samchain/econo-pairs-v1 huggingface dataset:
When banks are required to hold more capital in a period of high credit growth, they will be more robust to large loan losses. In addition, increased capital requirements could restrain credit growth. The Ministry of Finance has the overriding responsibility for regulating the financial industry, but Norges Bank will be given the primary responsibility for elaborating the basis for the establishment of the countercyclical capital buffer. With a buffer ceiling of 2.5 percent of banks’ risk-weighted assets, the buffer will probably have a limited downward impact on banks’ lending enthusiasm in good times. But banks that have solid capital reserves can take larger losses before having to limit lending to creditworthy customers. The countercyclical buffer comes on top of a new, comprehensive regulatory framework. Equity capital requirements will be tightened. Banks will face stricter maturity requirements for funding, limiting their share of short-term funding. They will be required to hold more liquid assets. All in all, the new regulatory regime will contribute to a more robust financial system and reduce fluctuations in credit growth. BIS central bankers’ speeches  7  The turbulence in Europe, which started with the problems in Greece, has now prevailed for close to two and a half years. Financial market sentiment and banks’ access to funding have varied widely during the period. The nascent market optimism may continue, but it is fragile. Should the economic situation abroad worsen again, and credit markets dry up, other tools can be put to use in Norway.

During the financial crisis in 2008, several measures were deployed, such as the so-called swap arrangement, which provided banks with access to liquid government securities in exchange for covered bonds. Smaller banks were given loans with longer maturities. The measures aimed at improving banks’ access to long-term funding. The measures enabled banks to maintain virtually normal lending standards for Norwegian households and businesses. Norway’s swap arrangement and quantitative easing have some common features: bonds shift from private to public hands, and banks’ funding costs become lower than would otherwise have been the case. But there is an important difference. The swap arrangement was reflected in the government’s balance sheet – not the central bank’s. Quantitative easing, which increases the size of a central bank’s balance sheet, as observed in the US and the UK, is still not a relevant approach for Norway. Normally, the provision of capital and liquidity by authorities is not to replace banks’ own sound liquidity management and long-term market funding. Any decision relating to the use of the creditworthiness of government or taxpayers to finance banks and businesses rests with the Government and the Storting (Norwegian parliament). Chart: Liquidity and EUR/NOK exchange rate International turbulence can push the krone in both directions. On the one hand, in periods of severe market turbulence, investors have tended to shy away from presumably less liquid currencies. The krone market is among the less liquid markets. One indicator of liquidity is the so called bid-ask spread.
A supervisory innovation: recovery planning The potential for rapid decay of asset and business line values unless assets and liabilities are transferred to a permanent owner quickly is a large part of what sets financial institutions apart from other companies entering insolvency. This difference motivates efforts to avert insolvency through supervisory action, as I described earlier. It also motivated U.S. banking supervisors in the early 1990s to ask some troubled banking companies not only to apply the three-part program but also to develop a meaningful contingency plan for reducing risk and raising capital if the first round of actions did not succeed. The supervisors incorporated the requirement to develop contingency plans in its supervisory agreements with those institutions. 2  BIS Review 140/2010  The CBRG has recommended that all systemically important financial institutions develop recovery plans. I believe the development of such plans by healthy institutions and their discussion by a college of the firm’s principal regulators constitute important innovations in the supervision of financial institutions. The Cross Border Crisis Management Group has provided momentum and a forum for discussion of progress and challenges as supervisors initiate discussion of recovery plans with firms. The discussions we have held in the United States involve the financial institution, its major U.S. regulators and the regulators of the foreign legal entities containing its principal business operations.

