samchain/econo-pairs-v1 huggingface dataset:
Unlike 2008, the solvency and liquidity of the banking system was not at the very forefront of market and regulator concerns. And, of course, the shock itself did not originate in the financial system but rather in a once-in100 year pandemic that has left us with many other, more powerful, and disturbing memories. But it is worth refreshing our memories about just how extraordinary were the events of late February and March 2020. The realisation that we were facing a global pandemic – and that, in order to contain it, large parts of the global economy would need to be shut down – sparked a reassessment of financial asset values and, as one would expect, a ‘flight to safety’ by investors. In February 2020, as you would expect, risky asset prices fell sharply. At the same time, the price of traditionally safe assets rose sharply and yields fell – the yield on US treasuries for example fell by around 100 bps. This flight to safety was also reflected in the gold price, which rose by around 4% over this initial period. In the early weeks of March however – from the 9th to the 18th – a different dynamic took hold; an accelerating ‘dash for cash’ in which, given the illiquidity of other markets, investors sold their most liquid assets, driving safe asset prices down. A dash for cash which turned into a stampede. The numbers are impressive.

By bringing together a new extensive set of quantitative data and survey responses from an array of global CCPs, clients and intermediaries, we were able to clarify the quantitative picture of the margin dynamics during the ‘dash for cash’. First, this revealed the scale of the shock on margin call. The total initial margin required by CCPs increased by over 70% (roughly $ billion) from the onset of the crisis to its peak in the ‘dash for cash’ period. Daily variation margin calls during the period of most acute stress in March 2020 were significantly higher than average flows observed between January and February 2020, increasing by over 500%, from around $ billion at the onset of the crisis to a peak of around $ billion. To put this into perspective US open-ended funds (OEFs), which represent around half of the global OEF market, saw a similar magnitude of outflows in March, at just under $ billion. Second, we identified significant dispersion in the size of initial margin increases across, and within, asset classes. The increases were most pronounced in exchange-traded derivatives (ETD) products and equity securities. Exchange-traded derivatives accounted for two-thirds of the total required across all asset classes, while initial margin collected by CCPs clearing cash equities increased by the most in relative terms (more than 300%). The differences we saw in margin dynamics across asset classes are partially explained by differences in the size of the shock experienced in each asset class.
As a result, borrowing or investment of free funds of second-tier banks at the Bank of Albania will ease the misbalance effects between the demand and supply for domestic monetary assets on the liquidity performance during the year. 2  Forecasts on the NDA and NIR objective growth during 2004 are based on the growth of gross foreign currency reserve by USD 45 million and the growth of the reserve money by nearly Lek 17.9 billion until the end 2004. 6  BIS Review 8/2004  Table 7. Liquidity performance during 2004 (in Lek billion).

T1  T2  T3  T4  2004  M2 growth  5.8  6.7  7.0  10.2  29.7  Money outside banks  1.7  3.1  3.2  6.9  14.9  Lek deposits  4.1  3.6  3.8  3.3  14.8  Deficit financing from the Bank of Albania  1.9  1.9  1.9  1.9  7.5  Deficit financing from banks  5.3  2.3  1.7  3.1  12.5  Credit to the economy  0.5  0.5  0.5  0.5  2.0  Borrowing from the Bank of Albania3  1.9  -0.8  -1.4  0.3  -/-  3.2  The demand of the economy for monetary assets  3.2.1  Currency position of the banking system  Net foreign currency assets of the banking system for the next year are forecasted to increase by nearly Lek 8.6 billion or 5.1 percent from the previous year. The increase of NFCA of the banking system will mainly come due to the increase of net foreign currency assets of the Bank of Albania, which will increase by Lek 7.1 billion. This is a 7.2 percent increase of the NFCA as compared to the 2.2 percent increase forecasted for 2003. The forecasted increase of foreign currency reserves of the Bank of Albania during 2004 at the level of Lek 5.4 billion will be the main source of the NFCA increase. Denominated in foreign currency, this increase is USD 45 million.
Stronger wage growth would likely result in more customers walking through the doors of business establishments and leading to stronger sales, more hiring and capacity expansion. During a normal and steady-growth business expansion, nominal wages would typically grow at the rate of productivity expansion plus compensation for inflation. If normal productivity growth is 1.5 percent and inflation is at our 2 percent target, this would suggest a steady labor compensation increase of 3–1/2 percent is sustainable without building inflation pressures. At today’s 2 to 2–1/4 percent compensation growth rates and labor’s historically low share of national income, there is substantial room for stronger wage growth without inflation pressures building. Fifth, do we really know that the public’s expectations are for low inflation? Judging by today’s Treasury yield curve, inflation expectations remain below our target. If anyone was expecting inflation to accelerate in the future, surely individual and institutional investors would demand to be compensated for growing inflation risk. However, our Chicago Fed affine term-structure model implies that the three-year-ahead average inflation expectations priced into the Treasury yield curve currently are below 2 percent and remain so for quite a number of years to come. Given today’s unacceptably low inflation environment and the wealth of inflation indicators that point to continued below-target inflation, I think we need continued strongly accommodative monetary policy to get inflation back up to 2 percent within a reasonable time frame.

