samchain/econo-pairs-v1 huggingface dataset:
Given the Bank of England’s general concern for systemic risk, we would tend to evaluate this question in terms of whether the existing cushion of capital has given the right level of protection to the system, ie have we established the right level of tolerance towards banking crises. Individual bank failures do not prove inadequacy of the framework - although a complete absence of bank failures would suggest severe overprotectionism. It is very difficult to answer this question definitively, given that bank failures and banking crises tend to have their roots in a number of different causes, not just inadequate capital. It is difficult to say therefore how much difference extra capital would have made, or how many more crises would have resulted had the regulatory capital demand been lower. Nevertheless the frequency of crises, even in developed countries since the Basel Accord was implemented, is not so low as to make us feel that the regulatory demand for capital is overstated. Using IMF data on banking crises, we find that during the BIS Review 70/2000  4  1990s four out of 11 G10 countries have suffered a banking crisis - a statistic which I do not find particularly comforting. And, although developed countries tend to escape the twin plague of a banking crisis combined with a currency crisis, we should not suppose that this rather high incidence of crisis in developed countries is mitigated by the costs of the so called crises being noticeably low.

The GFC has also taught us that even the largest banks in the world are not immune to failure in risk control and management and, when they failed, there would be devastating effects on systemic stability and on the society at large. 4. Fellow INEDs, while you may have come from a rather diverse background, I believe most of you know each other quite well already. This is because all of you have worked for decades in your respective fields, crossing the paths of a wide spectrum of industries, and have achieved proud accomplishments in different shapes and forms. It is your unique experience and expertise, your reputation and your willingness to serve the banking sector that have brought you together as INEDs today at this Conference. 5. As INEDs, you play a crucial and irreplaceable role in the governance of the banks in Hong Kong, serving not only the shareholders but also the public at large, given the special and important role of banks in the society. I think you will agree with me that in the interest of good governance, a board of directors has to provide the needed steer, guidance and checks and balance to the bank. Clearly this can only be achieved if the INEDs can function effectively and efficiently. Without functioning INEDs, the board is just another gathering of the senior bank management. We may as well abolish the board of directors as it would serve no real or useful purposes. 6.
1990=100  110  110  105  105  100  100  Local currency  95  95 Common currency  90  90 1990 1992 1994 1996 1998 2000 2002 2004  Sources: TRCIS, Ministry of Finance and Norges Bank  14  BIS Review 11/2004  The fall in the value of the krone over the past year has strengthened the Norwegian business sector. The business sector is, however, still feeling the effects of a sharp rise in labour costs over a period of several years. Relative labour costs measured in a common currency are in line with the level prevailing in 1990, but approximately 10 per cent higher than in the mid-1990s. The internationally exposed sector has been scaled back. Those companies that are currently operating may be in a better position to bear the high wage level. Nevertheless, costs may limit activity and employment. Growth in the Norwegian economy picked up again through the summer of 2003. In the period ahead, solid growth in household income, subdued consumer price inflation and low interest rates will provide the conditions for high growth in private consumption. There is optimism in the building and construction sector. High petroleum investment is also supporting activity while mainland business investment has been low for a long period. The number of persons employed began to increase in the summer of 2003 and unemployment stabilised.

Businesses are rationalising and earnings are on the rise, but they are still investing and borrowing on a limited scale. The upturn is still not entirely self-sustained. A global financial market  Chart 1. Long-term interest rates Per cent 15  15  12  12  9  9  6  6  3  3 Norway  US  Germany  0  0  1983  1986  1989  1992  1995  1998  2001  2004  Source: EcoWin  Cross-border capital flows have increased considerably in recent decades. Bond markets have moved more in tandem, particularly since the mid-1990s. This also applies to equity markets. BIS Review 11/2004  1  Investors are increasingly spreading their investments across countries. They are diversifying risk, and seeking high returns. In parallel, governments, banks and companies are issuing more debt externally. Chart 2. Global daily foreign exchange trade In billions of USD 1600 1200 800 400 0 1983  1989  1992  1995  1998  2001  Sources: BIS, IMF, central banks  Currency trading has increased markedly since the 1980s. This trend was reversed when the number of currencies was reduced owing to the introduction of the euro. Large trading volumes enhance market liquidity. The growth in currency trading is ascribable to an increase in portfolio investment, higher foreign direct investment and growth in world trade. The forward exchange and options market have expanded in recent years.
30  There are a number of possible explanations for such a phenomenon. Stifled competition in certain sectors and for certain products may have prevented the trickle-down of innovation. 31  For example, restrictions on  patents and intellectual property (IP) might restrict new entrants and retard replication. A related hypothesis is that, in today’s globalised markets, network economies of scale and scope are more potent, generating natural monopolies in which single or small sets of players dominate market share. 32  A third hypothesis is that the emergence of a long tail of non-frontier companies, failing to keep pace with innovation, is the result of management failings. For example, Nicholas Bloom and John Van Reenen have shown that weaknesses in management processes and practices go a long way towards explaining the long  21  Gordon (2012) and Cowen (2011). Gordon (2012). 23 Decker et al (2016) argue there has been a fall in entrepreneurship in high tech sectors over recent decades. 24 Gordon (2014). Jones and Romer (2010). 25 See Tuuli and Batten (2015) for a summary of this debate. 26 Craft (2004). 27 Brynjolfsson and McAfee (2011). 28 Mokyr (2014a and 2014b) and Baily et al (2013). 29 Comin and Hobijn (2010). 30 Andrews et al (2015). 31 Andrews et al (2015). 32 For example, Haskel and Westlake (2016). 22  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  tail of low productivity manufacturing companies.

