samchain/econo-pairs-v1 huggingface dataset:
I do not believe that it would have been possible to build up confidence in the price stability target as quickly as we did if we had not been as open as we were regarding our work and our decisions. •  Secondly, openness and clarity are currently an important part of monetary policy in itself. You could say they are one of the tools in our toolbox. So what do I mean by this? There is a relationship between interest rates with different durations. And expectations of short-term interest rates, which the central bank governs, are important to the long-term interest rates. A central bank can therefore ”indirectly” influence interest rates with longer durations by influencing expectations of shortterm interest rates. Greater influence over interest-setting throughout the economy – the yield curve – makes the impact of monetary policy more effective. This is often called conducting monetary policy with the aid of “management of expectations”. And the best way to do this is to provide good information. •  The third and final aspect is that increased openness and clarity “outwards” can contribute to our working more efficiently within the Riksbank. This is a quite important argument. The more open we are, the easier it is for others to evaluate how well our monetary policy functions. This gives us an extra incentive to do a good job. What has the process towards openness and clarity resulted in?

To improve the exchange of information and the cooperation between the authorities in different countries, special agreements have been signed between the EU member states. In addition, various work is being done to ensure that the member states implement and apply relevant EC regulations in a uniform manner. All of this is good, of course, and is aimed at managing the problems and challenges I have taken up here today. But it is far from sufficient. I do not intend to go into any detailed suggestions of how the various problems should be resolved. Instead, I would just like to convey – as a contribution to continued discussions on this subject – some general thoughts on how we can proceed. BIS Review 38/2007  3  In the short term, we should make improvements primarily in three areas: Firstly, we in the EU should develop joint regulations for crisis management, which link together the responsibility for supervision and crisis management in a good way. The ultimate driving force to achieving efficient and appropriate supervision is, after all, the knowledge that one has to bear the consequences of deficiencies in supervision. Secondly, we should improve and deepen the exchange of information, cooperation and coordination between the authorities in the different countries. At present there is, for instance, no common model as to how supervisory authorities can work together. Such a model is necessary to maintain high quality and efficiency in the supervision of complex banks with operations in several countries.
Behavioral risk refers to behaviors within an organization that could potentially lead to negative business outcomes.3 In such organizations, behavioral risk is not effectively mitigated or even considered, and the stated values of the firm are not reflected in the actions and norms of the organization’s members. Group think is prevalent and employees do not speak freely, or are ignored, when they have concerns about the way their group is doing business. The letter of the law may be followed but not the spirit, with illegal activities only coming to light when discovered by authorities. “Conduct” is viewed as something that is only the responsibility of the compliance department through a set of rules and controls. The outcomes stemming from high behavioral 1/5  BIS central bankers' speeches  risk reduce cultural capital, damage the firm and the trustworthiness of the industry over time. In an organization with a high level of cultural capital, on the other hand, behavioral risk is low. Employees refrain from taking excessive risks and they are unafraid of – and rewarded for – raising issues up the management chain. When they speak up, they believe the organization will take them seriously with meaningful responses. The organization recognizes and rewards employees who understand and internalize the expectations of laws and regulations, and do not view compliance as a checklist. In organizations with a high level of cultural capital, an important factor in advancing to senior leadership is role-modeling behavior consistent with a firm’s values, assumptions and behavioral norms.

