samchain/econo-pairs-v1 huggingface dataset:
Philipp Hildebrand: SNB overview of financial market activity Introductory remarks by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2005. * 1. *  *  Developments in the financial markets  Financial market activity has been dominated in recent months by three key developments. Firstly, the US dollar started to strengthen. Secondly, long-term capital market yields declined further despite their already low levels. Thirdly, changes in credit risk premiums in the different debtor categories have been more mixed than in the preceding months. Despite the persistently high current account deficit in the US, the dollar has appreciated since the beginning of the year by roughly 12% against both the euro and the Swiss franc, and by approximately 7% against the yen. The dollar benefited in particular from the willingness of foreign investors to back US financial investments. In 2004, net purchases of US securities were dominated by the strong demand from certain Asian central banks. While such purchases have remained significant so far this year, private investors outside the US, too, have bought more US securities. This surge in demand is due in part to the fact that the markets continue to rate the growth prospects in the US better than those in Europe and Japan. The growing yield spread in favour of dollar investments as well as political uncertainty regarding the future development of the European Union have also contributed to the relative attractiveness of the greenback.

In principle, the National Bank does not invest in Swiss equities and corporate bonds, thus avoiding, from the outset, any potential conflicts of interest which could jeopardise the SNB’s independence. As a shareholder in Swiss companies, the Bank would risk being confronted with structural issues. It could also lead to a conflict between its monetary policy and investment policy goals if an interest rate hike by the SNB were to erode the domestic companies’ profits. Furthermore, such a move could have an adverse effect on prices should the SNB have to liquidate securities of Swiss businesses at short notice. And finally, it is conceivable that the National Bank could gain access to privileged financial market information through its activity in the area of system stability. This would make investing in the Swiss financial sector even more problematic. The influence of equity portfolios and corporate bonds on the National Bank’s risk profile is only moderate. The overall risk attached to assets – as measured by value-at-risk – has not changed greatly since the introduction of these investment options. Gold and exchange rates are still the biggest factors contributing to overall risk. Equities account for less than 5% of the total risk, while corporate bonds contribute only a negligible proportion. The current investment structure and the performance of the SNB’s assets are published online on a quarterly basis in an updated appendix to the Investment Policy Guidelines of the Swiss National Bank. 3.
Most recently, the Federal Reserve established dollar swap lines with major central banks during the global financial crisis of 2008, and reactivated them in May 2010. Last November, the FOMC, cooperating with five other central banks, reduced the rate being charged on these swaps to increase usage. The swaps are intended to create a credible backstop to support – but not supplant – private markets. Banks with surplus dollars are more likely to lend to banks in need of dollars if they know that the borrowing bank will be able to obtain the dollars it needs to repay the loan, if necessary, from its central bank. Ultimately, these dollar swaps are designed to support financial stability, and avoid an unnecessary tightening in financial conditions, so that economic activity and job creation in the United States can continue to recover. Our principal aim is to protect U.S. banks, businesses and consumers from adverse economic trends abroad. I am pleased that the swaps seem to be working. In conjunction with the ECB’s long-term refinancing operations, the swaps have helped European banks avoid the significant liquidity pressures we feared a few months ago and have reduced the risk that they would need to sell off their U.S. dollar assets abruptly. Conclusion In sum, I am hopeful that Europe can effectively address its current fiscal challenges. The Federal Reserve is actively and carefully assessing this situation and the potential impact on the U.S. economy.

