samchain/econo-pairs-v1 huggingface dataset:
The problem that loomed around this time a year ago is a thing of the past and terms in the secondary market are more favourable again. The Central Bank underlines that global market conditions can take a sudden turn for the worse and it is important to be on the alert and prepared for such a contingency. The current episode of ample liquidity and lower interest rates which has been ideal for risk-seeking investors may change unexpectedly. Short-term interest rates have been rising in most markets recently and capital costs are no longer so favourable. The Icelandic banks are better equipped for such a reversal than a year ago, because experience has taught them to extend and disperse their borrowing, and build up substantial liquid reserves in foreign currency. In 2006 the spotlight was on the banks’ liquidity risk. Now that this risk has ebbed, the focus has shifted to credit risk and the potential impact of higher interest rates and a depreciation of the króna. Amidst the turbulence of 2006, the banks slowed down their credit growth and expansion of their balance sheets. No major foreign financial companies were acquired and equity exposures were reduced. Nonetheless, it is natural to consider their credit risk and vulnerability towards a fall in asset prices. Icelandic households’ debts with credit institutions have soared in recent years, especially averageincome and young households.

It is critical to achieve some redress of imbalances before external conditions tighten. Strange as it may sound, the banks’ efforts to hedge against the effect of a conceivable depreciation of the króna on their equity ratios has increased the market risk on their foreign exchange exposures. Credit institutions fulfil the Central Bank’s rules on foreign exchange balance, but have been permitted to maintain separate additional currency balances. Thus the banks’ capital positions are well hedged against a conceivable depreciation of the króna, but a short-term appreciation cannot be ruled out. The banks’ customers, on the other hand, are less protected against shocks from a depreciation, although data from the banks show that most of their borrowers of foreign currency-denominated loans also have substantial currency earnings and thereby a natural hedge against exchange rate movements. Financial Stability 2006 reported on a Central Bank stress test of the impact of a serious shock involving a simultaneous large rise in global interest rates, depreciation of the króna and fall in asset prices. This simulation has now been repeated using new data and assuming an even larger depreciation and decrease in house prices. Were all these shocks to coincide, estimates show that the contraction in national expenditure could prove considerably greater than in the Central Bank’s most recent macroeconomic forecast in Monetary Bulletin in March 2007. The pressure on the financial sector will be determined to some extent by the pace of the adjustment and the banks’ own responses to it.
During 2010, the Bank made substantial progress in setting up a credit reference bureau which will allow the banks to exchange information on customers in an effort to reduce the  BIS central bankers’ speeches  5  incidence of nonperforming loans, reduce the interest rates on loans and stimulate private sector credit flows. The relevant bill has been drafted and forwarded to parliament for enactment, and draft guidelines have been developed. Staff of the Bank have also been trained in the management of the credit reference bureau and an office has been established. Your Excellency, distinguished guests, the Bank continues to be vigilant in the supervision of the financial system and I shall now outline policies geared towards repositioning the Bank to meet the challenges of the financial sector. Repositioning the Bank of Sierra Leone to meet the challenges of the financial sector Your Excellency, distinguished guests, before I start on the current activities of repositioning the Bank, I would like to acknowledge the efforts of past Governors in reforming the financial sector through the implementation of various IMF/ World Bank programmes, since this dinner coincides with the 50th Independence anniversary. In this regard, we pay tribute to Mr. Gordon Hall, the very first Governor and Mr. Sylvanus Nicol-Cole, the first Sierra Leonean Governor. We also want to remember two former Governors who sadly passed away whilst in active service; late Messrs. Sam Bangura and Victor Bruce (may their souls rest in peace).

