samchain/econo-pairs-v1 huggingface dataset:
We should think about how market participants will react to the potential politicization of the monetary policy process. Knowing that a decision to raise interest rates today might be criticized by the GAO six months later, market participants could begin to worry about the Fed’s willingness to make tough choices in terms of tightening monetary policy. If that were the case, inflation expectations could become less well anchored. This, in turn, would make it more difficult to keep inflation under control, even if the fears of market participants about the Fed ultimately turned out to be unwarranted. Our monetary policy decisions are already public and a wide range of Fed officials explain the rationale for our actions. It has been well established around the world that monetary policy independence leads to better outcomes in terms of unemployment and inflation. In my view, any legislation that would cast doubts about the Fed’s independence in the conduct of monetary policy would not be beneficial to this country. Thank you for your kind attention. I would be happy to take a few questions. 8  BIS Review 161/2009

Turning to today’s conference theme of “On the Horizon for Community Banking,” I have a few observations that I’d like to share. These observations, in part, preview the day’s agenda and I look forward to the continued conversation on these important issues. First, our country and the banking industry have benefitted from steady economic growth, modest inflation, and low unemployment in recent years. These are all positive and welcome outcome, but not all regions have benefitted equally here in the Second District. Some portions of upstate New York have benefitted from an influx of technology companies and other industries, while other regions remain challenged due to a lack of population growth. Later today we will hear from two of our economists who will share national and regional economic trends. Also in the spirit of looking forward, I can share some views on what community bankers can expect from the supervisory process. Examiners are keenly focused on emerging trends around funding costs and liquidity risks. Bankers consistently share with us the challenge of raising core deposits to fund loan growth. Community banks compete not only with other community banks for deposits, but also with credit unions and larger institutions. And, these larger counterparts are actively courting customers through direct mailers and offering competitive rates. Data in the Second District show cost across most deposit categories have increased with a slight uptick in the higher cost funding sources such as borrowings. Data for the largest banks exhibit a comparable trend, but they control a larger market share.
And if structural reforms are well-designed along these parameters, they can in fact have a largely neutral, if not positive impact on short-term demand – and even in adverse cyclical conditions. Credibility of reforms First, if reforms are credible their positive effects on short-term demand, via confidence, can more than compensate for any negative effects on inflation via increased supply. This is because, for firms, an upward shift in potential growth implies higher expected revenues and higher future profitability, which should in turn encourage them to bring forward investment into the present. And investment, remember, raises both supply tomorrow and demand today. It can therefore in no way be construed as being detrimental to our monetary policy objective. A similar logic applies to households and their life-cycle income. Reforms that raise expectations of life-cycle income should immediately support current consumption. To give just one example of this effect, an extension of the retirement age should lift not only medium-term supply – by expanding the active population – but also short-term demand, by reducing the need for precautionary savings ahead of retirement. But credibility is crucial in determining how quickly these positive effects materialise. If there is uncertainty about the timeline over which reforms will be implemented, or about the commitment of successive governments to maintaining them, it will take longer for firms and households to adjust their expectations and the benefits of reforms will be delayed.

15 Moreover, if reforms are not perceived to be sustainable under a wide variety of conditions Moreover, if reforms are not perceived to be sustainable under a wide variety of conditions – for example, if a pension reform is unrealistic over the longer-term – agents will anticipate a reversal in the future and refrain from adjusting their behaviour today.– for example, if a pension reform is unrealistic over the longer-term – agents will anticipate a reversal in the future and refrain from adjusting their behaviour today. We have used our Euro Area and Global Economy (EAGLE) 16 model to analyse for a medium-sized euro area country the effect of credibility and timely implementation 17 – in this  13  Andrews, D., A. Caldera Sanchez, and A. Johansson (2011), “Housing Markets and Structural Policies in OECD Countries.” OECD Working Papers, No. 836, January 2011. 14  Gnocchi, S., A. Lagerborg, and E. Pappa (2014), “Do labor market institutions matter for business cycles?”, Journal of Economic Dynamics and Control, vol. 51, February 2015. 15  Giavazzi, F., and M. McMahon (2008), “Policy Uncertainty and Precautionary Savings.” NBER Working Papers 13911, National Bureau of Economic Research. 16  Gomes, S., P. Jacquinot, and M. Pisani (2010), “The EAGLE. A model for policy analysis of macroeconomic interdependence in the euro area.” ECB Working Paper Series No. 1195, May 2010.
The Bankruptcy Act of 1831 gave accountants a role in winding-up enterprises and the Companies Acts of 1844 and 1862 established a legal requirement for companies to register and file accounts. By the end of the century, audit practices were becoming established. The accountant’s role was to provide a true and fair view of a company’s assets and income, as protection for the state (to whom it paid taxes) and investors (to whom it paid dividends). It was these concerns that led to the gradual emergence during the second half of the 19th century of fair-value based accounting conventions in the US. From the late 19th century, banks’ securities were carried at market values and their fixed assets at “appraised values”. In other words, by the early 20th century fair value principles were widely applied to companies in general and to banks in particular. In many respects, this period may have been the high-water mark for fair value principles. In the US, this first wave of the fair value debate ended in 1938. 4 The backdrop was inauspicious. The first phase of the Great Depression, between 1929 and 1933, saw the failure of a large number of US banks. Between 1933 and 1937, the US economy recovered somewhat. But by 1938 there were fears of a double dip. At the Fed’s prompting, Franklin D Roosevelt called a convention comprising the US Treasury, the Federal Reserve Board, the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC).

