samchain/econo-pairs-v1 huggingface dataset:
And that they represent only a fifth or less of the credit markets in the U.S. And yet as I speak, depository institutions, including foreign banks doing business in the United States, have $ trillion in excess reserves on the books of the 12 Federal Reserve Banks. So one would be hard pressed to say that ending our asset purchases, which the depository institutions from which we buy them deposit back with us as excess reserves, would deny the economy needed liquidity. “Normalizing” policy The focus of our discussions now is when and how to “normalize” monetary policy. Given that we work directly with only 20 percent or less of the highly developed U.S. credit intermediation system, this becomes a complicated matter. It raises questions, for example, about whether we should focus on the federal funds rate, which has been our traditional fulcrum, or some other measure, such as the rate we pay on excess reserves or that we pay on overnight reverse repos or some mix thereof. You can expect to hear more about this as  BIS central bankers’ speeches  3  time passes. Today, I am going to focus on another aspect of “normalization,” and that is: Once we have wound down QE3, when are we likely to raise the short-term rate that anchors the yield curve? In the parlance of the trade, market operators and bankers alike are seeking “forward guidance” about our intentions.

You might have noted that Janet Yellen’s speech of May 1 to the Independent Community Bankers was titled “Tailored Supervision of Community Banks.” The Federal Reserve banks take this charge seriously. This is no idle claim. Just looking at the Eleventh District, we are increasingly being petitioned by banks for membership in the Federal Reserve System. The number of state member banks in the Dallas Fed district increased by 8 percent in 2012, by 19 percent in 2013, and we have already increased membership an annualized 26 percent in the first three months of 2014. So I would just say this to those of you who are madder than (bleep!) about what Congress and the regulators have wrought: The Federal Reserve knows what community and regional banks do for their communities. We appreciate that you are the backbone for the homeowners, small businesses, service clubs and school sports teams and scouts and churches and myriad other activities that make for better communities. We want you not only to endure, but to succeed and grow. And we want to make sure you play on an even playing field with those who have legions of white-shoe lawyers and K Street lobbyists you couldn’t dream of affording. I wanted to just say that at the outset. 2  BIS central bankers’ speeches  Monetary policy going forward: de-spiking the punch bowl 10 ounces at a time Now, if you will indulge me, I want to speak of the direction of monetary policy from here onward.
Over the next two days, we will cover subjects in the area of financial inclusion, Small and Medium Enterprises financing, climate-related risks and their implications for financial stability. These topics are relatively new. They were not on the agenda of macroprudential policymakers a decade ago. Nowadays, these subjects, along with fintech, aging or inequality are high on the agenda of policy discussions, not only in the financial stability fora, but also in monetary policy meetings. Therefore, we consider it worthwhile to dwell more on some of these topics during the seminar. I am confident the discussions will be very interesting, just by looking at the diversity of panelists: central bankers, representatives of the Bank for International Settlements, the European Commission, Bruegel or the Council for Economic and Policy Research. Not to mention our partners from the International Monetary Fund who will also provide their perspective. Lower financial inclusion is an increasing concern across countries, especially in emerging economies. The topic is linked with another concern represented by income inequality. The financial system can play an important role in amplifying or cutting down both. However, macroprudential authorities might not be among the best-suited institutions to deal with such phenomena. The evidence we have so far shows that, in the short term, macroprudential policies may reduce financial inclusion when implementing credit constraints, especially for borrowers that are more vulnerable to possible income or interest rate shocks (generally, lower-income individuals).

