samchain/econo-pairs-v1 huggingface dataset:
The issuance of risk warnings, in the context of safeguarding financial stability – where the analysis is centred on the downside risks and thus on highly improbable events – differs substantially from other types of analysis focused on a central, most probable, baseline scenario (such as the one supporting monetary policy). The translation of systemic risk assessments into proposals for concrete policy actions – of a prudential or supervisory nature – is also, to a large extent, new to the central banking community. 3. What went wrong? Confronted with the question of whether central banks and international bodies with financial stability competencies saw the financial crisis coming, it would be fair to answer “Yes, to some extent”.

I’ll ask why the communications about the risks that built up were insufficient to prevent the crisis. The fourth part is a what if? What if the Risk Board had existed in the early 2000s – could the factors that led to the crisis have been identified and averted? The answer should point to some of the key advantages of (and reasons for) the EU’s new macro-prudential function. 1. The setting-up of the European Systemic Risk Board  The idea of establishing a body to monitor and assess systemic risk at European level was first mooted in the late 1990s. 2 It took over a decade and a financial crisis to implement it. Let me recall the milestones of the setting-up of the ESRB institutional framework. Following the recommendations of the de Larosière Report, in February this year, the main features of the institutional framework for macro-prudential supervision were defined by the Communication published by the European Commission on 27 May as well as the Conclusions approved by the ECOFIN Council on 9 June and by the European Council on 18 and 19 June. The European Systemic Risk Board will be responsible for the macro-prudential oversight of the financial system within the European Union. It will seek to prevent or mitigate systemic risks within the financial system, so as to avoid widespread financial distress, and it will contribute to a smooth functioning of the Internal Market and ensure a sustainable contribution of the financial sector to economic growth.
In contrast to a “traditional” bank run, such as those that occurred during the 1930s,2 the run in the current crisis took the form of a large and sudden increase in collateral haircuts in the US repo market.3 If one plausibly estimates the size of the US repo market at $ trillion at the eve of the crisis, a 20% increase in haircuts led to a withdrawal of funds from the banking sector equivalent to $ trillion.4 Chart 4 provides an estimate of the increase in haircuts in the US market while Chart 5 displays the drop in overnight repo volume between March and December 2008.5 This run on the repo market had obvious implications for the ability of the banking sector to lend. The consequent dearth of liquidity in US dollars was felt throughout the world, in particular in Europe. It was the main reason for the swap agreements initiated by the Federal Reserve and a number of international central banks, including the SNB. The aim was to substitute central bank liquidity provision for the failing money market in US dollars, and was directed, particularly, at international market participants. In contrast to this account of the early phase of the financial crisis in the US, Chart 6 reports the evolution of the exchanged volumes in the Swiss secured and unsecured money markets.

In Switzerland by contrast, the collateral accepted in 99.8% of the transactions in the secured interbank market corresponds to the definition of the SNB collateral basket, that is, to the collateral accepted by the SNB in its own repo operations. The SNB’s collateral policy is based on a transparent, essentially rule-based approach. This means that when securities are excluded from the list of acceptable securities  2  See Diamond and Dybvig (1983). “Bank runs, deposit insurance, and liquidity”, Journal of Political Economy 1983, vol. 91, no. 3, pp. 401–19. 3  Typically, the total amount of the deposit will be some amount less than the value of the underlying asset, with the difference called a “haircut”. For more details, see Gorton and Metrick (2009) “Securitized Banking and the Run on Repo”, NBER Working Paper Series (NBER Working Paper No. 15223), August 2009. 4  This could be a reasonable approximation. See Gorton (2009): “Slapped in the Face by the Invisible Hand: Banking and the Panic of 2007”, Prepared for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference, May 2009; and Gorton and Metrick (2009). 5  Chart 4 illustrates the average repo haircut on structured debt. This is a good indication for an overall “haircut index”, as shown by Gorton and Metrick (2009). 6  Another important difference is that the Swiss repo market is conducted on a highly efficient automated and centralised platform while US repo transactions are traded over the counter. 7  Hördahl and King (2008).
On that note, I look forward to the engaging sessions ahead. Thank you. 5/5  BIS central bankers' speeches

