samchain/econo-pairs-v1 huggingface dataset:
And ultimately, where we identify that firms have taken an approach which is not consistent with the aims of the policy, then we will certainly let those firms know. Findings on impact tolerances On impact tolerances it’s clear from our work that, whilst progress has again been made, firms have found this more challenging than identifying IBS. This is in part due to the complexity of defining tolerances for the different regulatory objectives of customer harm or market integrity 3/6  BIS central bankers' speeches  versus safety and soundness, and – for the largest firms – financial stability. For example, we have seen that several of the IBS that have been submitted by firms were accompanied by an impact tolerance for customer harm or market integrity but did not include one for safety & soundness, and an even higher number did not include one for financial stability. These are gaps which we expect firms to fill as a matter of priority. We also noted that the granularity with which firms defined their IBS impacted the tolerances they then defined.

ii) Impact Tolerances The second is the requirement for firms to set impact tolerances for their IBS. Here, we expect firms to assume that disruption to IBS will occur and then set clearly defined time-based metrics, and well defined thresholds, at which the disruption would threaten regulatory objectives. iii) Mapping and Testing The third area is, following the identification of IBS and setting impact tolerances, we expect firms to perform mapping and testing so they are able to demonstrate their ability to stay within their impact tolerances. Firms’ testing strategies should incorporate the risks and vulnerabilities they will face in severe but plausible scenarios and then demonstrate how they will remediate any disruption in a timely manner. The experience gained from this testing can then inform how firms monitor risks to their operational resilience and increase the maturity of their overall processes. Policy interactions For the recent March 2022 deadline, firms had to meet the first two of these elements, namely identifying the IBS and setting impact tolerances. Looking ahead to the next key deadline, which is in 2025, firms will have to prove that they are able to remain within the impact tolerances that they have set out, and this is where the assurance gained from high quality testing will be key. I would also like to highlight the interaction of these expectations with the PRA’s outsourcing and third party risk management policy2, which was published at the same time as the policy on Op Res.
Svein Gjedrem: The krone exchange rate and competitiveness in the business sector Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to the Federation of Norwegian Process Industries, Oslo, 29 April 2004. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 21 April, Inflation Report 1/04 and on previous speeches. The charts can be found on the Norges Bank’s website. *  *  *  The primary objective of monetary policy is to ensure nominal stability. There were wide fluctuations in the Norwegian economy in the 1970s and 1980s. Economic developments were marked by high and variable inflation. Inflation rose gradually and it took a long time before it fell. The absence of a nominal anchor was one of the main reasons behind these pronounced swings in the Norwegian economy. With a policy of low interest rates and devaluations, inflation took root. Nominal interest rates were kept at a low level even though inflation and the value of tax-deductible interest expenditure rose. Frequent devaluations from 1976 were not able to prevent a decline in the manufacturing sector. On the contrary, they proved to be self-reinforcing. The wide fluctuations culminated in a credit boom in the mid-1980s, and a rise in costs as a consequence of the spring 1986 wage settlement. A pronounced downturn and high unemployment followed at the end of the 1980s.

Among other things, an integrated approach analyzes and plans for the impacts of disruptions on suppliers and customers from an operational as well as reputational perspective. Integration broadens the focus from the availability of infrastructure (e.g., the servers are up and the facilities are accessible) to successful organizational outcomes (e.g., the organization is able to deliver products and services). In the current threat environment, achieving resilience is as much about protecting the integrity and confidentiality of information as it is about maintaining availability. An integrated plan delivers coordinated and coherent responses to incidents, including ones of significant scale, complexity, and surprise that can overwhelm normal control systems.6  The Complexity of Control The second resiliency challenge is the complexity of control. To improve resilience, we seek to control outcomes, and risk management has a lot to say about control. A simple story about 2/5  BIS central bankers' speeches  control goes like this: when we are setting up a business process, we look for sources of problems and start adding controls. Mainly, we’ll create controls to prevent problems. But, recognizing that there will be times when prevention doesn’t work, we also put in place controls to detect problems and then correct them. Once the process is up and running, if problems come up that we didn’t expect, we add additional controls to prevent those problems from happening again. I wanted to go through some examples of how this doesn’t always work well in practice.
One example is the work involved with preparation for the Millennium date change, in which the Bank was heavily involved in ensuring that the UK financial system was ready; this work certainly brought home to me the reliance on IT and the huge variety of interconnections between different systems. While IT networks and improvements in communications have allowed provision of financial services more cheaply and efficiently, they have also brought financial markets around the world closer together. This trend to globalisation has been beneficial to the UK. Net investment income and profits from overseas make an increasingly large contribution to the UK balance of payments, going some way to offset the deficit on traded goods. However, with global markets, shocks in one part of the world are transmitted more quickly to other financial systems. The most recent example was the Asian crisis, starting in the summer of 1997 in Thailand; and spreading to Korea which had to seek outside support in December of that year. As turmoil spread through financial markets in the region, within a year equity markets had halved in value with a similar depreciation in exchange rates. Conditions were further exacerbated in August 1998 by the default on Russian government debt, fuelling further fears about emerging market debt. The flight to quality this prompted contributed in turn to the collapse of one of the large US hedge funds, Long-Term Capital Management. The events of 1997 and 1998 brought home the complex linkages between financial markets in a global economy.

