samchain/econo-pairs-v1 huggingface dataset:
Moreover, risks that operators seem to be managing well individually may prove to be a considerable strain on the financial system as a whole. As a response to this, a new macroprudential surveillance framework is now in the making. 4  BIS central bankers’ speeches  Norway, which is in a surplus and net asset position, faces some particular challenges. As investor and manager of the Government Pension Fund Global, we have seen that prices and yields can react strongly to uncertainty about the future. New steps in the management of financial wealth Norway invests a large proportion of its petroleum revenues in international equity, bond and real estate markets via the Government Pension Fund Global. The fund is fully integrated with the government budget, and the same priorities are imposed on spending from the Fund as on any other government spending. Today, the value of the Fund is around NOK 3.5 trillion, or about 170 percent of mainland GDP. Chart 5  The Fund should be invested with a view to maximising future purchasing power. At the same time, investments must be diversified in order to reduce the risk of losses also during periods when markets are shrouded in fear and uncertainty. BIS central bankers’ speeches  5  Chart 6  The world’s economic geography is changing. While growth in advanced economies has been weak and is slowing, growth is robust in Latin America and Asia. Several countries in Africa are now catching up. The Fund has considerable ownership interests in Europe.

Its average holding in European companies is today around three times as high as in the Americas and Asia. The chosen regional distribution is related to Norway’s import pattern and has been viewed as a form of currency hedging. But the result has been that a large proportion of the Fund is invested in a region that has experienced weak growth over the past decade. Analyses show that exchange rate risk in the Fund is relatively small and less than previously assumed. Based on these findings, the Norwegian Government has decided that the relative share of European investments should be reduced over time, so that the Fund’s geographical diversification is further improved. A more even distribution of the Fund’s ownership will provide us with the opportunity to take part in value creation in regions with strong growth. This implies a reduction in the allocation to European equities and an increase in the allocation to the Americas and emerging economies. High economic growth in Asia may provide sound returns on investments in that region, even though today’s equity prices already reflect expectations of higher growth in eastern than in western regions. A more even distribution will nonetheless improve the trade-off between risk and expected rewards. Petroleum revenue spending Norway as an oil nation stumbled at the start. The current account surplus at the end of the 1960s had reversed to a deficit of 12 percent of GDP by 1977. The deficit was three times as large as that recorded by Italy and Spain last year.
These criteria, related to each step of the process, should be implemented in a strict and effective manner, in order to provide the countries concerned with the external constraints necessary to bring their economies into line with the respective standards and the final goal of EMU, while also avoiding any discrimination. Against the background of different starting points and possibly different lead-times for progress towards real and nominal convergence, a plurality of approaches should be feasible without compromising equality of treatment. This may apply, in particular, to the timing of the individual steps towards accession. In accordance with the Treaty establishing the European Community, the Eurosystem will always focus on the maintenance of price stability in the euro area. Hence, our involvement in the accession process, including our technical assistance, and any arrangement or other forms of cooperation with accession countries, must be without prejudice to the Eurosystem’s independence and its primary objective. BIS Review 116/1999  4  Over time, the Eurosystem – like other EU institutions – will face the necessity of institutional adjustments required by enlargement. These adjustments should preserve the efficient functioning of the Eurosystem and its ability to maintain price stability in an enlarged euro area. In the case of previous enlargements, the entry of new Member States often brought about so-called “arithmetical adjustments” to the composition of EU institutions. However, an enlargement by as many as 12 new countries may require more substantial adjustments.

