samchain/econo-pairs-v1 huggingface dataset:
1 Given that the sixth anniversary of the collapse of Lehman Brothers passed just a few weeks ago, let me briefly remind you of the hectic events that gave rise to the policy actions of the past few years. The bankruptcy of Lehman Brothers on 15 September 2008 turned what had previously been a crunch in the interbank market into an outright financial panic. In the weeks and months after the collapse of Lehman, the prospect of a second Great Depression was real. In fact, key economic indicators showed worrying parallels in the early stages of the two crises; by  1  Galbraith (1990). BIS central bankers’ speeches  1  January 2009 global industrial output had dropped by more than 10%, global trade by almost 20%, and the global stock market had lost about half of its value. 2 In the 1930s, all three of these indicators continued to fall for another two years, eventually leading to record unemployment of 25% in the United States and around 30% in the United Kingdom and Germany, the second and third largest economies at the time. This, at the end of 2008, was the environment in which policymakers found themselves and the prospect that they were trying to avoid. So how did they react? Almost immediately after the collapse of Lehman Brothers central banks, including the SNB, began to lower interest rates to almost zero.

5  The path was not entirely untrodden: in the 1990s, Japan was facing weak growth and the threat of deflation in the wake of its asset price crash, even though the Bank of Japan (BoJ) had slashed rates to zero. The BoJ thus started to experiment with unconventional monetary policy measures. 2  BIS central bankers’ speeches  certain period of time. Both of these tools are intended to lower long-term borrowing rates and, through that channel, to stimulate economic activity. The SNB is a bit of a special case. In summer 2011, Switzerland was confronted with an excessive appreciation of the Swiss franc as a result of the euro area crisis, an appreciation that continued to the point where it posed a serious threat to price stability. As a result, we resorted to a range of unconventional tools to increase Swiss franc liquidity and – eventually – introduced an exchange rate floor of 1.20 Swiss franc per euro in September 2011. So, are central banks doing too much in terms of unconventional policy? The answer is – again – “no”, but less categorically than in the case of conventional policies. On the one hand, being the only ones left to react to weak economies and high unemployment forced many central banks to take further action – action that was justified by their mandates. On the other hand, the jury is still out on the overall assessment of unconventional policies.
It appears, the reforms jointly developed and implemented by regulators in the major countries after the global financial crisis truly bolstered the financial system. The very structure of the global financial markets has undergone dramatic changes over the past decade. The role of global banks and cross-border lending by banks has taken a downward turn. Moreover, capital raising markets (stock markets) saw stagnation and even company delisting. The role of market lending (bond markets) and asset managers, i.e. the markets impacted by regulatory reforms to a lesser extent, has increased. These markets could potentially become more volatile, however. In broad terms, what does all this mean for global growth? In our view, it will not be stable. Average growth rates will be lower than in the early 2000s. The main trend we will see in the coming years will be slow economic recovery and the leading central banks taking a tighter policy stance. This will include increased interest rates and curtailed balances. For financial markets, these dynamics bring about two contradictory trends. On the one hand, economic growth has a positive impact on financial markets and risk appetite. On the other hand, increased interest rates are cooling the markets. Therefore, despite the overall stabilisation, there is a high probability of financial market volatility. What does all this mean for the Russian economy? Our economy will be bolstered by external demand to a lesser extent and will be sensitive to external volatility.

