samchain/econo-pairs-v1 huggingface dataset:
On the other hand, a tighter hold on the reins during the good years preceding the crisis would have increased resilience and provided more room for manoeuvre to manage the crisis when it did occur. It would then have been possible to manage the crisis within a couple of years and we wouldn’t still have to be dealing with it today. My conclusion is that well-balanced monetary and fiscal policies offer the best possible chances of preventing financial crises, but essentially other measures are needed. We need tools that are specially designed for working with the stability of the financial system. Macroprudential policy – a new policy area Traditionally, financial supervision has had a rather one-sided focus on the health of individual financial institutions. In practice this has also been the case in Sweden, although formally Finansinspektionen has the task of working for a stable and efficient financial system alongside its consumer-protection tasks. However, the fact that individual parts of the financial system appear to be healthy does not mean that they are immune to contagion from other parts of the system. The institutions have exposures to one another and it is sometimes unclear who is exposed to what risks. When an individual institution experiences problems, this may then have serious repercussions for the financial system and, ultimately, the real economy. However, traditional supervision has not sufficiently taken into account the risk of financial problems becoming contagious. Monitoring those risks is also a rather different process to monitoring the risks in an individual institution.

These days, your participation in the workshop takes another and even more significant meaning in the wake of the tragic consequences caused by the strong earthquake. It helps to show that, despite many losses, we are resilient and will continue to work to overcome the emotional and economic hardships of this tragic event, shed the desperation, fear and despair, and return to normal activity. I wish the workshop a great success, and all guests and participants a pleasant stay in Tirana! 2/2  BIS central bankers' speeches
This was shown clearly in the spreads of retail bank lending rates over corresponding market rates and in the increasing risk premia on corporate bond interest rates. The ratio of debt of non-financial corporations to GDP, which increased substantially in the second half of the nineties, only started to stabilise last year. The relatively high debt levels of non-financial corporations, combined with the decline in the value of financial assets, has had adverse consequences on firms' financing conditions via balance sheet effects and therefore on private investment in particular over the past few years. Furthermore, corporations have become increasingly reluctant or have found it more difficult to issue equity capital on public stock exchanges. In 2002, total gross issuance of equity only accounted for around 45% of the annual average for the period 1999-2002. In fact, in the second half of 2002, the value of quoted shares issued in the euro area was at its lowest level since the mid-nineties. The slowdown in equity issuance activity in 2001 and 2002 was accompanied by a similar decline in debt securities issuance by non-financial corporations. These declines in securities financing partly point to lower capital demand following the economic slowdown, but the worsening of capital market sentiment in recent years may also have induced companies to increasingly rely on other sources of finance. Furthermore, stock market participation of households in the euro area steadily increased in the 1990s.

The excesses, which were particularly evident in the stock markets, are the most notable expression of the interaction of the belief in the “new economy” with developments in financial markets. However, the growth in debt markets also played its role. The introduction of the euro and the start of the single monetary policy seem to have had a strong, positive impact on the possibilities for corporate issuers both financial and non-financial - to resort to corporate bond issuance as a financing source. In addition, this process was fuelled by the surge in mergers and acquisitions, as more and more companies prepared to grasp the opportunities of the new dynamic environment. Furthermore, issuance activity by certain sectors linked to the “new economy”, such as the telecommunications and high-tech sectors, promoted the development of certain segments of the bond markets, for example the market for high-yield bonds. 2  B. van Ark, “Measuring Productivity in the “New Economy”: Towards a European Perspective”, De Economist 148, No.1, 2000, pp.87-105. 2  BIS Review 23/2003  We all know where all this optimism about the “new economy” led to. Since March 2000, we have seen both a substantial decline in stock prices and rising financial imbalances. I shall now discuss the aftermath of the boom and burst period that we experienced in financial markets.
They would state that that the ultimate responsibility for the crisis rests with monetary policy. Specifically, according to this view, by keeping interest rates too low for too long a time, central banks have tolerated – or even condoned – the build-up in risk and financial imbalances. They “created”, so to speak, the credit bubble which burst in 2007. Let me state clearly that I don’t share this view. It is very apparent that some features of recent financial innovation – including securitisation – have contributed to excessive risk taking and increased financial fragility. They explain why the crisis has been so severe. It is also striking that real – not only nominal – interest rates have stayed at low levels for an extended period of time. Over the medium run, long term real interest rates are beyond the control of monetary authorities. They have been driven by the continuous increase in saving rates which occurred over the last decade, especially in emerging economies. This created a demand for safe and liquid assets which could not be met by equivalent supply in those countries. Because of this “asset shortage”, saving flows were directed towards industrialized countries, first of all the USA. At the same time the financial system in those industrialized countries worked to produce “complex” assets which looked safe and liquid – and were rated as such. Apparently, supply matched demand. But we know now that this was an illusion. Complex assets were neither safe nor liquid.