At this time, although I do not anticipate further efforts by the Federal Reserve to address the potential spillover effects of Europe on the United States, we will continue to monitor the situation closely. Thank you for your invitation to testify today, and I look forward to answering your questions. BIS central bankers’ speeches  3
Therefore, we do see now financial literacy and inclusion high on the global agenda. Thus, in 2010, Global Partnership for Financial Inclusion (GPFI) was established reflecting concerted global efforts that do not solely reflect the need to elevate financial education and literacy to safeguard financial stability. Much more, they are reflection of the understanding that inclusion can help to address poverty and shared prosperity by smoothing household incomes, reducing vulnerability to shocks, enhancing investments in education and health, and encouraging the growth of businesses. In fact, this is why financial inclusion is linked to at least eight of the United Nations’ 17 Sustainable Development Goals. Global efforts yielded up global improvement. Leveraging on different data sources and the latest 1/3  BIS central bankers' speeches  conclusions of the Global Partnership, several takeaways can be pinpointed. There is a rise in the financial inclusion. Globally, the share of adults holding an account at a financial institution or through a mobile money service over the years has significantly increased from 51% to 69%. In low-income economies, there are twice as many mobile money accounts than bank accounts per 1,000 adults. (IMF Financial Access Survey). Yet disparities remain. Despite this progress, 1.7 billion adults remain unbanked and inequalities persist. Women in developing countries remain 9 percentage points and globally, by 4 percentage points less likely to have an account than men. Small and medium-sized businesses are mostly excluded from formal borrowing, despite increasingly having an account at a financial service provider.

It is fairly understandable that certain EU member states support the current, rather non-transparent way of modifying the institutional set-up: it is the only way for them to maintain or even strengthen the draconian mix I just described. 2  BIS Review 165/2009  Given that European integration is taking place in this “European” way (in the bad sense of the word), it is no wonder that standard democratic politics has not left the national level: all formally EU-wide ideas are always translated in each individual member state into the local political context; there are no true EU-wide political parties, no true EU-wide politicians, no true EU-wide media. The debate in EU institutions rarely follows the lines that we are used to in standard political debates, such as whether we want more freedom or more redistribution. Instead, most time is spent, as I said, on procedures and institutions. The official efforts at gradual political integration thus give the impression of squaring the circle. These awkward traits in politics at the EU level then lead to some perverse implications. On the one hand, measures which would help Europe to retain a strong economic position – and here I mean especially liberalisation of markets and trade – take years or even decades to implement: the single market for services still does not exist and even the single market for labour still has fundamental exemptions.
That is to ensure that the financial system and the broader economy are protected from threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security of the country. In relation to the Mutual Evaluation that will be undertaken from 13 to 25 November this year, I wish to inform that some of you will be called to meet the assessors during the on-site assessment in November. The purpose of the meeting is for the assessors to assess how effectively have AML/CFT measures been implemented by the reporting institutions. We have identified several potential institutions as per the criteria given by the assessors. If your institution is being selected, you will receive formal notification from us in due course. Of course, there are possibilities that the assessors may request to meet other institutions during the on-site assessment. Malaysian leadership and authorities are fully committed and unrelenting in the efforts to address money laundering and terrorist financing risks. For the country, an effective AML/CFT regime is critical to: •  Reduce the overall crime in the country;  •  Increase government revenue and reduce leakages in the economy;  •  Preserve the integrity and reputation of our financial system;  •  Create conducive environment for businesses and investors, and support the Government’s economic transformation agenda; and  •  Strengthen Malaysia’s reputation as a country committed to combat money laundering and terrorist financing.

An interesting – and delicate – question is whether it is possible to expand the coordination monetary and fiscal policies during deep downturns. Under the present fiscal policy framework, the budget regulations for fiscal policy are one possible obstacle. The regulations were set up to ensure a responsible fiscal policy and avoid a constantly increasing national debt. But perhaps we should have a discussion on how these rules should be applied in a deep  14 There has also been an academic discussion of a more fundamental interaction between fiscal and monetary policy, known as the fiscal theory of the price level; see Leeper (1991) and Sims (2017). 15 See Ubide (2020) for a discussion of the interaction between fiscal policy and monetary policy. 16 [25]  downturn and consider whether the scope for discretionary fiscal policy could be linked to the limitations of monetary policy. A mild form of coordination could take place in the form of the Riksbank publishing alternative scenarios in its Monetary Policy Report stating that monetary policy is limited and that, if fiscal policy were to become more expansionary, this would not lead to higher interest rates but only to inflation closer to the target. A stronger form could involve the Riksbank informing the Ministry of Finance that monetary policy needs the assistance of a more expansionary fiscal policy if the inflation target is to be met.
The effect would then be in practice the same as if the target had been lowered to 1 per cent. With a lower expected rate of inflation the nominal interest rates in the economy, including the repo rate, will on average be lower. This means that in future economic downturns the distance between the repo rate and the lower bound may be smaller than before. If the repo rate hits its lower bound earlier, and remains there for longer periods, it will be a less effective tool in counteracting economic downturns. It will be even more difficult than it is now to bring down the real interest rate as low as one might need. The essence of this is that “preventive” increases in the repo rate would ultimately not result in more ammunition, but less. It is therefore important that increases in the repo rate are not made in such a way that inflation will be tangibly lower and confidence in the inflation target is put at risk. Cut the repo rate further? Another possible means of counteracting an economic slowdown is to cut the interest rate more than to the −0.5 per cent level which has so far been the lowest point. It may be possible to go even lower − for instance, the policy rate in Switzerland is at −0.75 per cent. But personally I think the possibilities here are fairly limited.

