samchain/econo-pairs-v1 huggingface dataset:
In particular, it is important that the measures are first and foremost designed to correct false incentives and to guide them in the right direction so that, first, unprofitable financial institutions leave the market of their own accord and, second, potential losses are borne by these institutions themselves, and not by the state. Consequently, in my opinion, measures such as a ban on proprietary trading or the introduction of a narrow banking system, that intervene too strongly in banks’ business models, are not very suitable. Such measures neither target the objective nor are they in line with the basic principles of the market economy. With regard to the TBTF issue, this principle has prompted the committee of experts appointed by the Swiss Government to draw up proposals including the creation of incentives for banks to become less systemically important overall, thereby reducing potential costs for the economy. At the same time, the committee of experts’ proposal will allow for improved resolution in the event that insolvency appears imminent, and this will significantly alleviate the TBTF problem. Are the measures “structural”? A second criterion is that the measures should not just address the specific circumstances of the most recent crisis. In other words, fighting the last war will not win the next one. At the same time, the lessons of history show us that certain basic mechanisms repeat themselves in every crisis. Consequently, it is very important that we recognise these general patterns and include them in regulatory considerations in order to improve our crisis prevention.

This prevention is geared to establishing instruments whose effects are as broad-based as possible, in other words, instruments that are independent of the specific causes that lead to crises. One general pattern in financial crises is that market and investor confidence plays a central role. 2 In general, when a bubble is being formed, soaring price trends are initially explained in “rational” terms. In the recent crisis, for instance, developments in the US housing markets were, for a long time, regarded as a logical and unproblematic consequence of state support measures or of innovation in the form of new financial products, as well as the constant inflow of capital from Asia. 3 However, when the first symptoms of a crisis become evident, the focus moves directly to other aspects. Which market participants are exposed? How heavily are they exposed? How can one’s own assets be safeguarded in the best possible way? The irrational optimism of the previous period is followed by a rapid loss of confidence and then by a flight to security. A broad-based loss of confidence of this kind can sometimes result in serious liquidity problems, even for fundamentally well-backed banks, thereby triggering far-reaching second-round effects. 4  2  Cf. Akerlof/Shiller (2008): Animal Spirits. 3  Cf. Reinhard/Rogoff (2008): Is the 2007 U.S. Sub-Prime Financial Crisis So Different? An International Historical Comparison. 4  Cf. Acharya et al (2009): Manufacturing Tail Risk. A Perspective on the Financial Crisis of 2007–2009.
If the effects of unchanged mortgage rates are excluded, inflation will develop in a more stable manner and be close to the target of 2 per cent for most of the forecast period. It is weak productivity developments and the weak krona that will contribute to holding up inflation despite the economic recession. If the Swedish economy risks deteriorating more than expected, it may be necessary to implement further unconventional measures The future direction for monetary policy will depend, as usual, on how new information on economic developments abroad and in Sweden will affect the prospects for economic activity and inflation in Sweden. If the economic situation deteriorates further it is possible to use monetary policy easing to further stimulate the economy. But there are also reasons for further consideration of what is an appropriate level for the repo rate. If the repo rate were to become too low the transmission mechanism might become less effective. This is because some market rates are lower than the repo rate. When the repo rate approaches zero, these interest rates would no longer be able to follow. A too low repo rate could also create costs in the financial sector as the result of, for instance, a reduction in the banks’ margins. There is thus a risk that the functioning of the financial markets will deteriorate if the repo rate is cut further. In this case monetary policy will not have the intended effect.

