samchain/econo-pairs-v1 huggingface dataset:
This is especially the case if no other firm in their peer group is subject to these measures, creating a collective action problem: firms, acting out of perceived individual interest, may choose to restrict their lending to the real economy rather than dip into their CCoB. But actions that can seem rational for each firm individually can prove damaging in aggregate for the economy and banking system as a whole. By way of illustration: stress tests carried out by the Bank of England in the early phases of the Covid crisis suggested that the direct gain to banks of preserving capital by not lending were small – adding c. 0.1 percentage points in capital ratio terms. In contrast, they showed that the costs to the wider economy, and ultimately the banking system, from not lending could be very large: reducing aggregate bank capital ratios by as much as 0.8 percentage points due to negative feedback to banks’ credit exposures from worse unemployment and corporate insolvency outturns over time when lending is restricted.11 Finally, just before management buffers are Countercyclical Capital Buffers (CCyB) which, when non-zero, operate as an extension of the Capital Conservation Buffer and can be released during generalised stresses.12 The key issue here is that there may be stigma associated with use of a regulatory buffer.

It ties up resources without providing the extra capacity in stress that regulators wanted them to provide, and had assumed they would when determining how to prepare the system to absorb shocks. If a regulatory buffer is instead perceived as similar to a minimum requirement and firms take actions to avoid dipping into it, these actions might be harmful to the real economy and, as last year’s Bank analysis showed, to the banking system. Thus it is essential to have a well-designed regulatory buffer framework which can make fresh resources available when they are most needed. The early Covid stress gives us an opportunity to investigate how the current framework behaves and how practically usable regulatory buffers may be. Given the effectiveness of the fire-fighting I mentioned at the outset, bank capital ratios did not approach their Capital Conservation Buffers, so we cannot probe directly how banks would have behaved had capital ratios fallen inside that regulatory buffer. However, there are at least three approaches we can look at. Approaches to analysing capital buffer usage Approach 1 – What do banks and investors say about buffers? The first approach involves asking banks what constraints they face in practice in dipping into buffers and how they manage their capital positions. In broad terms, they told us that expectations of capital instrument and debt investors and concerns about the actions of credit ratings agencies are a major constraint.
Has the publication of regular forecasts, which are seen to bear a close relationship to the decision taking process, helped to make the policy decisions themselves more predictable? The test is whether markets are less likely to be surprised by interest rate changes, given full knowledge of all the relevant economic news. We ran some simple statistical tests on two measures of ‘market surprises’. One is based on the Reuters poll of economists. The surprise measure is the difference between the actual repo rate change and the mean expected repo rate change. The other surprise measure is a bit further out along the yield curve: changes in the implied three-month forward LIBOR rate.11 Both measures suggest that interest rate surprises have become significantly smaller in the post-2001 period than previously (Table 2 Panel C), consistent with improved policy predictability. But, intriguingly, there is also some tentative evidence that surprises in Inflation Report months tend to be relatively large.12 What are we to make of that? 11  More precisely, this is an implied 3-month Libor forward rate at a constant horizon of 3-months, where the constant horizon is calculated by linear interpolation of adjacent futures contracts. The results are largely invariant to using six or twelve month horizons. 12  This could, of course, be entirely driven by the expectation that there would be no move in non-Inflation Report months: in the extreme, if the distribution of surprises in those months is degenerate (i.e.

And that counts, both when it comes to organising the debate between nine experts, and when it comes to explaining the basis of policy to a non expert public. But forecasts are highly fallible, so our forecast centred approach to inflation targeting has gone hand in hand with a determined effort to illustrate the wide range of uncertainties around any central projection and a systematic attempt to factor the Committee’s own judgements about the risks into decision taking. That, for me, is a key reason for resisting recent calls by the IMF and others for the Bank to ‘publish numerical projections for a broader range of key variables’. Detail is seductive – but it can also be highly misleading, and a committee that spent its time debating the details of the forecast rather than using it as a tool to address big picture issues would be at risk of losing its way. Forecasts are indispensable – but they should be handled with care. 10  BIS Review 17/2005  Table 2. Interest rate surprises  A. Are rates changes evenly spread over the months of the year? Rate changes IR months non-IR months Whole period 1997-2000 2001-present  15 6 9  14 10 4  B. Are rates changes expected to be spread evenly over the months of the year?
BIS central bankers’ speeches  1  Now I would like to review recent developments in the local and national economies, and at the end of my talk will be happy to answer any questions you have. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee. Regional employment and economic trends First, let’s talk about economic trends in New York City. The City’s economy showed resilience both during and after this last severe recession. Payroll employment fell sharply in 2008 and 2009; it bounced back, slowly at first, but by July of 2011, the City’s economy had recovered to its pre-recession employment peak and, in November, it eclipsed its previous all-time peak of 1969. Since then, employment has continued to grow strongly, rising at a roughly 2 percent annual pace and outpacing the national growth rate. The demand for labor has been driven by start-ups, tech, health care and business services. While Superstorm Sandy caused substantial damage to homes and the region’s infrastructure and severe economic disruptions in late 2012, the local economy as a whole bounced back quickly. Despite the robust job growth, the unemployment rate among City residents has been persistently high – though it did fall to 8.0 percent in December, nearly a 5-year low.