Temporary cut in the interest rate on CHF-denominated loans in order to offset the impact of the stronger CHF May be a valid option, given that both the benchmark rate of the Swiss National Bank and the CHF market rate have reached negative values. C.  Implementing a debt rescheduling scheme, with the award of a compensation by the State Such a solution would be efficient in light of at least four arguments. First and foremost, it would contribute to a higher disposable income of the beneficiaries of this scheme (performing borrowers), with favourable effects on consumption and economic growth. Secondly, it represents a burden-sharing approach among creditors, borrowers and the State. Thirdly, enforcing the relevant law implies favourable effects also in terms of managing the structural liquidity surplus in the banking sector. Fourthly, the measure targets the segment of vulnerable borrowers, with gross monthly incomes of up to lei 3,000, given households’ high degree of indebtedness and its uneven distribution across various income groups. The measure proposed by the Government consists in amending Government Emergency Ordinance 46/2014 by extending its scope of applicability and introducing simpler and more flexible loan rescheduling procedures, and may be applied to CHF-denominated loans as well. The legislative enhancements are aimed at providing some relief to low-income borrowers facing temporary difficulties in repaying their loans, while also improving the mechanism so as to be promoted by banks and requested by eligible debtors.
First, have the proposals achieved enough risk sensitivity? And second, do they achieve too much risk sensitivity, particularly in the context of the debate about whether ratings amplify procyclicality? As I said earlier, the new Accord has been designed to incorporate some real-world pragmatism. A major achievement of the existing 1988 Accord, and one that we would like to see preserved, has been its near-universal worldwide acceptance as the minimum standard for banking stability. So, if this huge advantage is not to be lost, it means that the new Accord has to be adaptable to a wide range of situations, to accommodate not only differing levels of sophistication amongst banks but also differing levels of expertise amongst supervisors. The answer, unsurprisingly, is a menu approach. For credit risk, alongside the greatly more risk sensitive internal ratings based approach, we have the option of a revised standard approach. This is certainly a step forward from the existing approach, but it remains a relatively simple framework. In its implementation, for many banks it may prove very simple indeed, since the large bulk of their loans are likely to have no ratings and so fall into the unrated bucket. The result will be little change on the existing Accord. I think this is inevitable.

In the UK, moves have recently been made to improve the competitiveness of SME finance; I believe that the new Basel framework could in turn be a positive contribution to banking stability but we stand ready to monitor developments. Although this conference is essentially about the issue of banking capital, I would like to end by emphasising that capital is only one component of banking stability; many other factors also come into play. In the field of prudential regulation, I would like to highlight two: valuation and provisioning frameworks, and liquidity management and regulation. There will be little point to all the Committee's work on risk sensitive capital measures if this is not underpinned by adequate loan valuation and provisioning practices - preferably ones which incorporate a forward-looking view of risk and deterioration in loans. A lot of valuable work has been done on loan provisioning by the Basel Committee and other bodies, and I welcome the debate that is currently being sponsored by the IASC on valuation frameworks. 4  BIS Review 29/2001  Secondly, adequate liquidity is a vital counterpoint to capital for banks; the regulation of capital adequacy and liquidity are interrelated. Rationally, solvency ought to be a guarantee against funding problems, with customers happy to roll over deposits where they are confident that a bank is soundly capitalised. But reason does not always prevail, in part because solvency is sometimes hard to ascertain, more often because, swept along by animal spirits, markets can behave emotionally and perversely.
Norway’s export revenues and government revenues can be expected to be very high as long as production remains high, and as long as the global market allows producing countries to extract substantial economic rent. At the same time, we know from experience that revenues may vary sharply from year to year. As a result of the high level of earnings and fluctuations in these revenues, the most important contribution fiscal policy can make to stabilising the Norwegian economy is to provide a sound, long-term plan for the use of petroleum revenues. Attempts to use the central government budget to fine-tune economic activity may, at worst, have a destabilising effect if these attempts are perceived as being a departure from the long-term plan for the phasing in of petroleum revenues. It is necessary to show that fiscal policy can be applied symmetrically in periods of economic expansion and contraction. A year and a half ago, the Government and the Storting adopted new guidelines for economic policy, which call for an annual use of petroleum revenues equivalent to the expected real return on the Government Petroleum Fund. At the same time, the Government issued a new operational mandate for monetary policy. Norges Bank shall set the key rate with a view to maintaining low and stable inflation. Monetary Policy Regulation (1) • Monetary policy shall be aimed at stability in the Norwegian krone's national and international value, contributing to stable expectations concerning exchange rate developments.

