samchain/econo-pairs-v1 huggingface dataset:
In particular, the current broad-brush treatment of credit risk means that the capital requirement in respect of credits of widely varying quality is the same. And though the existing Accord was modified a number of years ago to incorporate capital requirements in respect of market risk, it doesn’t require banks to hold capital against many other risks they run - for example, operational risk, interest rate risk in the banking book, and business cycle risk. So there are many good reasons why there should be a Basel II to address these weaknesses in the current Capital Accord. But while this objective of better matching capital requirements to the risk taken is certainly very worthwhile, it’s really only part of the story. For the aims of Basel II are somewhat broader than this. Basel II is not about creating some wonderful all-singing all-dancing system of capital requirements to keep the banking supervisors happy. It’s not a case of supervisors trying to dictate how banks should manage their business. On the contrary, it’s quite the opposite. For Basel II is an attempt to mould supervisory capital requirements to the ways in which banks actually manage their business. Moreover - and this is the crucial point - it aims to relate the capital requirement not only to the amount of risk they undertake, but also to how well they manage that risk.

Third, we decided to launch a new series of quarterly targeted longer-term refinancing operations (TLTRO-III), starting in September 2019 and ending in March 2021, each with a maturity of two years. These new operations will help to preserve favourable bank lending conditions and the smooth transmission of monetary policy. Under TLTRO-III, counterparties will be entitled to borrow up to 30% of the stock of eligible loans as at 28 February 2019 at a rate indexed to the interest rate on the main refinancing operations over the life of each operation. Like the outstanding TLTRO programme, TLTRO III will feature built-in incentives for credit conditions to remain favourable. Further details on the precise terms of TLTRO-III will be communicated in due course. Fourth, we will continue conducting our lending operations as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the reserve maintenance period starting in March 2021. Today’s monetary policy decisions were taken to ensure that inflation remains on a sustained path towards levels that are below, but close to, 2% over the medium term. While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year. The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment.
It represents the financial system’s interface with the general public and is crucial for preserving confidence in the financial system and, ultimately, in the euro as the single currency. Two issues relating to the retail business and the current turmoil are noteworthy. First, the retail business – with its cornerstones of saving, lending, and payment services – has successfully withstood the financial crisis. Second, banks with a balanced business model have been best equipped to cope with the current challenges. Therefore, retail services offer two major opportunities at the present time: first, to revive confidence in the banking sector in the eyes of the general public; second, to strengthen banks’ balance sheets. However, one important – sometimes overlooked – issue seems a key prerequisite: in the same way as the large value infrastructures mentioned before, stable and efficient retail infrastructures are needed throughout Europe in order to alleviate systemic risk and safeguard financial stability. However, despite 50 years of European economic integration, Europe is still lacking an integrated retail payments market. Therefore, the further realisation and completion of the Single Euro Payments Area project is a crucial element for the retail banking and payments market beyond the turmoil. Without doubt, SEPA is the largest payment initiative undertaken in Europe, following the euro cash changeover. Major milestones have already been achieved: only recently, regulators have addressed the uncertainties surrounding interchange fees and the reachability of the SEPA Direct Debit. Nevertheless there are still a number of further topics on our common agenda, e.g.