Restoring traditional accounting principles sounds desirable, provided the (Italian) values we import are Pacioli rather than Mussolini. At the same time, it needs to be recognised that too much sunlight can scorch. That means applying appropriate filters to fair values, screening out their harmful rays. Rethinking valuation practices across firms, asset classes and countries, better to capture expected losses, is one important such filter. Recognising the liability as well as asset characteristics of institutions may be another. We need to ensure these changes do not erode fair value principles, as that would result in the baby being thrown out with the bathwater. Making fair values less foul ought to advantage both investors and regulators. It would protect fair value from lightening strikes when the next financial thunderstorm breaks. References Allen, F and Carletti (2007), “Market-to-Market Accounting and Liquidity Pricing”, Wharton Financial Institutions Centre Working Paper 06–15. Billings, M and F Capie (2009), “Transparency and Financial Reporting in mid-20th Century British Banking”, Accounting Forum, 38–53. Bronk, R (2009), The Romantic Economist, Cambridge University Press. 12  BIS Review 28/2010  Financial Accounting Standards Board (2009), “Financial Instrument: Improvements to Recognition and Measurement”, Financial Statement Presentation of Financial Instruments, 13 August 2009 (Board meeting handout). Federal Deposit Insurance Corporation (1997), History of the Eighties – Lessons for the Future. Friedman, M and A J Schwartz (1963), A Monetary History of the United States, 1867–1960, Princeton University Press. Goethe, J W (1796), Wilhelm Meisters Lehrjahre.
The wood and wood products industry accounts for about a fourth of manufacturing employment. As in the rest of the country, the public sector and parts of the private service sector are important for employment in Hedmark. Business and financial services account for a smaller share than the national average. In spite of interest rate cuts and a stimulatory government budget, overall economic policy has been tight as a result of the strong krone. The depreciation of the krone exchange rate since January and the reduction in the interest rate have, however, contributed to an easing of monetary policy. In the Inflation Report, we presented two alternative scenarios for the Norwegian economy. In the baseline scenario, where the interest rate is held constant at 5½ per cent and the krone exchange rate at the average for the past month, mainland GDP is projected to increase by 1¼ per cent this year and 2 per cent next year. This is lower than what is considered the long-term growth potential in the economy. In 2005, growth is projected at 2¼ per cent. An alternative scenario, which incorporates monetary policy easing in line with market expectations - as they were then, points to higher growth over time. The rise in prices for goods and services produced in Norway is being influenced by markedly higher wage growth in Norway relative to trading partners. Wage growth moved up further last year, even in industries where profitability had weakened considerably.