To give another example, under the transposition of the second European Payment Services Directive (PSD2) in 2018, third-party payment service providers – which do not hold client funds – are subject to reduced annual reporting requirements. However, this proportionality does not mean being less demanding, especially with regard to the fight against money laundering. The general principle of “same activity, same rule” must apply. Indeed, it is in the Fintechs’ own interest that we should help them to apply the regulatory framework. We also want to help them when new rules are put in place. Under the PSD2 framework, the ACPR was the first European authority to grant authorisations for payment initiation and aggregation services. In total, it has authorised more than 20 actors to offer these new services since 2018. It has also worked to promote the development of open banking, by making sure that all actors can work together on the deployment of APIs. The eight workshops this afternoon, led by experts from nearly all of the ACPR’s directorates, are testament to the focus we place on teaching and informing. But if we can do even better, even more, tell us today. I shall finish by focusing on the ACPR-AMF Fintech Forum which is what brings us here today. Created in 2016, it is a forum for exchange which we try to make as efficient as possible by setting up, where needed, targeted working groups to make concrete progress on key topics.
They will again be put to the test when the terms-of-trade change is reversed and the gains either fully or partly dissipate. Monetary policy in Norway is oriented towards low and stable inflation. Low and stable inflation provides enterprises and households with an anchor for inflation expectations. Given that there is confidence in the nominal anchor, monetary policy shall also contribute to stable developments in the real economy. Norges Bank therefore operates a flexible inflation targeting regime. This means that weight is given both to variability in inflation and variability in output and employment in interest-rate setting. Monetary policy is facing particular challenges. Inflation has been considerably lower than the inflation target during the past three years. During the same three-year period, economic growth has been high, and higher than our estimate for long-term growth potential. The output gap has shifted from negative to positive. Unemployment is low and falling, and the increase in house prices, equity prices and credit has been high. Monetary policy has been and continues to be expansionary. Real interest rates have been low, and considerably lower than what is regarded as a neutral level. The expansionary monetary stance must be seen in the light of the fact that inflation has been very low and that there was idle capacity for a longer period. BIS Review 49/2006  1  The economy is periodically exposed to unexpected supply- and demand-side disturbances that affect both inflation and output.

They can also be seen through less direct linkages such as confidencerelated behaviors that are manifest in higher haircuts and margins or reluctance to do business with certain firms or types of firms, uncertainty about the true health of a firm, or the impact of fire sales on the valuation of a broad class of assets held by a broad range of investors. The fact that these costs are external to a given financial firm can lead to excess risk-taking. BIS central bankers’ speeches  3  The realization of these externalities during the financial crisis has had a profound impact on the Federal Reserve’s approach to supervision. Most specifically, they provided the practical experience to support the conceptual case for tightened prudential requirements for the largest, most systemically important institutions. This focus is seen in the mandate from the Dodd-Frank Act for the Federal Reserve to implement enhanced prudential standards, including higher capital standards, to mitigate the risks posed to financial stability by systemically important financial institutions. For example, both the Basel Committee for Banking Supervision and the Federal Reserve System have identified factors that contribute to a financial firm’s systemic importance through these types of externalities. These mechanisms are proxied for by observable metrics such as the size of the balance sheet, interconnectedness between firms, complexity of the business, cross-jurisdictional activity, short-term wholesale funding, and substitutability of certain activities.
As a case in point, the Bank of Tokyo-Mitsubishi recently acquired a microfinance bank in Cambodia, using the Bank of Ayudhya in Thailand as a base for the acquisition. Such financial linkages will serve Japanese enterprises and tap opportunities in one of the region’s exciting emerging markets. The strong presence of Japanese financial institutions in the region will surely be an important conduit for non-financial companies in Japan to leverage on the promising prospect of the GMS region. Ladies and gentlemen, We have indeed come a long way and have gone through several tests of external disturbances. Let me assure you that the Bank of Thailand will continue to strengthen our macroeconomic resilience and stay firmly committed to financial stability as one of our principle mandates. We also embrace continuing reforms and upgrades in the financial sector to remove obstacles to the development of regional trade and investments. We are confident that Japan, Thailand and the region can mutually benefit from broader and deeper linkages, both economically and financially. With stronger economic and financial ties, I am excited to see how we, together, will move the region forward and continue to work closely in the global arena. Again, it is my great honor to be here tonight with our close and longtime friends who have supported Thailand’s economic and financial development. Thank you very much for your friendship, your commitment, and your contribution to the Thai economy. I look forward to further cooperation between our countries for many years to come. Thank you very much.