This forecast is based on the projected gradual increase in the levels of resource utilization, a firming in global demand, and the upward pull exercised by stable inflation expectations on actual inflation. Underpinning the latter assumption is the broad stability of long-term inflation expectations across different financial and survey measures, combined with ongoing moderate growth of wages and unit labor costs – all observations consistent with anchored inflation expectations. Overall, I would characterize the outlook as reasonably favorable. But I would very much prefer faster economic growth and more rapid progress towards our dual mandate objectives of maximum sustainable employment and price stability. Hence, the continued need for monetary policy to remain highly accommodative to support the economic recovery to the fullest. Thank you for your kind attention and I will now be happy to take some questions. BIS central bankers’ speeches  5
In addition to the practical issues I have mentioned, behind dynamic provisioning there lied a conviction, resulting from many years of supervisory experience and, more recently, also from empirical evidence, that credit risk appears in bank balance sheets at the time lending is granted. Risk is an ex ante concept, and default is no more than the ex post manifestation of this credit risk. As I just mentioned, banks commit lending policy errors in upturns, when there is excessive optimism and it is believed that the business cycle has disappeared and that recessions are a relic of the past that will not return, and when bankers, caught up in this wave of exuberance, relax their credit granting standards. By contrast, and as we are all experiencing at the moment, a reaction in the opposite direction occurs in recessionary phases. Banks, pressured by high default rates, which impact their income statement and their level of capital, contract credit significantly, granting financing only to those borrowers whose solvency is beyond all doubt. The end result is as follows: an overly expansionary credit cycle during the upswing and, by contrast, overly contractionary credit growth during the downswing. In addition, there may be a perverse effect on institutions’ income statements and levels of capital. During upswings, the failure to recognise risk through loan loss provisions results in very high profits.

But a more conservative monetary policy in expansionary phases would not only have favourable effects on tempering the amount of credit, it would also improve credit quality. Monetary policy also affects how banks assume risks. Researchers at the Bank of Spain have shown that a long period of low interest rates contributes to relaxing banks' credit granting standards. The market pressure to maintain high returns in a setting of low interest rates and, therefore, of lending offering very tight income margins, leads some banks to extend credit to individuals and firms with a greater risk profile. Also, the expansionary monetary policy stance means this greater risk takes longer to materialize, which in turn stimulates ever greater increases in this type of risky investment. Banks thus increase their risk profile by financing individuals and companies with a history of default, or by increasing the credit extended to new borrowers who, lacking a credit record, entail a greater level of uncertainty and, therefore, of potential risk to the bank. Finally, in an environment marked by low interest rates and the search by banks for yield, the general conditions of risk acceptance and selection are substantially relaxed, which translates into the riskier granting of credit that will materialise once the cycle turns down.
Looking at our development over the last ten years, I do believe that price stability, due to monetary independence and flexible exchange rates, has been beneficial to the Swiss economy. It has maintained a low interest rate environment which has facilitated the private sector's adjustment to the rapid changes of the world economy. And what about Israel? I think that the arguments in favour of Switzerland's monetary independence apply even more to this country. While we at the SNB concentrate primarily on domestic developments and trends in the euro area, the Bank of Israel also has to take into account economic conditions in the US. Thus, there are three major sources of shocks that Israeli monetary policy has to respond to in order to achieve the goal of price stability. BIS Review 46/2006  7  Despite difficult circumstances, Israel was able to stabilise its monetary framework in the 1990s. The Bank of Israel now operates with an inflation target and will soon benefit from a new law that will modernise its decision-making process and strengthen its autonomy. All the necessary ingredients are now in place for the implementation of a successful independent policy in this country, as was once also the case in Switzerland. May I wish Stanley Fisher and his colleagues all the best in this endeavour. 8  BIS Review 46/2006

