samchain/econo-pairs-v1 huggingface dataset:
12  All speeches are available online at www.bankofengland.co.uk/speeches  12  aftermath of a crisis by 0.1% – broadly consistent with the evidence here - this would raise optimal capital requirement by around 2 percentage points, other things equal.14  Working in the opposite direction, however, have been developments in resolution arrangements and new standards for TLAC. No account was taken of these in the LEI study. But if TLAC can be credibly bailed-in, including for systemically-important institutions, this would tend to reduce both the likelihood and severity of future crises.15 It may also discipline banks’ management, avoiding them taking excessive risks in the first place. Some studies suggest this market discipline effect could be material, reducing the likelihood of a financial crisis by as much as 30% (Afonso et al (2015), Brandao-Marques et al (2013)). Colleagues at the Bank of England (Brooke et al (2015)) have estimated that, if these measures of the beneficial incentive effects of TLAC and credible resolution regimes are correct, and if increased resolvability in addition reduces the cost of crises by around 60%,16 then optimal capital ratios for the UK banking system could be up to 5 percentage points lower than would otherwise be the case. A recent study by economists at the Federal Reserve Board (Firestone et al (2017)) also considers the impact of improved resolution arrangements. They use estimates from Homar and van Wijnbergen (2016) to model a reduction in the expected duration of crises from such arrangements.

In this regard, promoting capital market development is important to open up additional channels of funding for long-term investments such as infrastructure. The good news is that the region is already taking steps in the right direction by improving the financial infrastructure of bond markets and expanding the investor base. Meanwhile, many economies are also making greater use of public-private partnerships to promote critical infrastructure investment projects. 9. In the face of these significant uncertainties and challenges ahead of us, IMF’s assessment of the prospects and risks, as well as advice on policy response for the region is particularly important at this juncture. We look forward to the presentation by IMF and the dialogue during the panel discussions. 10. 2  Thank you. BIS central bankers’ speeches
The question is whether these netting benefits will prove robust in a major stress – if not, the aggregate leverage ratio for firms in our sample would fall by up to 70 basis points. Second, the growth in synthetic prime brokerage (sometimes the clue is in the name – “double-leverage” is another classic of the genre, and one we have recently issued more guidance on in order to head off unsafe practices). Prime brokers can provide exposure to an asset via repo or synthetically using a total return swap, and the synthetic approach now accounts for around half of the prime brokerage activity undertaken by firms in our sample. The exposure measure does a reasonable job of capturing this activity, by requiring the firm to capitalise the effective notional position. But firms can hedge the position and thus avoid capitalising much of it where they are able to offset two client positions on equal, opposing TRSs. We should keep testing how robust these “internalisations” are likely to be in stressed conditions, to ensure that we have captured the impact of these exposures on firms’ capital positions in the same way we’ve already captured their effect on liquidity – if they came unstuck because of clients withdrawing positions then our rough worst case estimate of the impact on firms’ aggregate leverage ratio is 10 basis points. I make these points on missing leverage not to suggest that we have any short-term intentions to re-litigate these issues at Basel or elsewhere.