Both the incidence of student loans and average loan size are by far greater in for-profit institutions than in comparable public colleges. Given the importance of post-secondary education in our nation’s future, and the key role that human capital plays in our nation’s growth, we at the  BIS central bankers’ speeches  3  New York Fed will continue to analyze the growth of the private for-profits in particular, and post-secondary institutions in general, in our region and the nation. I will now ask Jaison Abel to discuss economic conditions in our region. 4  BIS central bankers’ speeches
A box in our Report makes a brief review of the factors that intervene in this relationship, showing that the transmission of global financial shocks to emerging economies is more intense when they have a fixed exchange rate regime. It has also been shown that, in the face of episodes of financial stress, the volatility of interest rates is higher in economies where the currency does not float freely. In fact, one characteristic of the developments of recent weeks has been that the increase in long-term interest rates in several emerging economies has occurred along with the depreciation of their currencies. About the fragility of the macroeconomic fundamentals, we can see that countries with high levels of inflation; high interest rates and bulging current account deficits are more likely to suffer significant adjustments in the prices of their assets when external conditions tighten. On this issue, a recent study published by the Bank presents empirical evidence that a rise in the interest rate of the Federal Reserve affects more those countries that have a worse solvency situation—measured by their level of indebtedness—and liquidity, measured through their external asset position. 5  How vulnerable does Chile look based on these criteria? Within the group of emerging economies, Chile stands out positively in institutional matters. In particular, it has an independent Central Bank, committed to a floating exchange rate regime; It also has an appropriate fiscal institutional framework, where the structural balance rule is worth noting.

The scenario of gradual convergence of inflation to the policy target, despite improved prospects for activity and short-term prices, relies in the fact that there are still important gaps in the economy. This is reflected in the evolution of the labor market, capacity utilization indicators, and the evolution of those prices most sensitive to said gaps. It also assumes that the impulse the Chilean economy will receive from abroad will be a little milder than we estimated in the last Report, showing not-so-favorable financial conditions going forward and somewhat lower terms of trade because of the higher oil price. It is with this context in mind that at yesterday’s monetary policy meeting we held the policy rate at 2.5%, thus sustaining the significant monetary impulse that has been there for over a year. Our Report’s baseline scenario assumes that this impulse will still be necessary for a while longer and we will only begin to withdraw it insofar as macroeconomic conditions continue to drive the convergence of inflation to 3% within the policy horizon. Let me now share with you the details of our macroeconomic scenario and the main risks we observe. The macroeconomic scenario Recent data for the first four months of this year show activity outpacing our projections. In part, this responded to specific supply-side factors such as fishery and electricity, gas, and water, and part to investment in machinery and equipment, hired services, wholesale trade and some durables.
Nonetheless, it is too early to sound the all-clear. The ongoing price corrections on the US real estate market will probably continue to put a strain on the US economy. Ultimately, this will spill over to countries outside the US, although according to our assessment the affects will be limited. Consequently, although the SNB expects a slowing in momentum in the coming quarters, it expects the decline in economic growth to be less pronounced than in the US. However, there is considerable uncertainty attached to the current forecast. This means that market participants, and in particular the banks, also need to take less favourable scenarios into account. A clear escalation of the crisis in the US real estate market would heavily depress economic growth in the US and this, in turn, would leave a more pronounced mark on Switzerland. Moreover, real estate prices have risen appreciably in recent years in the US, as in other countries. Price corrections can already be observed here and there in the real estate markets of other countries. Further developments of this kind cannot be ruled out. We do not see any greater risks for the Swiss real estate market at the present time. As already mentioned, the Swiss big banks have reduced some of their risk positions in recent months. However, they remain exposed with regard to international developments. So far, the financial market turmoil has mainly affected the trading portfolios of the big banks, and hardly any losses have been recorded in traditional lending business. This could change.