The beginning of the end I will now turn to legacy business and what has come to be referred to as the ‘endgame’. After extensive consultation by ISDA across markets we will shortly have a robust and trusted fallback for trillions of dollars of derivative contracts. We encourage early sign-up to the protocol, but that is not a substitute for continuing to move business onto near risk-free rates. We expect to see more of the sterling swap market to move towards SONIA in the UK given the high likelihood that contracts will be linked to this rate after 2021. We are working with the market on fallbacks for cash instruments, looking to ensure hedge positions convert at the same time as underlying exposures, to minimise the introduction of any new basis risk. We have continued to see firms start to convert Libor linked instruments to alternative rates, for example through consent solicitation processes where over £ of legacy Floating Rate Notes, securitisations and covered bonds have converted to SONIA. We have been clear and consistent in the importance of transitioning away from Libor and that this transition should be a market driven, but we have also acknowledged the authorities have an important role to play.
BIS Review 37/2008  9  Strong growth in real income has contributed to the long period of high housing investment and rising house prices. House price inflation peaked amid the housing market euphoria of about a year ago. The housing market is now cooling. In parallel with rising house prices, households have been borrowing more and saving less. Household financial saving was negative in 2006 and 2007. At the same time, Norway has a substantial current account surplus. Most of the current account surplus is matched by government financial and oil sector surpluses – which are redeployed abroad. Adjusted for these outflows, Norway recorded a basic balance of an estimated minus NOK 150 billion in 2007, or close to 10 per cent of mainland GDP. 10  BIS Review 37/2008  The corollary to the deficit on the basic balance is that Norwegian businesses, as well as Norwegian banks, borrow in foreign markets. The recent turbulence in international money markets has affected the price and supply of funding in these markets. Monetary policy assessments Monetary policy in Norway is oriented towards keeping inflation low and stable. The operational target is annual consumer price inflation of close to 2.5 per cent over time. Norges Bank operates a flexible inflation targeting regime. Both variability in inflation and variability in output and employment are given weight in interest-rate setting. Inflation has been expected to pick up for some time.

Whether an economy functions smoothly and efficiently or not depends much on the manner in which the financial system performs this task. A strong banking sector with highly disciplined risk management helps to mitigate the risks of financial imbalances while the existence of a deep and liquid financial market that offers a breadth of financial instruments helps improve the ability of the economy to absorb shocks. More generally, the level of development of an economy’s financial sector has a fundamental bearing on social welfare insofar as it determines the ability of agents to smooth out their consumption profile in the face of fluctuations in income. As such, a substantial part of the observed differences in macroeconomic outcomes between emerging market economies and developed economies can be attributable to the disparate levels of financial sector development in these two groups of countries. Indeed, a number of empirical studies indicate that financial development, especially greater financial access, is associated with lower macroeconomic volatility. 2 Next, the institutional framework of monetary and financial supervision policy also has an important influence on the extent to which various shocks make their way through the economy. Importantly, in a setting where the central bank lacks independence, its performance is likely to be more easily influenced for short-term political ends with adverse macroeconomic consequences.
But let me note first that, those collapses did have significant negative spillover effects within the crypto ecosystem, and second that, in attempting to replicate some of the functions performed by the mainstream financial system, the crypto ecosystem inherits and may amplify the vulnerabilities of that system. For instance, tokenisation increases operational risks, especially cyber risks. It is currently the number one operational risk to financial players, and it has the ability to jeopardise the stability of the entire financial system. The tokenisation of finance creates in particular new points of vulnerability: let me mention bridges between blockchains, or oracles that feed data to blockchains. In addition, the governance issues of public DLT infrastructures, which contribute greatly to the risk of hacking, are still far from being resolved. II/ Impact on our role and activities In response to these transformations, we see our role as twofold: as a financial stability authority to help bring tokenised finance within a regulatory framework which allows its benefits to be reaped but also its risks appropriately mastered to safeguard financial stability and therefore confidence. But we see ourselves as being part of the innovative ecosystem with the objective to act as a facilitator and catalyst, in our operational role of central bank services provider. 1/ Contributing to a confidence prone regulatory framework Fundamentally, what does not change in the financial sector is the need for confidence .

