samchain/econo-pairs-v1 huggingface dataset:
This conference, attended by Keynes, among others, saw the signing of the agreements to set up the International Monetary Fund and the new exchange-rate system, which remained in force until the beginning of the 1970s. The system to which the Bretton Woods agreements gave birth replaced gold with the US dollar, insofar as exchange rates were fixed in relation to the dollar rather than to gold, although an indirect link to gold was maintained through the dollar/gold parity. It was agreed 3/7  at Bretton Woods to set up the institution charged with oversight of the stability of the international system of exchange rates, namely the International Monetary Fund. The “dollar standard” set the tone for the post-Second World War period. This era of relative stability and widespread prosperity ended in the early 1970s, when the US government suspended the convertibility of the dollar into gold, one of the pillars of the Bretton Woods agreements. This occurred when the markets came to believe that the dollar/gold parity overvalued the former, in a context of the economic and financial disruption that followed the oil market crisis in 1973. The system of fixed but adjustable exchange rates was abandoned and replaced by a floating exchange rate system, and at the same time all the rules relating to the convertibility of the various currencies into gold were also abandoned. Since then, the system of floating or variable exchange rates has been the mainstay of the international currency market.

16.06.2017  Speech by the Governor of the Banco de España at the 2017 CUNEF graduation ceremony Luis M. Linde Governor  It is an honour to be here with you today, to celebrate the CUNEF University 2017 graduation ceremony for graduates and postgraduates. Allow me to congratulate all those who are graduating today, and to express my gratitude for the invitation to preside over this ceremony, which it has been a great pleasure to accept. Since its foundation more than 40 years ago, CUNEF University has played a very important role in the education of banking and finance professionals in Spain. CUNEF graduates occupy important positions not only in the private sector but also in the public sector, including in the institution that I represent. And I am sure that the students graduating today will maintain the tradition of professional excellence built by this university. I would like to focus today on what is, without a doubt, the key function of central banks: monetary policy. I will start with a brief historical outline of how the functions of central banks have changed from when they were first established up until the present day, and I will then describe the current framework for monetary policy implementation, concluding with some reflections on the main challenges we face following the economic and financial crisis that broke ten years ago this year. The evolving role of central banks Central banks are offspring of the Enlightenment.
Also this broad comprehensive reform approach can help create the consensus that is needed for reform, as different actors perceive more clearly the benefits of a comprehensive reform package, and not only the costs to them of specific reforms. Some good examples of the benefits of this comprehensive approach are Denmark or the Netherlands, countries that adopted a mix of labour market, public finance and product market reforms that complemented and reinforced one another. I do not want to take up any more of your time with these opening remarks. Let me simply thank you once again for sharing your thoughts with us. Here’s wishing every success for the conference. Now Professor Blanchard will complete these introductory remarks. Olivier, the floor is yours. 4  BIS Review 65/2010

As a growing part of the international financial system that has become increasingly challenging, our task will be to build on the inherent strengths of Islamic finance and to continue to strengthen the supporting structures so as to ensure that Islamic finance will contribute to the overall stability of the global financial system. BIS Review 145/2008  5
Out of 48 countries considered in the study, 35 adopted some of the macroprudential policies identified. This amounts to 73%, a significant fraction. However, there is large concentration in few policies. In effect, the most commonly adopted policies are those aimed at reducing the vulnerability of borrowers. For instance, the most widely used measure across countries is caps on Loanto-value. They have been present in 24 out of 48 countries studied in the period that ranges from 2000 to 2010. Two more countries should be added that adopted similar policies (Debtto-income caps). Overall, 54% of countries applied this type of measure. The second most common objective of macroprudential policies adopted is reducing credit growth, with 14 out of 48 advanced and emerging countries (29% of the sample) having used one or more of the instruments in this group. Six countries opted for direct caps on credit growth, five for reserve requirements, nine for dynamic-loan loss provisioning, among which two also applied countercyclical capital requirements. Finally, limiting foreign currency exposure was adopted by eight countries, while restrictions on profit distribution by six. 2  BIS central bankers’ speeches  As mentioned before, there have been several studies assessing the impact of macroprudential policies in cross-country settings. 1 For the sake of brevity, I will focus on the results of variables that have been tested in at least five studies.