I don’t mean it would be completely smooth right now; it would be smoother in a year or so as more progress is made. But in extremis, it could be done now. That surely is a massive signal to bankers and markets. Europe has not yet reached the same point, but contrary to some commentary is not far behind. The necessary legislative regime is close to completion. In contrast to the US, however, many of the largest European – including UK – banking groups will need to reorganise in order to make themselves susceptible to either Single Point of Entry or Multiple Point of Entry resolution. That brings me to my second point. (2)  The Single Point of Entry versus Multiple Point of Entry resolution strategy distinction may be the most important innovation in banking policy in decades  We will learn to speak of banks and dealers as either “SPE groups” or “MPE groups”. Some technical developments don’t matter hugely. This one does. A lot will follow from it, as I will sketch in a moment. But first I should recap the difference between SPE and MPE resolution strategies. A single-point-of-entry or SPE resolution works downwards from the group’s top company – most simply, a pure holding company (Holdco). Losses in subsidiaries are first transferred up to Holdco. If Holdco is bankrupt as a result, the group needs resolving. The “bailin” tool is applied to Holdco, with the equity being written off and bonds converted as necessary into equity to recapitalise the group.
It has since picked up again. When population growth is taken into account, this picture also changes. Growth in fixed capital per capita has declined and is close to zero, even after three years of low interest rates and solid growth in the economy. Investment in the mainland economy has been at a low level in the years following the financial crisis. Thus, our overall value added per capita has increasingly been spent on consumption and on replacing existing fixed capital. Chart 18: High growth in labour-intensive sectors The phasing-in of a highly profitable oil industry and higher petroleum revenue spending via the central government budget has amplified the structural shifts in the Norwegian economy. Services production has increased. When the financial crisis hit, industries that do not benefit from oil sector demand or public spending stagnated. The differences in growth across industries has thus widened since 2008. Labour-intensive sectors with relatively low productivity have accounted for a large share of employment growth in recent years. Employment has shown only moderate growth in industries with a high share of fixed capital per employee and a high productivity level, such as manufacturing and technical activities. Chart 19: Public purchases of goods and services Budget spending priorities have pushed in the same direction. In the past 40 years, public consumption as a share of mainland GDP has increased considerably from 18 percent in 1970 to 28 percent in 2011. In the same period, the share of investment has remained virtually unchanged.

Countries that have attempted to shield their economies from the rest of the world have fallen back into stagnation. Nascent signs of increased protectionism are again giving cause for concern. If this tendency intensifies, international trade and prosperity will be undermined. With its open economy, Norway would be severely affected. It is in our own interest to make an active effort to counteract such a development. Monetary policy – a nominal anchor Against the background of an economic downturn and low interest rates among Norway’s trading partners, the conduct of monetary policy in Norway is challenging. A higher key policy rate might have curbed debt growth and demand pressures in the Norwegian economy. But in an environment of persistently low external interest rates, such a policy would likely have led to a sharp appreciation of the krone, resulting in too low levels of inflation and economic activity. Thus, the crisis in Europe and weak growth in the US are also contributing to keeping interest rates in Norway at a low level. BIS central bankers’ speeches  3  The main objective of monetary policy in Norway is low and stable inflation. This objective provides the economy with a nominal anchor. With firmly anchored inflation expectations, monetary policy can contribute to stable developments in the real economy. Chart 7: Rise in consumer prices The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. Over the past ten years, average inflation has been somewhat below, but close to, 2.5 percent.
Additionally, impairment losses, which had been falling uninterruptedly since 2013, increased by 10.6%. Net interest income rose by somewhat more than 3%, while net fees and commissions grew by 2.5%. The decline in profit was seen at nearly all banks, albeit to differing extents. As a result, ROE decreased by more than 1.5 percentage points (pp) with respect to the same period a year earlier and stood at 6.2%. This figure is lower than current estimates of the cost of capital, which, subject to their characteristic uncertainty, are somewhat above 7%. 6/29  In any event it should be borne in mind that profitability levels vary considerably across banks, both in Spain and in other European countries. This shows that profitability issues affect the sector unevenly because of the heterogeneity of banks’ business models across countries and within each jurisdiction, and also because of the multiplicity of explanatory factors. Factors explaining low bank profitability To better understand the factors behind the low profitability of Spanish banks compared with pre-crisis levels, I intend to focus on their business in Spain. This is because profitability figures as per the consolidated financial statements are influenced by the growing share of international exposure in recent years, which complicates the interpretation of earnings as they are affected by significant changes in composition. Furthermore, only a small number of banks have significant international exposure, so the performance figures based on consolidated financial statements may not be very representative of the majority of the banking sector.