News conference  15 December 2022, 10.00 am  Introductory remarks by Andréa M. Maechler In my remarks, I will talk in more detail about the implementation of today’s monetary policy decision, which Thomas Jordan has already touched on. I will start, however, by giving you an overview of how we have steered interest rates since the switch to a positive SNB policy rate in September. The switch from a negative to a positive SNB policy rate required us to make an adjustment to the implementation of our monetary policy in the money market. The new approach comprises two elements: reserve tiering – that is, tiered remuneration of the sight deposits that banks and other financial market participants hold at the SNB – and reserve absorption. This approach has proved successful. Following our monetary policy decision on 22 September, secured short-term Swiss franc money market rates moved quickly towards the new SNB policy rate (cf. chart 1). We are also continuing to see solid activity among participants in the money market, which ensures a robust basis for the calculation of SARON. From the outset, the market responded favourably to the deployment of our monetary policy instruments to absorb liquidity. On the very day of the monetary policy assessment in September, we started conducting repo transactions on a daily basis and issuing SNB bills on a weekly basis (cf. chart 2). In this way, we were able to reduce the liquidity supply in the money market sufficiently to allow us to steer interest rates effectively.
a Deviation in the level of cumulative GDP in 5 years, the time considered necessary to reach the new "long term". The two simulations assume a "no-deal" that includes a long-term scenario under WTO rules. FORECASTS FOR THE SPANISH ECONOMY: MAIN RISKS. SURPRISES ON THE DOWNSIDE FOR INFLATION OIL PRICES  OVERALL INFLATION  3  CHART 6  %  Projections  70  Dollars/barrel  Projections  65 2  60 55  1  50 0  45 40  -1  35 -2 2013  2014  2015  2016  LATEST PUBLISHED PROJECTIONS  2017  2018  PROVISIONAL UPDATE  2019  30 2016  2017  2018  2019  ASSUMPTIONS USED IN LATEST PUBLISHED PROJECTIONS UPDATED PROJECTIONS  SOURCES: ECB, INE, Reuters and Banco de España. which Spanish general government has been immersed since 2009, as part of the “corrective arm” of the EU’s Stability and Growth Pact. Specifically, the budget deficit is expected to be below 3% of GDP both in 2018 and 2019. 1.3  Main risks and elements of vulnerability  The macroeconomic and financial scenario I have just sketched, which prolongs the expansionary phase of the Spanish economy, is, however, subject to certain downside risks. It should also be added that these risks have tended to increase recently and are being reflected in sharper downward revisions of analysts’ opinions on the outlook for the global economy in 2019 (see left-hand panel of Chart 5).

These adverse effects arise because public debt absorbs funds that could be put to more productive use and alters the overall financing conditions of the economy, distorting private investment decisions. Moreover, in adverse situations, high indebtedness detracts from the stabilising capacity of fiscal policy. In addition, sustaining high public debt requires maintaining primary surpluses over a prolonged period, which may call for higher levels of taxation or lower levels of productive expenditure. Lastly, one of the key possible adverse effects of high debt is the greater vulnerability of public finances to changes in investor or market sentiment. According to simulations performed in studies published by the Banco de España, under credible assumptions, the process of reduction of Spanish government debt will be very gradual; indeed, several decades may elapse before the debt-to-GDP ratio reaches 60%, which is the benchmark set in the current European fiscal rules framework. In consequence, it is crucial that advantage be taken of the current favourable economic setting to complete the fiscal consolidation process and create budgetary headroom in order to be in a position to address future downturns. The work remaining should take the form of a medium-term programme setting out the measures required to meet the budgetary objectives, together with prudent macroeconomic and public revenue forecasts. Reducing the vulnerability of Spanish public finances is even more important considering the medium and long-term challenge posed by population ageing (see Chart 13).
I sincerely hope that we in Malta can similarly find the inner strength and conviction to put aside our differences and unite on these vital issues that are clearly our common concern. BIS Review 83/2001  5