Third, and instead, what matters more – not just for inflation itself but the cost of government debt as well – is the prevailing regime for monetary policy. The two can clearly interact: the monetary regime was abandoned in those wars partly because of the pressures from higher spending, and it was that de-linking from gold that allowed prices to rise in the first place. Equally, it was precisely because of the visibility and prominence of that measure, and the belief that it was likely to be temporary, that both the subsequent inflation and the rise in the cost of new government borrowing were contained to the degree they were. Conclusion Aggressive monetary easing by central banks, occurring as it has alongside very large government deficits, has raised fears in some quarters about “monetary finance”. These are misplaced. Certainly there’s nothing about the coincidence of the two in time that, in and of itself, constitutes monetary finance. If the rise in government debt is caused by a weak economy, something that would otherwise depress inflation, easing policy is exactly what an independent, inflation-targeting monetary authority should be doing. Theory tells you that, to stabilise inflation, policy needs to lean against swings in demand and UK history bears that out. It’s true that, if only for a while, easier money policy reduces the real cost of borrowing, for public and private sectors alike. That’s how it’s meant to work. The reduction in the cost of borrowing for the private sector stimulates demand and inflation.
We can also look at medians of various percentiles of the individual distributions.27 We measure aggregate forecast uncertainty as the median across respondents of the individual IQRs. We also monitor the probability that respondents attach to extreme inflation outcomes by computing, for instance, the median probability of deflation: in other words, the median of the individual subjective probabilities assigned to outcomes with inflation less than zero. Finally, to characterize the variation in inflation expectations across respondents, we compute the dispersion of expected values: the IQR of individual density means. Again, we can look at other percentiles of the distribution across respondents to detect possible clustering and polarization.28 We publish at a monthly frequency many of the aggregate measures of inflation expectations, as well as measures for a broad range of labor market  25  Delavande et al. (2011b). 26  See Bruine de Bruin et al. (2011b). 27  By tracking the same individuals over time, we can in principle study the extent to which respondents update their expectations in response to new information. For instance, if respondents receive information that deviates from their priors, their density forecasts could initially exhibit greater uncertainty and even become bimodal until they converge to a new value for their central tendency. 28  For example, in the immediate aftermath of the financial crisis, we detected a certain amount of polarization in the distribution of inflation expectations, with some consumers expecting relatively high inflation, and some expecting deflation.