2/3  BIS central bankers' speeches  Lastly, I would like to underline that the Bank of Albania will make maximum efforts for the cooperation in the framework of this agreement to be concrete and have a direct impact. Concluding, on behalf of the Bank of Albania, allow me to thank once again the Central Bank of the Republic of Turkey for the continuous fruitful cooperation; I would also like to thank, in particular, Governor Çetinkaya, who has honoured us today with his presence at the ceremony of signing the Common Memorandum. Thank You! 3/3  BIS central bankers' speeches
This implements Bagehot’s prescription for mitigating systemic risk, that the central bank should as far as possible make clear in advance its preparedness to provide liquidity in stressed conditions. Referring to the central bank, he puts it thus: ‘The holders of the cash reserve must be ready not only to keep it for their own liabilities, but to advance it most freely for the liabilities of others. They must lend to merchants, to minor bankers, to “this man and that man”, whenever the security is good.’ The picture becomes more complex in the case of global firms that manage liquidity centrally. Such firms have liquidity needs in multiple currencies and locations. They may find it costly to hold enough liquid assets in every market in which they operate, and hence potentially face a mismatch between the location of their liquidity needs and that of their liquid assets. In response to this several central banks, notably those in Switzerland, Sweden, the UK, and the United States, have taken steps to allow the cross-border use of collateral in some or all of their routine lending activities. Others have taken the alternative route of attempting to reduce collateral costs for banks, and hence relax potential constraints, by accepting a range of less liquid and nonmarketable assets, while still controlling the credit quality of the assets involved. For example, the Eurosystem accepts a wide range of non-sovereign debt securities, including corporate bonds and asset-backed securities.

The Bank of Zambia is in the process of engaging the banks with a view to finding a solution to the high cost of banking which is often cited as the main hindrance to access to finance. I therefore appeal to all the banks operating in Zambia to critically assess the level of their charges and to continue playing the supportive role to development that they have in the past. In this regard, I am particularly pleased to make mention of the spirited efforts that Standard Chartered Bank continues to make in financing SME’s and Micro-finance. The experiences of many economies show that these sub sectors have the capacity to create a middle class and  BIS Review 163/2008  1  to emancipate both rural and urban dwellers from their poverty trap. Zambia has many promising entrepreneurs whose only constraint is affordable funding. As you explore the opportunities that this new venture will bring you, I urge you to focus on the customers who may appear small today, but could grow with the bank if they are given the right support. I wish you every success as you embark on this journey into North Western Province. 2  BIS Review 163/2008
I will try to illuminate two questions: 1) Is our reaction pattern and the conditionality of our interest rate forecast understood? and 2) Do we affect the expectations of economic agents? [Chart: Decomposition of change in the interest rate path: Forecasts] Prior to the announcement of a new interest rate forecast, many of the market analysts publish their own forecast of our interest rate path. These forecasts are usually accompanied by a discussion of the factors pushing the expected revision of our path in either direction. Some analysts even publish their own assessment of our decomposition of the interest rate change, quantifying the estimated effects from different factors. The charts show the forecasts of the change in our interest rate path provided by three different macroanalysts prior to the publication of the October 2011 Monetary Policy Report. Our published change in the path and its decomposition are shown in the lower panel to the right. As shown in the chart, the forecasts are quite accurate, which is a typical pattern. We take this as an indication that market participants in general understand our reaction pattern. It also indicates that the agents correctly perceive our interest rate path as a conditional forecast, and not as an unconditional promise. [Chart: Changes in money market rates after monetary policy announcements] The next chart shows the changes in money market rates on the day of a new monetary policy announcement.