Another way to calculate Texas’ contribution to job creation is to lop off those states that have continued losing jobs and consider only those that have positive growth in employment these past two years. Using this metric, Texas has accounted for 29.2 percent of job creation since the recession ended. These are the facts. You may select whichever metric you wish. Regardless, it is reasonable to assume Texas has accounted for a significant amount of the nation’s employment growth both over the past 20 years and since the recession officially ended. This raises the obvious question – what kind of jobs are being created in Texas? Here are two charts that might help you form an opinion. BIS central bankers’ speeches  3  The first provides a breakdown of employment growth by sector since the recession ended, listing each employment sector by its weight in the employment mix of Texas. The most jobs have been created in the educational and health services sector, which accounts for 13.5 percent of Texas’ employment. The second-most jobs have been created in the professional and business services sector, which accounts for 12.5 percent of the Texas workforce. The mining sector, which includes support activities for both mining and oil and gas, employs 2.1 percent (yes, two-point-one percent) of Texas’ workers. In the second chart, you will see that these jobs are not low-paying jobs.
As the world economy began feeling the brunt of the global financial crisis with the fall of Lehman Brothers in September 2008, public discourse in most countries called for a rapid and decisive policy response. In an unprecedented move, finance ministers from many OECD and emerging countries announced important fiscal packages in an attempt to revive the world economy. Chile was no exception, where the government implemented a fiscal expansion over 2% of GDP – in relative terms, among the largest in the world. Central banks, for their part, also implemented large monetary expansion measures to stimulate the struggling economy, first by lowering interest rates to their effective lower bound, and then, in many cases, by taking additional steps aimed at providing liquidity to seized financial markets. This was also the case of Chile, where we reduced interest rates to its lowest historical level, and then increase its expansionary stance by implementing nonconventional measures. This is a fundamental factor in Chile’s current strong recovery. The present challenge is the withdrawal of the monetary stimulus at an appropriate pace, which insures that inflation forecast is consistent with our target of three percent in a two year horizon. We are taking into account the different factors affecting the outlook, such as the behavior of the exchange rate, the strength of the expansion of demand and activity, and the perspectives of lower interest rates in the world, among others.

On the policy front, the central bank and Government in general will continue to pursue appropriate policies that promote financial sector growth so as to enable them to reduce the cost of financial intermediation and improve the delivery of high quality financial services. On its part the Government contributes to reducing the cost of capital through lower deficit spending. This frees resources for private sector borrowing. Chairperson, I wish to strongly encourage the accounting profession to join hands with the central bank and other Government organs in the task of reducing the cost of doing business. In answering the question: The Cost of Capital – Wither the Zambian Financial Markets? – I would say that Zambia has made significant achievements in making the financial markets as properly functioning as possible. In its current state, the banking system, being the dominant player in the financial sector, should embrace competition and offer products and services that can spun growth of the entire economy. The capital market has the challenging task of mobilising small number of participants and limited range of long-term investment products. Despite these challenges I am optimistic that working together, we can reduce the cost of finance in Zambia. The Bank of Zambia will continue to provide the required leadership and act as the catalyst for the emergence of viable and responsible markets to serve the interests of all investors. Ladies and Gentlemen, I wish you success in the deliberations of this conference and in the rest of your endeavours for 2010.
It’s important to keep in mind that the Taylor rule’s theoretical underpinnings are loose, especially compared with the seminal 1979 John Taylor article 10 on optimal monetary policy in a rational expectations model with sticky prices. Indeed, the Taylor rule parameters are not necessarily stable. In particular, consider the intercept term. The usual specification of the rule assumes that this intercept term is a constant 2 percent equilibrium level of the real interest rate. However, it is well known that equilibrium real rates of interest are not constant, and modern macroeconomic models of optimal monetary policy all take this into account. Assuming that the equilibrium real interest rate is constant is just as egregious an error as failing to account for the time-varying nature of the natural rate of unemployment. We all know that mis-specifying the natural rate of unemployment can lead to seriously inappropriate monetary policy outcomes like double-digit inflation in the 1970s. It certainly seems that the fallout from the financial crisis and persistent headwinds holding back economic activity are consistent with the equilibrium real interest rate being lower than usual today. Indeed, if you put any weight whatsoever on the secular stagnation hypothesis that Larry Summers and Paul Krugman have described, 11 an appropriate analysis would recognize lower expected real rates of interest.

