samchain/econo-pairs-v1 huggingface dataset:
Jean-Pierre Danthine: Credit – is the sky the limit? Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the International Center for Monetary and Banking Studies, Geneva, 16 April 2013. *  *  *  I would like to thank Claudia Strub and Till Ebner for their very valuable support in drafting this speech and for the underlying analysis of the topic. I would also like to thank Robert Bichsel for his helpful comments. 1. Introduction  The Swiss Federal Council has recently decided to activate the countercyclical capital buffer (CCB) acting on a proposal by the Swiss National Bank (SNB). The key feature of this new tool is to counter the “pro-cyclical” behavior of financial institutions whose collective action can be a source of systemic risk. To this end it requires banks to temporarily increase the level of capital they must hold as a backing for mortgage loans on residential property. In doing this, Switzerland is one of the first countries to make effective use of a tool advocated by the international community as a means for preemptively dealing with cyclical risks to financial stability. What was the motivation for activating this instrument? The main goal of the CCB is to increase the resilience of financial institutions against the background of imbalances in the domestic mortgage credit and housing markets that have been building up gradually over the last several years.

If the individual members sent out different signals it was probably also difficult to distinguish a clear message from this "cacophony of voices", to quote Professor Blinder again. This type of problem seems rather unnecessary. A central bank should be able to be so clear with regard to its view of the future that there should be no need for loosely-grounded speculations and interpretations – it should not be necessary to be a Kremlinologist to interpret the Riksbank. We hope that we have solved this problem with our new way of working. A further weakness of the earlier signalling process concerned the responsibility the Riksbank has in its role as independent authority. It is a question of democracy. This responsibility includes, for instance, the fact that the general public must have good insight into the decision-making process – the decisions at the monetary policy meetings must be made in a correct manner. This is why minutes are taken at the monetary policy meetings and then published, and the chairman and deputy chairman of the General Council of the Riksbank have the right to attend the Executive Board meeting. There must be no doubt that the interest rate decisions are actually made at the monetary policy meetings and not at some other point in time – in some informal way that prevents insight. If the signalling prior to the meetings leads people to believe that the interest rate decisions have been made in advance of the meetings, then doubts may arise.
(…) With credit and money markets essentially frozen and equity prices plummeting, banks and other financial firms saw their access to funding eroded and their capital shrink owing to accumulating mark to market losses.” The Lehman bankruptcy had triggered a widespread crisis of confidence. Among other repercussions of the Lehman Brothers collapse, the above-mentioned virtually completed sale of Glitnir assets did not materialise. This kicked off the well-known chain of events. Glitnir turned to the Central Bank for assistance. Not only was the bank unsuccessful in its attempt to sell assets, it was unable to renew a bank loan that it had expected to extend without any difficulty. Ultimately, the Government decided that the Treasury should acquire a majority holding in Glitnir, but before that could be finalised, the bank collapsed. In early October, there was substantial pressure on Landsbanki’s deposit accounts in London, and the British Financial Services Authority (FSA) steadily tightened the demands it made on the bank. Landsbanki’s liquidity difficulties became insurmountable, and it was clear that rescuing the bank would not represent prudent use of the Central Bank’s foreign exchange reserves. The amounts involved were simply too large. By this time, only Kaupthing remained of the three large banks. In view of the prospects for Kaupthing’s liquidity, the bank was deemed likely to survive the storm. On the basis of that assumption, the Central Bank, after consulting the Government, granted Kaupthing a collateralized fourday loan that should have sufficed – as things stood then.

In these funds, the cost is the risk of suspension or the risk of dilution as other investors exit first. The opacity of those costs tilts the investment playing field towards funds that offer daily redemption. And that tilting of the playing field could have been a barrier to the opportunity to invest in the most illiquid assets – assets that require great patience, such as infrastructure, private equity or venture capital. The fund industry itself notes that funds offering daily dealing are “not realistic for funds investing in highly illiquid assets”. 20  See report by the Task Force on Climate-related Financial Disclosures (June 2019): ‘2019 Status Report’. See report to Government by the Green Finance Taskforce (March 2018): ‘Accelerating Green Finance‘. See page 49 of the Investment Association UK Funds regime working group report (June 2019) ‘Final report to HM Treasury Asset Management Taskforce’. 18 19 20  11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  So the unlevel playing field could have been a barrier to greater investment in patient forms of capital – a central tenet of the government’s framework for raising productivity.21  For a fair and transparent fight, the risk of suspension or dilution would be properly factored into the pricing and redemption terms of open-ended funds. If that were the case, those funds that invest for the long term and require more patience from investors could look relatively more attractive.
§  Progress in these areas, even if only incremental, will have important implications for what is possible and necessary in the future. For example, having stronger bank and corporate balance sheets, with lower leverage, expands the scope for using interest rates and asset price adjustments as stabilizing devices. Better liquidity management at both the micro and macro levels - - longer maturities, and greater reserve coverage and back-up financing - - will create margins to ride out financial shocks. And more  5  effective insolvency regimes would make decentralized workouts more feasible, particularly in cases where systemic stress is better contained. •  The approach to crisis management and resolution also needs to be creative. In part, this can be accomplished by relying as much as possible on the efforts of debtors and private creditors to work things out on their own. The perception in some circles that private creditors are not interested in resolving payment problems expeditiously is mistaken, and stands at odds with recent experience. If nothing else, investors are interested in restoring liquidity to debt instruments in order to move on to new opportunities. There is also scope for exploring creative market-based ways to lever in private participation and stretch the impact of public sector funds. G  •  The various experiences since the late 80s with buybacks, partial guarantees, and debt exchanges provide some hints for how targeted deployment of public moneys can spur tendencies in a direction consistent with public policy goals.