2  BIS central bankers’ speeches  While foreign direct investment continues to gravitate to emerging economies, in particular to Asia, the scale of such investment activity has also moderated. Finally, the international regulatory reforms and the unilateral initiatives in a number of the major advanced economies have also had their intended and unintended consequences. The reforms, which have focused on building a stronger global regulatory framework and raising the resilience of the banking system, are still in their early stages of implementation. While it is too early to verify the concerns raised on the new prudential standards, the call has, however, been for the need to ensure that the benefits of greater systemic resilience will exceed any costs to the efficient functioning of the financial intermediation process and to the real economy. For Asia, the new standards contribute positively for regional financial integration, as they promote a more consistent regional approach to regulation. They also work to strengthen regional financial stability arrangements, through more robust frameworks for the oversight of systemically important financial institutions at the regional level. These reforms have, therefore, encouraged increased communication and closer coordination on financial stability developments between regulators in the Asian region. These financial reforms are, however, not without challenges for emerging economies. In particular, the standardised regulatory prescription goes against the grain of regulation that is proportionate to risk.
I note that even publicly traded companies that wrestle with the relatively easy task of providing forward guidance on revenue and earnings find that exercise especially vexing; most won’t venture beyond forecasting the upcoming quarter – and that is after they already have a month’s worth of the quarter’s data in hand! In this morning’s Financial Times, Charles Goodhart, professor emeritus at the London School of Economics and former member of the Bank of England’s Monetary Policy Committee, claims to have examined the record of three central banks that have most prominently engaged in the practice of providing multiyear rate forecasts. He concludes: “The record for central banks in New Zealand, Sweden and Norway is not encouraging. In the short run, over the next three months and to a lesser extent over the subsequent quarter, these central banks do have additional (inside) information about their own future actions. Beyond this, however, the extra informational content of those central bank forecasts is zero. Moreover, the market knows that central bankers have no superhuman forecasting ability and will tend to view the supposed longerterm forecasts as a version of jawboning, attempts to persuade the market to change its mind for immediate policy purposes. Again, there is little empirical evidence that the market responds to such jawboning, and why should it when the central bank is as ignorant of the longer-term future as they are?”6 I don’t in any way consider my learned colleagues on the FOMC to be ignorant.

Miroslav Singer: Regulatory earthquake Welcoming remarks by Mr Miroslav Singer, Governor of the Czech National Bank, at the Basel Consultative Group Workshop on the impacts of Basel III on emerging market and smaller economies, Czech National Bank, Prague, 26 August 2013. *  *  *  Dear participants of the Basel Consultative Group Workshop, Ladies and gentlemen, Let me warmly welcome you to the Czech National Bank, which is proud to host this workshop on the impacts of Basel III on emerging market and smaller economies. I am very glad that my institution is involved in this workstream because I believe it is important for emerging economies not to be merely passive recipients of the regulatory “earthquake” in the banking industry which is spreading from advanced countries. Emerging economies should not and cannot blindly adopt new regulatory measures, as their financial markets have their own specific features. What is a priority for regulators in the most developed economies may not be a priority for regulators in emerging economies. On the other hand, the proposed measures within the Basel III framework may have unintended consequences for these countries, so it is worthwhile either to be prepared for them or to try to mitigate them if they are negative. Let me start by underlining what I consider to be the two fundamental difficulties of the current regulatory push.
With more than 25 million members and an average CET1 ratio of more than 26%, the building society sector was well placed to weather the storm from a financial resilience perspective, extending more than £ billion of new loans in 2020 and offering a peak of more than 300,000 payment deferrals to customers in financial difficulty. From an operational perspective, societies also adapted quickly to lockdowns and home-working arrangements, with almost all society branches continuing to serve their members through the pandemic. But the disruption caused by Covid-19 has shown why it is critically important for firms to identify the key services they provide and invest in their resilience. Societies – like all of 1/5  BIS central bankers' speeches  us – have witnessed an acceleration in technology innovation over the last year. Continuing to build on these developments and incorporating them into operating models will be important, both for the sector’s operational resilience, but also for serving the evolving needs of the sector’s members. As we sit here today, the outlook looks better than we might have expected a year ago. But a considerable amount of uncertainty remains, not least as many of the bridging measures put in place by the authorities begin to roll off. Though it may now look less likely, additional financial and operational pressures may still be on the horizon, and we will be monitoring that closely.

The second trade-off is the approach to simplification. There are two broad approaches we can follow: the first is what we have called a ‘streamlined’ approach, while the second is what we have called a ‘focused’ approach – you can tell from this that the PRA is not a marketing agency. You can think of the ‘streamlined’ approach as retaining most of the chapters of our Rulebook, but simplifying the text within them. On the other hand, you can think of the ‘focused’ approach as completely removing whole chapters from our Rulebook. For example, under a streamlined approach we could perhaps simplify our Pillar 2 capital requirements, whereas under a focused approach we might get rid of them altogether. How far we go in either direction will partly depend on how broad the scope of the framework is. This then brings me to what I think is the third key trade-off: the strength of the framework. The more focused an approach we take – that is, the more requirements we completely remove – the more likely it is that the calibration of the remaining requirements may need to be increased to ensure that the overall framework remains strong. This indeed is the approach that has been taken by several other jurisdictions, such as the US and Switzerland. By how much calibrations might need to adjust would in turn depend on what requirements had been removed, what if any requirements had replaced them, and what requirements had remained in place.
3 But the current level is still relatively high by historical and international standards and is something that, in my view, the FPC needs to keep carefully in mind when thinking of financial stability. Hotspots Within this current overall picture of the UK being at the beginning of a period of standard risks, credit growing gently at a similar rate to nominal GDP, and asset prices supported by low long-term interest rates, there are some hotter spots in property markets and elsewhere, such as consumer lending. 4 I will focus on property markets. Buy-to-let First and foremost, within the residential property market, lending for buy-to-let has been growing strongly for a number of years. The stock of buy-to-let mortgage lending has grown at an annual average rate of 6% since 2008. It rose by 11.5% in the year to 2015 Q4, while the stock of lending to owner occupiers was unchanged. Buy-to-let mortgages now account for 17%, by value, of the total stock of secured lending. Lending for buy-to-let has clearly been profitable. At around the start of 2016, lenders were planning to grow their gross buy-to-let lending by, on average, almost 20% per annum over the next two years, with some challenger banks and smaller building societies planning to grow their buy-to-let books at a much faster rate.