Can non-interest rate policies stabilize housing markets?. Evidence from a panel of 57 countries. BIS Working Paper no 433. Lim, C.H., F. Columba, A. Costa, P. Kongsamut, A. Otani, M. Saiyid, T. Wezel and X. Wu (2011). Macroprudential policy: what instruments and how to use them? Lessons from country experiences. Working paper 11/238, International Monetary Fund. Peek, J., E. Rosengren and G.M.B. Tootell (2015). Should U.S. Monetary Policy have a Ternary Mandate?, Federal Reserve Bank of Boston, mimeo. Tovar Mora, C.E., M. Garcia-Escribano and M. Vera Martin (2012). Credit growth and the effectiveness of reserve requirements and other macroprudential instruments in Latin America. Zhang, L. and E. Zoli (2014). Leaning Against the Wind: Macroprudential Policy in Asia. Working paper 14/22, International Monetary Fund. BIS central bankers’ speeches  7
As of Monday, the per-counterparty maximum bid limit was raised from $ billion to $ billion, and an overall size limit of $ billion was imposed for each operation. If the total amount of bids received in an operation is less than or equal to the $ billion size limit, awards will be made at a fixed offering rate. However, if the total amount of bids received exceeds the overall operation size limit, the $ billion in ON RRPs will be allocated through a single-price auction using interest rates that counterparties now include with their bids. Awards are made at a “stopout rate” – the rate at which the overall size limit is achieved – with all bids below this rate awarded in full and all bids at this rate awarded on a pro rata basis. The stopout rate is determined by evaluating all bids in ascending order by submitted rate up to the point at which the total quantity of offers equals the overall size limit. 12 The Federal Reserve will be closely analyzing the results of the ON RRP exercise conducted under these new testing parameters in order to further its understanding of how an ON RRP facility might best be structured during the initial stages of the normalization process. In addition, the Federal Reserve Board has been testing a facility through which it offers term deposits to credentialed depository institutions. Term Deposit Facility (TDF) transactions could be used to temporarily reduce the quantity of reserve balances.

Thus, the current size and composition of the Federal Reserve’s balance sheet actually create strong incentives to adjust policy in a timely way. A far more important threat to central bank independence than the use of unconventional monetary policy is whether the fiscal authorities act in a manner consistent with the central bank’s objectives. As recent history has shown, central banks may not be able to achieve their objectives when an inconsistent fiscal regime is in place. That is, monetary and fiscal authorities need to share the same objectives. When the objectives differ, fiscal dominance  BIS central bankers’ speeches  3  can become a major problem for the central bank. For example, if the budget trajectory were clearly unsustainable, then monetary policy may no longer be able to credibly act in a way that keeps inflation expectations in check. But I don’t think the issue of fiscal dominance is linked back to whether the central bank pursues unconventional monetary policies or not. At the end of the day, I think that the best way to maintain independence is for central bankers to use all their available monetary policy tools, including unconventional monetary policy tools when needed, to best achieve their objectives. The historical record is clear: Central bank independence tends to lead to better monetary policy outcomes. But, the causality also runs in reverse: Good monetary policy outcomes help ensure monetary policy independence. Thank you for your attention. 4  BIS central bankers’ speeches
As Kenneth Arrow, Nobel Laureate in Economics, said about his four-year experience as a weather officer in the US during World War II, “one thing I learned from meteorology is that being an actual science was no guarantee of exactness”. Economics may or may not be an actual science, but it certainly suffers when trying to predict the future. There are at least three explanations for this unpredictability that are common to economics and other scientific disciplines. First, assigning probabilities is particularly difficult for infrequent high-impact events such as financial crises, tsunamis, or climate change, for which there are few precedents. Because the samples of such events are so small, as we learn about these processes our assessment of their likelihood will change, possibly sharply. Second, even systems that are deterministic rather than stochastic can be very unpredictable. Small differences in starting conditions can imply very different outcomes. Weather systems display chaotic dynamics, so that small initial forecast errors may lead to large revisions to the forecast further out. Economists, in contrast, often rely on simple linear models, but with additive stochastic errors. In modelling any phenomenon there is a choice, and among the experts in the area often a live debate, about whether it is more useful to use deterministic but chaotic or stochastic models. 1 But the motivation in both cases is to bring out the importance of unpredictability. Another feature that hinders predictability is that a priori indistinguishable shocks can have very different effects in some systems.

