samchain/econo-pairs-v1 huggingface dataset:
As summarised in Table 1: The purpose of the intervention was grounded in the risk to UK financial stability from dysfunction in the gilt market. The Bank’s Financial Policy Committee (FPC) identified this risk and recommended that the Bank take action to safeguard against it; The operation was strictly time limited. The purchase window was open for 13 business days, the minimum period judged necessary (through contact with market participants) for pension and LDI funds to improve their resilience. This hard deadline, though criticised in some quarters at the time, proved critical in driving timely recapitalisation, and also gave policy makers and markets confidence that the time profile would be very different from QE. Similarly, the commitment to unwind the gilt holdings in a timely but orderly way gave confidence that there would be no lasting impact on the Bank’s stock of gilt holdings – the variable voted on by the MPC during QE. [16] Unwind was completed using an innovative demand-sensitive approach over a period of four working weeks – broadly the same time it took to run up the holdings. [17] The operation was targeted only at those assets involved in the LDI adjustment – long-dated conventional and (in the latter phases of the operation) index-linked gilts, whereas QE operations took place across the (conventional) curve; and  Page 10  The operations were subject to a system of backstop reserve pricing, aimed at ensuring we purchased only as many assets as required to resolve the financial stability issue and recatalyse the market.

A temporary and targeted backstop purchase facility for gilts proved effective in ending the firesale dynamic, providing the LDI funds with a window to increase their resilience while minimising risks to public funds, market incentives and the stance of monetary policy – which, unlike in 2020, was now in a tightening phase. [3] In my remarks today, I want to discuss four main lessons that I take from those events: 1. The changing nature of systemic liquidity risk: though focus naturally alights on the idiosyncrasies of the autumn fiscal announcements and the UK LDI sector, the real import lies in the features the events had in common with the dash for cash and other similar developments: another reminder, if more were needed, that we face a new era of liquidity risk, originating outside the banking system, that can amplify shocks, destabilise core markets and undermine monetary and financial stability. 2. Public backstops vs private self insurance: as a central bank it fell to us to provide a public backstop to prevent systemic liquidity risk from undermining monetary and financial stability. At the same time, the events revealed material weaknesses in pension fund and LDI risk management. Given the costs involved, we must ensure public backstops do not end up substituting for a failure to achieve the appropriate level of private insurance against liquidity risk here and elsewhere in the non-bank sector. 3.
Occasional tremors in financial markets had been evident over the past year or so, and again in July this year. It was impossible to tell whether they constituted a gradual release of pressure on risk premia that had become overly compressed, or whether they signalled a more disruptive movement to come. On August 9 the question was answered. As if to highlight the global nature of the crisis, the unexpected revelation by a French bank that its investment funds could no longer value their exposures to US sub-prime mortgage loans produced a sharp reappraisal of the risks they were taking by investors around the globe. The returns demanded by investors on all risky assets rose – from packages of bank loans to plain vanilla company shares – so the prices of those assets fell. And in some markets for complex financial instruments, investors realised that perhaps they did not understand as much about the nature of the risks involved as they should. So not only did asset prices fall, but the markets in some of these instruments virtually closed. There were no buyers. This freezing of capital markets led to a chill in banking systems around the developed world. Banks that had relied on selling packages of loans in securitised form found that they couldn’t sell them. Investment vehicles that held securitised loans have found it difficult to finance their holdings by borrowing.