Given that all the Swedish banks benefit from the Riksbank’s foreign-exchange reserve, it would not be unreasonable for them to share the costs of maintaining it. If we can price this in an effective way it will also give the banks an incentive to reduce their own currency risks. This would reduce the risks to financial stability in the Swedish economy. BIS central bankers’ speeches  9  It is of course no secret that we are also looking at mortgage loans from the asset side in the banks’ balance sheets. As I have already pointed out, the banks’ risk weights are very low. Finansinspektionen intends to begin applying a risk-weight floor of 15 per cent for the banks’ portfolios of Swedish mortgage loans. The Riksbank supports the proposal for a risk-weight floor of 15 per cent. We also believe that there are good reasons for analysing whether this floor needs to be raised even further. One important reason is that the public sector and non-financial companies would have to bear a large part of the risk if the debt-servicing ability of the households were to weaken. I have also spoken about the risks arising from the fact that a large proportion of the mortgage loans are interest-only loans. In this context, the Swedish Bankers’ Association’s recommendation that all mortgages that exceed a loan-to-value ratio of 75 per cent should be amortised is of course welcome, although one may ask whether this is enough.
The economic performance of the euro area since the mid-1990s Since 1996, the annual growth rate for the euro area has averaged 2.1% per year compared to 3.3% in the US. What are the fundamental causes of this unsatisfactory low trend growth in the euro area? The answers can be found by looking at the factors that determine potential or long-term economic growth, namely 1 : •  The degree of labour utilisation,  •  Productivity growth,  •  And the demographic trends. - Over the period 1996-2006, the euro area witnessed a slight improvement in the utilisation of labour, which increased on average by 0.4% per year (compared with 0.1% in the US) when defined as the total annual hours worked divided by the total population. Labour utilisation reflects the extent to which the potential labour resources in an economy are actually utilised and therefore have a direct influence on output growth. This improvement in labour utilisation mainly reflects the significant rise in the euro area overall employment rate from 58% in 1996 to 64.4% in 2006, accompanied by a decline in the aggregate unemployment rate from 10.7% to 7.9%. Although this is a very encouraging fact, which shows that the positive employment effect we witnessed over the last ten years has significantly helped us to partly counteract the growth differential to the US, one has to remain aware of the inferior starting position of euro area countries.

This fact has been recognized by the markets so that, since the onset of the global alarm about the pandemic, in Chile asset prices have fallen less than they have in other comparable economies. As Central Bank, we are actively working to ensure the full implementation and effect of the measures adopted. At the same time, we will be vigilant on how events unfold, ready to deploy all our instruments to support the economy. At this juncture, however, the actions of one institution alone will not do the job. In recent weeks we have been strengthening our coordination with the Ministry of Finance and the Financial Market Commission, to align rules and incentives so that the funds flow to the most stressed businesses and households. The challenges we face require intensifying this coordination, including a response from the banking system to measure up to the circumstances, and cooperation of the National Congress to speed up the legal reforms that require urgent implementation. Although this emergency affects the day-to-day lives of many people, if we know how to manage it well, with good policies and collaboration of everyone involved, the impact will be temporary and, as the pandemic is controlled, we can all return to our activities as usual. This will allow the economy to recover its growth rate and leave the period of contraction behind. However, for this to happen, it is essential that those needing help to get through this shock obtain it. Households and businesses must have access to credit at a reasonable cost.
With more demand for liquidity and less supply, the cashproviding banks were able to achieve higher, i.e. less negative, interest rates, which led to an upward drift in SARON, shown by the black line in Chart 4. These upward pressures on SARON and other short-term money market rates, while anticipated, were not desirable from a monetary policy perspective. Since last November, the SNB has conducted a number of operations to keep secured shortterm money market rates close to the SNB policy rate. Between November 2019 and July 2020, and in particular since the end of March, we conducted several fine-tuning operations in the overnight segment of the repo market. These operations are shown as red diamonds in Chart 4. In a fine-tuning operation, the SNB places so-called ‘cash provider quotes’ directly on the repo trading platform, which any repo market participant can then ‘hit’ if they choose to do so. When the SNB offers funds at a particular quote, cash takers have no reason to accept liquidity at a higher – that is, less attractive – interest rate. With these fine-tuning operations, the SNB can cap repo rates and limit upward spikes. Since July, we have further supported the gradual convergence of SARON towards the SNB policy rate by auctioning one-month funds on the repo platform. These auctions are depicted as blue triangles towards the right-hand edge of Chart 4. Unlike fine-tuning operations, with which the SNB caps interest rates, the SNB’s one-month auctions offer liquidity on a medium-term basis.