Having clarified this point, I can potentially see four main ways of increasing resolution capacity: The first would be to increase the amount of regulatory capital held by CCPs, and explicitly ring-fence a share of this capital as a means to recapitalise a new entity in a resolution scenario. In the EU, CCPs are required to hold sufficient own resources to cover operating costs over a six-month period – this requirement could be strengthened, not only in order to cover for a potential wind-down, but also to meet the funding costs of a new entity. For the reasons described above, I believe there would be important drawbacks in relying only on CCPs to increase their regulatory capital. CCPs should provide a proportional contribution to the resolution process, but should not bear all the costs. A second policy option could be to make use of initial margin haircutting as a means to fund the resolution process and establish a new CCP. While this would provide CCPs with significant resources, mutualised across the entire clearing membership, and could provide a base for re-launching a viable CCP with some degree of certainty over the sharing of losses, it would also imply a significant change in the way clearing members understand their liabilities towards the CCP – indeed, in certain jurisdictions, initial margin currently has to be bankruptcy-remote. It would be difficult to predict the potential pro-cyclical effects resulting from this tool, as well as the effects on incentives for members to take part in central clearing.
These projects relate to building the capacity and enhancing the efficiency of financial institutions as well as the development of consumer education and protection. Policy measures for the insurance industry in 2002 will continue to focus on promoting incentives for improved performance, encouraging the adoption of best practices and strengthening consumer protection. Towards this end, 10 recommendations under the FSMP involving 13 projects are targeted to be fully implemented in 2002. The recommendations include the introduction of independent financial advisers (IFAs) and the adoption of 'best advice' practices in the sale of life insurance products that will enable Malaysian consumers to obtain professional independent advice on their financial options. Given the right strategic focus, there is tremendous potential for future growth in the life insurance sector, particularly in products and services that provide for retirement needs, capital accumulation and long-term care. Given the right strategic focus, there is tremendous potential for future growth in the life insurance sector, particularly in products and services that provide for retirement needs, capital accumulation and long-term care. To achieve sustainable growth, there is a need for insurers to intensify research and development efforts to provide consumers with a broader range of innovative and competitively-priced products. Furthermore, there is a need to establish and continuously strengthen minimum underwriting standards and controls, particularly in new lines of business. This is to ensure that business is underwritten on sound and prudent insurance principles.

And I want to greet Sebastián Claro, the new Board member of the Bank, who I am sure will quickly be immersed in the spirit prevailing in this institution. I believe that everyone here today share a legitimate pride because of the place this Bank has achieved both in the Chilean society and at the world level. Let me tell you what happened to me four years and seven months ago, when President Lagos asked me if it would be a problem to me to be appointed Board member and Governor of the Central Bank for such limited period, which was the remaining of the term of my predecessor, Mr. Carlos Massad. I replied that it was not a problem, because it gave me time enough to propose and develop an agenda. It is no secret that I came to an institution that was living a crisis. My predecessor, in an act of great integrity, had chosen to resign in order to avoid the criticism that was building up against the Bank from affecting its institutional capital irreparably. I was aware then that, by accepting the post, I was assuming an enormous responsibility, which consisted essentially in protecting and strengthening its institutional capital. It was, therefore, a major task, that started precisely by introducing policies of riskmanagement, transparency and efficiency that would protect the Bank’s institutionality and autonomy. In global terms, it was tantamount to placing the Central Bank at the same level in management as it was in monetary and financial policy matters.