samchain/econo-pairs-v1 huggingface dataset:
With knowledge of the exposure, it does not take a rocket scientist to figure out some scenarios. It turns out that, during the last exercise, such calculations would produce very reassuring numbers. But, for some reason, they were never made public by most analysts. Just as an illustration, the total exposure of French banks to sovereign debt in Southern Europe is 38% of total Tier 1 (13% without Italy). I will let you draw your own conclusions. Even in an apocalyptic scenario, only a small fraction of French banks’ Tier 1 ratio would be compromised. The same results apply, with some variations, to other countries. Conclusion Let me now conclude. Like all other major advanced economies, the euro area is facing big challenges in adjusting to the post-crisis environment. For all, these challenges relate to long-term fiscal sustainability. They are neither bigger nor smaller for the euro area than for the United States, the United Kingdom or Japan. They may be more complicated to solve because, by nature, our governance is more complex and we face specific collective action problems. It may take us longer to deal with difficulties as they appear, and we are paying a price for this relative inertia. But problems are being tackled, reforms are being implemented and I am convinced that, in the end, the euro area will emerge as a stronger and more robust entity than before the crisis.

At the outset of these purchases, we communicated that ETFs would only be used if their purchase is reasonably expected to achieve the objectives of the SMCCF more effectively than the purchase of underlying bonds.11 One month after starting ETF purchases, the Federal Reserve announced a framework to use corporate bonds as the SMCCF’s primary vehicle for providing support. In preparation, we had created a “Broad Market Index” of eligible corporate bonds, weighted proportionately by amount of debt outstanding from individual companies.12 We then began purchasing bonds across the index in a rules-based manner, taking care that our purchases are neutral toward eligible sectors and companies. I should note https://www.newyorkfed.org/newsevents/speeches/2020/sin201020  2/5  20/10/2020  The Federal Reserve’s Corporate Credit Facilities: Why, How, and For Whom - FEDERAL RESERVE BANK of NEW YORK  that in making an assessment of credit eligibility, we broadened our use of ratings to include perspectives from all Nationally Recognized Statistical Rating Organizations. Providing broad access also applies to the service providers that support the facilities. In early September, we announced the expansion of counterparties to the SMCCF, including several smaller and minority-owned broker-dealers.13 In early October, we announced the launch of our process to re-bid our engagement with the facility’s investment manager. This process has begun with the CCF cash management role, and in the coming weeks and months we will re-bid the remainder of the role.
The focus on price stability, as well as considerable efforts to develop norms and regulations within the field of supervision have undoubtedly reduced the risk of imbalances being able to accumulate over a long period. The question, however, is whether a monetary policy that is normally governed by forecasts of inflation in the short or medium term will be able to prevent the kind of imbalances that I have discussed from building up? If not - is there then any other way to improve the operationalisation of the target for a monetary policy aimed at achieving price stability without abandoning the goal that the decisions be rule-based and transparent? In countries that have experienced long periods of high, fluctuating inflation, discretionary stabilisation policy has been greatly discredited. First, we must point out that even if it is possible with hindsight to say that equity prices, debt levels and investment have been fuelled by over-optimistic expectations of future growth, the central bank cannot possess perfect knowledge of the future. Rising asset prices and a sharp expansion in private credit could be a sign of increased confidence in the economic policy aim of achieving price stability, as well as of reduced risks in the future. Lower public debt, which has been part of this policy, could in that case be reflected in higher private debt and in rising asset prices. Technological advances can also contribute to increasing expectations of future profits and income, and is mirrored in rising asset prices and high debt levels.