As many of you know, governance is an area in which I have been working for some time and with which I am very familiar. Let me recall for you the areas of improvement banks still have to tackle and which decisively influence the business model and future challenges. Admittedly, considerable progress has been made in recent years in relation to governance. But I would like to highlight two areas where we must continue working: i) the functioning of boards; and ii) the implementation of risk appetite frameworks. On boards there is scope for improvement in terms of independence, dedication and succession planning. Many institutions have carried out self-assessments of how their board works, but more still needs to be done as regards the time dedicated to preparing meetings and board oversight of control functions. 6/8  The oversight of managers and, in particular, internal control functions must be strengthened, especially in risks and compliance. And let us not overlook the quality of data and information on risks that are pivotal to determining strategy and decision-making. In addition, work remains to be done on integrating the risk appetite framework into management, as a key instrument of risk control. For example, at many banks the involvement of the risks function in the limit-setting process is still poor and lacking in ambition. In risk management, structured decision processes are needed, with incentive arrangements that are conducive to sustainable risk-related decisions.
Andrew G Haldane: Ambidexterity Remarks by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the American Economic Association Annual Meeting, Philadelphia, Pennsylvania, 3 January 2014. *  *  *  For most of the post-war period, central banks have executed macro-economic policy with, at most, one hand – the monetary policy hand. It is generally felt that their dexterity improved steadily over that period. This culminated in a long period of low and stable rates of inflation and a steadily growing economy between the mid-1990s and 2007 – the “Great Moderation” [Goodfriend, 2007]. Central banks had becalmed both inflation and the business cycle – and had done so single-handedly. Or so it appeared. But even while the economies of major advanced countries were an ocean of pre-crisis calm, a storm was brewing out in the credit market seas. When this storm hit in 2008, it caused a contraction in global output only rivalled by the Great Depression. Great Moderation turned abruptly to Great Recession. In response, questions began to be asked about whether monetary policy, while necessary, was sufficient to stabilise simultaneously the macroeconomy and the financial system [Bank of England, 2009]. Unlike the Great Depression, central banks’ response to the Great Recession was swift and sizable. Central bank interest rates in most advanced economies quickly fell to close to their floor, while central bank balance sheets rose to new heights.

As Chart 5 illustrates, between 1995 and 1999 interest rates fell by between 3 and 6 percentage points in Ireland, Spain and Portugal. And in Greece between 1995 and 2001, interest rates fell by a remarkable 16 percentage points. Whether by coincidence or causality, what happened next in credit markets in these countries was dramatic. The credit gaps in each of Spain, Portugal, Ireland and Greece widened significantly and continued widening through the early part of this century (Chart 6). By 2008, these credit gaps stood at over 25 percentage points in Greece and Portugal, almost 40 percentage points in Spain and over 50 percentage points in Ireland. It is unlikely that any of these countries have previously seen credit booms on this scale. It is useful again to rerun history and ask how macro-prudential policy might have looked over this period. Charts 7 and 8 give the “Minsky rule” paths for bank capital ratios in Spain and Ireland relative to their actual paths. As in the US, they show macro-prudential policyimplied capital ratios lying significantly above their actual paths, by progressively larger amounts. At their peak, Minsky rule paths for bank capital are more than twice their actual levels in Spain and three times their actual level in Ireland. Macro-prudential stringency would have counteracted the loosening of monetary policy.
The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. Households, businesses, public entities, employees and employers can base decisions on the assumption that inflation in Norway will be 2½ per cent over time. High demand for goods and services and labour shortages normally point to higher inflation in the future. When interest rates are increased, demand falls and inflation is kept at bay. When demand is low and unemployment rises, inflation will tend to slow. Interest rates will then be reduced. The inflation target is a vehicle for, not an obstacle to, monetary policy’s contribution to stabilising output and employment. This intention is also expressed in the Regulation on Monetary Policy. The inflation target of 2½ per cent is broadly in line with the inflation targets of our trading partners. It is also an anchor for developments in the krone exchange rate. The krone fluctuates. We have open trade with other countries and free capital movements. We do not have the instruments to fine-tune the krone exchange rate. The krone has been strong. As a result, prices for imported goods have fallen. This has led to low and stable inflation in spite of sharp wage growth. The krone exchange rate fluctuates. This is not surprising because other countries’ currencies also fluctuate. The Swedish krona, sterling and the New Zealand dollar have fluctuated considerably in periods. The krone exchange rate is the price of our currency measured in terms of a foreign currency.

