samchain/econo-pairs-v1 huggingface dataset:
The main behavioural assumption underlying this monetary injection was that it would gain traction via a portfolio rebalancing channel. Most UK government bonds are held by non-bank financial sector companies (OFCs), such as pension funds and insurance companies. 3 As long as these investors do not regard money as a perfect substitute for gilts, they will attempt to reduce the additional money holdings associated with gilt purchases by switching into other assets. This process of portfolio rebalancing will continue until the yields on gilts and on alternative assets, such as corporate bonds and equities, have fallen sufficiently to compensate investors for holding the higher level of money balances. The degree of stimulus associated with the monetary  2  Del Negro, Eggertsson, Ferrero and Kiyotaki (2009) extend this framework to analyse monetary policy at zero bound. 3  At the end of 2008, prior to the commencement of the asset purchase programme, almost 60% of outstanding gilts were held by OFCs (of which 40% were held by insurance companies and pension funds), and 35% were held by overseas investors. UK banks and building societies held only 4% of gilts. BIS Review 29/2010  3  injection will be greater the lower the substitutability between money and gilts, and the higher the substitutability between gilts and other assets. Trying to estimate the likely size of these effects is very difficult, not least because a policy of this form and scale has never been implemented in the UK.

Instead, I’d like to focus on some of the more awkward questions which confront us as a regulator with prudential and competition objectives. Five years on from the introduction of our competition objective it’s a natural moment to do this. But before turning to those questions, I have to ask you to indulge me for a few moments in picking out what to me are the most significant things we have done to advance our secondary competition objective during the first five years of its existence. I will limit myself to three:   First, the structures we have put in place to encourage the entry of new banks: our New Banks Unit, which engages with prospective new entrants and provides a nursery for newly authorised banks; our ‘mobilisation phase’ which allows new banks to get going in a live environment but before being released into the wild; and our ‘wind-down’ approach to setting PRA buffer requirements for new banks in order to avoid penalising early stage growth. I don’t think it’s a coincidence that we’ve authorised 17 new UK banks in such a short period.1    Second, bank capital. I have long been troubled by the difference between some standardised and modelled capital requirements, particularly for mortgages. And there are remaining tensions on capital which I will come back to.
For one, advances in technology, telecommunications, and markets have changed the way that banks collect, measure, and manage their risks. Having gained experience in quantifying exposures to market risk, leading banks today are quantifying and using increasingly reliable estimates of the credit risk associated with particular borrowers. Evolution in markets has furthermore provided banks with more tools for managing and transferring credit risk, such as through securitisation transactions and credit derivatives. Likewise, many banks seek to quantify in a more reliable manner their exposures to operational risk, or the risk of losses stemming from failures in internal processes or systems or from damage caused by an external disruption. As risk management becomes more sophisticated, the simple and static rules of the 1988 Accord are becoming less relevant. Leading banks increasingly view the old rules as a burden, constraining their abilities to administer their businesses relative to the best information and practices available today. Supervisors, for our part, have less confidence in the 1988 Accord’s measures of risk for banks that engage in the most sophisticated forms of risk taking and risk mitigation. By the late 1990s, it became clear to banks and supervisors that we needed a new capital framework. But the Basel Committee sought more than just a reworking of the minimum requirements. We wanted instead to create incentives for the industry to enhance the state of the art in risk management.