Just imagine a company that has no long-term strategy and experiences management reshuffles every few years, including board members, department directors and often unit heads. Every department within this company has its own budget, sets its own priorities and pursues its own often obscure goals (so as to maximize the available budget), which are frequently inconsistent with the overall purpose of the company. Can such a company compete in the global economy against companies with clear and consistent vision and strategy, companies where all departments’ activities are subject to this vision? This is a rhetorical question, as after using up all simple reserves of growth, such company would be doomed to bankruptcy unless it changed. The same applies to entire countries. While others continue to paint and fulfil daring visions, for example 11 iN2015 (Intelligent Nation 2015) in Singapore, we are still unable to join our efforts and are stuck in a business model where each department silos keeps pursuing its own goals. The ability to capitalize on knowledge will be crucial to Poland’s success in the 21st century. The country’s economic strength will be built with the power of mind, not muscle or machinery. For the time being, we have lost a million of minds that have increased the growth potential of other  9  A Venables, Shifts in economic geography and their causes, paper presented at an annual symposium of Federal Reserve Bank of Kansas City in Jackson Hole on 25 August 2006.
But the price for receiving protection is that banks must be subject to some regulation and supervision. Having acknowledged this, I am not a fan of extended bank regulation but rather regulation of a limited and transparent type, intended to protect society against major incidents and costs but allowing banks to conduct and develop their business as flexibly as possible. Clearly, bank regulation must aim at promoting efficiency and stability. Only efficient banks will remain stable in the long run. The old-fashioned type of regulation forcing banks to do business on other than market-oriented terms must be abolished. If the government wants to subsidize certain activities, such as banking for people in remote geographical locations, mortgage lending on favourable terms, or lending to important borrowers or projects, the costs for this should be transparent and show up as a part of the fiscal budget. Such activities should not be conducted by directives from the government to the banks. Another type of regulation which is becoming increasingly obsolete and inefficient is when the authorities try to micro-manage the behaviour of the banks by setting upper or lower limits on fees, deposit rates, lending rates, and credit expansion. The situation in the economy changes so rapidly that the authorities will never be able to catch up and their actions could then be more harmful than helpful. The type of regulation I would like to promote is flexible.

SPEECH  Quantitative tightening: rationale and market impact Speech by Isabel Schnabel, Member of the Executive Board of the ECB, at the Money Market Contact Group meeting Frankfurt am Main, 2 March 2023 Eight years ago, we launched the asset purchase programme (APP). It was the first time the ECB employed quantitative easing (QE) to help secure price stability when the space for further policy rate cuts was becoming constrained by the effective lower bound. By now, there is a wealth of evidence suggesting that the APP was successful in lowering long-term interest rates, stimulating economic activity and raising inflation at times when price pressures were unusually weak. [1] As risks to medium-term price stability had increased sharply, we decided in June 2022 to end net asset purchases under the APP as of July. In December, we announced that the APP portfolio would decline at a measured and predictable pace as of March 2023. This became effective yesterday when we started limiting reinvestments of maturing securities. Until the end of June 2023, the APP portfolio will decline by € billion per month on average. [2] For our corporate bond portfolio, the remaining reinvestments will be tilted more strongly towards issuers with a better climate performance, in line with the goals of the Paris Agreement and without prejudice to our primary mandate. [3] In the second quarter of this year, the Governing Council will reassess the pace of APP portfolio reduction. I will start my remarks today by presenting the rationale for conducting quantitative tightening (QT).
Looking forward, we face as a nation a number of very important policy questions. This financial crisis, as all past crises, has highlighted vulnerabilities that require action. No economy is stronger than its financial system, and as we continue to focus on the immediate challenges of financial repair and supporting economic growth, we need to begin the process of building consensus on a comprehensive set of change to our regulatory framework. In addition to a stronger set of protections for consumers, the overwhelming imperative of reform must be to put in place a stronger framework for financial stability. Our objective should be a system that preserves the unique strengths of our financial markets in providing individuals and entrepreneurs access to capital and credit, but with a greater capacity to withstand stress. 8  BIS Review 39/20086  This will require significant changes to regulatory policy and the supervisory framework. And the focus has to be on changing the incentives that all financial market participants face in managing the risk in exposure to adverse outcomes. In my view, there are a set of important objectives and principles that should guide this effort. •  We need to ensure there is a stronger set of shock absorbers, in terms of capital and liquidity, in those institutions, banks and a limited number of the largest investment banks, that are critical to market functioning and economic health, with a stronger form of consolidated supervision over those institutions.