However, the rise in salaries for white-collar workers may also reflect weak cost control in enterprises and organisations following a long period of expansion. A precondition for interplay that functions well is that monetary policy is known and remains firm. The best thing Norges Bank can do to contribute to good interplay between the various components of economic policy and wage formation is therefore to be transparent about its analyses and assessments of economic developments. 3  Various game situations between fiscal and monetary policy are described in the literature. Some of these games are discussed in Kai Leitemo (2000): “Samspillet mellom penge- og finanspolitikken under et underliggende inflasjonsmål for en liten åpen økonomi” (The interplay between fiscal and monetary policy under an underlying inflation target for a small, open economy) in Norsk Økonomisk Tidsskrift No. 2/2000, and in Erling Steigum (2000): “Samspillet mellom penge- og finanspolitikken ved et inflasjonsmål” (The interplay between fiscal and monetary policy with an inflation target) in the book Perspektiver på pengepolitikken (Perspectives on monetary policy), edited by Jan F. Qvigstad and Øistein Røisland. 4  This is the game theory known as the Cournot-Nash equilibrium. 5  Cf. descriptions in the Stackelberg equilibrium game theory.
Lorenzo Bini Smaghi: Private sector involvement – from (good) theory to (bad) practice Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Reinventing Bretton Woods Committee, Berlin, 6 June 2011. *  *  *  The title of this first session of the conference is: “Policy responses within countries and inside the eurozone since 2010: an appraisal”. The topic is very broad and I cannot cover it in such a short time span unless I am selective and focus on some specific issues. I would like to consider mainly what has not gone as expected and the disappointments. This enables me to avoid talking, once again, about the ECB’s actions over the last 18 months. There are at least three things that have gone wrong. The first is that governments of the countries under stress waited too long before recognising that they needed financial assistance, and submitting their requests for support to the IMF and EU. This is true in all three cases, Greece, Ireland and Portugal. More often than not support programmes are delayed and within well integrated economic and financial regions such as the euro area these delays exacerbate market turmoil and create contagion. There is thus an externality in leaving it entirely to the country in question to turn to the IMF and EU for financial assistance.

How can we prevent taxpayers of the good performers in the euro area from being asked to foot the bill for the excesses of the bad performers? EMU is based on two pillars. The first is price stability, ensured by an independent central bank. The second is sound public finances, promoted by the Stability and Growth Pact. This second pillar has not worked properly and needs to be repaired. Including some form of automatic private sector involvement does not repair the SGP. It actually weakens it by delegating discipline to the financial markets, which we know are late and pro-cyclical. It makes debt restructuring easier and thus discourages fiscal discipline. The only way to protect taxpayers in “virtuous” countries is to avoid over-indebted countries from easily getting away with not repaying their debts; the payment of debts should be enforced, through sanctions if need be. When countries go off track they can receive financial assistance only in exchange for strict adjustment programmes, including asset sales, which allow these countries to remain solvent. Respect for contracts is the one of the key principles underlying the market economy. It is also the basis of monetary union between sovereign countries. BIS central bankers’ speeches  5
One instrument (namely, the interest rate) is often not enough for pursuing two objectives. More generally, the two objectives should be addressed with more than one instrument. The choice of instrument will depend on both the cause of the financial fragility and the institutional setting of each country. For a start, central banks should work closely with “micro-prudential” supervisors, communicating potential risks so that these can be incorporated into the supervision process or into changes in regulation. A regional house bubble would be a good example of this kind of coordination, with supervisors adjusting provisions accordingly. In addition, central banks  4  Chapter V, Financial Stability Report 1st half 2009, Central Bank of Chile. http://www.bcentral.cl/publicaciones/politicas/pdf/ief2009_1.pdf  BIS Review 76/2010  5  should consider macro-prudential regulation that adjusts capital, liquidity or asset quality regulation through the cycle or in periods of higher risk taking. Finally, central banks should not discard using their balance sheet to “correct” the prices of financial assets when these asset prices are leading to increased vulnerabilities in the financial system. In EMEs this is typically the case of a boom where there are signs that the currency may be strengthening beyond its fundamentals, in which case a mechanism of selfinsurance, such as accumulation of reserves, may help to smooth the transition and to have the economy well-prepared for potential reversals of capital flows. In the case of Chile, we have intervened three times in the exchange rate market since the currency was allowed to float in 1999.