BIS central bankers’ speeches  3  MAS will therefore introduce a “regulatory sandbox” approach that aims to give FIs more confidence to experiment and launch their innovative products or services within controlled boundaries. •  The idea is not to remove all risk. Failure is an inherent part of innovation. •  Rather, we want to create an environment where if an experiment fails, it fails safely and cheaply, without larger adverse consequences. •  MAS will soon issue guidelines for public consultation on how the regulatory sandbox will work. Three, we promote greater inter-operability within the industry to harness the full potential of technology. An innovative environment proliferates a wide range of technologies and solutions. •  But if the solutions cannot interact with one another, we sub-optimise efficiency gains or customer experience. •  While we should allow a hundred flowers to bloom, we should also take care we create a garden. Greater inter-operability across data systems is therefore a key priority. Let me give two examples of what MAS is doing together with the industry. •  •  One, common standards for payments systems to realise more seamless payments across a range of platforms. –  We are working towards a unified Point of Sales (POS) terminal – a single terminal that can read all kinds of cards at retail and hospitality outlets.
Furthermore, global financial conditions are still favorable, partly because the main central banks continue to carefully and gradually withdraw their large monetary stimuli, helping to keep interest rates and term premiums low. In addition, capital has continued to flow to emerging markets and the prices of various assets are high. Commodity prices, in general, remained above the levels foreseen in September, especially copper and energy sources (figure 8). The copper price rose 3.5% to USD 3.2 per pound during the period, to settle around USD 3.1 at the closing of this Report. This behavior is common to most metals, in a context of still high pressures coming from financial factors and improvements in some fundamentals. Among the latter, the increase in demand and perspectives is worth noting, something that has occurred thanks to increased global industrial production and the performance of the Chinese economy. This, combined with some stabilization in output, has gradually reduced inventories. Beyond recent movements, the weakening of the US dollar during the year has also been sustaining the copper price. Thus, the baseline scenario in this Report adjusts it to USD 2.95 and USD 2.75 per pound on average for 2018 and 2019, respectively. Regarding oil, the prices of Brent and WTI rose a 2  An abbreviation from its Spanish Indice Mensual de Actividad Económica, literally Economic Activity Monthly Index. 4  significant 20% in the period, to near USD 63 and 56, respectively, explained largely by a somewhat more balanced market.

In the long run monetary policy is only capable of influencing inflation; a systematically higher rate of inflation, however, would not lead to higher long-term growth. The level of long-term growth is determined instead by real economic factors such as demographic changes, technology, education and the efficiency of markets. In so far as a long-term relationship between inflation and growth does exist, most of the evidence suggests that, if anything, higher inflation impairs the workings of the economy and thereby weakens output. Today there is widespread - though not yet complete - agreement on this. What monetary policy can do, on the other hand, is influence the economy’s fluctuations around the long-term trend, albeit without any lasting effects on growth. This means that if resource utilisation is low or high, monetary policy can be used to stimulate or dampen activity temporarily, but not to fine-tune the economy. With an inflation target which applies downwards as well as upwards, so that deflation as well as inflation are avoided, monetary policy can then exercise a stabilising influence and help to smooth economic fluctuations around the long-term trend. Problems arise if resource utilisation becomes so high that inflation starts to accelerate and the central bank has not intervened. People may then begin to count on inflation remaining high in the longer run. A higher level of inflation may then be established, whereas the effects on production and employment will be only temporary.
More importantly, I believe, the IMF’s decision will promote further confidence in using the RMB for international trade and financial transactions, giving more impetus to RMB’s internationalisation process. The IMF’s decision therefore represents a key milestone in the RMB’s internationalisation. Significant progress has also made in other areas in the cross-border use of the RMB over the past year. And, I see three important trends emerging: Key trends on RMB internationalisation First is the continuing liberalisation of the capital accounts with major breakthroughs in new policy headroom granted by the Mainland authorities. The Shanghai-Hong Kong Stock Connect has been in place and operating smoothly since November 2014, allowing international investors access to the A-shares listed in Shanghai through the stock exchange in Hong Kong, and vice versa. The Mainland-Hong Kong Mutual Recognition of Funds scheme was implemented in July this year, allowing Mainland and Hong Kong funds to be distributed in each other’s markets through a streamlined approval process. Eligible funds currently going through that approval process are expected to be launched in the market shortly. Since June, offshore banks have also been allowed to conduct repos in the onshore interbank bond market, while since July, foreign central banks, sovereign wealth funds and supranational organisations have been allowed access to the onshore interbank bond market without investment quotas and to conduct a much wider range of transactions. They were also granted access to the Chinese foreign exchange market in September. These have been key steps in liberating the capital accounts.