Some hedge funds that had used Bear to borrow money and clear trades were withdrawing cash from their accounts. Some large investment banks stopped accepting trades that would expose them to Bear, and some money market funds reduced their holdings of short-term Bearissued debt. The rumors of Bear’s failing financial health caused its balance of unencumbered liquidity on March 13 to decline sharply to levels that were not adequate to cover maturing obligations and funds that could be withdrawn freely. This precipitated the phone call that I described in the beginning of my testimony. The news that Bear’s liquidity position was so dire that a bankruptcy filing was imminent presented us with a very difficult set of policy judgments. In our financial system, the market sorts out which companies survive and which fail. However, under the circumstances prevailing in the markets the issues raised in this specific instance extended well beyond the fate of one company. It became clear that Bear’s involvement in the complex and intricate web of relationships that characterize our financial system, at a point in time when markets were especially vulnerable, was such that a sudden failure would likely lead to a chaotic unwinding of positions in already damaged markets. Moreover, a failure by Bear to meet its obligations would have cast a cloud of doubt on the financial position of other institutions whose business models bore some superficial similarity to Bear’s, without due regard for the fundamental soundness of those firms.
It is not the Banque de France’s role to take the place of the relevant authorities by issuing a list of recommendations for reforms in the fields of education and training, the functioning of the labour market or social welfare. However, as far as methods are concerned, the Monetary Policy Council believes that a benchmarking principle for structural issues could be adopted in the euro area, namely convergence towards best practices, as we did in monetary and fiscal matters with the Maastricht criteria. Why not reverse the burden of proof in the field of structural reform by asking euro area countries why they do not introduce, in their own countries, reforms that have been successfully BIS Review 115/2000  4  implemented in another euro area country? The choice of such reforms should depend on three criteria: first that they have been decided on the basis of a political consensus, second, that they have been implemented on the basis of a social consensus and third, that they have been successful in combating unemployment. A large number of reforms pursued within the euro area meet these criteria. Thirdly, maintaining economic competitiveness: making France an attractive business location in an equally attractive euro area In the new environment created by Monetary Union and the single currency, cost and price competitiveness is, more than ever a key indicator of the conduct of national economic policies. European policies must place the emphasis upon this aspect of competitiveness.

Given the prevailing wage moderation, this acceleration in activity has been particularly propitious for job creation: the euro-area unemployment rate has declined by one percentage point since October 1999 and stood at 8.9% in October 2000. Surging oil prices and the depreciation in the euro’s effective exchange rate have fuelled a marked rise in inflationary pressure since the autumn of 1999. Inflation as measured by the Harmonised Index of Consumer Prices (HICP) thus rose above the 2% threshold in the twelve months to February 2000. In November 2000, the year-on-year increase amounted to 2.9%. There have also been increasing signs of pressure on the productive system, with the appearance of production bottlenecks and rising capacity utilisation rates throughout the euro area. The latter work out to 84.7% for the fourth quarter of 2000, i.e. almost three points above their long-term average of 81.8%. In addition, the value of imports rose substantially under the combined impact of buoyant economic activity, an almost two-fold increase in oil prices and the euro’s depreciation. As a result, the current account, which had shown a surplus, shrank to a slight deficit. Robust growth for the French economy Following the trend initiated in 1999, the French economy enjoyed robust growth. Although the growth rate levelled off somewhat in the third quarter, it should remain sustained given the renewed confidence expressed by households and the business prospects of the industrial sector, where our surveys indicate that order books are well-filled.
Debt levels continue to fall, and the propensity to save is considerably stronger than has usually been the case during post-World War II upswings. This is probably due in part to greater caution in the wake of the financial crisis, but tight monetary policy has been a factor as well, by contributing to slower demand growth than would otherwise have been the case and by shifting a part of the steep rise in income and wealth towards saving. All of these factors have pulled together to create a better balanced economy than I have seen in my entire career. We have a handsome surplus on the current account of the balance of payments. Inflation has been below target for nearly three years in spite of large pay increases and strong demand growth. Positive supply shocks and the resulting currency inflows play a role here, and so does importation of labour. As a result, imported deflation and the appreciation of the króna have proven stronger than the inflationary pressures from the domestic labour market. Monetary policy has pulled in this direction as well, as I  1  mentioned, and in a historically important development, inflation expectations are close to target by most if not all measures. If this continues, monetary policy will have greater scope to mitigate the impact if positive developments give way to negative shocks.