Jean-Pierre Roth: Fifteen months of financial crisis – a status report Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Associazione Bancaria Ticinese, Centro di Studi Bancari, Vezia, 3 December 2008. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial crisis broke out a little over fifteen months ago. The magnitude of the turmoil experienced by the financial industry has been greater than all the forecasts. So far, our entire attention has been focused on the problems of the financial industry, while the real economy appeared to be passing through this difficult period without too many problems. We now realise that this view was deceptive: the situation in the non-financial sector is deteriorating substantially. This could lead to new challenges in 2009. After having benefitted extensively from the international expansion of the past few years, we are currently experiencing the consequences of a widespread recession. This situation is difficult for our country, but we may be better placed than others for coping with it. BIS Review 150/2008  1
In the UK, the Financial Policy Committee of the Bank of England (FPC) formally recognised this risk to financial stability in June 2013. It recommended that the authorities should assess, test and improve the resilience of core parts of the UK financial sector to cyber attack. The FPC has maintained oversight of this programme of work which has included a number of strands, not least the ‘CBEST’ vulnerability testing of critical financial firms and FMIs. 15  Improving resilience to cyber risk is one part of the Bank’s wider work on broader operational resilience. Operational resilience is not a technical issue, especially for the infrastructure firms that need to act as ‘systemic risk managers’. It must begin in the boardroom. The Bank has worked with supervised firms to improve governance, so that standards can be maintained or strengthened, and threats responded to, without regulatory or supervisory pressure. The Bank of Bangladesh incident also shows why, given the critical nature of the services provided by SWIFT, effective international coordination in its oversight is essential. Oversight of SWIFT is led by the National Bank of Belgium (NBB) as SWIFT is a Belgian company. However, the NBB has for many years conducted the oversight of SWIFT in coordination with other central banks, including the Bank of England. These arrangements proved important in maintaining the confidence of regulatory authorities worldwide in the aftermath of the attack. And the oversight arrangements have now been extended in scope to cover the implementation of the crucially important customer security programme.

1  2  These global pipes fulfill three functions :   international payments systems enable money to move at the click of a mouse – and incidentally mean that central bankers are no longer at risk of getting their heads blown off trying to effect cross border payments;    international securities settlement enables the ownership of financial assets to change hands quickly and safely, often without the movement or amendment of any physical documentation of ownership; and,    central clearing systems enable participants in international financial markets to manage the counterparty risks in financial contracts that can last for decades. “Clearing” of financial activity has a number of meanings. I am here referring to central clearing, to the central counterparties (CCPs) that manage the risks of financial contracts rather than to the clearing of payments. 3  Three points are worth highlighting about this global plumbing. First, it is true that it is almost entirely private sector built and owned either by their users or as independent profit-maximising companies. 1  Based on Bank of England calculations, using data from 23 jurisdiction. Data from Bank for International Settlements, ‘Statistics on payment, clearing and settlement systems in the CPMI countries: Figures for 2015’. December 2016. http://www.bis.org/cpmi/publ/d155.pdf 2 I have excluded Trade Repositories from this list; the Bank does not supervise Trade Repositories. 3 Financial sector participants in a network will have both claims on each other and liabilities to each other.
Capital requirements that increased with the rate of  BIS Review 39/2009  5  growth of balance sheets, or some measure of incipient stress. Variable margin requirements on the terms of credit provided to financial, or even real-economy, borrowers. A fourth big question is whether the chosen instrument(s), whatever it is, could be operated by rules or would require an element of top-down judgment. On that, I am inclined to the view that our community is unlikely to be able to write down a suitably robust rule. I have two reasons for that. One draws a parallel with monetary policy. The history of monetary policy, not least in this country, is littered with failed attempts to design an optimal rule, giving way to efforts to constrain the discretion of policymakers making judgments. I cannot see why we would be any better at developing rules for financial stability. As the structure of the financial system evolved, we would need to adapt the rule and would probably fail to spot the need to do so. But there is also something about the nature of financial stability problems that makes “rules” implausible to me. In the upswing of the credit cycle, there is often a collective-action problem. Even though individual banks may perceive risk as underpriced, not knowing for sure whether or when the party will end they hesitate to step off the rollercoaster for fear of damaging their business franchise.

Stability in the elemental sense I have described was profoundly threatened last autumn – when the universal crisis of confidence triggered by Lehmans’ failure tore the fabric of international commerce. That stability has been sustained owes everything to governments stepping in, effectively being prepared to borrow from the future in order to prop up the banking system now. In that sense, we are, of course, “beyond Financial Stability”, insofar as, ordinarily, we would regard instability as a state of affairs that requires such support. The Turner Report rehearses the analysis of how we got to that point. It rightly places weight on the baleful effects of persistent and cumulative global current and capital account imbalances. I dearly wish that the international authorities had taken on board the lessons from the 1990s EME crises about the vital importance of monitoring, and where necessary managing, national balance sheets – for large countries as well as EMEs. It is striking, however, that other analysts, including recently from the IMF, are starting to play down the part played by the international monetary system. I do not go along with that. There can  BIS Review 39/2009  1  surely be no disputing that macroeconomic imbalances have mattered greatly to the crisis, as they contributed to the build up of debt and, through the compression of risk-free rates and risk premia, the appreciation of asset prices. But in acknowledging that, we do not have to claim that of themselves such imbalances lead inevitably to financial instability.
But as the weight of exchange rate-linked items in domestic balance sheets declines, and as confidence rises and the foundations for the exchange rate itself are strengthened, monetary policy can devote greater attention to the slack in the economy and the inflation outlook. In this context, three factors are most important: returning domestic financial institutions to full functionality, converting foreign-denominated debt to domestic currency, and restoring access to foreign credit and financial markets. It is important to enhance the effectiveness of the Central Bank’s monetary policy instruments and improve the transmission mechanism of monetary policy. While confidence in the financial market remains limited, the Central Bank’s policy instruments will not be fully effective because, under these circumstances, financial institutions have every reason to consider it more beneficial to do business with the Central Bank than among themselves. The Central Bank has set a framework for the money market, foreign exchange market, and bond market, thereby contributing to their resurrection, in co-operation with the authorities and the financial institutions. At this point in time, it is primarily the bond market that has  BIS Review 39/2010  3  shown signs of recovery. However, financial institutions’ conduct still shows that they are uncertain about the future, and the premises for trading are distorted to some degree. Finding a solution to this will be an important task in the coming months. At present, investment in Iceland is close to a post-WWII low.