There is, however, still progress to be made; our monetary and economic union needs to be completed. Our European economic institutions are like a trimaran. Our vessel already has a robust central hull in the form of the ECB and the Eurosystem, with its credible single monetary policy. This boat must be completed with two floaters. On one side, we need a public float with a standing common fiscal capacity to better cope with macroeconomic shocks. This need not mean increasing permanently our yearly budget; rather we should construct a fiscal facility that could be activated in moments of crisis or recession. In this respect, the EUR 750 billion Next Generation EU programme – agreed in 2020 and now actively implemented – has been a major step forward. On the other side, we need a private float to foster a better capital allocation, which is just as important. The  Page 5 sur 9 Banking Union and Capital Markets Union, though somewhat “boring” and technical, should be absolute political priorities to enhance the free circulation of capital across the EU and build what I suggest to rebrand a “Financing Union for Investment and Innovation”. In the U.S., private capital flows are a major financial shock absorber between states. We can achieve the same in Europe, and make better use of the world’s largest pool of savings, including by fostering venture capital which is still underdeveloped.
Svein Gjedrem: Making use of the central bank Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at Norges Bank’s Symposium “What is a useful central bank?”, Oslo, 17 November 2010. *  *  *  The text below may differ from the actual presentation. In his first year as governor of Norges Bank in 1985, Hermod Skånland gave a speech entitled: “Making use of the central bank”. 1 Skånland compared the independence of the Bundesbank with Norges Bank’s position in the government administration under the credit rationing policy of the time here in Norway. He said: “In Norway, where no great degree of power has been given to the central bank, it must develop other qualities.” The Bank was to be efficient in its operations and function as a sound adviser for the government authorities. But in the course of Skånland’s years as governor, Norges Bank’s role changed – the interest rate once again became an active monetary policy instrument. The Norges Bank of today is a result of its own and the country’s economic history. Although the Bank’s role is influenced by central bank developments in other countries, we also have our own legal traditions and our own way of organising government administration. The tasks assigned to the Bank are also supported by modern economic theory. A central bank is different from other public bodies in that it has its own balance sheet, independent budgetary authority and its own accounts.

Here I would like to remind you that the Banco de España has opened a public consultation process on the amendment of Circular 2/2016 on supervision and solvency this very week. The aim is to develop certain aspects of the macroprudential toolkit that legislation has made 1/2  BIS central bankers' speeches  available to the Banco de España. Pursuant to this legislation, the Banco de España may set limits and conditions on lending standards and other financial institution transactions, along with sectoral concentration limits. The new Circular defines the procedures for activating, deactivating and changing these measures, including the variables and parameters that the Banco de España may take into consideration to adopt a decision, the sectors that may be affected and the contractual terms or ratios that the measures may apply to. I would like to conclude by thanking the General Council of Economists for this initiative geared to young people, a group that the Banco de España considers a strategic priority in the context of the Financial Education Plan. It is a further example of how the Financial Education Plan partners, in this case the General Council of Economists, play an essential role in meeting the Plan’s objectives. We have continued to move resolutely in this direction: through partnership agreements such as those recently signed with the Ministry of Education and Vocational Training and the Ministry of Consumer Affairs; and by pressing ahead with the work avenues opened with the Ministry of Economic Affairs and Digital Transformation.
Investment spending should also benefit from a better international outlook and the improvement in U.S. trade competitiveness caused by the dollar’s recent weakness. The softer dollar and solid growth abroad also suggest that the trade sector will no longer be a significant drag on economic growth. Turning to the outlook for inflation, I have been surprised by the persistence of the shortfall from the FOMC’s 2 percent long-run objective. While some of this year’s shortfall can be explained by one-off factors, such as the sharp fall in prices for cellular phone service, its persistence suggests that more fundamental structural changes may also be playing a role. These include the increased ability of prospective buyers to compare prices across different sellers quickly and easily, the shift in retail sales to online channels of distribution from traditional brick-and-mortar 1/6  BIS central bankers' speeches  stores, and the consequences of these changes on brand loyalty and business pricing power. Over the coming months, I hope that we will be better able to differentiate between these competing explanations. If it turns out that structural changes have played a significant role, I would generally view this as a positive, rather than negative, development. It would imply that the U.S. economy could operate at a higher level of labor resource utilization without generating a troublesome large rise in inflation.