Swiss economic outlook What does the economic outlook for Switzerland look like, given a baseline scenario with a world economy on a weak growth path as described above? After two years of fairly robust recovery, we expect the Swiss economy to slow considerably in 2012. The situation remains very challenging for Switzerland. On the one hand, the still very strong Swiss franc is weighing on export performance. Firms are suffering from compressed margins. If the difficult exchange rate situation persists, companies may consider relocating production capacity to other regions. On the other hand, the slowdown in external demand, as expected in our global baseline scenario, will likely weigh on investment spending and labor demand in the quarters to come. Although some recently released indicators point to a slight stabilization, we project the Swiss economy to grow only weakly over the next few quarters. Moreover, as mentioned before, there is a very high degree of uncertainty regarding the global outlook. This is also true for the Swiss economy, which depends particularly on economic conditions in the euro area. If the risk scenario of a further escalation of the debt crisis were to materialize, economic activity in Switzerland would suffer a much more pronounced slowdown than just described. Such a development would lead to a severe risk of deflation. Current Swiss monetary policy Given this highly uncertain outlook, the SNB is – more than ever – committed to enforcing the minimum exchange rate with the utmost determination at any time.
The need to focus on good practices of Corporate Governance mainly arose as a response to the separation of ownership and control following the formation of joint stock companies. The owners or shareholders of these joint stock companies, who were not involved in day to day operational issues, required assurances that those in control of the company, the directors and managers, were safeguarding their investments and accurately reporting the financial outcome of their business activities. Thus, directors were the original targets of Corporate Governance, and practices and principles were designed to protect the interests of the shareholders from misdemeanours of directors. However, current thinking recognizes a company’s obligations to society more generally in the form of all stakeholders, and it has been this new thinking that has driven the study and practice of good Corporate Governance to the levels it has reached today. Perhaps it is also such thinking that accounts for the hectic pace at which developments have taken place and are taking place in the practice as well. Since the latter part of 2001, the very lively and often controversial debate on Corporate Governance became an even more turbulent debate as a result of the massive corporate scandals and failures that rocked the business world, namely Enron and WorldCom. Almost as a knee-jerk reaction, new laws, e.g.

In the Annales, he wrote: “The destruction of private wealth precipitated the fall of rank and reputation. At last, the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount. Credit was thus restored, and gradually private lenders were found.” 1 Replace “emperor” with “governments and central banks”, “sesterces” with “dollars” or “euro”, “security” with “collateral”: this two thousand year old quotation could sound surprisingly familiar. Yet, even though two thousand years have passed, with many financial debacles in between, I think it is fair to say that we entered the current crisis less than ideally prepared. First, we had to improvise with an economic interpretation of the causes that led to those unprecedented market disruptions. The dramatic fall in confidence revealed a source of risk that macroeconomists had not modelled carefully and that had not even been considered relevant by most theorists of finance. Now, the concept of “systemic risk” is almost common knowledge. Second, we had thought that the financial system would act as a shock absorber. Portfolio theory had demonstrated that the dispersion of individual risks would attenuate aggregate risk. But the mispricing of risk multiplied exposures, and the assumption of similar risks by market participants increased the potential for contagion. In the event, we learned that dispersion does not necessarily mean effective diversification.
This period of time  BIS Review 47/2003  5  will also allow us to take careful note of valuable information coming from domestic consultations under way in some jurisdictions, including the process for the Advance Notice of Proposed Rulemaking in the United States. The Committee also discussed the importance of ensuring that the calibration of the New Accord achieves its objectives. Accordingly, prior to implementation, a further review of the calibration will be conducted on the basis of additional information, such as further impact assessments in some jurisdictions and the monitoring of banks’ parallel calculations. In terms of specific issues, a number of areas were identified where major improvements were possible: the expected versus unexpected losses calibration issue, securitisation, credit cards commitments and risk mitigation techniques. At present, we have offered for public review a proposal to resolve a fundamental concern raised by the industry on the treatment of expected versus unexpected losses. I would encourage those interested to read the statement outlining our proposed revision on our website and to share any thoughts you may have by the end of this year. We have also simplified the proposals for securitisation exposures, as we decided to replace the “Supervisory Formula” approach to unrated tranches with a simpler rule. Also, as we draw closer to finalisation, the Committee has intensified its efforts to facilitate a consistent implementation of the New Accord.