We have also seen some peaks in transaction volumes as well as more frequent and higher margin calls. Furthermore, many infrastructures have had to cope with the default of a major participant, notably in the context of the demise of Lehman Brothers in September 2008 and the corresponding spill-over effects on its subsidiaries. Fortunately, EU market infrastructures were able effectively to overcome these challenges without any major operational disruptions. In particular, the Eurosystem’s TARGET system – which is not only the backbone of the large-value payment infrastructure for the euro, but also plays a central role in providing settlement services for 36 retail payment systems and 33 securities settlement systems that are connected as ancillary systems – has proven to be  BIS Review 74/2009  1  stable and resilient. Nonetheless, I would like to mention three key stylised facts which illustrate the impact of the current turmoil: First, the values processed in TARGET in the last quarter of 2008 showed an unusually high increase of 13% compared to the first three quarters (see Chart 1). When looking at the average values settled in different time bands during the day, the main difference between the third and the fourth quarter of 2008 relates to the values settled in the last hour of operations.
It has the potential to spur the generation of new economic strengths through the promotion of entrepreneurship and job creation while also promoting greater financial inclusion and thus enhanced prospects for balanced growth. The IAP enables investors to directly finance a broad range of economic activity of their choice, therefore diversifying their investment portfolio with exposures to various types of projects and industries that yield potential returns that are based on the performance of the underlying chosen ventures. For businesses, the IAP provides a new source of funding for activities, with more competitive financing terms in a range of financing structures. Ventures and entities of varying types, size and industries, including SMEs, listed firms and multinational companies can raise funds on this platform. Given its greater visibility, the IAP will also provide access to a broader range of individuals and institutional investors. For Islamic banks, the IAP creates a differentiated product that presents a new source of income and funding profile. There is also the potential for institutions with specific mandates including Government agencies to strategically collaborate with the IAP and Islamic banks to form public-private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures. The role of the IAP that is launched today is envisaged to transcend beyond our domestic borders to become an effective channel to further enhance financial interlinkages in the regional and global economy.

This would address the concerns of investors on the risks associated with the asymmetry of information. Such features would contribute towards strengthening the ability of the IAP to attract a wider range of investors, therefore enabling the platform to cater for different types of risk profiles of the different ventures. This shared infrastructure for advancing the delivery of the investment account product offerings represents an important platform to take this proposition forward. I wish to congratulate the six financial institutions that include four Islamic banks and two development financial institutions on their collective effort to initiate this platform. I understand there is  2  BIS central bankers’ speeches  interest from other Islamic banks to take part in this platform. This platform will have the potential to create a more extensive network of sponsoring banks to meet the more diversified demands of investors and ventures. This would further enhance the potential for the value proposition of the IAP as a Shariah compliant investment vehicle and a fund raising avenue that would bring benefits to the economy. On that note, it is my great pleasure to officially launch the IAP. I wish it every success. Thank you. BIS central bankers’ speeches  3
Allow me to express in my address also full recognition to Prime Minister Mart Laar who has been the leader of the Estonian government during several critical periods. Mart Laar was the head of the Estonian government during one of the most difficult periods - from the autumn of 1992 to November 1994. This was the turbulent period of initial reforms not only in the economy but the entire society, immediately after the monetary reform and adoption of the constitution. But, with your kind consent, I shall hereby focus on economic issues. These were the times when Estonia’s foreign reserves, in the current denomination, could have been expressed in hundreds millions of euros, the average monthly wage was slightly above one thousand kroons and, by the end of 1992, three big banks had collapsed. These were the years just after the monetary reform when the question “for how long this kroon is going to last” was often asked in Estonia, but even more frequently abroad. The central bank has always stressed the essential backing provided to the stability of the kroon’s exchange rate and the financial system by the economic reforms at large and a stable, predictable budget in particular. We have repeatedly stressed that the foundation for our relative economic success was laid in 1992 and 1993. Our banks would not be so strong to date without solid customers - private enterprises, individuals.

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Does that imply that the current stance is appropriate, if your staff forecasts are confirmed? Yes. And if there is a further deterioration, then we will react. But for now, our monetary policy stance is fully compatible with both inflation and real activity. The important element is that we are totally ready to react. And I would add another element, if I may: risks are tilted to the downside. Do you mean, in terms of real activity? Both in terms of real activity and in terms of inflation. So if those risks materialise, then we will react. Can you think about different monetary policy tools to address different problems? If the issue is with the exchange rate, official rates are probably the answer; if it’s real activity, then QE; if it’s monetary transmission, then it’s targeted longer-term refinancing operations (TLTRO)… We do not allocate our instruments to different objectives. Something that I think is relevant, but is sometimes a bit overlooked, is that monetary policy is not almighty. If there is a problem with price stability, that’s within our mandate. But this is something everyone has to keep in mind to avoid creating expectations that will not be met: we do not have the philosopher’s stone. Are you implying that having something of a policy mix would be good, in total respect of the ECB’s independence? Sure.