Carry trade-related inflows into the bond market did cause some disruption of monetary policy transmission in summer 2015 and last winter and could have posed risks for financial stability further ahead. For this reason, and also to prevent the development of a new “overhang” following the offshore króna auction in June 2016, it was considered appropriate to take action to mitigate these inflows. Since then, they have largely stopped. However, there has been no let-up in foreign currency inflows in recent months, and by the end of last week, the Central Bank had bought foreign currency in the amount of 160 b.kr. since the beginning of July and the exchange rate had risen by nearly 12% over that same period. The available data indicate that foreign currency inflows are to a large extent related to the trade surplus, which has been quite large, owing partly to growth in tourism and positive terms of trade, plus foreign investors’ increased interest in direct investment in the Icelandic economy. The banks’ and other Icelandic firms’ improved access to foreign credit could play a role as well. On the other hand, speculative  7  flows related to the interest rate differential appear to account for only a small part of the inflows. Another important factor is that liberalisationrelated outflows are still limited. It should be noted, though, that balance of payments figures for Q3/2016 could change the picture somewhat, but they will not be available until the beginning of next month.
[De]Globalisation and inflation Speech given by Mark Carney, Governor of the Bank of England  2017 IMF Michel Camdessus Central Banking Lecture 18 September 2017  I am grateful to Clare Macallan and Iain de Weymarn for their assistance in preparing these remarks. I would also like to thank Will Abel, Fernando Eguren Martin, Rebecca Freeman, Alex Haberis, Simon Lloyd, Rana Sajedi, Andrej Sokol, Gregory Thwaites, Thomas Viegas, Matt Waldron and Gabija Zemaityte for the background research and analysis they conducted as well as Wayne Chapman, Chris Peacock and Lyndsey Pereira-Brereton for help with the presentation materials. 1  All speeches are available online at www.bankofengland.co.uk/speeches  I. Introduction During his term as Managing Director, Michel Camdessus oversaw the second great wave of globalisation. The Berlin Wall fell, capital controls were liberalised, the euro was constructed, and China prepared to join the WTO. Product and financial markets became increasingly integrated, with trade growing at an annual rate of 10% and capital flows of 20%. The effective global labour force doubled, and more than a billion people were lifted out of poverty. Central banks are now grappling with one consequence of such enormous achievements – the impact of globalisation on inflation. All central banks must consider the cyclical relationship between global slack and domestic inflation; the degree to which secular forces from globalisation affect local inflation dynamics; and how global factors influence the stance of domestic monetary policy itself.

SAMA effectively contributes to the efforts exerted in international regulatory reforms, enabling SAMA to cope with the latest developments and international standards in supervision and control. On this occasion, I pray to Almighty Allah to preserve the security and stability of our country and may the Kingdom’s continue its development march under the wise leadership of the Custodian of the Two Holy Mosques, Crown Prince and Deputy Crown Prince. 2  BIS central bankers’ speeches
Overall, controlling the borrowing in the domestic money market, expanding the Government securities investment base and stabilising the risk premia in the economy create grounds for a better functioning of transmission channels in the future. Therefore, the Bank of Albania believes that the longterm public debt sustainability and public borrowing constraint in the domestic money market help enhance the monetary policy effectiveness and increase the space for the private sector credit of the economy. Monetary indicators were characterised by slowing growth rates in the second half of the year. They signal low monetary inflation pressures on the economy. The annual monetary supply growth averaged 5.9% in October and November, supported primarily by developments in the external sector of the economy. Money demand by the domestic agents of the economy was low. The increase in households’ participation in public debt securities was reflected in lower financing of this sector by the banking system. Businesses’ and households’ demand for funding decelerated significantly, reflecting the low demand for consumption and investments. Also, banks continued to pursue a more prudential approach in lending, applying tight standards in response to uncertainties perceived at sector level and the economy. Responding to them, annual growth of credit to economy reached 4% in November. Credit to economy was based on the 18% increase in ALL-denominated loans, against the 3.2% decline in foreign currency-denominated loans. Also, credit growth continued to be driven by increase in business loans, while consumer loans and home loans appeared rather low.

Public expenditure increased by 0.9%, y-o-y, mostly reflecting the negative growth rates of capital spending. As a result, the budget deficit of this period marked 8% annual decline. The fourth quarter highlighted a better pass-through of monetary stimulus in financial markets. It was also characterised by a better anchoring of interbank market rates and their decreasing volatility. The Bank of Albania has pursued an easing monetary policy during the last three years. The monetary stimulus has increased progressively during this period, bringing the key interest rate to record low levels and mitigating the liquidity pressures on the interbank market. However, the pass-through of easing monetary policy effects on the economy has been contained due to higher perceived risk premia and changed stance by financial market agents and the real economy. Over the first half of the year, the domestic primary market faced structural changes arising from implementation of new tight measures by the European Supervisory Authorities. This development impacted on maintaining relatively high yield rates, despite the easing monetary policy and lowering short-term interest rates in the money market. Normalisation of the primary market in the second half of the year was reflected in progressively falling yields over this period. This tendency might have been passed on to ALL-denominated private sector credit costs, though with lower intensity as a consequence of risk premia reflected in private agents’ credit price.