Looking ahead, on the basis of current oil futures prices, headline inflation is likely to pick up further in the near term, largely reflecting movements in the annual rate of change of energy prices. However, measures of underlying inflation are expected to rise more gradually over the medium term, supported by our monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack. Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with its annual rate of growth increasing to 4.8% in November 2016, up from 4.4% in October. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 8.7% in November, up from 8.0% in October. Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual growth rate of loans to non-financial corporations was 2.2% in November 2016, after 2.1% in the previous month. The annual growth rate of loans to households was 1.9% in November, after 1.8% in October. Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and nonfinancial sector balance sheets, the monetary policy measures put in place since June 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area.
I expect not because I think there’s always people that test the limits of the law and regulation and are always trying to see where they can go. And there are obviously going to be bad apples in any really large organization. What I hope is that, one, the banks will sustain their effort to improve their cultures. Banks really are working on this. I spoke at a bank industry conference about a month ago, where they brought in all their very high potential mid-level people to talk about culture, and it was really them talking about bank culture and I came in for a very short period. I think I was the only person from the official sector that spoke there. And I thought the fact that they were taking all these people that are high-performers and spending a day trying to inculcate them with the importance of culture maybe suggests that we’ve passed a tipping point. So, that’s important. I think the other thing that I’m hoping to see is the banks start to cooperate a little bit more with each other and share best practices on bank culture. Up to now it’s been most banks working sort of on their own thing alone. I think if they actually shared best practices, shared survey results, to see how they were doing relative to their peers, that would also help them perform. And the last thing I would say on culture, I think we’ve got to continue to work on incentives.

The total capital ratio remained adequate, above the EU average, but the capital reserve shrank once with the marking to market, because of the fast-paced interest rate rise. Asset quality continued to improve, with the non-performing loan ratio falling to European levels and the NPL coverage by provisions staying at significantly higher levels than the European average; profitability increased. Yet, Romania's banking sector faces a number of vulnerabilities: (i) expectations on a higher risk of default on private sector loans amid worsening macroeconomic conditions, the uncertainty about future developments, and growing debt service due to higher interest rates, (ii) the close link between the banking sector and the government sector, and (iii) the polarization of credit institutions by size. The slowdown in lending, which started in the second semester of 2022, was also due to the rise in financing costs amid the tightening of both monetary policy stance and  2/3  BIS - Central bankers' speeches  credit standards. In the second quarter of 2022, banks tightened credit standards for loans to non-financial corporations and to households, and were expected to continue to do so in the third quarter of 2022. The prolonged energy crisis, the heightened geopolitical tensions and the mounting uncertainty about the economic outlook prompted banks to reassess the level of risk. In respect with challenges raised by climate change and energy efficiency, as of May 2022, the NBR started collecting information on green loans from banks.
For Sweden there is also membership of the European Union and possibly of EMU. ·  Analytical requirements are heightened in general. Matters are becoming increasingly complex. Another factor here is the new technologies with electronic payment systems, for example. ·  In our case there is also the crisis in the early 1990s and the lessons we have tried to learn from it. I shall now say something about the work we have done in recent years in three respects: Concentrating on cores activities; Strength and security; and Management with an executive board. BIS Review51/2001  1  Concentrating on core activities A good performance presupposes that we concentrate our resources to what is really important. The starting-point here is, of course, our main statutory functions, namely to maintain price stability and promote a safe and efficient payment system. For three hundred years the Riksbank has owned a paper mill and a note-printing works in Tumba and a mint in Eskilstuna. These are largely manufacturing operations. Through the Tumba works, in the past decade the Riksbank has been active in export markets and produced banknotes on behalf of a number of countries. Besides manufacturing notes and coins, we distribute them. Like McDonalds and the food chains, we send our products, wrapped in plastic though not deep-frozen, to everywhere in Sweden. In our case the security requirements are, of course, considerably higher. But is this really something we should be doing? At the Riksbank we decided it was not.

This is something that has to be renounced to enable us to perform our tasks properly and both attract and retain the best university graduates. An open internal dialogue with management is needed to promote an informal exchange of ideas. Taking responsibility and meeting deadlines must also be rewarded. It is easy to say that some mistakes are acceptable provided things get done but that attitude is by no means customary in a central bank. Last but not least, we must have an open attitude to the outside world, accept impulses and explain what we are doing. So what have we done in recent years to make the Riksbank a more modern place to work in? Here are some examples: ·  We have aimed for a better organisation by making it flatter and delegating more to heads of department and division. That in turn means that general objectives and tasks must be formulated clearly for all concerned so that everyone is aware they are not just piling stones on top of each other but actually helping to build a cathedral. ·  We have accentuated the analytical and academic profile. Our advisers are world-class academics and members of the staff have access to further education in Sweden as well as abroad. We have also made the basic operations more efficient. ·  Another aim has been to give staff a more flexible working life.
François Villeroy de Galhau: Looking up to achieve a Financing Union Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chair of the Board of Directors of the Bank for International Settlements, at the EUROFI High Level Seminar 2022, Paris, 23 February 2022. * * * Ladies and Gentlemen, It is a great pleasure for me to open this edition of Eurofi today in Paris, and I extend my warmest thanks to Didier Cahen and David Wright for their tireless efforts that allow us to gather in this beautiful Hôtel du Collectionneur. Today I will indeed be speaking about a collection – not of fine arts, but rather of national banking and financial systems. Unfortunately, such a collection is nothing to rejoice about, it is rather an Achilles heel. But let me start with a few words about Ukraine. We are obviously monitoring closely the geopolitical developments, and their possible economic and financial implications. Let me already stress that the direct exposure of French financial institutions to Russia remains limited, but the SSM called all European banks to enhanced vigilance on cyber risks. We will assess in our Governing Council in March the more indirect consequences on inflation and growth, and we will be facts driven: more than ever, optionality – about the right monetary stance – and flexibility – to guarantee the right monetary transmission – are the two names of the game for our policy.