Turkey has a good record for structural issues. We have liberalized the trade and capital accounts of the balance of payments for about two decades. We have a flexible labor market. High domestic savings is one of the main characteristics of the economy. Market oriented economy is another aspect of the structural component of Turkey. Right now, Turkey has four important structural reforms on its agenda, not only as a part of the disinflation effort but also because they are essential for changing the environment. Thus, these structural reforms are vital for adapting to the changing global environment. They consist of reforming the banking sector, the social security system, agricultural subsidies, and privatization. Some of these reforms have already been approved by parliament, and the others are in the pipeline. The new Banking Act which was approved by parliament in June has the following four general objectives: •  to close the legal loopholes;  •  to implement the international supervisory regulations;  •  to assign the supervision of banking organizations to an independent agency; and  •  to make some adjustments regarding the process of founding and operating banks. In particular, the twenty-five Core Principles for Effective Banking Supervision drawn up by the Bank for International Settlements in 1997 have been endorsed in the amendments to the Banking Act. As a result, the amendments are consistent with modern principles of effective banking supervision.
Given how significant the monetary system is, it is only right and proper that the associated developments are also the subject of regular public debate. With this conference dedicated exclusively to the issue of sound money, you are making an important contribution in this regard. Sound money is a fragile accomplishment, and is thus essentially always at threat. However, against the backdrop of the global financial crisis, concerns that our good money could turn bad have increased markedly across broad sections of society in recent years. On the one hand, this is understandable. Central banks’ crisis management has led to an extraordinary expansion in money supply and interest rates are at record lows – in the past, these phenomena have often been indications of imminent inflation and thus currency depreciation. On the other hand, it is a demonstrable fact that the value of money has never been as stable as it has been in the past 20 years (cf. chart 1). Viewed from this perspective, central banks’ expansionary monetary policies have simply satisfied the enormous demand for central bank money. The strength of this demand is actually testament to a high level of trust in central banks. The fact that inflation has been held in check for so long may also explain the increasing popularity of ideas from an entirely different perspective. The proponents of modern monetary theory would like to see central banks being put at the service of state financing.

Added to this, public finances are in good shape as far as debt is concerned, which reduces the political pressure on the SNB. The value of bank deposits in Switzerland is stable because the value of its central bank money is stable, because the banks are operating prudently, and because the regulation of the banking system is centred on stability. The strong capital base and high liquidity of the banks in Switzerland increase the resilience of the system in times of crisis and promote confidence among depositors. Both of these factors contribute to bank deposits retaining their value. Current monetary policy and the role of central bank balance sheets Our findings are therefore rather reassuring. In Switzerland, central bank money and bank deposits are essentially sound money. However, there is no guarantee that this will always be the case. Or, to put it in somewhat more pointed terms: will the expansionary monetary policy that the SNB has been following for some years jeopardise the solidity of the Swiss franc in the future? Issuing too much central bank money can indeed undermine the foundations of sound money, especially if the money is created to solve political or structural problems. However, the unprecedented expansion in the monetary base in recent years does not pose a particular threat to the stability of the Swiss franc’s value.
Going forward, I would not be surprised to see Puerto Rico’s exports rise further as your companies take advantage of the opportunities presented by the rapidly emerging economies. At your upcoming forum and summit, you’ll learn more about how to develop export markets for your products. I applaud your efforts to do so, as an important component of sustaining the vigor of the economic recovery in Puerto Rico. The long view and the New York Fed’s role Although the signs I’ve mentioned suggest that the recession is over, the road to sustained economic growth is likely to be challenging in the near term. In its favor, Puerto Rico has some important intrinsic advantages. These include natural beauty, a hospitable climate and unique status as a major U.S. economic and population center in the Caribbean. Perhaps just as important, the island has a relatively well-educated workforce. Research shows quite convincingly that abundant human capital is an important ingredient for a thriving economy. We at the New York Fed aim to do our part to help sustain growth in the Commonwealth. For example, we co-sponsor a financial awareness video competition for college students here and the Community Reinvestment Act Week activities with the Puerto Rico Bankers Association. And, as a member of the Alliance for Economic and Financial Education we promote economic and financial education via teacher training, a high school economic competition, and a speaker series. The New York Fed also has several ongoing programs of technical assistance in Puerto Rico.