BIS Review 5/2010  1  In addition, it is common knowledge that Zambians prefer to be in formal employment rather than engage in entrepreneurial activities on a full time basis. The small number of educated Zambians engaging in entrepreneurial activities limits the scale of indigenous businesses as evidenced by the non participation of Zambians in major sectors of the economy like mining or manufacturing. It is however, important to realise that individual entrepreneurs as well as small and medium sized enterprises form the engine of economic and social development as they generate the much needed employment for our people. Hence the need to encourage all efforts aimed at stimulating entrepreneurship. Distinguished Invited Guests, our institutions of higher learning play an important role by molding and developing innovative and creative mindsets amongst our young people. With this belief in themselves, young people can be productive, take responsibility in their respective communities and ultimately drive our economy forward. We need to remind ourselves that Google was founded by students; Facebook was founded by a student; and even Microsoft was formed by Bill Gates as a student. Ladies and Gentlemen, let me assure you that the Bank of Zambia is committed to ensuring the availability of finance to viable entrepreneurs including small and medium sized businesses.
Inflation targeting means setting the interest rate so as to achieve a numerical target for inflation. Norges Bank sets the interest rate with a view to stabilising inflation at 2.5 per cent within a reasonable time horizon, normally 1-3 years. The more precise horizon will depend on disturbances to which the economy is exposed, and how they affect the path for inflation and output. The inflation target represents a framework for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. We have chosen flexible inflation targeting. Variability in output and employment as well as inflation is given weight. The objective of monetary policy is to safeguard the value of money in the long term, and seek to contribute to stabilising economic developments in the short and medium term. The objective of monetary policy is low and stable inflation. The instrument is the interest rate. The interest rate influences inflation with a lag and with varying intensity. As interest rates fall, household and local government consumption and investment tend to accelerate. Higher demand leads to higher output and employment. Wage growth may pick up. Higher wage growth combined with higher profit margins will result in higher inflation. BIS Review 61/2004  1  Lower interest rates normally lead to a depreciation of the krone. Imported goods then become more expensive and inflation accelerates. Expectations play a key role in price and wage formation, and they are influenced by the interest rate.

15 This means developments in the US have disproportionate influence on global economic and financial conditions. Indeed, our research suggests that the influence of US financial conditions on foreign GDP has increased by a third relative to its average from 1990 to 2005, despite the US’s rapidly declining share of global GDP. Capital Flows as a % of GDP 2 0 -2 -4 Average Capital Flows-at-Risk Contribution of pull factors Contribution of push factors Total Capital Flows-at-Risk 1996  1999  2002  2005  Gross Gross outflow inflows s  Chart 10: Capital-Flows-at-Risks in emerging market economies are growing again  -6 -8 2008  2011  2014  2017  Sources: IMF and Bank staff calculations. Notes: See chart 7 for notes. Push factors are proxied by the Bank of England’s global financial conditions index. 15  Ilzetzki, Ethan, Carmen M. Reinhart, and Kenneth S. Rogoff (2019), Exchange Arrangements Entering the 21st Century: Which Anchor Will Hold? Quarterly Journal of Economics 134 (2): 599-646. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  When the Fed responds to domestic developments (such as a loosening in fiscal policy) global financial conditions and activity react strongly. This was the case during both the 2013 ‘taper tantrum’ and over the past year, as Fed communications significantly shifted expectations for US monetary policy. During both periods, Capital Flows-at-Risk in EMEs spiked (Chart 10). Financial (in)stability in advanced economies has also influenced the sustainability of capital flows to EMEs.
However, at the end of 2007 and during the first quarter of this current year, companies became less reticent and began to make more frequent and more significant price adjustments. The moderating factors that have been at play until now have gradually lost their impact. Inflation thus reached 2% in December and has even exceeded this level in  4  BIS Review 50/2008  recent months. We cannot rule out the possibility that costs will increasingly be passed on in 2008. My fears are based on two particular aspects. First, the rapid rise in the cost of labour at the end of 2007 put pressure on margins. At the same time, productivity gains became less marked as companies reached the limits of their production capacity. Therefore, adjustments in the margins will probably have to be made. Second, the current favourable business climate encourages companies to reinstate the margins they had previously cut in order to maintain their market share amid stiff competition. Some companies may pass on a disproportionate share of the higher costs they have incurred in the past. The SNB does not underestimate these risks, but is nevertheless confident with regard to the inflation outlook in the medium and long term. In essence, our confidence is based on the fact that monetary policy of the past three years has been successful in gradually normalising the interest rate level.