Should the repo rate be used to slow down this development to try to prevent prices becoming so high that the fall, when it actually  BIS Review 37/2005  3  comes, will be too fast and too far? There are many examples of how the air has gone out of asset markets and thereby triggered or aggravated a downswing in economic activity. Or is it more reasonable to wait until the “bubble” has burst and then try to counteract the effects the best one can? This question is neither a simple one nor a new one. It is discussed by central banks around the world, whether or not they have specific inflation targets. And there is hardly a clear-cut answer. As I see it, the seriousness we in Sweden should attach to households' increased debt burden is closely connected with how we assess price trends in the housing market. Although there has so far been a large rise in prices, particularly in metropolitan areas, we have not seen the clearly speculative tendencies apparent in other markets, for instance Australia and the United Kingdom. In Sweden we still usually buy housing to live in it ourselves. In some other countries, where the tax legislation and housing loan markets are different from in Sweden, people buy one or more additional properties in the hope that they will rise in value, rather like buying equity or other financial assets.
As you know, we have a branch office up here in Yorkshire, in fact in Leeds, which serves as a part of our network of eyes and ears and indeed voices at 13 locations throughout the UK. The new responsibility made us more conscious than ever of the importance also of visits around the country by senior members of the Bank in London, including members of the MPC and indeed our Directors, both to inform themselves about local economic conditions and to explain locally what it is that we are trying to do. That explains why you have been seeing much more of us in recent years and it explains in particular tonight’s invasion of Yorkshire, by 11 of our 16 Directors and 6 of the 9 members of the MPC. Tomorrow in Leeds will in fact be the third occasion on which our Court has held one of its monthly meetings outside London since the new legislation was introduced in 1998, a practice which we intend to continue. So that I hope explains why we are here – and I hope that you will avail yourselves of the opportunity to bend the ears of our representatives where you can – but preferably not until I’ve finished speaking to you!

But on the basis of that forecast the short answer to the question: can our steady economic progress be maintained, over the next couple of years anyway, is a cautious “yes”. Since that forecast was completed things have gone in different directions. The prospect for external demand has somewhat weakened and so too has the oil price. There are mixed messages relating to tightness in the labour market, but earnings growth has so far remained reasonably well contained - as it must continue to do. On the domestic demand side, private consumption growth has remained stronger than we had supposed, while the growth in private investment has been weaker; meanwhile it is not clear that underlying public sector demand has – at least yet – picked up as rapidly as planned. The exchange rate has fallen, and so, too, have market interest rates. I would not venture to suggest how these – and all the other developments we look at – will influence our next forecast in February; and it would be pointless to anticipate possible future policy decisions. I would be surprised if they radically altered the broad prospect of relatively steady progress over the next two years. But I can assure you of one thing: if the prospect – or the balance of risks around it – were to change significantly – either in the context of our February forecast or subsequently – we will promptly react to that change.
Whether banks continue to draw down on their capital buffers to maintain lending – or whether they react defensively and deleverage to conserve capital, particularly as they approach Maximum Distributable Amount thresholds for restrictions on AT1 coupons, will be a key area for regulators to watch in the coming months. My initial assessment, however, on what we have seen is that the UK banking system has demonstrated so far that it is likely to be resilient a pretty long way into the tail of adverse shocks. The little thought experiment above illustrates that while building resilience in the financial system in good times might seem expensive, it is the better economic bet over the long run. The other major post crisis reform that we have seen operating under severe stress conditions in recent months is the changes made to derivative markets and particularly the requirement that derivatives trades be prudently ‘margined’ or collateralised against counterparty failure and – where sufficiently standardised – centrally cleared.7  10 years ago, as financial asset prices fell, a complex and under-collateralised web of ‘over the counter’ (OTC) derivative trades between financial market participants was revealed. The resulting exposures and demands for collateral greatly amplified the stress and uncertainty in the financial system.