I would now like to address the objectives that we are yet to complete. The most pressing problem is lending to business owners. The standard N25 restricting financing of one’s own projects was introduced this year but is still only applied in a preferential mode. Lending to owners is dangerous for two reasons. First, the bank will turn a blind eye to risks linked to its own company when issuing it a loan i.e. the risk of non-return. Second, our practice has shown that if the owner’s project really experiences difficulties the last place it returns money is the affiliated bank. These are not marketable loans but loans extended by unwritten rules. Banks cannot refinance or resell them. In the end, this is the cause of bankruptcy for many banks. It is one of the factors that led to the collapse of relatively large banks, whose licenses we revoked. We want the banking community to know that our intentions in this field are serious and we will continue to take a tighter stance. Therefore, I advise those whose business model is built on lending to owners to seriously consider finding alternatives. Yet another problem is the quality of banks’ capital. We need to be confident that our banks have real, not borrowed, capital. Therefore, as of this year we will be introducing tighter regulation on the quality of capital. When calculating a bank’s capital, we will not take funds from nontransparent sources into account. There is another whole host of problems associated with collateral.
This is a slightly better outcome than in our July forecast, where we assumed that GDP would fall by 0.3 per cent in the second quarter and that the fall would not come to a halt until the third quarter. However, there was unusually great uncertainty regarding the preliminary national accounts figures on this occasion. In recent months various confidence indicators have also shown an improvement. The National Institute of Economic Research’s Economic Tendency Survey, which summarises companies’ and households’ views of the economic situation, increased by almost seven units in July, to 87.1. However, the level is still below 100 and indicates that the mood among companies and households is still much weaker than normal (see Figure 13). 6 The purchasing managers’ index for July was also more positive than market expectations had implied. It rose by almost four units to 54.3 and was thus above 50 for the second month in a row (see Figure 14). The purchasing managers’ index is usually a slightly quicker indicator of developments than the economic tendency survey and an index above 50 indicates growth. 7 Labour market continues to weaken Our assessment in the most recent Monetary Policy Report was that the labour market would continue to be weak. A deterioration in the labour market usually lags behind in an economic downturn, which was also the case this time.

On the US side of the Atlantic, some of you will recognise echoes here of the Paulson Plan for the creation of a financial stability authority in the Federal Reserve. Furthermore, FPC will have a responsibility to advise the government on when the perimeter of the PRA’s microprudential supervision should change. Very obviously, this is aimed at countering the risk of regulatory arbitrage undermining attempts to tighten up banking regulation. It also recognises that the shape of the financial system is bound to evolve in unexpected ways over the years. The regulatory regime needs to be adaptable. It is not all about banks: instruments addressed to network issues That underlines that the UK’s new macroprudential regime is not all about banks. For example, were it to be warranted, the FPC could potentially intervene via Recommendations or Directions to the microregulators on disclosures made around the issuance and structuring of securities; on the trading infrastructure of markets, to increase the likelihood that liquidity would prove resilient under stress; on limits on large exposures amongst different kinds of firm; and on the rules of the game for the many varieties of shadow banking. On the last, for example, it is no secret that, speaking only for myself, I should like to see the rules for money market mutual funds altered to address the “break the buck” problem.
I am doubtful whether a further easing of monetary policy in this group of countries would be able to help move the yield curve in the desired direction. It could actually have the opposite effect - if investors perceived it as heralding a weak euro. In any event, given the current level of short-term interest rates, monetary policy’s margin for manoeuvre is extremely limited. It is possible that the level of real long-term interest rates in Europe reflects, partially at least, that of real interest rates worldwide. Europe has no influence over that effect. BIS Review 67/1997  -3-  Europe can, however, have an influence on the effect which comes from the constant increase in public sector indebtedness in our countries. As a reminder, between the end of 1991 and the end of 1996 the general government debt rose from around 56 to above 73% of GDP for the European Union as a whole. This development, together with the worry that it might not yet have run its course, are not likely - to say the least - to lead to a fall in real interest rates. Nor do they create the climate of confidence necessary for consumers and investors to modify their current prudent behaviour. On the other hand, the certainty that governments are tackling the underlying causes of the public deficits which are responsible for the constant increase in the debt burden could well bring about such a change in behaviour.