The market for these securities had dried up because the traditional investors in these securities – SIVs, bank-related conduits and securities lenders – have either disappeared or are balance sheet constrained. This has reduced the availability of credit for consumers and led to higher borrowing costs. The first subscriptions for financing under TALF Version 1.0 will occur on March 17. The first batch of new securitizations will be funded on March 25. TALF Version 2.0 will follow. This will broaden the TALF into new asset classes such as Commercial Mortgage Backed Securities. Development of this phase is still in its early days. But it anticipated that the size and scope of TALF will expand sharply in the months ahead. So how will the TALF restart securitization activity and provide balance sheet capacity to the private sector? By providing leverage and 3-year term, non-recourse financing to investors, the TALF should increase the demand for AAA-rated securitizations. Yields of LIBOR + 400  4  BIS Review 28/2009  basis points may not be sufficiently attractive on an unleveraged basis, but at 10 times leverage the returns become very attractive. The non-recourse nature of the loans is also important. If the price of the security falls considerably, the investor just loses an amount equal to size of the haircut.
The ability to endure, to persevere, to be resilient in the face of such extreme odds is about having a great sense of purpose of what needs to be achieved and the motivation of why it needs to be achieved. The sheer responsibility and the awareness of the accountability that comes with it is the very driver of such perseverance. It is also the fear of failure and knowing the far-reaching and damaging consequences. This is reinforced with the values and the discipline to stay the course to do what is right and to do what is in the interest of the people. The discipline is also important so that the Central Bank is consistent in its behaviour in managing the challenging conditions or in its aspirations to push the frontiers and create great value for the country. During such times, having great clarity in the vision and on the objective of what is to be achieved becomes paramount. This has to be the starting point if it is to draw on the energies of the entire organisation. Articulating it with great clarity throughout the organisation allows the collective alignment to the goals. This also avoids being diverted by distractions when we are confronted with destabilising times. It is also imperative when we are ambitious with bringing about change and transformation. Knowing clearly the outcomes and the benefits it brings increases the potential of bringing diverse groups within a country and across countries to building the consensus on achieving a common goal.

Were we still producing the same labour-intensive goods as before, with output concentrated in industries like agriculture (including hops), textiles, coal-mining and ship-building, we too would have seen the price of our own output fall, just as it did for hop growers a century ago. Instead we allowed output and employment to expand in those industries where we could exploit a comparative advantage. In Kent, the expanding sectors include financial services, transport (with 18 million tons of freight passing through the Channel Tunnel each year) the exploitation of life sciences, and higher education (with five universities in the county). As consumers, we have benefited from falling prices of goods made in China and elsewhere in Asia. Between 1995 and 2005, the prices of imported manufactured goods fell by a sixth and, relative to the price of domestically produced output, by no less than a third. So over the past decade we have been able to increase consumption by more than the increase in production. Openness to the world economy has resulted in a higher standard of living. The second signpost marks the rise in oil and other commodity prices. Rapid growth of production in China, India and other newly integrated economies has led to a substantial rise in the demand for oil and other raw materials. Between 1995 and 2004, net imports of oil to China rose by a factor of seven.
This means that this year investment will fall short of projections, with an annual growth rate that is now estimated closer to 1 percent (4.1 percent in December). It also inputs first-quarter data available, as well as the downward revisions to investment in 2013 and the turn of 2014 shown by the latest survey of the capital goods corporation CBC. Another factor behind the lower growth forecast for the immediate future is the upward correction to inventory levels, meaning that this source of expansion will provide a smaller impulse. The baseline scenario also estimates that, as has been occurring for some quarters, private consumption will post a moderate slowdown, grounded on a looser labor income and a stable borrowing trend. This year, growth will go from less to more. Such a trajectory assumes that investment will stabilize, due to several elements coming together. On one hand, the CBC survey shows an increase in investment plans in engineering works in the second half of 2014 and for the period 2015–2016. On the other, there is housing construction that should continue the trend of last year, considering that the supply of homes is still low, housing sales are strong, and financial conditions (i.e. credit cost and volume) remain favorable. Meanwhile, the fiscal budget for 2014 is expected to be more in line with historical patterns, implying greater public spending with respect to 2013, especially investment. Machinery and equipment imports have been stable for some months.