As clearly outlined in our Financial Stability Report, leverage at the Swiss big banks is very high, and since the mid-1990s, average indebtedness at the two big banks has risen from 90% to over 97%. That means over CHF 97 of borrowed capital for every CHF 3 of equity. This ratio is also very high by international standards. In terms of return on equity, high leverage may appear attractive. In terms of financial stability, however, it is also a source of risk. Thus, in the current crisis, losses arose on Swiss big bank risk positions which are relatively small in comparison to total assets. However, because leverage was high, in the case of UBS these losses destroyed almost half the bank’s equity. The two measures mentioned above have a complementary effect. The risk-based requirements ensure the best possible risk-sensitivity for capital adequacy purposes. Alongside this, a leverage ratio would guarantee a minimum safety buffer which does not depend on complex models. Thus, the leverage ratio would be a protection against unexpected shocks that are not sufficiently covered by the risk-weighted requirements. This limitation set on the degree of indebtedness would mean that capital requirements would increase for activities based on large amounts of borrowed funds, such as proprietary trading. In the US, banks have long been subject to a leverage ratio. They have to comply with a capital-to-assets ratio of at least 5% in order to be considered as well capitalised.
You gave your time freely and shared your ideas selflessly. Thank you. We are also indebted to our partners and trainers who have contributed on a pro-bono basis to IBF’s learning resources – working on impossible timelines to deliver high-quality training standards and study guide materials. There is a final group that I want to acknowledge, the unsung heroes of the IBF story – the past and present staff of IBF. •  From administering the CMFAS examinations to developing new industry examinations;  •  from reviewing and accrediting training programmes to certifying individuals under FICS;  •  the management and staff of IBF have been unrelenting in their commitment to raising industry standards. As we look back at IBF’s 40 years, we can take pride in what it has achieved. •  Some 200,000 participants have benefitted to-date from training courses offered or accredited by IBF. •  Close to 2,000 practitioners have been certified under the FICS Standards. One of the reasons why IBF has done well is that it has renewed itself periodically, to stay relevant and effective amidst a changing environment but always focused on its core mandate of promoting competency in finance. Today, IBF embarks on the next phase of its journey to raise industry standards. Our new mission is to “empower practitioners with capabilities for a robust Asian financial industry”. To equip our finance professionals for the next phase in Singapore’s development as a financial centre, IBF will focus on two new dimensions.

First, we will put together programmes which will not only develop depth in core competencies but also breadth across related functional capabilities. A successful career in finance today requires versatility across different areas, be it to offer comprehensive solutions to customers or manage risks holistically across multiple business lines. 2  BIS central bankers’ speeches  Second, we will build expertise and capabilities to serve and operate not just in Singapore but in a pan-Asian financial market. With the surge of opportunities in Asia, those with the knowledge and skills to operate across regional markets will be in high demand. These are capabilities that we must consciously seek to build amongst our professionals. IBF does not operate in a vacuum but in the larger context of what it takes to develop and grow the financial sector – to create meaningful jobs for Singaporeans, support the needs of the economy, and serve the larger region. It is now my pleasure to welcome our Guest-of-Honour, Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, to talk to us about this larger context. It is especially appropriate that DPM Tharman is doing this as he is himself an IBF Pioneer who, as IBF Chairman some 14 years ago, transformed IBF to set competency standards for the industry. DPM Tharman, please. BIS central bankers’ speeches  3
The crisis, besides all else, evoked negative public attitudes in relation to banks. Although not a lev of Bulgarian taxpayers has been spent to bail out banks and it would be unfair to place the Bulgarian banks next to those that continue to receive capital support from many governments and central banks, we should be aware of such attitudes. A short list runs like this: “… banks are the ones to blame for the crisis; besides they do not show commitment to the problems of businesses during these hard times”; “… interest rates and taxes in Bulgaria are high”; “… banks enjoy regulatory comfort,” etc, etc. 2  BIS Review 169/2010  Have we got sufficient evidence to expect that such attitudes will dissipate any time soon? And what is our response? There is more than just one side to this problem, because the majority of the population lacks a basic financial knowledge. Others are not responsible enough in managing their own money. I agree with you when you feel indignation at the lack of objectivity in much of the criticism against commercial banks. But we can’t change people. The important thing is to do anything we possibly can to give our clients the maximum correctness. You could step in and play an important role by streamlining your business practices with regard to servicing clients. “He who works, makes mistakes” Mistakes however should be owned and rectified in a prompt manner.