The situation would be even more critical if the bank was at the same time a relatively small actor in its own country. In this type of situation the supervisory authority in the home country – which in this case is the one that decides – would probably consider that the need for supervision was not as great as the other countries might consider it to be. There is an evident risk of a conflict of interests between the countries. 2  BIS Review 38/2007  There are elements of similar problems in the Nordea case, too. However, here the problem is rather the opposite – namely that the bank group’s different companies (parent and subsidiaries) would be covered by supervision in several countries. The fact that each cross-border bank group has to obey and report to several supervisory authorities leads to additional costs and administrative duties for the bank. This is an obstacle to continued integration and to the competitiveness of the European bank market. Another problem is that there are no common arrangements for crisis management within the EU. Basically the only EC regulations defining how responsibility should be divided between the countries in the event of a cross-border crisis are regulations for compensating depositors in the case of bank failures. However, these regulations are not primarily intended to ensure efficient crisis management. They should rather be seen as protection for consumers.
Richard Dzina: Advancing the Fed's wholesale services in an era of unprecedented challenge and change Remarks by Mr Richard Dzina, Executive Vice President of the Financial Services Group of the Federal Reserve Bank of New York, at the Securities Industry and Financial Markets Association's Operations Conference and Exhibition 2017, Boca Raton, Florida, 9 May 2017. * * * Thank you and good morning. In leading the Federal Reserve’s wholesale services I am continually reminded that my stewardship responsibilities for this extraordinary business run in at least three directions. Organizationally, I am accountable to principals across the Federal Reserve System and to the Directors of the Federal Reserve Bank of New York. Managerially, I am accountable to the men and women who make this business function, as capable and as dedicated a cadre of public servants as has served our nation anytime, anywhere. Operationally, and the sensation I feel most keenly standing before this audience of industry leaders, I am accountable to our depository institution customers, and their end users, which rely upon our services to send and receive time critical payments; to transfer, maintain, and provide safekeeping for Fedwire-eligible securities; and to settle positions derived from transactions in other markets. I’d like to thank SIFMA for the opportunity to participate in today’s program, and for the visceral reminder of accountability that comes with this invitation. I have long maintained that the Federal Reserve’s wholesale services represent the franchise when it comes to our nation’s financial market infrastructure.

There are areas where we are likely to have erred in being too prescriptive and others where we left too much room for discretion and judgment. It would be good if we could find a way to build into the initial design of guidance and regulation the capacity for quicker and continuous evolution as we learn more. Second, we need to continue to adapt our approach to the imperatives of a much more integrated global financial system. Global integration, of course, gives us all a greater stake in the quality of supervision outside our borders. This pragmatic interest will lead us to spend progressively more resources and attention on the international dimension of our work. This recognition informed the efforts that led to the Basel Capital Accord, the Lamfalussy Standards for payment and settlement systems and many other international cooperative efforts. But the imperative is much stronger today because of the much greater extent of financial integration, and it is only likely to grow. It is also important that the design of regulatory initiatives in the United States be informed by a careful assessment of their relative impact on U.S. institutions and markets. Effective solutions to many of the concerns we face in our national financial systems will require multilateral approaches.
The interest rate path we published last week showed that the key policy rate will probably be raised gradually. When households and firms perceive signals concerning future interest rate developments as credible, the impact of interest rate increases that lie ahead may occur earlier. Communication enhances the effectiveness of monetary policy Communication about the evolution of the economy is therefore an important part of Norges Bank’s monetary policy. We communicate our view of the economic situation and our monetary policy trade-offs in various ways. The Bank’s most important channel of communication is the monetary policy report. The report contains a thorough review of new information that is relevant to the evolution of the Norwegian economy and the background for the interest rate decision. Last week, the Bank launched a new product – Pengepolitikken kort fortalt [Monetary policy in brief]. [1] We believe there is a need for this. This product is designed for Norwegian readers looking for a more generalised, brief description of the background for the interest rate decision. The fundamental message conveyed is of course the same as in the Bank’s monetary policy report. Norges Bank has published forecasts for the key policy rate three to four years ahead since 2005. If the economy evolves as envisaged by Norges Bank, this is the Bank’s best forecast for future key policy rate levels. The interest rate forecast is thus a summary of the message in the monetary policy report.

Financial crises are even costlier in emerging economies than in industrialized countries, as their ability to bear such costs is severely constrained by spillovers between the banking system and sovereigns and the related vicious circle of escalating risk premia. BIS central bankers’ speeches  1  The crisis has also revealed that effective policy remedies have a transnational perspective. In the European Union the idea of a Banking Union emerged as a solution to break the above-mentioned vicious circle, thus putting a stop to financial fragmentation and helping restore the normal capital flow from the core EU countries to the periphery. In addition, the Banking Union has the merit of removing the contradiction between the pan-European nature of banking activity and keeping banking supervisory and resolution tasks at the national level. In this context, Romania’s membership in the Banking Union comes as a natural choice, given that euro area banks hold three fourths of the total assets of the Romanian banking system and two thirds of its capital. As was the case with EU membership, the national interest may be better served in the banking sector by relinquishing some of the national policy prerogatives. In the context of such a high financial integration, preserving the banking supervisory powers at national level would only entail suboptimal results, due to the limited access to information on parent banks and the lack of a cross-border perspective.
Until now, the contribution of prudential regulation to international competitiveness and growth has not been a focus of research in academia or the regulatory and central banking community. More research and debate with practitioners, academics and regulators will help us deliver our new objective and will help us understand how to measure and report on how well we are doing. This is why I am delighted to announce that we will be holding an international conference on 19 September to deepen our understanding of the links between prudential regulation, international competitiveness, and growth. I hope that the conference, which will be held after the Financial Services and Markets Bill is expected to be enacted, will kick off the next stage of a debate about how we can pursue our new objective. We would also like to share at the conference ideas about the information – including quantitative metrics – that could be provided to Parliament so that they can judge our performance. This is important because I recognise that we regulators shouldn’t be judged on our words alone. It is right that Parliament have access to timely, informative, and transparent information on what we are doing. But any measures should be about what the PRA can control, and not what it can’t. They should be about our work strengthening the regulatory foundations that support our likely new objective.