So, future work should concentrate on how to make the rating process clearer and more explicit and to preserve and strengthen its integrity. A second, alternative view, on the collapse and confidence and liquidity would point at the inadequation of capital to risk in the new securitized model. Ultimately, the ability of an investor to carry risk is determined by her capital base. Capital must be sufficient to absorb the potential losses if risk materializes. If not, confidence may vanish and liquidity may disappear. To quote Stephen Cecchetti 1 , "in the context of financial intermediaries, capital plays the role of collateral". So, for the securitized model to work, there cannot be too big a disconnect between the allocation of risk and capital in the system. This is true both at the aggregate level and for each individual issuer of securities. At the aggregate level, insufficient capital leads to excess leverage and, as a consequence, to excess fragility. For each individual issuer of securities, carrying risks with little (or no) capital increases the probability of a liquidity crisis. It may be that, as time goes by and we look more closely at what happened, this second view will gain in importance. I would note that cracks occurred in those places – the conduits and especially the SIVs – where there was no capital available to absorb shocks.
Furthermore, the stress on household finances is likely to increase as around 4 million mortgage borrowers10 see their monthly mortgage payments increase, including as borrowers roll off the current fixed term of their mortgages over 2023. What does this mean for mutuals’ credit portfolios? What I have outlined so far are potential early indicators of pressures to come. The credit data that PRA regulated firms report to us have not yet shown a significant increase in levels of arrears or defaults. These have typically remained at or below pre-Covid levels and only in Q1 2023 have started to show an uptick in areas like ‘new to arrears’. This 4 Supply matters − speech by Andrew Bailey | Bank of England 5 As at 19 April 2022 6 Monetary Policy Report - February 2023 | Bank of England 7 UK consumer confidence index 2023 | Statista 8 Credit Conditions Survey - 2023 Q1 | Bank of England 9 Financial Policy Summary and Record - March 2023 | Bank of England 10 Financial Stability Report - December 2022 | Bank of England  Bank of England  Page 4  uptick is not yet at a level that indicates a material amount of credit risk is crystallising, but rather I take it as a clear warning that firms need to take action now to be prepared both to support their customers and preserve their resilience should the stress that we are observing result in a marked deterioration in their credit portfolios.

Collectively, BSA members manage over £ of assets, nearly 15% of assets managed by the UK deposit takers we supervise at the PRA. Also, all 50 BSA members have headquarters outside London enabling a connection with local communities, some members of whom might not have other ways of accessing mainstream financial services. This is further fostered through a network of almost 1350 branches serving more than 26 million members. In line with this, we see our role in supervising BSA members as central to our mission at the Bank of England to ‘promote the good of the people of the United Kingdom by maintaining monetary and financial stability’. My remarks today will focus on two areas. Firstly, a key challenge for the mutual sector to tackle over the coming year, managing a fast-evolving outlook for credit risk whilst supporting your members in the current economic climate. I will be setting out the PRA’s expectations and a flavour of what we are doing in this space. Secondly, the opportunity we are taking to evolve our regulatory regime to ensure it continues to deliver resilience in  1 Refrain, Lys Assia, 1956, Switzerland, winner. 2 3  Making your mind up, Bucks Fizz, 1981, UK, winner. Better the devil, Sonia, 1993, UK  Bank of England  Page 3  the sector, remains proportionate and supports growth, including in light of the Financial Services and Markets Bill which is currently making its way through Parliament.
According to the Banco de España 2018 Annual Claims Report, published last Wednesday, the number of claims processed by the Bank last year fell by more than 50% on 2017 to close to 19,700.1 Nonetheless, the total percentage of rectifications by banks relative to those estimated by the Banco de España was 70.6%, a similar percentage to that of 2017. 1  In any event it should be borne in mind that, since 2013, the annual claims figures have shown strong year-to-year oscillations, generally linked to the impact of specific legal rulings. 14/15  Business model Evidently, banks should analyse their current business models with a view to assessing to what extent they respond to this new technological and customer-relations reality, but also to identifying their strengths and weaknesses. To conduct this analysis, the above-mentioned management information is needed, which depends, in turn, on the quality of systems. Consequently, technology becomes an objective of the change in business model and a prerequisite for such change to occur, hence its central role. Naturally, another prerequisite worth mentioning is governance, without which all these changes will be destined for failure. Importantly, reflection on the business model should be individualised, and adapted to the particular characteristics of each bank. Indeed, the results of a theme-based review by the Single Supervisory Mechanism on profitability and business models show that there is no single approach and that there are differences in strategies among those banks with the best profitability results.