Faced with the possibility that they would have to finance these vehicles themselves, banks with spare cash have hoarded it and have become reluctant to lend to other banks beyond very short maturities. That has been evident in the spreads between interbank lending rates and central bank interest rates in the UK and equally in the euro area and United States. The bottom line is that banks that had financed themselves by borrowing from their peers, or by securitising and selling their loan assets, found that their funding dried up. In the United Kingdom, Northern Rock was particularly exposed. It was able to borrow only at shorter and shorter maturities. The present financial crisis is of a most unusual nature in that it comes against a background of five years of strong growth of the world economy and a decade and more of remarkable economic stability at home. Moreover, most banking and financial crises in the past – from the failure of Overend and Gurney in 1866, to the collapse of BCCI in more recent times – were associated with bad loans and significant losses on assets. The remarkable fact about this crisis has been the relatively small size of the bad loans compared with the total assets of banks. The crisis has arisen instead from the way banks have managed their liabilities. What did the Bank of England – as the central bank – do for the banking system?
For now, we affirm the monetary policy stance announced in the April Monetary Policy Statement. WHY DID MAS RECORD A FINANCIAL LOSS AND IS IT CAUSE FOR CONCERN? I now turn to MAS' financial results. Let me start with the headline. MAS recorded a net loss of $ billion for FY22/23, reflecting the effects of monetary policy tightening to bring down inflation. This is the largest loss MAS has ever recorded. The loss was due to two factors: negative currency translation effects of a stronger Singapore Dollar; and  4/16  BIS - Central bankers' speeches  high interest expenses from mopping up excess liquidity in the banking system. I will explain these two factors in detail and address some pertinent questions: Is the loss cause for concern for MAS? Could the loss have been avoided or minimised? Does the loss affect the Government Budget? Let me start with currency translation effects. About 70% of the net loss or $ billion was due to the negative currency translation effects of a stronger Singapore Dollar. As we have explained on many past occasions, currency translation effects arise when MAS' Official Foreign Reserves (OFR) which are held in foreign currencies are reported in Singapore Dollars. If the Singapore Dollar weakens against the foreign currencies maintained in MAS' OFR, we will experience positive currency translation effects. Conversely, if the Singapore Dollar strengthens against the respective foreign currencies, we will experience negative currency translation effects.

Central banks have responded decisively to the inflation threat, with the most synchronised and rapid tightening of monetary policy in decades. Headline inflation in most economies has eased from its multi-decade highs. Global supply chain bottlenecks have been largely resolved. Oil and commodity prices have come down significantly. But core inflation is persistent, especially in the advanced economies. Services inflation has yet to show a sustained moderation given ongoing strength in demand and tight labour markets. It will take time for labour market imbalances to be resolved even as tighter monetary conditions gradually cool consumer demand. 1/16  BIS - Central bankers' speeches  In Singapore, growth prospects have dimmed and the economy will operate slightly below its underlying capacity. Growth has perceptibly slowed in recent quarters. The Singapore economy was within a hair's breadth of a technical recession, with sequential growth in Q4 2022 at 0.1% and in Q1 2023 at -0.4%. The two growth engines of the economy in the last three years – manufacturing and financial services – have stalled in recent quarters. Manufacturing is in recession and financial services has stopped growing in sequential terms since the middle of last year. The economy has been supported, however, by the domestic facing industries, including those benefiting from increased travel-related and tourism activity. Growth will remain weak in the near term. Manufacturing and financial services are expected to remain in the doldrums amid the weaker external outlook.
All of that should mean that firms face a more balanced choice between incurring the costs of specialist climbing equipment to climb a particularly steep bit of the mountain and strolling up a somewhat gentler hill instead. The mountain guide The consultation we’ve launched today introduces a new Supervisory Statement to make it much clearer how our expectations change over time for banks as they grow from ‘new’ to ‘mature’. Whilst most of this reflects how we have supervised firms in practice over the past few years, we have brought it all together for the first time so that the mountain path ahead is clear to you all. I won’t set out the entire supervisory regime now. But I did want to draw your attention to three changes introduced by the CP, all relating to capital, and which are designed to deliver a clear path from being a new bank at base camp to being established and on the way to the summit.   First, we are proposing to update how we calculate the capital buffer requirement for new banks. To date this has been based on an unspecified wind down cost calculation. But interpretation by banks has (understandably) been inconsistent, so we are proposing to move to a clear and consistent policy of setting the buffer as six months of operating expenses. This should be enough to allow banks time to find alternative sources of capital or to change their business model if investor support is lost.