Figure 15 shows that the population has increased much more than the number of completed homes over the past ten years, which is an indication that housing construction has been too low. Despite housing investment now increasing, it is important that structural problems on the housing market are discussed so that we can obtain greater efficiency on this market in the longer run. Several inquiries have put forward proposals regarding what needs to be done, most recently this was done in an annex to the Long Term Survey of the Swedish Economy. Not having an efficient housing market is not merely a problem for indebtedness, it can also comprise a threat to a healthy development of society and it can create conflicts between the generations. The Riksbank has long pointed out the risks linked to the high level of household indebtedness and has previously also weighed in them in the repo-rate decisions to some extent, by setting the rate somewhat higher than would otherwise have been the case. However, the effect these considerations have actually had on monetary policy – the amount by which the repo rate has actually been set higher – has been exaggerated substantially. There are quite simply limits as to how far the policy rate can be used for this purpose. And 6  BIS central bankers’ speeches  let me emphasise that the main focus for monetary policy has always been to bring inflation back on target and to attain a good development in the real economy.
Zeti Akhtar Aziz: The Malaysian banking industry - gearing up for excellence Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Malaysian Banking & Financial Services Summit 2002 - “Gearing up for excellence”, held in Kuala Lumpur, 20 May 2002. *  *  *  Ladies and Gentlemen, The drive for excellence in the banking industry is a matter of priority, given that the well being of the banking sector is integral to the health and prosperity of the Malaysian economy. The advanced progress achieved in the restructuring and consolidation of our banking system in the recent year, has provided us with the strong foundation on which to develop and strengthen further the banking sector so that, it is better positioned to respond to the new and changing requirements of the economy and better abled to become more efficient and competitive. The focus of our strategies has therefore shifted from financial restructuring to that of capacity building and to ensuring the soundness and stability of the system. In essence, our drive for excellence in this phase of our development of the financial sector is to achieve an enhanced level of effectiveness and competitiveness in the banking sector. The issue before the banking industry is therefore the strategies and actions needed to gear up for this excellence. Ladies and Gentlemen, It is my pleasure to be here again at this year’s Malaysian Banking and Financial Services Summit organised by ASLI.

The quality of the indicators and the assessment of investments will further improve as more and better data sources become available. 5  See ESMA (2023). Progress Report on Greenwashing. May. 5  Several regulatory initiatives in the European Union will make new data available as a result of new climate and sustainability reporting requirements for financial and non-financial institutions. Currently we have the Sustainable Finance Disclosure Regulation (SFDR), that sets mandatory environmental, social and governance (ESG) disclosure obligations for financial markets participants, and the Corporate Sustainability Reporting Directive (CSRD). With regard to the latter, the European Financial Reporting Advisory Group (EFRAG) is working on the details of the thematic standards for collecting information on ESG aspects, trying to reconcile CSRD with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the work of the International Sustainability Standards Board (ISSB). As you know the TCFD issued a set of recommendations to disclose climate-related risks and opportunities, grouped into four categories: i) governance, ii) strategy, iii) risk management and iv) metrics and targets, but again they are voluntary. The ISSB is working on a global framework for sustainability but it has a different approach from EFRAG. For example, the ISSB considers single materiality while EFRAG considers double materiality. As you can see we have an alphabet soup to negotiate in the drive for transparency. In reality, there is as yet no global standard for disclosure, and it will take several years to achieve a complete framework.