Preserving the credibility of our commitment to price stability is vitally important, not least because of the flexibility it affords us to confront future shocks that have the potential to cause damage to the financial system and the economy. Second, it is important that the United States work to build more confidence that it will act on the fiscal front to achieve a better balance between our commitments and our resources, both with respect to the medium term and the longer term. Given the inherent uncertainty surrounding long-term growth forecasts, the formidable rise in costs associated with providing for an aging population with longer life expectancy, and a potentially protracted elevation in national security costs, it makes sense to build a stronger financial position into our fiscal future. The present fiscal trajectory entails an uncomfortable scale of borrowing and little insurance against possible adverse outcomes in an uncertain world. Building a stronger fiscal cushion can help reduce the risk of adverse outcomes - those that might come in the form of a decline in the willingness of foreigners to acquire claims on the United States on the present scale, as well as those that might take the form of a reduction in private investment and lower future productivity gains. Strengthening confidence in our fiscal management and fiscal sustainability is critical to reducing the risk in the size of our external imbalance. Third, the U.S. and the major economies have an important role to play in encouraging further evolution in the international monetary system.
In that case, as in any other business, but all the more so in an industry as competitive as Spanish banking is, it would be of paramount importance to have flexible cost structures capable of adapting to new scenarios. Indeed, once the property market has moved onto a more moderate path, institutions will not only be confronted with a volume challenge, but also one of type of business. Specifically, they will progressively have to limit the importance accounted for by the property sector in their lending portfolios in recent years, moving towards other activities. In the design of these strategies it is to be hoped that easy, short-termist decisions, but which have highly negative potential in the medium term, will not be adopted. Entities should not succumb to the temptation of offsetting the slowdown in demand with a decline in credit quality standards. Recently, some concern was detected in this connection in the US mortgage market, especially in relation to subprime lending to the least creditworthy segments of the population. Such lending in the United States is usually to borrowers with a poor credit history or with little documentation of income that makes it difficult to properly assess their creditworthiness. In Spain, if we identified as subprime those operations with individuals who at some point in the past have failed to meet their credit obligations, the amounts extended to such individuals would stand at around 1.27% of the overall mortgage funds lent, compared with levels for the US subprime market of around 14% of mortgage loans.

I should not wish to conclude this address without highlighting the need to further efforts in the financial education of consumers. In early 2007 the Banco de España released a new version of the Bank Customer Portal, but much remains to be done. The growing complexity and sophistication of the international financial system is, as I mentioned, creating a “knowledge gap” between financial institutions and final investors. And far from closing, the gap is widening. Supervisors, along with the other authorities involved in safeguarding consumer rights, must step up and, above all, combine their efforts in this field, since bank customers with a sound financial grounding are a vital pillar in a sound, competitive and stable financial system. It remains only for me to express my thanks, which it is a pleasure to do. During these first 11 months of my term of office I have had the good fortune to work closely with this Governing Council, the Executive Commission, the Deputy Governor and the Directors General, and to have received the firm support of the Bank’s staff. I thank you all and, after having celebrated the 150th anniversary of the adoption of the name Banco de España, I can bear witness to the fact this institution is performing increasingly better the tasks entrusted to it. BIS Review 67/2007  9