Closer attention must therefore be paid to the financial fragility that accompanied this process – both to the factors that led to the distortions in asset prices and to the factors that amplified the crisis once the adjustment took place. Let me touch briefly on two of these factors:   The first is financial innovation. Despite a lot of public debate and criticism I believe that financial innovation is essentially welfare enhancing. However, we must not forget that financial innovation can also become a form of circumventing regulation. The way some securitized assets where used was the clearest case of this abuse. They were structured in a way that only secure tranches remained in the balance sheets of banks, and the others were sold, many times to off balance vehicles, allowing credit to expand with a weak capital base. The result was excess demand for certain securitized assets, and excess exposure of highly leveraged intermediaries to these assets. Moving forward, financial innovation needs to move in step with regulation to ensure that it adds value and is not just a form of evading regulation and aggravating financial fragility.   The second is liquidity transformation. Along with important benefits, liquidity transformation entails significant risks. We have known the vulnerabilities of liquidity transformation in the presence of aggregate shocks for a long time; in fact, many countries paid very dearly for this risk before central banks where set up to provide aggregate liquidity.
17  All speeches are available online at www.bankofengland.co.uk/news/speeches  17  Chart 11: Pay growth strengthened as slack absorbed Four-quarter wage growth (per cent) 4.0 UK  3.5  Darkest values are 2019  3.0 2.5  US  2.0  Euro area  1.5 1.0 0.5  Lightest values are 2013  0.0 3.0  4.0  5.0  6.0  7.0 8.0 9.0 Unemployment rate (per cent)  10.0  11.0  12.0  Sources: ONS, Eurostat, Bureau of Labor Statistics, and Bank Calculations Notes: The UK wage measure is Average Weekly Earnings (AWE) regular pay, the US wage measure is Employment Cost Index (ECI) wages & salaries, and the EA wage measure is compensation per employee. Data frequency is quarterly. **************************** Over the past year, the broad economic trends in the period following the EU referendum have deteriorated (Charts 12a and 12b). The global economy moved from a broad-based expansion to a widespread slowdown. Uncertainties and growing concerns over the fracturing of the global trading system have been weighing on global activity, likely pushing down the global equilibrium interest rate, and exacerbating concerns about limited monetary policy space. The pace of growth in the UK has slowed below potential, owing to the weaker external backdrop and a persistent drag from entrenched Brexit uncertainties.

First, the efforts already made on the fiscal front by euro area countries are already bearing fruit: the primary position of the euro area should be close to balance by the end of 2012, which is a remarkable achievement compared to the other major economic areas (Japan, the United States and the United Kingdom will all run deficits of around 9%, 6% and 5% respectively). At the current juncture, this is clearly an asset for us and an element of confidence both for the markets and economic agents, and needs to be further enhanced. In addition to these efforts at the national level, a stronger framework for common discipline has been put in place, which represents a major step forward towards a more integrated economic union. The legislative package (known as the “six-pack”) which came into force last December considerably reinforces the Stability and Growth Pact: the surveillance powers of the European Commission regarding national budgets have been enhanced, sanctions have become quasi-automatic and the public debt and public spending criteria are being more closely monitored. In addition, the Treaty on Stability, Coordination and Governance puts in place a new “fiscal compact”, notably including the requirement that the annual structural government deficit does not exceed 0.5% of GDP. 2  BIS central bankers’ speeches  At current debt levels, economic agents would respond to loose fiscal policy by delaying their own private spending. The financial markets would continue to impose very punitive interest rates on our countries to compensate for the uncertainty surrounding the fiscal outlook.
The annual organisation of this workshop has served to share experiences with the participating central banks and have enriched research work, becoming in turn an integral contributor to policy formulation. These workshops have made a valuable contribution for confirming and interpreting research results, which enable the compilation, calibration and implementation of policy measures for tackling the pandemic and similar shocks. Your findings, comments and discussions assist our authors to improve their studies, and in turn contribute to the formulation and decision making of policy at the central bank. Evidence, analysis and forecasts based on the research work that you will present in these two days will provide accurate and valuable information for orienting and coordinating decision making in the future. 20 research projects will be presented and discussed this year, which in in spite of covering a broad gamut/range of topics, are directly related to the activity and interests of the central bank. We have discussed almost the same topics a year ago however, you could rightly say: “What a difference, compared to last year?” In 2020, discussions were focused on the modern monetary policy, and the role of the central bank’s balance sheet as a permanent instrument of monetary policy that can and should be broadly used to bolster aggregate demand. The current monetary policy debate is concerned with the size and duration of the recent jump in inflation. The latest inflationary developments have divided academics and central bankers into two camps with diametrically opposed positions.

I am hopeful for two-days of productive workshop interactions. I invite you to join the panels of presentations and become part of the fruitful comments and discussions! 2/2  BIS central bankers' speeches