This is where a robust carbon market comes in. Carbon credits are essentially tradable certificates that represent the reduction, avoidance, or removal of a certain amount of emissions from the atmosphere. Firms can buy these credits to offset hard-to-abate emissions. To efficiently match the demand for carbon credits with the supply of these credits, we need a robust carbon market. In so doing, a carbon market becomes an important mechanism to channel funds to the emission reduction and removal projects that generate the carbon credits. Adopting a twin strategy of reducing and offsetting carbon emissions is a practical and effective way to reach our climate goals in time. Given Asia’s transition needs, a well-functioning carbon trading ecosystem is particularly relevant to the region’s decarbonisation effort. There are two types of carbon markets: The compliance carbon markets support the trading of emission allowances by entities subject to mandatory targets set by national, regional or international emissions reduction regimes. The voluntary carbon markets, on the other hand, are not tied to emissions trading systems or regulatory requirements. Any company or individual can purchase carbon credits to offset their own carbon footprint voluntarily. In our journey towards a greener world, voluntary carbon markets are expected to play a more impactful role. First, the voluntary market can cater to a wider group of firms and individuals. Emissions trading systems tend to cover sectors with higher emissions and so not all firms participate in the compliance carbon market.
If things go really wrong, the result may be a financial bubble that – just like any bubble – sooner or later bursts, with dramatic consequences. Those with practical experience of financial markets will readily find themselves at home in this new theoretical and empirical analysis. In the 1990s there were a number of bubble-like developments where prices ceased to mirror fundamental values. The one that comes to mind first is perhaps the IT 7  See De Bondt, W.F.M. & Thaler, R. (1985), Does the stock market overreact?, J. of Finance 40, pp. 793–805; also Jegadeesh, N. & Titman, S. (1993), Returns to buying winners and selling loosers: implications for stock market efficiency, ibid. 48, pp. 65–91. 8  Cutler, D. Poterba,J. & Summers, L. (1991), Speculative dynamics, Review of Economic Studies 58, pp. 520–546. 9  See e.g. Tversky, A. & Kahneman, D. (1974), Judgement under uncertainty: heuristics and biases, Science 185, pp. 1124– 1131. 10  Shiller, R. (2000), Irrational Exuberance, Princeton University Press, New Jersey. 11  Janis, I.L. (1982), Groupthink (2nd ed. ), Houghton Mifflin Co., Boston. 12  Babad, E. (1987), Wishful thinking and objectivity among sport fans, Social Behavior: An International J. of Applied Social Psychology 4, pp. 231–240. 4  BIS Review 5/2001  bubble.

I trust this regulation will be approved shortly, in accordance with the objectives set by the new European Commission, and that this taxonomy will finally provide us with a common definition of what may be considered “environmental” or “sustainable”. The role of supervisors – external initiatives As supervisors, we clearly have responsibility for urging on these changes. We need to be proactive; in particular, we need to enter into a dialogue with banks to analyse how they are incorporating environmental risk. At the Banco de España we are intent on pressing ahead with this dialogue. Let me mention just a few examples of recent steps taken. To assess the level of preparation for environmental risk, we conducted a survey among the 12 banks directly supervised by the SSM and several other smaller banks. Subsequently we discussed the survey findings with the participating banks, conveying to them the importance of this issue and the supervisory expectations. According to the survey findings, many banks that were already explicitly considering environmental risk have included it in their social responsibility areas. Almost all have a team dedicated exclusively to Sustainable Finance and some also indicate that they have established specific committees, reporting in some cases to the Area General Manager or Corporate Secretary and in others directly to the Board of Directors. 4  In general, the Green Bond Principles are updated once a year, to reflect the latest market developments.
According to Statistics Sweden’s first preliminary compilation of the National Accounts for the second quarter of this year, Swedish GDP increased by 1.2 per cent, compared with the first quarter (seasonally-adjusted). This is slightly more than the 0.9 per cent we have assumed in our report, and also slightly more than other forecasters have expected. GDP has thus increased for five quarters in a row and has recovered half of the large fall totalling 8 per cent that took place during the previous five quarters. (Figure: GDP per quarter). The picture of continued good growth is also supported by the National Institute of Economic Research’s Economic Tendency Survey, which was presented at the end of July. Although the indicator fell between June and July this year, the fall was marginal and the indicator still points to the mood among companies and households being much stronger than normal. (Figure: Economic Tendency Survey). The purchasing managers’ index in Sweden rose to 64.2 on the other hand, which can be compared with a figure of 62.4 in the previous month. It was primarily increased orders and production that contributed to the rise. (Figure: Purchasing managers’ index). Moreover, new statistics show that industrial production has continued to increase strongly, and slightly more than market expectations, while the production of services has remained at an almost unchanged level. However, industrial production is still far below the earlier peak levels. (Figure: Industrial and services production). Brighter labour market The recovery in the labour market has also continued.