The relationship between economic activity and the labour market Each economic cycle is unique, which became particularly clear during the most recent economic downturn. However, there are some patterns that often recur in economic cycles and forecasters have therefore often used them as a base in their forecasting work. For example, it is normal that changes in activity in the labour market occur with some time lag compared with changes in production. This is mainly because it is expensive for companies to adjust production to a new demand situation and to employ and give notice to staff. Firms may therefore initially choose to wait and see whether the change in demand is temporary. This means that the first thing to happen in an economic downturn is that productivity growth falls. Firms gradually adapt to the new situation by reducing the number of hours worked without reducing the number of employees. However, if the downturn is long-lived, the personnel force is also downsized over time. The time lag between GDP and the number of hours worked is usually one quarter in Sweden, while the time lag between GDP and employment is usually twice as long, that is, six months. A well-known relationship between economic activity and activity in the labour market was formulated by Arthur Okun in the early 1960s. 1 This describes a negative relationship between GDP growth and changes in unemployment, which has become known as “Okun’s law”.
But I will also caution that we will forfeit these gains if we once again fall under the spell of the three lies of finance that helped cause the global financial crisis. To resist their siren calls, we must maintain the new institutional frameworks created in its wake. Globally, the most important of these is the Financial Stability Board (FSB). Having agreed all the major international reforms to address the causes of the crisis, the FSB is now pivoting to focus on their timely, effective and consistent implementation. Mindful of history, the FSB is also scanning the horizon to identify and address new vulnerabilities that emerge as the structure of our economies and financial systems change. We know we cannot rest on our laurels. Financial history rhymes all too frequently, with enormous costs to our citizens. We must remain vigilant, resist the three lies of finance, and reinforce some core financial truths. II. THE THREE LIES OF FINANCE “This Time Is Different” The first lie of finance is the four most expensive words in the English language: “This Time Is Different.”1 This misconception is usually the product of an initial success, with early progress gradually building into a blind faith in a new era of effortless prosperity. It took a revolution in macroeconomic policy to help win the battles against the high and unstable inflation, rising unemployment and volatile growth of the 1970s and 1980s.

It is necessary for the communication policy of the Central Bank that the open letters and Inflation Report would be perceived as complementary factors. Role of public sector in inflation targeting strategy It should be reemphasized that the monetary policy should be supported by fiscal policy in order to be able to turn the downward trend in inflation into a long-term and lasting achievement. The fiscal policy can affect inflation through various channels. A particular channel, through which fiscal policy has direct effects on inflation, is the price and tax adjustments in the goods and services produced by the public sector. Making these adjustments in line with a pre-announced schedule or a pre-described rule would diminish  BIS Review 4/2008  3  uncertainties regarding inflation forecasts and thereby contribute to the reputation of inflation targeting regime. The Central Bank sets inflation targets on the basis of the budget projections of public sector. Therefore, while updating the monetary policy stance, the trend of public sector expenditures, which is a very important component of total demand, is closely monitored. Moreover, keeping public sector wage adjustments consistent with the inflation target is very important as the private sector take these adjustments as a benchmark for their own wage adjustments. Due to all these reasons mentioned above, the Central Bank closely monitors the income and fiscal policy implementations, and frequently emphasizes the importance of structural reforms that would enhance the quality of fiscal discipline and predictability of fiscal policies.
Anita Angelovska Bezhoska: The denar was and remains one of the key pillars of the stability of the Macedonian economy Address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, on the 29th anniversary of the monetary independence, Skopje, 26 April 2021. * * * Monetary sovereignty is one of the main components of the sovereignty of any state. Today we mark 29 years since the laying of the foundations of our monetary independence – the day when the denar replaced the Yugoslav dinar, and the National Bank began to function as an independent central bank, facing numerous challenges in those turbulent times of separation from the former Yugoslav state. Looking back through years, we can freely say that the monetary independence took place in an extremely difficult period marked with high macroeconomic instability as its main feature. Frequent exchange rate devaluations, when there were almost no foreign reserves, along with structural problems, ignited inflation, which reached four-digit levels, and all this had strong effects on the economy and the living standards of citizens. The economy has been declining 1996, when economic growth of 1.2% was registered for the first time since independence. Hence, no doubt that establishing a stable macroeconomic environment required great courage, commitment and professionalism of the National Bank team. The efforts of the National Bank, together with other policy makers and the academic community, have played a key role in ceasing the inflation spiral and stabilizing the exchange rate of the domestic currency.