This occurs because all firms assume a worst-case scenario – that they will be unable to access liquidity when required – and this causes them to hoard liquidity. Alternatively when information is dispersed across a large number of people, each with a noisy signal about economic fundamentals, outcomes may be determined by an “information cascade”, the outcome of which is hard to predict (Banerjee, 1992; Bikhchandani et al, 1992). 5  See May and Arinaminpathy (2010) for a model of the financial system which makes this distinction. 4  BIS Review 36/2010  There is strong experimental evidence that people are subject to biases when collecting and processing information under uncertainty, and that such processing occurs only intermittently. 6 The evidence suggests that people are also frequently incoherent in assessing, assigning and processing probabilities – even in highly artificial settings where information is complete – and find it particularly difficult to assess probabilities which are very low or very high, partly because there is less scope for learning in these cases. There is also evidence that, when making complex decisions or without full information, such as when deciding whether to have eye surgery, people often use rough heuristics, or go on first impressions, appearances, gut instinct or intuition. We want to highlight four main aspects of the behavioural view: (i)  Perceptions of risk have been shown to be unduly influenced by recent or personal experience.
Ultimately, the total volume of assets transferred amounted to USD 38.7 billion, where the purchase price was roughly USD 1 billion below the book value of the assets at UBS at the end of September 2008. In addition, a substantial portion of the amount transferred includes liabilities in the form of derivatives which currently do not need to be financed by the SNB. The initial financing of the StabFund was therefore considerably lower than the purchase price. It comprised the SNB’s loan to the StabFund totalling USD 26.6 billion and UBS’s equity contribution in the value of USD 3.9 billion. The fund’s portfolio contains several thousand positions. Table 1 gives an overview of the portfolio and the different investment segments. The portfolio management concept is based on a long-term risk/return assessment. For assets where the cash flow is expected to exceed the current market price, we are mainly pursuing a hold-to-maturity strategy. For assets where this is not the case, we will sell if the opportunity arises. The objective of our portfolio management is to repay the SNB’s loan in full if at all possible. Market developments to date have impacted strongly on the StabFund’s assets. As it stands, most of the assets do not have to be entered in the balance sheet at market value. Rather, they only have to be written down if the balance sheet value is no longer considered sustainable based on the results of an impairment test.

However, despite this method of stating assets in the balance sheet at amortised cost, the StabFund had already used up its equity capital by the end of March. Up until that point, it had been necessary to make value adjustments amounting to roughly USD 5 billion. Nonetheless, it still looks as though the StabFund will ultimately be able to pay back the loan. This is because, on the one hand, markets can recover; the positive turn of events in April and May corroborates this. On the other hand, the assets have been generating relatively robust cash flows until now. Owing to interest payments and loan repayments, the SNB loan has already been reduced considerably. By mid-May, it came to only USD 23.7 billion. In addition, the original size of the StabFund has declined by around USD 6.7 billion as a result of sales, maturities and the closing out of derivatives positions. In mid-May, the size of the StabFund, as valued at amortised cost, was just roughly USD 32 billion, of which around USD 4 billion comprised contingent liabilities from derivatives. The performance of the stabilisation fund’s assets is due to be reassessed at the end of the second quarter. Approximately 80% of the SNB’s loan to the StabFund is denominated in US dollars. Originally, the SNB fully refinanced the dollar loan via the existing swap facility with the Federal Reserve. Now, less than 20% is refinanced thus, accounting at this stage for only about USD 3 billion.
The external scenario, beyond recent volatilities, continues to signal higher growth in the developed world, with favorable financial conditions for emerging markets and commodity prices without major changes, after having begun a recovering in late 2016. Thus, although important external and domestic sources of uncertainty remain, prospects for this year and next are in line with forecasts. Accordingly, the projections in the baseline scenario that I will be sharing with you in a moment, assume that monetary policy will remain expansionary throughout the projection horizon, so that inflation will fluctuate around 3% during much of the period, and activity will recover higher rates of expansion, especially towards the second half of 2017 and into 2018. Let me now present the details of our vision about the macroeconomic scenario and estimates contained in our Monetary Policy Report. The Monetary Policy Report Recent evolution of the economy and our projections The inflation outlook shows no substantive changes. Annual CPI variation has been at 2.7% since February, while core inflation—the CPIEFE—has decreased slightly (figure 1). The baseline scenario estimates that the real exchange rate will not change much and that capacity gaps will begin to close some time next year. In this context, core inflation will continue to decline for some months, to around 2%, to then approach values of the order of 3% towards the end of the projection horizon.