Andrew Bailey: It’s a recovery, but not as we know it Speech by Mr Andrew Bailey, Governor of the Bank of England, Mansion House, London, 1 July 2021. * * *  Introduction Lord Mayor, there has been nothing usual about the last sixteen months. Even long-standing neighbours like the Bank and the Mansion House have had to resort to video conferences rather than popping round for a word. And one of the trickiest issues for all of us is dress code and etiquette – is this a ties on or off video, who knows? I can admit that I don’t seem to be a very good predictor of dress code. But you did throw me not long ago Lord Mayor, when we had a video call about an hour before we were both speaking at an event, and I can reveal that you were dressed in a Mansion House bomber jacket. So, white tie to black tie to bomber jacket. I should say that by the time of the event, the Lord Mayor had changed into something more conventional. The story so far Conventional is not a word I have used about the performance of the economy in the last sixteen months. Last calendar year, UK GDP declined by an annual growth rate of 9¾%, and based on our last forecast in early May we expect it to grow by 7¼% this year. It’s more meaningful to express the level of activity relative to the end of 2019 (pre-Covid).
There is sometimes a tendency by the authorities to try to solve all problems by more regulation. It is  BIS Review 104/2006  5  true that we could regulate away all the risks in the banking sector – but such regulation would hamper economic development. There must be a balance. Thus for each regulation we introduce we must also conduct a fair analysis of its costs, also non-financial, as well as its benefits, also non-financial. I agree that this is not easy, partly since in most cases you will not find any clearly measurable indicators, but the process of conducting the cost/benefit analysis will in itself help you in your decision. Supervision Good regulation is closely linked to good supervision. Supervisors must be able to build their work on a broad and relevant regulatory framework. Supervisors must also possess the necessary powers and other prerequisites to conduct efficient work. There are at least four important aspects: First, the supervisory authority must have operational independence from industry as well as from politicians. These must not interfere in the operational decisions of the supervisors, e.g. to take remedial measures or to close banks. Such decisions must be taken on purely prudential grounds. Of course, the supervisors are still responsible for their actions and could be criticized afterwards, e.g. in Parliament hearings, but they must be able to perform their operational duties independently. Also the bank, its owners and management should be able to sue the supervisors for malpractice and they may receive compensatory payments.

But, it should be stressed that throughout survey vintages, a rebalancing of the 4  CESEE Bank Lending Survey, European Investment Bank. sources of financing was visible. Given the deleveraging of the international banks present in the region, the intra-group financing which was receding was substituted with local funding. Easy access to retail and corporate deposits was reported as a feature in the second half of 2015, and the first half of 2016 as well. Chart 4: Average annual credit growth Annual credit growth in %  70  average 2005-2008  60  average 2009-2012  average 2013-2016  50 40 30 20  10 0 -10  SLO  SRB  ROM  POL  MKD  LIT  LAT  HUN  EST  CZR  CRO  BUL  BIH  ALB  -20  Source: Central Banks’ internet pages. In light of the rising importance of local funding as a source of financing for the banking systems in the region, and hence as a basis for further credit revival, one important aspect is the impact of low interest rates on the savings in the banking system. The dynamic observance of the deposits rates in the banking system of the region reveals a large downward adjustment of the yield on deposits, both for corporates and for households.
Page 9/9  Protectionism complicates monetary policy  Thomas J. Jordan Chairman of the Governing Board Swiss National Bank Volkswirtschaftliche Gesellschaft des Kantons Bern Berne, 31 October 2018  Chart 1  2  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 2  3  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 3  4  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 4  5  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 5  Greater uncertainty / appreciation of the CHF  6  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 6  7  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank

The krone exchange rate is the price of our currency measured in a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. Capital flows freely and flows can change rapidly. This can spill over to exchange rates and interest rates as well as output and employment. There is a cost involved for businesses in hedging against fluctuations in the krone. A krone that is stable - but too strong - also entails social costs in the form of low activity. Likewise, a krone that is stable - but too weak - is a source of high inflation. Norway is running a current account surplus as a result of sizeable oil and gas exports. Owing to high oil prices, the current account surplus is rising this year. An increase in the current account surplus will normally result in higher net demand for the domestic currency. In Norway, however, the additional foreign exchange revenues that accrue to the Norwegian state as a result of high oil prices will be invested in foreign securities through the Government Petroleum Fund. As a result, they will not have a direct impact on the balance in the Norwegian foreign exchange market. Oil companies hold a large share of their financial capital in foreign currency, and higher revenues in these companies therefore results in an increase in capital outflows.