Digitalisation is an ambivalent process in that it also offers banks tools to control these risks. For example, artificial intelligence is a valuable tool in the prevention of money laundering and terrorist financing, as it can be used to analyse large volumes of data quickly in order to spot unusual transactions more swiftly. 1.2 Vulnerabilities in relation to the transition to a sustainable economy [SLIDE 3]  The other structural challenge, namely the green transition, exposes banks to a number of vulnerabilities. The exposure of banks to climate-related risks is now well established, in part thanks to work by the Network of Central Banks and Supervisors for Greening the Financial System, or NGFS. In particular, banks may be exposed to physical risks and transition risks. Physical risks stem from the rise of extreme weather events such as droughts, flooding and storms. These events can weaken the businesses and households to which banks are exposed, potentially generating losses. Transition risks are related to the measures that are taken by public authorities or the private sector to support the move to a low-carbon production model, which oblige economic participants to restructure their activities and cause some assets to become impaired. Coal mines, for instance, are destined to become stranded assets. Since transition risks materialise over a longer time horizon and are less visible, they are challenging to identify and model. In addition to climate risk, the financial system is also affected by the risks linked to ecosystem disruption, such as biodiversity loss.
Should this be confirmed, besides the need for monetary policy to maintain a prolonged, very accommodative stance and for the selective extension of certain ERTE support measures at the national level, an expansion of the support measures for the financing of firms would be advisable, in order to sustain the recovery. In any event, in this second phase of the economic policy response, credit support mechanisms should focus on prioritising access to these funds for firms with  See Banco de España (2020), Annual Report 2019, Box 4.3, “Developments in bank finance for productive activities in the context of the COVID-19 crisis”, and R. Blanco, S. Mayordomo, Á. Menéndez and M. Mulino (2020), Spanish non-financial corporations’ liquidity needs and solvency after the COVID-19 shock, Occasional Paper No 2020, Banco de España. 3  4  sound viability prospects, with a view to providing for the necessary cross-firm and crosssector reallocation of productive resources. Also, it should be acknowledged that the number of financially vulnerable firms will rise significantly as a result of COVID-19. According to analyses by the Banco de España, this increase will be more marked in the SME segment and among firms pursuing activities in the sectors most exposed to COVID-19. An initial factor to be taken into account when assessing the impact of the COVID-19 crisis on the corporate sector’s solvency is the future decline in the return on firms’ assets.

At the same time, persistently high public debt (as will inevitably be generated by this crisis) would reduce the scope for action in response to future adverse shocks, expose the economy to a situation of chronic vulnerability and limit its growth capacity. In this situation, we should accept that the necessary short-term fiscal expansion must be accompanied by an ambitious reform agenda to address the structural challenges facing the Spanish economy and a fiscal consolidation programme, to be implemented as soon as the recovery firms. Without doubt, further analysis and experience will be required before we can draw all the lessons from this crisis. However, we should be aware, in any event, of the unprecedented scale of the collective challenge that we as a society face to return to a path of prosperity and opportunities for all. Hence, once again, I advocate broad-based agreements to shape the urgent, ambitious and comprehensive growth strategy that Spain currently needs. The financial system can and should make a significant contribution in this regard. Thank you for your attention. 17
4  BIS central bankers’ speeches  If such tools had been made available at an early stage, it may have been possible to slow down the dramatic expansion of credit that proved to have such devastating consequences. The IMF can play an important role in the work with macroprudential policy Macroprudential policy has come increasingly to the fore in the effort to find ways of preventing crises in the future. Macroprudential policy entails preventive work aimed at analysing and counteracting risks in the financial system. This includes the development of methods and forms of cooperation to discover and assess potential threats to stability in the financial system. I believe that the surveillance- and analytical capacity of the IMF means that the organisation can play an active role in this context by systematically collecting, analysing and providing information on the lessons learned in different countries and regions. I also believe that the IMF can support the exchange of information between authorities on the development of methods and models in the field of systemic risks. The range of possible tools and the division of responsibility between authorities and countries are now being discussed intensively within the framework of macroprudential policy. The tool that is attracting most attention at the moment consists of the countercyclical capital buffers that form part of the new Basel regulations. This means that the banks will be forced to hold more capital in periods when a credit boom risks triggering problems in the financial system.

Prasarn Trairatvorakul: Thai economy – tapping the untapped opportunity Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the inauguration of the RMB Clearing Bank in Thailand and 5th year celebration of the ICBC (Thai), Bangkok, 22 April 2015. *  *  *  1. Your Excellency Ambassador Ning Fukui, Chairman Jiang, Chairman Hu, Dr. Zhigang Li, distinguished guests, ladies and gentlemen, thank you for the invitation to give a few remarks on the occasion of the inauguration of ICBC (Thai) as the official Renminbi clearing bank here in Thailand. 2. This development of the RMB Clearing Bank in Thailand and certainly also to celebrate the 5th Anniversary of ICBC (Thai) is in fact the result of the long and continued ties between China and Thailand. It has marked another important step in further development of our financial ties following the signing of the Renminbi – Thai Baht Bilateral Swap Agreement and the Memorandum of Understanding with the People’s Bank of China on the establishment of the Renminbi Clearing Arrangements in December 2014. 3. Today, I was invited to talk about Thai economy. So I am pleased to have the opportunity to share with you some of my observations on the current state of the Thai economy. Let me humbly start from some of the challenges we are facing, the economy is currently reeling from both internal and external headwinds. Internally, the stagnant technology and labour readiness has so far taken a toll on Thailand’s economic expansion.