I’d like to discuss this morning why the Basel Committee believes that applying transparency and market discipline approaches in the New Capital Accord will help us achieve our objectives to reinforce the safety and soundness of the banking system. My first point will be that, despite its name, the New Capital Accord is about much more than just capital. It is also about maintaining a level playing field and about strengthening incentives to foster sound risk management through three pillars: risk sensitive minimum capital requirements, coordinated supervisory review and - importantly, given the theme of this conference - enhanced market discipline through greater transparency. The New Accord is therefore much more comprehensive than its 1988 forerunner. Second, I’ll comment on the rationale behind the compound approach followed by the Basel Committee that blends rules, discretion, and market-based incentives. It could be viewed as a portfolio of different policy approaches that allow supervisors to achieve or at least draw close to a kind of efficient frontier. Third, I’ll share with you key issues that the Committee faced in drafting the market discipline component of the New Accord and, specifically, I will mention some of the concerns that arose in our public consultations.
More than 30 Mainland and multinational conglomerates have told us that they are actively considering establishing or expanding their CTC operations in Hong Kong. These include many household names in energy, electricity generation and power grids, infrastructure operators, consumer goods and financiers. This is exciting news for Hong Kong’s treasury sector and its practitioners. We should expect increased treasury activities taking place here, bigger demand for a wide array of financial products, and importantly more promising career prospects for the treasury practitioners including our younger, aspiring professionals. If we succeed in attracting big corporates to use Hong Kong for their CTC functions, which I am confident that they will, it should also make it easier to convince them to locate their regional headquarters’ management activities in Hong Kong too. 7. Ladies and gentlemen, IFC is a brutally competitive business because moneys are highly mobile, and asset owners and managers will only congregate in places which provide the best services. For Hong Kong to maintain its competitive edge, we must take a two pronged approach. On the one hand, we must continue to strive to improve and excel in the underlying product, i.e. to be able to deliver the safest and most efficient services in banking and finance. On the other hand, we must continue to promote and market Hong Kong as the most sought after brand in financial services.

However, the headroom is only relevant if all of us – the financial firms, practitioners, regulators – work together to build the “Hong Kong Brand”, a brand that is widely preferred and cherished by customers looking for the best and most reliable financial services. We in the HKMA are fully committed and ready to build the “Hong Kong Brand”. I trust you all share the same commitment and readiness. Thank you very much! 4/4  BIS central bankers' speeches
In normal times, if the ECB lowers its key rates, the banks’ financing costs decrease, allowing them to pass these lower costs on to the lending rates they offer to customers, companies or households. BIS central bankers’ speeches  3  However, we noticed that this channel was no longer functioning correctly in the euro area. In fact, we noticed that a drop in key rates was feeding through to lower lending rates in certain parts of the euro area, but not everywhere. This means a fundamental aspect of our monetary policy and of its efficacy – i.e. its singleness – was impaired. As a result, major differences in bank lending rates appeared across euro area countries, which could not be explained by disparities by the fundamentals of the countries concerned. For example, two hotels with the same activities and financial characteristics and located on each side of the Austro-Italian border are obliged to borrow at substantially different rates. This is not because of a real difference in the credit risk. In reality, this rate differential stems from the fact that certain segments of the financial markets had developed fears regarding a possible break-up of the euro area. They were adding to the rates they were offering certain countries a risk premium to cover a “re-denomination” of bonds into the local currency.

For the time being, the UK has conducted a referendum and triggered Article 50 but doesn’t leave the European Union until March next year: there are no tariff or trade barriers. Yet the pound fell immediately after the referendum result in anticipation of more difficult external trading conditions in the future; this has substantially hurt the purchasing power of UK households. Business investment slowed down – as apparently it has in Canada due to NAFTA uncertainty. The Bank of England estimates that UK real GDP is already 1¾-2% lower than it otherwise would be as a result of Brexit. Fiscal policy Uncertainty about fiscal policy in many advanced economies is a second source of policyinduced uncertainty. Public debt has risen significantly since the Great Recession. Average gross government debt in the Euro Area rose from around 65% of GDP in 2007 to peak at over 90% in 2014 and is currently still over 85%, despite the fact that primary balances have improved on average across the Euro Area. The macroeconomic costs of fiscal uncertainty can be felt even without an actual sovereign debt crisis. Risk premia increase and raise the cost of borrowing but without any riskadjusted increase in return for savers. The risks of fiscal uncertainty are highly non-linear and one could almost say binary due to the reaction function of financial markets, as we have seen since 2010 in the Euro-zone. Below a certain threshold, fiscal uncertainty has very limited effects on sovereign borrowing spreads or economic activity.
Furthermore, incoming data suggest that it will take longer than expected to recover. This, coupled with recent events that have considerably eroded mining activity, will pull down annual GDP growth in 2017. However, as can be seen in the outlook I will be sharing with you in a few moments, a number of elements will help the economy to regain momentum within the projection horizon. Worth noting among these are that no significant macroeconomic imbalances are observed, that the negative impact of the mining investment adjustment has diminished, that the external scenario has improved, and that monetary policy will remain clearly expansionary. Overall, capacity gaps foreseen for the next two years will be somewhat wider than we thought in December, toning down medium-term inflationary pressures. In this context, the Board lowered the monetary policy interest rate (MPR) by 50 basis points during the early months of the year, speeding up the cuts with respect to provisions made in December. At the same time, we considered that, to ensure the convergence of inflation to the target, it will be necessary to enhance the monetary impulse somewhat, which reflects in an MPR trajectory similar to the one implied by financial asset prices during the ten days prior to the statistical closing of this Report.