Allow me to highlight some of our resilient features: •  We continue to have a strong current account position with the current account last year registering a surplus of 9 percent of GDP, or around 35 billion US dollars, thanks largely to a substantial saving on energy imports. •  Our international reserves have been at a healthy level, standing at three times of the short-term external debt we hold. •  Our capital markets are relatively less exposed to the risk of capital flight, with foreign holdings at less than 9 percent of the Thai government and Bank of Thailand bond outstanding, compared with more than 30 percent in some other emerging markets in the region. •  External debt of the Thai corporate sector has been relatively low, hovering around 13 percent of total corporate debt. And, most of the external debt belongs to large corporations which have used the proceeds to finance their investment aboard and are able to manage their exchange rate risks sufficiently well. As a result, the currency mismatch does not pose a threat to the Thai corporate sector, unlike what they experienced during the 1997 economic crisis. Taken together, the strength of Thailand’s external position on many fronts has helped the Thai economy withstand the recent global financial turmoil, and would continue to provide cushions against possible external shocks in the future. Nevertheless, it would be a mistake to be complacent with where we stand and fail to anticipate greater challenges ahead.
“Recent developments in the Chilean Financial System and Challenges ahead” Rosanna Costa, Governor of Central Bank of Chile Chile Day – December 12 and 13, 2022 – London, United Kingdom Good morning distinguishes authorities and dear friends. I am going to talk about the recent developments in the financial system in Chile and the view of the Central Bank of the challenges ahead. Introduction In December of last year, the former Governor of the Central Bank of Chile (and nowadays the Minister of Finance) presented in this very same forum in London about the developments and prospects of the Chilean economy. By then, our country was going through a process of strong recovery from major shocks that affected our economy: first the social unrest of 2019 and then the pandemic of Covid-19. Therefore, the discussion last year focused on the aftermath of the pandemic and the different measures that were adopted by the Central Bank and the government to mitigate its effects on the real economy. Since July 2021, the Central Bank has been hiking the monetary policy interest rate, due precisely to strong pickup of household consumption driven by governmental aids and pension funds withdrawals. A year ago, the Central Bank also raised a note of caution for 2022 and 2023 due to the weakening of the capital markets, identifying several factors including the reduction of long-term savings due to pension withdrawals and its impacts on access to long-term financing for companies and individuals, risk of fiscal deterioration and persistent uncertainty, among others.

As part of this process, in 2021 and in accordance with the definitions of the General Banking Law, a policy framework was published by the Central Bank to implement the Countercyclical Capital Requirement. The CCyB is the main macroprudential policy tool under BCCh authority, and BCCh-CMF coordination. As applied, the objective of this bank capital requirement is to increase banks’ resilience in the face of severe stress scenarios, resulting from systemic risks, thus contributing to reduce the impact of these events on financial stability, avoiding restricting essential banking services, such as credit supply, hence protecting the economy. The BCCh has so far not activated this requirement. As indicated in our latest Financial Stability Report, the banking system shows resilience, with contained risks and high levels of provisions, liquidity and capital that constitute sufficient buffers to withstand severe stress scenarios. Moving forward, it is necessary to advance in the coordination processes between the Central Bank, the CMF, and the Financial Stability Council to consolidate over time the implementation of these new tools within a framework of macroprudential regulation that follows international guidelines. 14  As we continue to observe the experience of jurisdictions that started the implementation of Basel standards before we did, we believe that the challenging last 3 years will provide extremely valuable information regarding the effectiveness of capital and liquidity measures implemented by Basel III and international standards.
Normalisation of the Swiss franc money market The effect of the monetary policy crisis measures introduced in recent years was also felt in the area of monetary policy implementation. By buying foreign currency against Swiss francs, we created a structural liquidity surplus on the Swiss franc market. We have since largely reabsorbed this excess liquidity via a set of instruments that are already well established. Liquidity is absorbed, on the one hand, through weekly issuance of the SNB’s own money market bills (SNB Bills) with terms of 4, 12, 24 or 48 weeks, and on the other through daily one-week repo transactions (cf. chart 4). We are currently using both instruments to absorb around CHF 140 billion of liquidity, of which some CHF 110 billion is accounted for by SNB Bills. This brings banks’ sight deposits, which ultimately determine the level of interest rates on the money market, to around CHF 20 billion. Compared to the period prior to the financial crisis, this level of liquidity is still high. However, our experience with liquidity-absorbing operations shows us that we can reabsorb the excess liquidity at any time. This allows us to manage the three-month Libor. There is a liquidity overhang in the banking system as a result of the interventions. This does not pose a problem for monetary policy, as we reduce the monetary base directly through the liquidity-absorbing operations.