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.
This theoretical and empirical examination gave the Federal Reserve confidence that it could effectively raise rates when the time came while limiting undesirable effects on financial market structure, and also ensured that additional term tool options were available if the combination of the overnight tools – IOR and ON RRP – was not sufficient to provide interest rate control.21 At this point, you might have a question: from late 2008 to late 2015, the federal funds rate traded well within the FOMC’s target range of zero to 25 basis points.22 Shouldn’t this have been conclusive evidence as to the ability of the operational framework to provide sufficient control of interest rates? Unfortunately, the answer is no, because there are natural features of the financial system that likely provide support to interest rates near the zero lower bound, or ZLB. These features include the availability of physical cash and a behavioral aversion by some money market investors to investing at negative rates, and also encompass certain unique features of money markets in the United States, such as legal and regulatory incentives applicable to money market mutual funds and the ability of the government-sponsored enterprises to leave unremunerated deposits at the Federal Reserve.23 As a result, while the pre-liftoff testing suggested that the tools were likely to work well, it wasn’t possible to determine with complete certainty the extent to which market rates were driven by the tools or by ZLB effects.

This meant that if the interest rate changed during a maintenance period, the change would not have been fully reflected in the interest payments to depository institutions until the beginning of a new maintenance period. This methodology likely would have resulted in slow adjustment of market rates to changes in the IOER rate. The revised calculation bases interest payments to depository institutions on the IOER rate in effect each day and the level of balances held each day. 20  See Clouse, Ihrig, Klee, and Chen, “The Federal Reserve’s Tools for Policy Normalization in a Preferred Habitat Model of Financial Markets,” October 2014; Martin, McAndrews, Palida, and Skeie, “Federal Reserve Tools for Managing Rates and Reserves,” September 2013; and Armenter and Lester, “Excess Reserves and Monetary Policy Normalization,” September 2015. 21  Testing focused on two types of term operations. Term RRPs are similar to ON RRP in most respects; for example, both operations use the same expanded set of counterparties. The key differences are that term RRPs are conducted for longer than overnight, they each have their own, separate, aggregate capacity limit, and the term RRP does not incorporate a per-counterparty cap. Term RRPs can be used in a variety of ways. In the current framework, they have been used to offer increased RRP capacity, using an interest-rate-oriented approach, around periods when larger-than-usual demand is expected, but they could also be used in a quantityoriented way to drain reserves.
There is a big difference though between a bank and a supermarket – you don’t entrust a supermarket with your hard-earned money or life savings; and if you are enticed by a supermarket promotion to buy something you don’t need, the loss is unlikely to be huge but this may not be case for investment or insurance products. You could lose your shirt. Therefore bank customers require protection not only on the safety of their deposits, but also in the way that they are treated as consumers and as investors. In terms of protecting the safety of customers’ deposits, the HKMA seeks to maintain prudential soundness of individual banks. We do this through the regulation and supervision of banks and, in the unfortunate event of a bank failure, through the activation of the Deposit Protection Scheme to safeguard customers’ deposits up to half a million Hong Kong dollars per depositor. In  BIS central bankers’ speeches  1  today’s speech, I propose to focus not on prudential supervision but on the protection of bank customers as consumers and investors. How do we protect bank customers? So the next question is : How do we protect bank customers as consumers and investors? The answer is the very same principle: “treat your customers fairly”. Now let me elaborate on how this can be achieved. First of all, when selling a banking product, such as a loan or a credit card the bank must ensure that the key terms and conditions are fair and equitable.

I think that makes sense for banks, but we’ve come to the view that it is really not relevant for credit unions in the UK. We also want to avoid discouraging growing firms, and are confident of our ability to manage the failure of smaller credit unions smoothly with our colleagues at the FSCS. Therefore we are launching a  9  For more background on this work, see https://www.bankofengland.co.uk/working-paper/2017/the-determinants-of-uk-credit-unionfailure 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  consultation today in which we propose to change capital requirements to simplify them, remove barriers to growth and deliver a greater degree of financial resilience for smaller credit unions that are more likely to fail. We propose to:  ∙  get rid of our “slab” system and replace it with a graduated, income-tax-style approach where larger credit unions would be required to hold 5% capital for assets up to £ 8% for assets between £ and £ and 10% for assets above £ as opposed to today’s system where firms have suddenly to hold 10% on their entire asset base if they grow a single pound over £ in assets;  ∙  maintain capital requirements at 3% for credit unions with total assets less than £ but introduce a “monitoring zone” of 3-5% whereby if a smaller credit union’s capital falls below 5% we would step up our supervisory activity.