is only sometimes LCR-friendly – during a 31-day month – whereas the new 35-day product always is. 21  All speeches are available online at www.bankofengland.co.uk/speeches  21  But how much additional liquidity has been obtained by extending the funding profile by five days? And how strong is liquidity risk management beyond the narrow requirements of the LCR?

Jessica Chew Cheng Lian: IFRS 17 Insurance Contracts Welcome address by Ms Jessica Chew Cheng Lian, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Joint IFRS Foundation &amp; MASB Regional Workshop “IFRS 17 Insurance Contracts”, Kuala Lumpur, 17 May 2018. * * * Good morning ladies and gentlemen and welcome to today’s Regional Workshop on IFRS 17 Standards for Insurance Contracts, jointly organised by the IFRS Foundation and the Malaysian Accounting Standards Board (MASB). Allow me first of all to congratulate the IFRS Foundation and MASB for putting this workshop together, with an impressive line-up of experts and practitioners to share their knowledge and insights on IFRS 17. We are especially privileged to have with us today two senior members of the IASB Board Mr. Darrel Scott and Mr. Amaro Gomez, both of whom have been with the IASB for more than 10 years. The strong interest in IFRS 17 and its importance both to financial systems and businesses are clear from the turnout today, with more than 250 participants from over 15 countries, representing industry players, accounting firms, national standard setting bodies and financial regulators. It is an honour for me to offer some brief remarks this morning to kick off today’s workshop. On my way here, I recalled a joke in which a lady was once told by her doctor that she would only have six months to live. Understandably very distraught, she asks the doctor for advice on what she should do.