Key among them are the interaction between sovereign debt and banking fragility and the problem of big banks in small countries – of which my country, Iceland, was a prime example and Cyprus is the latest. I will expand on this shortly. The financial crisis and the policy responses to it, especially some of the drastic decisions taken in the heat of intense crisis management, have changed the structure of the financial sector and will do so more profoundly going forward. There are several reasons for this, such as the plain collapse and disappearance of financial institutions, the non-viability of certain business models and practices in the new environment, the need for the financial sector to shrink and deleverage after the real risks in this world had been revealed, the intended and unintended consequences of new prudential regulation, the coming effects of structural regulations that at least partly ring-fence insured deposits and payment systems from the “casino”. Then there is the shrinking of cross-border banking through the retreat of banks  1  See http://www.bis.org/speeches/sp081119.htm  BIS central bankers’ speeches  1  behind their national borders and the weakening and, in some cases, collapse of international financial centres in smaller countries. We can see where this is heading: towards a financial sector that is smaller, less leveraged, less complex, more fragmented, more regulated, and more national.
Indeed, having enough capital and hence being considered robust is – undoubtedly – also in the interest of the banks themselves. Although we dealt with the crisis competently – here, I am referring to the successful bail-out of UBS in autumn 2008 – there is unfortunately no guarantee that our country will come off so lightly in future crises. The Swiss TBTF proposal As the above remarks make clear: big, interconnected financial institutions can destabilise the financial system and an entire economy, with dramatic consequences. How can they be made more secure? And how can the problem of the implicit state guarantee be reduced? The package put together by the Federal Council in Switzerland is precisely targeted at these two questions.2 A central component of the Swiss approach is that systemically important banks should markedly improve their capital base and liquidity positions, both qualitatively and quantitatively, and reduce their risk exposure to other banks.3 This will make systemically important banks more stable in future and reduce the likelihood of them running into difficulties. Furthermore, organisational measures aim to ensure that systemically important functions can continue to be performed during a crisis, while simultaneously liquidating the big bank in an orderly manner. This reduces the need for state intervention. These measures may have different starting points and goals, but they all harmonise with each other.

However, this is exactly what the proposed measures on convertible capital take into account. They create better conditions, so that capital structure will have less influence on a bank’s financing costs. Independently of this finding, it is argued that the reduction of the state subsidy – which is one aim of the new regulation – will lead to an increase in lending rates for clients. There are various arguments against this. On the one hand, structural factors within Switzerland’s banking sector limit the big banks’ scope for setting prices even today: There is a sufficient  5  Cf. Modigliani, F. and Miller, M. H., 1958. The Cost of Capital, Corporation Finance and the Theory of Investment. BIS central bankers’ speeches  3  number of domestic lending providers in the market, which keeps margins relatively low. On the other hand, the reduction in the subsidy will tend to lead to even more competition. The current disadvantage suffered by other banks active in the domestic market is lessened – the package of measures thus levels the playing field in the Swiss customer business segment. In this environment, an increase in lending rates by the big banks would lead to a loss of market share. A reduction in the subsidy is therefore more likely to manifest itself in lower returns on equity or lower compensation for the bank management than in higher lending rates. Empirically, there is no connection between the capital ratio and the credit volume, either.
I have indicated that the Monetary Policy Committee’s decisions on interest rates are announced immediately; and that the minutes of its meetings are published. In addition, the Bank of England publishes a quarterly Inflation Report, which gives a full account of its monetary actions, and their effect, over the past quarter, and a detailed assessment of the forward outlook for inflation, including a projection looking two years or so ahead and an assessment of the relevant upside or downside risks. This degree of transparency is, we believe, important in generating greater public understanding of the stance of monetary policy, as well as better-informed public debate and greater public confidence in the process. BIS Review 110/1997  -2-  7. Closely related is a fourth key feature of the arrangements -- a high degree of accountability by the central bank for its actions. We are accountable in the first instance to our own Court of non-executive Directors, who are specially charged with monitoring the process by which the Monetary Policy Committee discharges its responsibilities. We are accountable also to the government, for which purpose we are required to write an open letter to the Chancellor of the Exchequer if inflation deviates by more than 1% either side of the 2½% target, explaining the divergence and the action taken to bring it back on course -- an open letter, and hence a further element of transparency.

A more standardized contract creates greater certainty and predictability about the characteristics of the financial contracts. When the parties involved are better able to understand their rights and obligations, stakeholders’ confidence in the market would correspondingly improve. In essence, standardization of documentation, products and practices are essential to ensure that the markets are fair, efficient and transparent. Whilst contract and product standardization is encouraged to the greatest extent possible, we also need to be mindful not to let it stifle innovation. As a nascent industry, the need for innovation and competition in Islamic finance is so important that its absence might impede its growth. One important area is the need to appreciate and subscribe to the value of diversity in Shariah. I believe that diversity in Shariah interpretation is the seed to harness innovation in Islamic finance. Diversity in opinions and practices generate wider options for consumers and practitioners. I believe that this is very fundamental. It is also for this reason that Malaysia subscribes to the concept of mutual recognition of the interpretations and decision of Shariah principles reached by a recognized Shariah body across countries. We believe in the need for diversity as it is an impetus for sustainable global growth of Islamic finance. While diversity would create a conducive environment for Islamic finance to prosper, varying interpretations of Shariah within a country can add to the complexity of the operating framework of Islamic financial institutions.