Private sector credit is oriented towards funding the working capital and consumption, illustrating the private agents’ reluctant behaviour to make investments and banks’ high prudence to lend. Furthermore, deposits in the system have shifted towards longer maturity terms, thus illustrating the Albanian consumers’ disposition to save. Latest developments in financial markets have reflected contained liquidity and inflation premiums. In the interbank market, short-term interest rates were downward, following successive cuts of the key interest rates. Furthermore, government security yields in the primary market were slightly up. This increase is mostly due to the interaction of demand and supply factors in this market and does not signal for risk premiums increase in the economy. Interest rates in the deposit and credit markets followed the Bank of Albania’s easing monetary policy over the last six months, while its transmission is expected to be more complete in the future, conform to the time lag that characterises the monetary policy transmission mechanism. Projections for the expected economic outlook in the future sustain our earlier assessments for positive, but below potential, growth of the Albanian economy in the period ahead. However, risks about this scenario have increased, mainly as a result of unfavourable developments in the global economy and financial markets. Overall, the economy in our trade partner countries is expected to be sluggish and lending terms in the euro area are expected to be tight for the period ahead.
As the problems have worsened the recovery that began after the financial crisis in 2008 has ground to a halt, and our assessment in the Monetary Policy Report published in October is that GDP will actually fall in the euro area in 2012. …which is having a major impact on the Swedish economy Sweden is what we usually call a small, open economy. We are highly affected by developments abroad. This high dependence on economic activity abroad has led to considerable fluctuations in production in recent years. The fall in GDP in 2009 was the largest since World War II, but growth in 2010 was the highest for 40 years. The recent weak development of economic activity in the euro area has once again dampened growth prospects in Sweden. An important explanation of why the Swedish economy is affected so much by what happens abroad is that we are highly dependent on the demand for the goods and services that we export to other countries. The euro area is our largest export market and problems in the euro area therefore have a major impact on the demand for Swedish exports. One way for Swedish export companies to reduce this impact is to turn to new markets instead, but this is a very slow process (see Figure 7). The euro area will continue to be easily the largest export market for Sweden for the foreseeable future. Uncertainty abroad affects households and companies in Sweden.

They’re number one in the state a couple of times. President Dudley: I agree with your concern. Is there a question? Audience Member: Yes, what can you do to set up financial resources for minority and women-owned businesses to become involved in the economy? Whether that’s establishing a bank – we’ve asked the controller to control this, let him set up a funding source for us using pension funds, and there’s a way to do that, if you look at it. But we need you to be an advocate for us in that area, but help us come up with an ingenious idea for how we can develop access to capital. President Dudley: Well, I certainly agree with the importance of access to capital, and I certainly agree with you in the importance of having minority work enterprises have the ability to participate in economic development and bidding on contracts. We don’t have the legal authority to do anything direct, but we have a lot of convening authority. One thing that we do do is we do continuing workshops, conferences, symposiums. We’ve had a number of things with small businesses on how small businesses can get access to credit, how small businesses can figure out how to export their goods and services. And so this is something that for you to talk to our regional development people on how we could be helpful.
We shall review this policy from time to time, with a view to further liberalise the rules. 3. The Financial Market Committee (FMC), through an industry-driven effort, is in the final stages of rolling out an operational framework for Foreign Exchange Administration (FEA) compliance. This will be an industry standard that sets the minimum due diligence and list of documents required for FEA. Further to this, a standard summary of the relevant FEA rules to facilitate common understanding and consistent interpretation among market participants is being formulated. It is expected, through this important initiative, there would be better clarity and greater efficiency for the financial institutions and their customers, in undertaking FX and hedging transactions. Taken together, these three measures are targeted at residents such as the Small and Medium Enterprises with a view to expand their access to hedge freely and directly with onshore banks. This flexibility will provide the avenue for simplified processes and flexible hedging activities within prudential limits and incentivise residents to use onshore banks for their hedging needs. These are but first steps. We will be looking at further measures, similar to these. The idea behind these measures is to make our onshore financial market more flexible, facilitative and competitive. In other words, we are deepening the onshore markets towards becoming the main actor to conduct the foreign exchange needs of our economy. This journey will be exciting and require some behavioural changes. But we have no doubt that with the full support of the industry, we can achieve these outcomes.