Øystein Olsen: A decade of forward guidance in Norway Speech by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), at a seminar, held at Columbia University, New York City, 8 April 2014. *  *  *  Accompanying charts can be found at the end of the speech or on the Norges Bank’s website. Please note that the text below may differ from the actual presentation. Thank you for inviting me to Columbia University. Economists in Norges Bank have been greatly inspired by researchers from this institution, and we have had the pleasure of hosting scholars from Columbia at a number of conferences in Norges Bank. Some of our economists have also been here as visiting scholars. It is therefore a particular pleasure for me to be here today. “Forward guidance” as an element of monetary policy has attracted attention in the aftermath of the international financial crisis. With key policy rates in some countries constrained at a lower bound, statements about central banks’ future actions have been used to affect interest rate expectations. Norges Bank has published explicit numerical interest rate forecasts as a regular part of our monetary policy communication for ten years. The interest rate forecast is our preferred way of guiding economic agents’ interest rate expectations. As such, our version of forward guidance has been reasonably successful. The topic of my talk is our framework for forward guidance and the experience gained over a decade of practising our approach.
Recent data show core inflation, which excludes volatile food and energy prices, running at about 3-1/2 percent, which is well above the Federal Reserve’s longer-term 2 percent goal. Taking a closer look at the data, it’s clear that this spike in inflation largely reflects the transitory effects of the rapid reopening of the economy, which is pushing supply and demand in extreme ways. As the economy gets through these unusual dynamics, I expect inflation to come back down to around 2 percent next year. Given the complexity of this topic, I’ll go into this in more detail. I find it helpful to view recent developments in terms of three categories. The first is related to prices for goods and services that underwent huge declines during the pandemic but are now rebounding as the economy reopens. For example, in the first year of the pandemic, prices for airfare and lodging fell sharply as people cut back on travel. Since then, we’ve seen these rebound toward their pre-pandemic trends, pushing the inflation rate up. One simple way to get a better read of inflation that is not overly influenced by these big swings in prices is to take the average inflation rate from the start of the pandemic. That calculation shows that core inflation has averaged 2-3/4 percent since February of last year. But even that number is heavily influenced by the effects of the pandemic on the second category: used vehicles.

After this year’s spike in inflation related to the effects of the pandemic—and with inflation expectations and other measures of underlying inflation close to our 2 percent longer-run goal—I expect inflation pressures to moderate over time and for the inflation rate to come back to its underlying trend of around 2 percent next year. It goes without saying that there is still a great deal of uncertainty about the inflation outlook, and I will be watching the data closely in the coming months. North Country I’ve spoken at great length about the outlook for the U.S. economy as a whole. While people’s experiences are influenced by the macro outlook, the local economy often plays a very important role in shaping their economic opportunity. At the beginning of this speech, I referred to the Federal Reserve System’s Second District, which is the region the New York Fed is responsible for. This area includes New York State, parts of New Jersey and Connecticut, Puerto Rico, and the U.S. Virgin Islands. To better understand the state of the economy and economic growth here, I’ve spent a lot of time this week meeting with North Country business leaders, community organizers, and elected officials. Much of what emerged from these conversations reflects the unique aspects of the North Country economy, which suffered outsize job losses at the onset of the pandemic and continues to experience a reduction in tourism owing to border closures. This area, like many across the Second District and around the country, has its challenges.
In fact, central banks’ role in times of financial instability is not a new issue for the economic literature. The term “lender of last resort” originated in the writing of Sir Francis Baring in 1797. In his book, “Observations on the Establishment of the Bank of England”, Sir Baring referred to the Bank of  3  Aninat, Eduardo. (2003). Foreword. Challenges to Central Banking from Globalized Financial Systems. IMF. 4  Schuerman T. (2004). Why Were Banks Better off in the 2001 Recession? Current Issues in Economics and Finance. FEDNY. Vol. 10. No: 1. 2  BIS Review 38/2005  England as “the dernier resort” from which all banks could obtain liquidity in times of crises. But the concept of lender of last resort had been described and used in a more comprehensive manner by both Henry Thornton in 1802 and Walter Bagehot in 1873. Distinguished Guests, I will add a point to the discussion that the benefit of having a strong financial system in an economy eliminates the ground for conflict in policies between financial stability and price stability. Since a strong financial system increases the efficiency of monetary policy on one side, it also provides elasticity for the economy to overcome external shocks easier on another. On the other hand, it is almost impossible to attain financial stability in the long run without maintaining price stability. Furthermore, price stability attained through credible monetary policies is an advantage in times of increasing uncertainty in the financial system and financial imbalances.