Chile has managed to navigate this period with no accumulation of imbalances. Still, we will inevitably be affected. The cycle of high commodity prices is starting to reverse and the copper price will thus approach its medium-term levels. As I noted, the recent reduction in investment is partly associated with this factor and is also one defined risk in our baseline scenario. Thankfully, our policy regime provides us with the tools to mitigate the effects of a more adverse scenario. Moreover, our country is well prepared to deal with future challenges. The depreciation of the peso has been a buffer, especially because it allows relative prices to adjust and thus rebalance resources and lessen the impact on output and employment. It also has an effect on inflation. This effect has been limited, in line with our economy’s fundamentals and the state of capacity gaps. This is also related with the credibility of our monetary policy’s commitment with the inflation target. Inasmuch as macroeconomic conditions warrant, the Central Bank has the room and the determination to continue contributing to mitigate the cyclical slowdown of the economy. But we also reaffirm our commitment to achieving price stability, indicating that we will do everything necessary to ensure that projected inflation is aligned with the 3 percent target over the policy horizon. As we have said time and again, this is the main contribution that monetary policy can make to the development and well-being of our country. Thank you.
If we look at those who have mortgages (which constitute approximately fourfifths of indebted households) the debt ratio reaches 313 per cent (see Chart 2). This comparison clearly shows that debt ratios vary depending on which households we choose to look at, and it also makes clear the extent to which the aggregate debt ratio underestimates the actual burden of debt for indebted individuals. 7  According to Statistics Sweden, loans from MFIs to households amounted to SEK 2,826 billion in July 2013, with 81 per cent of these being mortgages. 8  From July 2010 to July 2013. 9  According to Statistics Sweden, 7.7 million people aged over 17 were resident in Sweden in 2013. 4  BIS central bankers’ speeches  Chart 2. Debt ratios for different groups Per cent 400 350 300 250 200 150 100 50 0 All, including non-indebted  Only indebted  Only mortgage borrowers  New mortgage borrowers  Note. The debt ratio for the group designated “All, including non-indebted” corresponds to the aggregate debt ratio shown in Chart 1. It is calculated as the household sector’s total debts in relation to the sector’s total disposable incomes. The debt ratios for the other three groups are calculated as averages of the individual households’ debt ratios. Sources: Statistics Sweden, the Riksbank and Finansinspektionen  Not only new borrowers have high debt ratios Another claim is that high debt ratios are mostly to be found among new mortgage borrowers.

Creditors’ incentives are very similar to those during a bank run, except with investors now seeking security rather than immediacy.27 As with a bank run, this dynamic risks becoming self-fulfilling. The greater the level of, and risk around, encumbrance levels, the higher the return unsecured creditors will demand given the risks of subordination. And the higher this cost, the greater banks’ incentives to finance instead on secured terms. Both banks and their individual investors have incentives to encumber the balance sheet by progressively – and self-fulfillingly – larger amounts. There is an arms race spiral. Yet the equilibrium of this seniority game is unlikely to be an optimal one, either for individual investors or for the financial system as a whole. To queue-jump is ultimately futile for creditors; it is another Red Queen Race. Not everyone can be at the front of the seniority queue. Indeed, at high levels of encumbrance, the financial system as a whole may even be riskier, as it is more susceptible to pro-cyclical swings in the underlying value of banks’ assets. The quest for individual security generates system-wide instability. So under an arms race to safety, the like of which may be currently underway, the outcome for the financial system could be both socially and individually inefficient. If there were a benign, enlightened regulatory planner, able collectively to co-ordinate investors and banks on a lower-encumbrance equilibrium, this race for safety could be forestalled. Unfortunately, there is not. ************ What public policy lessons might be drawn from these financial arms races?
This would move the euro area closer to the type of financial union we see in federations like the U.S. or Switzerland, where banking sector problems are dealt with at the federal level and have no implications on the finances of the federated units. Of course, this must be accompanied by appropriate incentives for banks to limit moral hazard. Policy conditionality should include restructuring plans in line with EU state-aid rules, and principles for orderly resolution of non-viable institutions and for limiting the use of public money. Second, the commitment to establish a single supervisor is critical insofar as it facilitates direct recapitalisation. But it also has positive effects in its own right. Given appropriate powers, a single supervisor would produce greater transparency in national banking sectors and reduce regulatory capture, thereby increasing investor confidence. In addition, it would support financial integration by “Europeanising” supervisory priorities. For example, some supervisory actions we have seen during the crisis that have caused the single market to fragment, like requiring banks to match domestic assets and liabilities, would no longer be anticipated. In terms of design, this supervisory mechanism should have a clear euro area dimension, while remaining fully compatible with the single market and EU-wide supervisory harmonisation. The ECB stands ready to play a role, provided that there is no contamination between monetary policy and financial stability. Of course, extending the remit of the ECB should come with higher standards of democratic accountability.