Traditionally – and this is true of the industry globally – financial institutions dealt with business transformation through a simple hire-and-fire strategy: hire from the market people with the skills to do the new emerging jobs and fire those in jobs that have become less relevant. This strategy will no longer work. The combination of deep domain skills, broad lateral skills, and the digital skills of the future does not often come in a package. The superior strategy is to continually train, upskill, and transform the existing workforce. This calls for a comprehensive workforce transformation strategy that is closely aligned to the business strategy. All the industry CEOs that I have spoken to understand this well. Together, let us build an agile and responsive training ecosystem that will transform the financial sector workforce. Let me now invite Mrs Josephine Teo, Minister for Manpower, to deliver her keynote address. 3/3  BIS central bankers' speeches
Instead we saw a ‘dash for cash’ and pronounced redemption dynamics. In prime institutional MMFs there were 20 consecutive days of outflows between 6 and 26 March 2020. [15] Redemptions in such funds have been a regular feature of market dislocations and it is these funds that underpin the CP and CD markets that provide many of the reference transactions for Libor. Many of these new credit sensitive rates continue to reference these markets and when liquidity drops away they seek to expand their ‘daily’ data sets through the use of rolling windows, giving the appearance of larger underlying volumes. Additionally executable quotes are also sometimes added (albeit at a lower weighting). The use of regression approaches introduces significant model risk and fitting of data to try to demonstrate stability – what is a lot less clear is how stable these rates will be in the future as these underlying market continue to evolve, especially against the backdrop of the potential for further money market reform. It is therefore not clear to what extent alternative credit sensitive benchmarks have truly addressed the weaknesses of Libor. These rates, which are being promoted by some as alternatives to the selected risk-free rates have only a fraction of the underlying data points and are still exposed to the liquidity premia inherent in Libor. Building new benchmarks from small, and shrinking markets can create large and sudden movements in those rates that immediately get passed on to borrowers with contracts linked to those rates.

or above as soon as the deposit in the payer’s account allows this to be done. The system thereby transfers payment orders, which are above the minimum needed to qualify for the RTGS system, directly to or from participants’ current accounts with the Central Bank. The RTGS system has a triple function. Firstly, the Central Bank uses the system for the implementation of its monetary policy; secondly, it is used in transactions by credit institutions with the Central Bank; and thirdly, it is used for gross settlements between credit institutions. The security and functionality of this system are thereby preconditions for enabling the Central Bank to achieve its objectives for both price and financial stability. Consequently, operation of the RTGS system has been assigned to the Central Bank, a familiar arrangement from many other countries. The Bank’s duty is to strengthen the security, efficiency and independence of the system. At the end of 2002 agreements were made with all system participants specifying payment authorisations and collateral security for settlements. This represented a major step towards bringing arrangements for the credit institutions’ transactions with the Central Bank into harmony with best international practices. Automatic Central Bank guarantees for settlements in the RTGS system are thus a thing of the past. Work is still in progress on developing the system. This year it is expected that the rules governing it will be revised, its independence be enhanced, collateral security amounts for settlements be reviewed, handling times be shortened and settlement limits be lowered.
IMF involvement will be sought for the design and monitoring of conditionality. The OMTs are an instrument in the ECB’s toolbox to help it fulfil its mandate, maintaining price stability. They will be conducive to the monetary authority restoring its power to control credit conditions in the euro area and, through that channel, inflation in the medium term. 3.2. Government actions to fight the crisis  Ultimately, however, the current crisis is the result of the lack of incentives in the Maastricht Treaty to pursue sound fiscal, economic and financial market policies. This can only be amended by the Member States, not by the ECB. The key to resolving the crisis thus lies first and foremost with governments, individually and jointly. Since the start of the crisis, the Member States have adopted a number of important measures to strengthen the institutional framework of EMU. A procedure for the surveillance of excessive macroeconomic imbalances has been established in order to detect and correct divergences at an early stage. In the case of non-adherence to agreed fiscal and economic rules, sanctions will be applied in a more automatic manner to reduce the potential for political interference and delay in the process. Further improvements are currently under consideration, such as the mandatory submission of draft national budgets to the group of euro area finance ministers – the so-called “Eurogroup” – for vetting before those budgets are submitted to national parliaments for adoption.