Such price increases are all the more remarkable given that these prices had tended to stagnate in recent years. This jump in the price of commodities was mainly attributable to the continuous growth in domestic demand in the emerging markets and low extraction and production capacity. In our opinion, this situation is not likely to change in any direction in the short term. Although partially offset by the weak US dollar, the rise in the oil price during the final quarter of 2007 triggered a sharp increase in inflation – from 0.7% in September to 2% in December. The price rises of other commodities were also significant, but they only had a minor impact on inflation in Switzerland. In fact, commodities are not directly included in the reference basket used to calculate the price index, which means that their price increases only had a minor impact in this respect. However, the indirect effects, i.e. higher prices for goods and services as a result of higher production costs, constitute a much more serious inflationary risk. Having said this, the related impact last year was modest because many companies chose not to pass on their higher costs to consumers, given the considerable competitive pressure in numerous markets. Moreover, the relatively moderate increase in wage costs and gains in productivity over the last few years allowed companies to absorb a good part of the additional costs they had incurred as a result of higher commodity prices.
The root causes of the crisis, therefore, are deeply structural. There was a combination of excess savings and asymmetry in financial developments between countries which was conducive to the formation of bubbles. This disequilibrium was amplified and compounded by distorted financial innovation. There was little, or no, role for monetary policy in that process. Looking to the future, however, it is legitimate to ask how monetary policy can better contribute to financial stability. Here, I would make four points 1. Financial instability should first be addressed and dealt with by specific tools. Those tools come in many forms, such as capital or margin requirements, loan to value ratios and liquidity constraints. Most are currently available to regulators and supervisors. They have been used, however, with one objective: ensuring the robustness and viability of individual institutions. There is now a need, which is widely recognized, for a change in perspective. Regulation and supervision should be designed and implemented in a broader, systemic perspective, with the objective of ensuring the stability and integrity of the financial system as a whole. 2. There is a strong case for giving central banks a pivotal role in this new “macro financial supervision”. They have intimate knowledge of financial systems and markets. They have an incentive to act since monetary policy works better when financial institutions are robust and financial markets are stable and efficient. And, finally, they are well placed to have an integrated view of the economy and its interaction with the financial sector.

4 Source: Sustainable Finance Institute Asia 2022 report findings quoted in "Green  transition a quantum leap for SMEs" FMT news article September 2022 5 Source: The Global Sustainability Study 2021, Simon-Kucher & Partners 6 Source: The World Economic Forum  3/3  BIS - Central bankers' speeches
Another objection to central banks publishing their own interest rate forecasts is connected to the functioning of the market. This means that in principle the financial market agents could stop looking for other information if they have access to the central bank’s forecasts for interest rates in the slightly longer term. How the market views economic prospects is normally reflected in the long-term market rates. This source of information could thus be lost and this would impair the functioning of the market. But as I perceive it, there have not been any such signs so far. In addition, I find it very difficult to imagine that the market agents would stop making independent assessments because we are publishing our own view of interest rate developments. They if anyone know that the interest rate path is a forecast and they therefore have strong reasons for continuing to search for information via other channels than the Riksbank. So far it has been clear that we and other market agents have actually had slightly different views regarding how the interest rate will develop in the future. And this is actually a sign that things are as they should be. It is quite natural that forecasters make different judgements, particularly in the slightly longer term. In the long term, there are also more factors than expected monetary policy that have significance for interest rates.

Percentage of those born in Sweden and those born abroad in the labour force, aged 15-74 years. Sources: Eurostat and Statistics Sweden (AKU)  Increased migration in Sweden and abroad During the latter part of the 19th century there was widespread emigration from Sweden to the United States in particular. Around 1.2 million Swedes emigrated to the United States between 1851 and 1930, which at that time was around one fifth of the population. The reasons were in many cases financial, but religious freedom and increased equality were also attractive. There were several factors that enabled emigration. The emergence of the steam ship was one factor. Liberal ideas on economics, politics and freedom – which made a breakthrough around Europe in the 19th century – were other factors. At the beginning of the 20th century, Sweden was an established “emigration country” with more emigrants than immigrants, see Figure 9. This was primarily due to the large-scale emigration, but we also had very few immigrants. In the year 1900 the percentage of people born abroad in relation to the population as a whole was just 0.7 per cent, with most of them coming from other Nordic countries. An interesting fact here is that the immigrants from outside of Europe comprised 90 people from South America, 79 from Africa (56 of whom were from  13 [24]  South Africa) and 87 from Asia.