Only a highly professional and independent institution can successfully deal with the hart times, which are not rare here. The latest example of this is the COVID-19 pandemic, which although a struggle for human health and life, is also a struggle for policymakers to maintain macroeconomic stability and reduce the impact on the economy. Therefore, I would like to express my gratitude to all current and former colleagues and collaborators, who with their contribution have contributed to what we are today – a modern central bank that operates in accordance with the latest and highest international standards and best international practices and stands out as a positive example in the central banking community. 1/2  BIS central bankers' speeches  Congratulations on the 29th anniversary of the monetary independence! 2/2  BIS central bankers' speeches
Decisions on the level of monetary policy restraint are always taken under conditions of uncertainty – about the current economic situation and probable future developments, and whether monetary policy instruments will be effective at any given time. This is why responsible and well-informed parties can easily disagree on what is the best course of action at any time. In the Central Bank’s Annual Report, which is available for perusal here, you can see how individual members of the Monetary Policy Committee voted at the various meetings in 2009. The minutes of the MPC meetings reflect the in-depth coverage of economic affairs at each meeting and the issues the Committee deals with at any point in time. I take the liberty of asserting that all MPC members vote as they deem most appropriate in view of current circumstances and the Committee’s objectives. Moreover, I strongly doubt that interest rate decisions based on some other arrangement, where professional views are less important and transparency less, would yield better results. Under the current circumstances, however, decisions on the level of monetary policy restraint are more complex than they generally have been in the past. That complexity stems in part from the fact that it is not clear where we are headed in the immediate future.

Although a great deal remains unknown about what happened in the financial institutions that collapsed and in the preparation of Government responses before and after the crisis struck, we also know a great deal about what was lacking in regulatory framework and supervision – particularly the elements that Iceland shares with many other countries. In the international arena, there has been extensive discussion of the flaws in regulation and supervision, and improvements are being implemented already. The Central Bank of Iceland is keeping close track of this work, not least through its membership to the Bank for International Settlements in Basel and its collaboration in European and Nordic fora. To my mind, the most important weaknesses in this regard – and they are not limited to Iceland – are the following: First, too much attention was paid to risks in individual institutions, while a comprehensive assessment of risk in the financial system as a whole was much less developed. The old adage – that the whole is greater than the sum of its parts – was forgotten. Second, the institutional framework was flawed, in that it did not promote such a comprehensive assessment of risk. It was unclear who was responsible for responding to systemic risk, and there were too few tools for addressing it, such as variable capital requirements and other restrictions to combat lending and asset bubbles and set limits on risk appetite. Third, liquidity risk was underestimated, not least risk related to liquidity management between currencies and financial institutions’ re-financing in foreign currency.
I have also had reason to go over how fiscal policy has been managed, since leaving the Ministry of Finance in 1997 to become head of the National Institute of Economic Research and later General Director of Statistics Sweden in 1999. In June 1999, Finance Minister Bo Ringholm appointed me to assess the reformed budget process. The budget process had been reformed in stages since the end of the 1980s. Following the assessment and with broad political agreement, a Budget Act came into force on 1 January 1997. It contained regulations on, for instance, an expenditure ceiling and guidelines for public expenditure. The main conclusion of the assessment was that the new budget process had functioned well. It had contributed to public expenditure as a percentage of GDP being reduced significantly and to public sector financial saving being turned around from a large deficit to a surplus. Of course, there had been some creative accounting to bring public expenditure under the ceiling, but this was on a relatively small scale. The changeover in exchange rate and monetary policy In 1992, when the fixed exchange rate for the krona could no longer be defended, and we changed over to a floating exchange rate, Sweden found itself in a situation where it had not been since the 1930s. The krona was floating and the fixed exchange rate could no longer function as a nominal anchor for monetary policy.

I have since had reason to go through what happened when confidence was restored in the Swedish economy and economic policy. Despite the decision on budget consolidation essentially being taken by the Government and Parliament in autumn 1994, it took some time before various figures believed it would succeed. The first international recognition of our policy came from the European Commission in spring 1995. I accompanied Göran Persson to Brussels and gave an account of Sweden’s convergence programme to Giovanni Ravasio, who was one of the leading economists at the Commission. Each member state of the EU was to draw up a convergence programme that would show what policy they intended to conduct to achieve stable public finances, low inflation and low interest rates. The Swedish convergence programme was aimed at achieving balance in public finances in 1998, and had the broad support of all of the parties in Parliament with the exception of the Left Party. Ravasio was convinced that the programme was sustainable. 4  BIS Review 21/2006  It was possible to see in the financial markets that the interest rate differential between Swedish and German long-term bonds began to decline in spring 1995 when the Swedish convergence programme had been decided and even more so in autumn 1995, when it had been approved by the EU’s finance ministers. For the Riksbank it took until the beginning of 1996 before short-term interest rates began to be cut. The krona was still weak during 1995 and inflation was close to 3 per cent.