Conclusion In closing, I would like to take this opportunity to congratulate the Islamic Financial Services Board for commissioning the "Surveys on Legal and Shariah Issues in the Islamic Financial Services Industry". The survey findings represent an important contribution towards augmenting the literature on the  2  BIS Review 35/2007  existing legal and Shariah framework across different jurisdictions. It serves as a useful source of reference for countries that are interested in establishing a legal and Shariah framework for their Islamic financial system. Deliberation on the survey results and the exchange of views and experiences among lawyers, Shariah scholars and Islamic finance practitioners will be important in contributing to increasing the efficiency in Islamic finance and facilitating its robustness as an integral component in the global financial system. Thank you. BIS Review 35/2007  3
Mario Draghi: The future of the euro – stability through change Contribution from Mr Mario Draghi, President of the European Central Bank, published in “Die Zeit”, 29 August 2012. *  *  *  Across Europe, a fundamental debate is taking place about the future of the euro. Many citizens are concerned about where Europe is heading. Yet the solutions presented appear to them unsatisfactory. This is because these solutions offer binary choices: either we must go back to the past, or we must move to a United States of Europe. My answer to the question is: to have a stable euro we do not need to choose between extremes. The reason this debate is taking place is not the euro as a currency. The objectives of the single currency remain as relevant today as they were when the single currency was agreed. To spread price stability and sustainable growth to all European citizens. To reap the gains of the world’s largest single market and make the historic process of European unification irreversible. To raise Europe’s standing – not only economically but also politically – in a globalised world. The debate is taking place because the euro area has not yet fully succeeded as a polity. Currencies ultimately depend on the institutions that stand behind them. When the euro was first proposed, there were those who said it would have to be preceded by a long process of political integration. This was because sharing a currency would imply a high degree of joint decision-making.

In the U.S., for example, on average about 90, mostly smaller, banks per year have been resolved since 2008 and this had no impact on the solvency of the sovereign. Political union can, and shall, develop hand-in-hand with fiscal, economic and financial union. The sharing of powers and of accountability can move in parallel. We should not forget that 60 years of European integration have already created a significant degree of political union. Decisions are made by an EU Council filled by national ministers and by a directly elected European Parliament. The challenge is to further increase the legitimacy of these bodies commensurate with increasing their responsibilities and to seek ways to better anchor European processes at the national level. A more solid political foundation should allow for agreement on a basic principle: that it is neither sustainable nor legitimate for countries to pursue national policies that can cause economic harm for others. This constraint has to be built into how countries design their economic and social models. The only sustainable model is one that is consistent with the terms of a common currency. Countries have to live within their means. Competition and labour markets have to be reinvigorated. Banks have to conform to the highest regulatory standards and focus on serving the real economy. This is not the end, but the renewal of the European social model. From the ECB’s perspective, a strong economic union is an essential complement to the single monetary policy. Building this will require a structured process with correct sequencing.
Jürgen Stark: Economic and financial situation – where do we stand? (Speaking notes) Speech by Mr Jürgen Stark, Member of the Executive Board of the European Central Bank, at the 2. Zeit Konferenz “Neue Architektur der Finanzwirtschaft“, Frankfurt am Main, 3 September 2009. *  *  *  •  We have witnessed two years of severe financial distress, with adverse effects on the euro area and elsewhere. We have experienced the trough of global and euro area negative growth around the turn of 2008/2009. Recent data are increasingly encouraging. We have just been observing more and more signs of economic stabilisation. Looking ahead, economic activity is likely to recover gradually in the course of next year. •  But uncertainty remains high and incoming data on economic activity are likely to remain volatile. Concerns regarding the outlook for a recovery in 2010 mainly relate to renewed increases in international commodity prices, intensification of protectionist pressures and a disorderly correction of global imbalances. •  Regarding price developments, annual HICP inflation in the euro area has temporarily dropped into negative territory, but is expected to turn positive again in the remainder of this year and evolve in line with price stability. Deflation risk, if there were any, have disappeared. Inflation expectations remain in line with price stability. Monetary and credit developments confirm the assessment of low inflationary pressure over the medium term.

The decision on whether monetary policy measures in the form of foreign currency purchases are necessary is based on an evaluation of the threat of deflation and the monetary policy expansion needed in order to counter this. Monetary policy inaction during the dramatic phases of 2009 and 2010 was not an option. The primacy of monetary policy applies, and the top priority of monetary policy is to ensure price stability. The SNB’s legal mandate is explicit in this regard. This is the contribution which the SNB can and must make to economic prosperity in this country. BIS central bankers’ speeches  1