Süreyya Serdengeçti: Financial stability and implications of Basel II Opening speech by Mr Süreyya Serdengeçti, Governor of the Central Bank of the Republic of Turkey, at the conference on “Financial stability and implications of Basel II”, Istanbul, 16 May 2005. *  *  *  Financial stability Minister, Governors, Academicians, Guests etc., I would like to welcome you to Istanbul today and thank you all for your participation in this conference. It is an honor for me to host such distinguished speakers and participants in Istanbul. One of the features of the world economy back in the 90’s was the financial liberalization of economies. The ambitious macroeconomic policies of many countries aiming at liberalizing capital accounts, started in fact with developed countries in the late 70’s and spread to developing countries in the late 80’s and 90’s. Another feature of the world economy in the 90’s was the acceleration of capital movements around the world, which I would say is also an outcome of the financial liberalization policies. The comprehensive technological progress in areas of information, communication and computing also highly promoted this active movement of capital across national borders. This impressive change in the global economic environment since the 80s has resulted in important changes in global financial markets. As the figures indicated, during this period, the global financial sector in general and the banking sector in particular developed much more than the real sector did. New financial instruments that were designed for firms’ financing needs provided new opportunities for companies.
I intend to briefly discuss both perspectives in turn and first explain why we made the decisions we made one to two years ago and how they have affected economic developments today – and then I will discuss how we use the monetary policy we conduct now to try to achieve the inflation target over the coming years. Reasons for the current low inflation rate The reasons why we misjudged inflation trends earlier are fairly easy to pinpoint now. Although some forecasters were more successful than others in their assessments, almost all made the same two mistakes; we underestimated productivity growth (and thereby overestimated resource utilisation in the economy) and we overestimated import prices. We, like many other analysts, assumed that the rate of productivity growth had increased in a number of sectors, partly due to IT investments combined with restructuring. Similarly, we knew that globalisation was pushing down import prices for many products. What we and many others misjudged was the magnitude of the changes. Productivity growth was even stronger than we had anticipated, with strong growth in the service sector, for instance, where IT use has increased. Import prices were slightly lower than we had expected, partly due to an unexpectedly high increase in the percentage of total imports from low-wage countries such as China and Poland. Consumer prices of imported goods have fallen since mid-2003. It is perhaps all too common that forecasters are reluctant to stick their necks out with regard to large underlying changes.

At the same time, the labour market has been affected by changes both within the EU and in the world economy as a whole. Asia is rapidly expanding production and exports and reduced trade barriers are increasing the degree of competition even in markets that were not previously exposed to competition. The emancipation of the countries in eastern and central Europe has dramatically increased access to labour for manufacturing in these countries and also for work in Sweden. So far the temporary labour migration has been only a small, although growing, element in the Swedish labour market. However, the pressure from the labour supply from the new EU countries is bound to increase. The amount of foreign labour entering the various sectors will depend on the initial wage differences. The new member states’ wage levels are in the process of converging with Swedish wages in the long term, but it is dangerous to assume that neither wages nor employment in various sectors in Sweden will be affected. If we assume this, there is a risk that we will not be sufficiently willing to make changes and then unemployment will rise. The Swedish labour force is thus facing competition both directly from foreign labour coming here and indirectly through households and companies choosing to buy goods and now even services that are produced abroad. Phenomena such as offshoring and merchanting can also be linked to the relatively high labour costs in Sweden.