15  16  17  Figure 14 90-day delinquency rate (percent of loans)  10  4 Clearing houses and family subsidies  8  4  6  Chain stores  Banks (right axis)  4  3  3  2  2 11  12  13  14  15  16  17  Source: Central Bank of Chile using SBIF, SUSESO and SVS information. 20  Figure 15 Household indebtedness (percent of disposable income)  70  Housing  70  Consumer  60  60  50  50  40  40  30  30  20  20  10  10  0  06  07  08  09  10  11  12  13  14  15  16  Source: Central Bank of Chile using SBIF, SUSESO and SVS information. Figure 16 Real housing prices and mortgage debt (*) (real annual change, percent)  16  CChC  House price index IPV in Metropolitan Region  12 House price index IPV  8  15 Mortgage debt (right axis)  12 9  4  6  0  3  -4  0 11  12  13  14  15  16  17  (*) IPV stratified method. CChC hedonic model for new homes in Metropolitan Region (RM). Source: Central Bank of Chile using SII, CChC and SBIF information. 21
Conclusion Let me conclude by emphasizing the obvious importance of the quality of macroeconomic policy management to the stability of the financial system. It probably is possible for a country with an exceptionally virtuous fiscal and monetary policy framework to experience a systemic financial crisis. But most financial crises involve a shock whose origins lie in the realm of macroeconomic policy error, often magnified by the toxic combination of poorly designed financial deregulation and an overly generous financial safety net. Probably the most important contribution policy makers can make to financial stability is to avoid large monetary policy mistakes or sustained fiscal and external imbalances that increase the risk of large macroeconomic shocks, and to try to ensure that policy reacts with sufficient speed and force in the face of those shocks we are unable to avoid. BIS Review 55/2004  5

The studies further cited successful community banks as having a strong and localized customer service focus – that is, avoiding the temptation to expand into new, less familiar areas and markets – and high community visibility, with staff members heavily involved in community activities, which in turn, created customer relationships built on trust. 5 So what did we learn from the experience of community banks with the financial crisis? A foundation built on good risk management practices and intimate local knowledge helped the successful banks to thrive during one of this country’s most difficult financial periods. The banks that prosper in the future will likely have characteristics similar to those that outperformed during the financial crisis. It bears repeating that community banks are critical in keeping local economies vibrant and growing. Strong community banks are essential to the provision of credit to small businesses in their localities. 4  See United States Government Accountability Office, Financial Institutions: Causes and Consequences of Recent Community Bank Failures, Statement of Lawrance L. Evans, Jr., Director Financial Markets and Community Investment, June 13, 2013. Also see Gilbert et al. (2013). 5  St. Louis Federal Reserve Study Shows Community Bank Model Can Thrive in Good Times and in Bad. BIS central bankers’ speeches  3  Importance of small business lending It is often noted that small businesses contribute disproportionately to employment growth in their communities. When you dig a little deeper into this stylized fact, you discover that it is new small businesses that are responsible for this growth.
This sharp decline in the number of credit institutions is mainly the result of mergers among savings and co-operative banks, which epitomise what one may call “consolidating” or “defensive” mergers – mainly aimed at cutting costs and diversifying risks but also at reaching a size of own funds compatible with a regulation that has been agreed at the EU level. So far, this consolidation process has taken place mainly within national boundaries, with the possible exception of the Benelux and Nordic countries. The preference for domestic mergers (as opposed to cross-border mergers) may be explained by the fact that the relevant market for retail services remains national rather than pan-European. Furthermore, the scope for cost-cutting appears to be larger if the merging institutions have overlapping operations. The fact that cultural “proximity”, notably in the corporate style of governance and management, is traditionally seen as a key factor in the success of mergers may also have played a role. However, from my own professional experience of running a truly pan-European bank, I could add that professional identity is a much stronger force for unity than national identity is a force for separation. Conclusion  BIS Review 63/1999  4  I have outlined the likely pattern of evolution that we envisage for the euro area financial system. Summing up the various elements, we see a pattern which leads towards a financial system that should perform its functions more efficiently using the advantages available to the financial system of a large economy.

The third step is the resolution of banks, applied by the Bank of Albania in view of the new mandate. Similar to recovery plans, the resolution plans drafted by the Bank of Albania aim to identify the legal and structural obstacles and difficulties with financial resources that banks face, toward resolvability. In this regard, the resolution plans are one of the key instruments to facilitate the Bank of Albania’s resolution implementation. This year in April, the Bank of Albania approved a bylaw that defines the content of resolution plans. Then banks were required to report a broad set of data for drafting these plans, based on the model of the European Banking Authority and we are currently in the process of drafting them. The drafting of the banks resolution plans is complicated, which includes complex and cross-border issues that must be implemented and coordinated within a short period of time. Hence, the resolution planning is an on-going process and a long-term mission to remove obstacles against the possibility for resolution action in banks. This planning does not mean drafting an annual plan that is stored somewhere in some shelf and it is dusted off only when its implementation is necessary; instead, it is the beginning of a long process of restructuring all aspects of the banking business that may hinder this process.