For instance, the IMF projects the aggregate euro area deficit for this year to be just over 3% of GDP, compared with around 8% in the U.S. and almost 10% in Japan. The equivalent figures for gross debt are around 90% of GDP in the euro area, compared with 106% in the U.S. and 235% in Japan. The right response to this discrepancy between fundamentals and perceptions is not defeatism. It is to fix the institutional flaws that facilitate it. Again, the European Council took an important step in this direction at the recent summit. Building on the report presented by the Presidents of the European Council, Commission, Eurogroup and ECB, it called for a specific and time-bound roadmap for the achievement of a genuine Economic and Monetary Union. This roadmap will be presented by the end of 2012. This is a very important development, for two reasons. First, it sends a clear signal of Member States’ commitment to the euro and to making EMU work. This should help remove  BIS central bankers’ speeches  3  investor concerns about the future integrity of the euro area. Second, the report presented by the Four Presidents is far-reaching and comprehensive – it has been designed to address the key challenges facing EMU in all relevant policy areas. It therefore proposes work on four parallel tracks: 1. The first is a financial union, with a single framework for supervising and resolving banks and for insuring customer deposits.
This was due in part to excessively lax supervisory standards, which led to insufficient monitoring of institutions under inspection and to the underutilisation of the information available to supervisors, and which allowed the excessive growth of the “shadow banking system”. Work is now in progress to define and standardise ways in which material information on transnational institutions can be exchanged through so-called colleges of supervisors, which group together the supervisors of the countries where these institutions have a significant volume of activity. Substantial headway has been made in a short time and improved supervisory cooperation at international level and at European level (with the creation of new European supervisory authorities) will unquestionably enable more effective action. BIS Review 51/2010  3  I would like to emphasise here another dimension which the Banco de España considers crucial, namely the improvement of national supervision. The first step in achieving effective international supervision is to ensure high quality national supervision, not only of large institutions, but of the whole system, since systemic risk may flare up due to a mere contagion effect. The second step is to foster the convergence of a majority of countries towards uniform and higher-quality supervisory standards. In this respect, work is commencing on a review of the various national supervisory models with a view to developing principles based on sound supervisory practices.

I am not thinking of the credit problems of SMEs in the short term due to higher risk aversion or to their weakness during the crisis. These problems have been covered extensively in previous addresses and the measures being taken to alleviate them include exceptional and, naturally, temporary programmes such as those of the Official Credit Institute. Here I am not referring to the short term. My concern is that, although it is positive that all the regulatory changes under way seek to ensure that banks will never again cause the serious problems which arose in many countries and ultimately spread to all of them, it should also be realised that those new post-crisis banks will, by definition, be less willing to lend money for business projects with a certain level of risk. Clearly, you can’t remove the punchbowl and expect the party to swing. The purpose of the calibration exercises undertaken is to avoid excessive requirements that stifle the economy. But nothing will prevent the post-crisis banks arising from the new regulatory regime from being much more prudent and focused on traditional intermediation than in the recent past. It will be possible to temper those requirements involving an excessive cost/benefit burden, but it is doubtful that a change enjoying such wide support will be stopped. The fact is that public opinion in the major countries wants the new international regulatory environment to oblige financial institutions to behave as conservatively as necessary to avoid a repeat of the current crisis.
6/6  BIS central bankers' speeches

In 200 and 500 Lekë banknotes, the portraits of Naim Frashëri and Ismail Qemali have been notably improved. 1/2  BIS central bankers' speeches  The designs on both the obverse and the reverse of the banknotes have been reconfigured and enriched with new or improved security features. The dominant colours have been preserved, but they have been given a fresh look, with more vivid and balanced colours for the eye. The design composition of each banknote is in harmony with the rest of the series. The overarching goal was to create a series of banknotes that are modern and easy to use, still in balance with tradition. The personalisation, versus unification, of some of the security features for each denomination is a new approach. The reduced dimensions make the banknotes more user friendly. Special attention has been paid to features for the visually-impaired. The nominal value on each side of the banknote is easier to read, the dimension of each denomination are different, and the raised print that may be felt on the edges of banknotes has been kept to help identify different banknotes. For the first time in Albania, the new series introduces polymer banknotes. This plastic material, which is more durable than cotton paper, was selected to be used for the 200 Lekë banknote, taking into account the higher frequency of changing hands and a lower paper quality evidenced in this denomination over the years.