As Chart 7 shows, in the housing market for example there is a clear difference between the biggest UK banks and the rest; we saw a big increase in lending especially by foreign banks in the years 2006 and 2007; many of them have now withdrawn from the market. On top of that, of course Northern Rock and Bradford and Bingley have largely ceased new lending. As a result the continued lending of the main banks – and some smaller banks and building societies – is offset by reductions elsewhere. What matters for the economy as a whole of course is the total flow of credit. BIS Review 5/2009  3  The policy challenge Nearly all economic policy decisions work with a lag. So there is a limited amount we can do at this point to influence the path of output in the first half of this year (although there may be ways of mitigating the costs). The main challenge now is to prevent a deep recession being unnecessarily prolonged. I want to conclude by making three points about that challenge. First, the full impact of the measures of the last few months have yet to be felt. In the UK, the Bank has cut interest rates from 5% to 1.5% since October, the government has cut taxes and expanded spending and the banking system has been supported through recapitalisation and improved access to funding and liquidity. These measures will have a growing effect, even if we do nothing more.
Interest rate premiums on bonds were pushed back during the pandemic and mortgage ratesfell marginally Basis points and per cent  Note. The bond rates refer to a 5 year maturity, difference against the expected policy rate (see footnote 7). Mortgage rates are an average of actual rates for new and renegotiated mortgages from Länsförsäkringar Bank, Nordea, SBAB, SEB, SHB and Swedbank. Sources: Bloomberg, Macrobond, Refinitiv, respective mortgage agents and the Riksbank. The housing market developed unexpectedly strongly during the pandemic Third, there are indications that the unusually low risk premiums for covered and corporate bonds had an impact on the behaviour of households and companies. The right panel in Figure 9 shows that the interest rate on household mortgage loans fell marginally in 2020 and 2021, despite the Riksbank having raised the policy rate just before the pandemic. In spring 2020, we feared that the housing and property markets – where indebtedness was high and where growth had been rapid – could be severely affected by the pandemic, which could ultimately jeopardise financial stability.24 However, the support measures, partly through expectations of continued low interest rates and easing the amortisation requirements from Finansinspektionen, seem instead  22  See Alsterlind (2021) for a more detailed analysis of how the risk premiums on covered bonds disappeared when the Riksbank's purchases began.

The recent rapid interest rate increases show instead that the central banks do not hesitate to raise interest rates, despite the fact that this entails losses on their balance sheets. Bernanke (2020) says that the signalling channel has been important, but thinks that it works differently. According to him, market participants rely more on central banks' communication on future asset purchases than on their communication on future interest rate decisions. In addition, they expect the central bank not to raise the policy rate while an asset purchase programme is still in progress. By communicating a purchase programme with a certain duration, the central bank can therefore keep interest rate expectations low.18 Signalling in this way has hardly been important in Sweden, at least not as a conscious strategy on the part of the Riksbank. This is because the market's interest rate expectations during much of this period were lower than the forecast for the policy rate published by the Riksbank. This was most evident when the purchases started in February 2015, as shown in Figure 6. If our ambition was to push down expectations of the future policy rate, this should have been reflected in a lower forecast for the policy rate.19  18 I find it difficult to see the logic of this reasoning (why is central banks' communication on asset purchases  more credible than their communication on interest rates?) but recognise it from expectations that I have sometimes heard expressed by market participants.