By this measure, we are aiming to: support the process of deeuroization in the economy, inject liquidity in support of lending to the private sector and stimulate higher inflows from nonresidents especially from financial institutions. Last, but not least, I would like to point out our efforts in strengthening our statistics in the last few years. In March 2013, the National Bank of the Republic of Macedonia started transmitting the quarterly balance of payments and annual international trade in services data to Eurostat, while in May 2013 additional data series on FDI flows and stocks disaggregated by partner countries and activities were submitted. Currently we are working on the establishment of new data warehouse system in the central bank that will contribute for improved data management in general, as well as enable the transmission of more demanding and detailed datasets in the future. In July 2012 we started with submission of a more detailed set of the external debt data to the World Bank within the Quarterly External  2  BIS central bankers’ speeches  Debt Statistics Database in accordance with the requirements for SDDS countries, thus being among the first countries in the region fulfilling the overall data requirements in this field. In addition, just recently, we have received the first Annual Report by the IMF on data submission under SDDS, that we joined in November 2011, with positive annotations of the overall data submission under this system.
A mechanistic compliance with rules cannot be an adequate substitute for an internalised sense of responsibility and basic morality that a finance professional owes to his client or counterparty. How can we build a culture of trust and strong values in the financial industry? We need an ecosystem to do so – with a role for regulators, the industry, and most important, the firm itself. What can regulators do? First, the role of regulators. The international regulatory community has been intensifying efforts to ensure that financial institutions foster a sound risk culture and conduct themselves in a prudent and socially responsible manner. But instituting a good risk culture is not merely about slapping on more rules or adopting a perfunctory, checkbox approach to compliance. MAS therefore takes an intensive supervisory approach to risk governance and culture in financial institutions. We prefer this to an overly prescriptive regulatory approach based on one-size-fits-all rules that may be less effective in addressing idiosyncratic risks. Financial firms differ widely in goals, activities, and culture. Instead, close supervision – consisting of both onsite inspections and offsite reviews – provides MAS with a good view of a firm’s risk governance and culture and practices on the ground. This allows us to assist the board and management in identifying emerging areas of vulnerabilities and to take pre-emptive corrective actions where necessary. Let me cite two areas we focus on: compensation and fair dealing. BIS central bankers’ speeches  3  Compensation is an important mechanism to shape incentives and behaviours.

•  We read of traders in banks circumventing internal rules to make outsized market bets that subsequently resulted in large losses for these banks. •  And in financial centres across the world, including Singapore, regulators have uncovered attempts by traders at several major global banks to manipulate key financial benchmarks used to set rates for loans and foreign exchange contracts. Little wonder that global surveys show that levels of trust in the financial industry are lower than ever. •  According to Edelman, a public relations firm, banking and financial services ranked last among 15 industries that the public trusted “to do what is right”. 1  •  In countries most affected by the financial crisis and its aftermath, levels of trust are lower still – barely 30% of the public in Europe trust their banks. 1  Edelman Trust Barometer, 2013 and 2014. BIS central bankers’ speeches  1  Why trust is critical to finance Financial products and transactions can be quite complex and information asymmetries often place financial institutions in a more advantageous position compared to their customers. •  Trust that the bank is sound is critical for savers to keep their monies in bank accounts and for borrowers to make long term investment decisions. •  Trust that financial advisers and insurance agents are dealing fairly is important for consumers committing large portions of their savings for a long period of time.