In the case of mining production, although its impact on GDP of the first quarter is significant as it is determined mostly by supply-side factors, it is deleted from the Other GDP calculation that the Bank uses in its models to measure the activity gap and the medium-term inflation outlook. Thus, the change in the projected range for 2017—of half of one percentage point— responds to two major factors. On the one hand, about half is explained by Escondida mining downtime and other incidents during the first quarter. On the other hand, the greater weakness we saw in the course of 2016 gives a lower starting point for the economy this year. In particular, because this weakness has been observed in sectors that tend to be more persistent in their dynamics, such as construction and associated areas. We must not forget that this sector received a significant boost in 2015, which lasted into early 2016, as a result of the new VAT that would be charged to the sector under the tax reform. Such reduced strength responds largely to the end of this boost. There is also the effect that the lending standards of mortgage loans have tightened too, given the higher down payment demanded by the banks. Another important issue worth looking into are the changes in inventories over recent years. The year 2016 completed three years of inventory depletion, which is quite uncommon. In general, inventory movements reflect how companies predict the future: if they are optimistic about it, they accumulate, and vice-versa.
Let us assume that demand in the economy has fallen, and that a need for more expansionary policy has therefore arisen to stabilise the real economy and inflation. The central bank then wants to cut the policy rate so that it is on the red curve. 9  Capital requirement here refers to the statutory capital adequacy requirement. BIS central bankers’ speeches  11  But at this low interest rate the financial supervisory authority may worry that risks are beginning to build up and it will therefore raise the capital requirement. However, the higher capital requirement not only means that the risks decline, it also has some negative effect on demand in the economy. This has the consequence that the central bank wishes to cut the policy rate further, which in turn makes the financial supervisory authority want to raise the capital requirement, and so on, and so on. This leads to a “race”, which ultimately leads to the capital requirement reaching its upper limit at the same time as the interest rate is extremely low. It is easy to imagine that this final mix of the two policy instruments is not optimal from the perspective of the economy as a whole. The means of control for monetary policy and risk have been used much more aggressively than is beneficial for the economy and also more aggressively than either the central bank or the financial supervisory authority would wish. Of course, one can discuss how realistic this particular example is.

As emphasized by the Director of the State Statistical Office, Mr. Apostol Simovski, the Republic of Macedonia has long been integrated into the system of the so-called IMF’s Data Standards Initiatives. This system is extremely dynamic and started to develop since the mid-1990s, in response to the then international financial crisis, in order to promote transparency of both economic and financial data. I say dynamic, given that its construction blocks have been continuously changing and increasing. Its last, third construction block is the SDDS plus which reflects the weaknesses identified in the statistical data infrastructure that surfaced with the latest global economic and financial crisis from 2008. It is a fact that the genesis of the crisis was not located in the lack of data, but fact is also the identified need for an enriched data set for conducting more effective economic policies. This crisis has clearly shown how inadequate regulation and excessive risk-taking can lead to a collapse of the financial system. It has shown how the underestimation of the strength of the links of the financial system with the real sector, as well as the underestimation of cross-border exposures of economies and financial integration, could lead to inadequate assessment of macro-financial links and underestimation of risks. The SDDS plus is actually a response of the international financial community to these statistical gaps. This initiative means enrichment of statistics, in both scope and quality, in order to timely recognize and appropriately react to vulnerabilities that may arise in an economy.