Moreover, new estimates of the public finances indicate that public consumption this year may be somewhat weaker than assumed in December. This is mainly due to the financial situation of municipalities. The municipal sector as a whole is running a deficit, which must be redressed in the years ahead. One issue that has been debated recently is the effects on the Swedish economy of the weaker dollar. It is true that the dollar’s performance has been weak, but this is not the whole picture. In tradeweighted terms (TCW), the krona has not strengthened recently. This is mainly because the krona quite contrary to what many had expected - rather has weakened slightly against the euro. So for foreign trade as a whole, the currency developments should not constitute any great problem. Another issue of course is if the weaker dollar, primarily in relation to the euro, could jeopardise the revival in the world economy. Neither does this appear likely as long as the adjustment is fairly orderly. As I mentioned earlier, it is probable that growth in Europe will be slowed down somewhat, but on the other hand it is likely to be more robust in the US. Moreover, the most recent data for the National Accounts and foreign trade indicate that we so far rather have been slightly too pessimistic about Swedish exports. The most palpable concern is the labour market, where growth has been weaker than expected particularly towards the end of 2003.
Crisis prevention  Turning to my last financial stability issue, that of crisis management, in my view this is mainly a question of being prepared. Or as prepared as possible, I should say, because how can you adequately prepare for the unknown? There are basically two types of crisis: a slow crisis and a fast crisis. By a fast crisis I mean single but severe events like fraud, major loan losses or general events that quickly lead to loss of market or creditor/depositor confidence. These cases call for quick action. Normally the central bank takes the lead because of its ability to provide emergency liquidity assistance and because of its access to updated information on the liquidity situation in the market. But close cooperation is required, especially with the supervisory authority, which has information on individual banks, and with the Ministry of Finance, if there is a need for solvency support. In my experience, there are many possibilities for such a process to fail. Misunderstood information, unclear leadership or conflicts of interest may delay the process until it is too late. The chances of solving a fast crisis increase enormously if all institutions involved have prepared for it, e.g. through crisis management drills. Such drills tend to uncover the shortcomings or conflicts that may prevent smooth cooperation when really needed. A slow crisis, on the other hand, may be detected but not always prevented by financial oversight.

Even loans with a longer duration could in principle be financed by short-term borrowing on the interbank market. The lending rate in the interbank market will thus comprise the bank's financing cost for this loan and is therefore an important factor when the bank decides the lending rate it will offer the company. For loans with a longer fixed term, expectations of the development of the repo rate during the duration of the loan will affect the financing cost and thus the lending rate the bank sets for a longer term loan. A bank that has a surplus to invest can in the same way choose between investing it in the interbank market and lending money. The interbank rate will thus influence the lending rate the bank offers households and companies as it comprises an alternative yield. In addition to the interbank rate, however, the banks' lending rates are determined by many other factors. When setting interest rates, the banks must of course compensate themselves for the credit risks connected with the loan and at the same time reserve funds in their own capital to meet any future losses. The fact that banks from time to time make differing assessments of borrowers' credit rating should not in itself affect how much the banks' lending rate changes when the repo rate is raised. The impact from monetary policy should not, therefore, change merely as a result of the banks changing their assessments of the credit risk.
The economy will also, though, be shaped by the behavioural responses of households and businesses, and the policy responses of Governments and central banks, to these shocks. Understanding those responses is the purpose of my comments today. I will partition my assessment of the economic impact of the Covid crisis into four phases, or “quarters”, covering the past, present and near and distant future. The first “quarter” covers the initial impact of the virus; the second, the immediate recovery following these shocks; the third, the second-round effects on spending and employment; and the fourth, the longer-run impact on households and businesses. Both the UK and the global economies are already well into the “second quarter” – the recovery phase. The UK’s recovery is more than two months old, while the global economy is perhaps three months into its recovery, in both cases from an exceptionally low starting point. Let me say a little about each of the phases, before concluding on the role of policy in supporting the economy during the Covid crisis. “The First Quarter”  The Covid-19 crisis has dramatically affected public health in every country in the world.

So is this the new paradigm of known-unknown? That is, we know what the major drivers of change are, but we cannot forecast outcome. So the key strategic challenge is how to deal with Known-Unknown. For the short-term, the key priority is dealing with the fragile and volatile global economy. Stability is the priority for banks and regulators. The strategic policy question is how to get the right balance between risk and return, stability and growth. Weaker banks will retrench, leaving rooms for the few stronger banks to take up market share. In Asia, we have seen banks from the Asia-Pacific, notably Japanese, Chinese, and Australian banks moved into market space where European and U.S. banks have retracted. ASEAN banks are also shifting strategy to play a greater role to support their conglomerates in the regional expansion. If this regional banking trend continues, what are the implications for banks, regulators, and central banks? While the region has so far remained relatively resilient to the first round impact of European bank deleveraging, there is significant concern about the second round impact through the slowdown in global trade and economy that will impact growth. Another known-unknown in the short-term is the impact of interaction of various traditional and non-traditional policy measures, such as monetary policy, prudential policy including macroprudential. As a result of this crisis, the acceptable policy space has been significantly widened, for example, macroprudential policy now includes sectoral measures such as those to prevent property bubbles or to control adverse impact of capital flows.