On the whole, a moderate, temporary decline in household saving is expected in 2003. Next year, a normalisation of electricity prices will contribute to increasing real income growth compared with 2003. At the same time, we have assumed that a share of the increased use of petroleum revenues over the central government budget will entail increased transfers or tax cuts for households. These factors, combined with lower interest rates, may fuel relatively brisk growth in private consumption in the next few years. In the last few months, house prices have risen at a slower pace than in previous years. Activity in the housing market has declined and it takes longer to sell a dwelling. Growth in household borrowing remains high, but has eased somewhat recently. Weaker developments in house prices and reduced household optimism may further restrain credit growth in the future. Growth in mainland GDP is projected to be lower than trend growth, at 1¼% in 2003 and 2% in 2004. In 2005, growth is projected at 2¼%. The underlying rise in prices in the coming year will be marked by the appreciation of the krone over the last two years. Despite high wage growth, the year-on-year rise in consumer prices adjusted for tax changes and excluding energy products (CPI-ATE) will most likely range between 1½ and 2% until the summer. Subsequent developments will partly depend on externally generated inflationary impulses, changes in the exchange rate and how these changes feed through to consumer prices in Norway.
In this respect, the crisis may well turn out to be a catalyst for a paradigm shift, transforming the global financial landscape for the better. •  Fourth, the process of globalisation that we have experienced in recent decades has been driven by an increase in global trade following the integration of emerging market economies into the world economy and the liberalisation of financial markets. This high degree of global economic integration has also been a major factor in the global financial turmoil and the highly synchronised downturn that we have been experiencing. This experience must not lead to protectionism. Although protectionist measures may seem attractive in the short run, they will only exacerbate the downturn, delay the recovery and reduce income potential for everyone. •  Fifth, the government’s role in the economy and the question of what should be left to the markets will be key. The crisis has given governments a more prominent role in the economy. Governments have become heavily involved in the banking sectors of a number of countries, and in some countries they have also taken on a significant role in other sectors, such as the car industry. Summing up: Have the parties involved learnt their lesson? •  The swift action taken by governments to rescue the banking sector and stimulate the economy has been key in stabilising the financial system and the economy.

The monetary pillar provides for discipline not to ignore risks to price stability stemming from imbalances in money and credit developments. •  Initiatives are now being taken to close the gap in the area of cross-border supervision and between micro- and macro prudential supervision. The envisaged establishment of the European Systemic Risk Board (ESRB) which the ECB will support analytically and logistically marks an important step in this direction. The ESRB will monitor systemic risk and provide risk warnings and recommendations. Effective cooperation and leadership at the European level will be crucial to make the ESRB successful in the pursuit of its mandate. •  Is the current improvement in some financial market segments genuine or driven by governments and central banks? When the crisis took hold and risk aversion spread, leading to de-leveraging and a sharp decline in securitisation public attention focused on executive pay as an area for regulation. In fact improving corporate governance remains a key area for regulation. Bonus systems need to be changed so as to make managers liable for their decisions and provide them with the right incentives to focus on longer-term sustainability of their business models rather than short-term profit. •  But corporate governance is just one area where regulation needs to be improved.