Since April the IMF has also made an upward adjustment to its forecasts for this year’s global GDP growth. However, the IMF is expecting much higher GDP growth in what is known as the BRIC countries – that is, Brazil, Russia, India and China – than in the more developed countries. (Figure: GDP growth in the BRIC countries). BIS Review 109/2010  1  Growth in Asia was also very strong at the beginning of the year. During the first quarter, the Asian growth economies expanded by the equivalent of an annual growth rate of 10 per cent. It is primarily demand from China that has benefitted other countries in the region. However, new statistics for the second quarter imply that China’s GDP growth has slowed down, compared with the first quarter, which may imply some slowdown in Asia. GDP in Japan was also lower than expected during the second quarter of this year. Growth in the USA slowing down The US economy is also growing at a good rate after the GDP fall in 2009: our latest forecast is that GDP in the United States will increase by 3.2 per cent this year. One reason for this is the strong economic policy stimulation. However, our assessment at the end of June was that growth will slow down somewhat in 2011 and 2012, as the effects of the economic policy stimulation in the United States wane. (Figure: GDP growth in the USA).
Luis M Linde: Results of the comprehensive assessment of the euro area banking system Address by Mr Luis M Linde, Governor of the Bank of Spain, at the press conference presenting the results of the comprehensive assessment of the euro area banking system, Bank of Spain, Madrid, 26 October 2014. * 1. *  *  Introduction  We have called you here today on the occasion of the publication of the Comprehensive Assessment results for significant banks in the euro area, which has been conducted as a prior step to the start-up of the Single Supervisory Mechanism on 4 November. I believe the press conference and the material published by the ECB provide a rounded view of the overall results of the exercise. The aim of this conference is to offer you an analysis of the data from the standpoint of the Banco de España, and of the Spanish banking system. Two clear messages emerge from the information published today: Firstly, at European level, despite its great complexity, the exercise has unfolded successfully and has met its main objectives: to improve transparency regarding the situation of European banks, to identify potential weaknesses in their balance sheets and contribute to strengthening their solvency. Secondly, the outcome of the Comprehensive Assessment highlights the fact that the reform and restructuring of the Spanish banking system in recent years has borne fruit, and that Spanish banks now face the future with healthy balance sheets and a sound solvency position. 2.

See  also Nina Boyarchenko, Richard Crump, Anna Kovner, Or Shachar, and Peter Van Tassel, "The Primary and Secondary Market Credit Facilities," Liberty Street Economics (May 26, 2020). 14 Information on the Term Asset-Backed Securities Lending Facility ("TALF") is available on the Board of Governors' public website and the New York Fed's public website. 15 Information on the Federal Reserve's Municipal Lending Facility ("MLF") is available on the Board of Governors' public website. See also Andrew F. Haughwout, Benjamin  G. Hyman, and Matthew Lieber, "Helping State and Local Governments Stay Liquid," Liberty Street Economics (Apr. 10, 2020). 16 Information on the Federal Reserve's Main Street Lending Program is available on the Board of Governors' public website and the public website of the Federal Reserve  Bank of Boston. https://www.newyorkfed.org/newsevents/speeches/2020/hel200625  3/4  The Federal Reserve’s Pandemic Response - FEDERAL RESERVE BANK of NEW YORK 17 Board of Governors, "Federal Reserve Board announces it will be seeking public feedback on proposal to expand its Main Street Lending Program to provide access to credit  for nonprofit organizations," Press release (June 15, 2020). 18 Daleep Singh, "Implementing the Fed's Facilities: Moving at Maximum Speed with Maximum Care" (Apr. 17, 2020). 19 Michael Feroli, "Fallout from COVID-19: Global Recession, Zero Interest Rates and Emergency Policy Actions" (Mar. 27, 2020). 20 12 U.S.C. § 343(3)(B)(i). 21 Id. at § 343(3)(B)(iv). 22 See, e.g., Lev Menand, "Unappropriated Dollars: The Fed's Ad Hoc Lending Facilities and the Rules That Govern Them," Law Working Paper No. 518/220 (May 2020).