For example, should central banks more explicitly incorporate considerations of financial stability into their policies than they do today? If so, how? To what extent would the extension of their roles be compatible with their independence or even with their mandates to ensure price stability? 2  BIS central bankers’ speeches  The reform of the international monetary system will be the central theme of the last session that will take the form of a roundtable chaired by Martin Wolf. I am particularly grateful to Bill White for accepting the difficult task of drawing a summary of our symposium which is bound to be both dense and captivating. I would like to hand the floor to Axel Weber to chair the first session, and, once again, I would like to thank all the eminent personalities who have agreed to participate in this symposium. BIS central bankers’ speeches  3
As the Swedish krona is judged to be undervalued at present, we also assume that the exchange rate follows a path that represents a gradual appreciation. The technical assumption of an unchanged repo rate and the presumed path for the exchange rate are then incorporated in the main scenario for inflation. As inflation’s future course is not a straightforward matter, we also include assessments of uncertainties. The overall picture of inflation prospects amounts in practice to an estimate of probabilities. The assessments in the main scenario imply favourable economic fundamentals: a growth rate between 2.5 and 3 per cent between 1998 and 2000, low inflation and a rising government surplus. Domestic demand in the main scenario is expected to generate a relatively limited increase in inflation’s underlying rate, from 1.1 per cent at present to 1.6 per cent at the end of next year and 2 per cent in the autumn of 2000. The 12-month change in CPI inflation is expected to be somewhat below the inflation target in one to two years time but the figure at the end of the period is judged to be approximately 2 per cent. All this means that at the end of the period under review, inflation is relatively well in line with the Riksbank’s target. It should be underscored, however, that the assessment of inflation prospects is more difficult than usual on account of the financial turbulence.

The changes in banking in particular had to be paced out, to ensure that confidence in our local banks and the system as a whole was not shaken, and to give the banks time to regear and to grow new capabilities. 7. The liberalisation of the banking industry to date has achieved its key objectives. Singapore is one of the leading financial centres in Asia, and plays an enhanced role in financing the region’s growth. We have also retained a core of strong and increasingly innovative local banks, as anchors of the banking system. Critically, trust in our local banks and the MAS as regulator remains high. We have avoided the sharp decline in trust seen in many financial centres. 8. MAS has consistently held the view that banking systems need strong anchor players, competitive and well-supervised, who can take the long view and have interests closely aligned with both the growth and stability of the system as a whole. The experience of the global financial crisis and its aftermath vindicated our view. A common feature of jurisdictions with systemically important financial centres that held up well through the crisis – notably Canada, Singapore, Hong Kong and Australia - was the presence of a handful of strong anchor banks in each of their systems. 9. We have continued to liberalise the system, a decade after the first major steps that introduced QFBs and enhanced the space for wholesale banks. In 2012, we took steps to encourage foreign banks to deepen their roots in Singapore.
Among the cyclical factors, I would like to mention two in particular: first, persistent slack in the labour market – the unemployment rate has fallen sharply in the euro area, to stand at 9.1% in August 2017, but it is still too high; second, backward-looking wage bargaining, which means that low past inflation is feeding through to wages today. The influence of these two causes should nevertheless diminish with the recovery in economic growth and inflation. Structurally, many studies iii suggest that the Phillips curve, that is the relationship between inflation and fluctuations in economic activity or unemployment, appears to have flattened since the 1980s [slide]. Inflation seems less responsive to changes in economic activity in advanced countries, notably because of globalisation,iv which appears to exert downward pressure on inflation via the decline in imported goods prices and competition from lowwage countries. But a flatter Phillips curve does not call into question this relationship: we are in no doubt about the way we are heading: the recovery and job creations will lead to higher wages and, ultimately, more inflation. But we remain, nevertheless, less certain as to the speed of this adjustment. We are both confident about the effectiveness of our monetary policy and willing to be patient regarding the time it will take. II. The prospects: an adequate reduction of asset purchases, within an overall substantially accommodative monetary policy Let me now turn to the implications of this for our monetary policy.

You are well aware that we at the ECB’s Governing Council will decide this autumn on the re-calibration of our policy instruments beyond the end of the year – and, to quote Mario Draghi, “probably the bulk of these decisions will be taken in October”. We are now faced with a simple requirement, in line with our mandate to maintain price stability, and the progress towards our inflation  Page 4 sur 8 target: we have to reduce the intensity of our net asset purchases, while maintaining overall a substantially accommodative monetary policy. As regards our asset purchases, we have to reduce their intensity in a pragmatic manner, as we already decided successfully in December 2016. “Pragmatic” because, while keeping the current rules – we shouldn’t change any of the parameters, including the issuer and issue limits –, we can on the one hand exploit the margins of flexibility of the programme and we must on the other hand hold in reserve an additional purchasing capacity – if needed. So, there is no reason to be worried by the prospect of an adequate reduction of our net purchases, which would be perfectly compatible with maintaining a substantial degree of monetary accommodation. Indeed, QE is not limited to net asset purchases, and monetary policy is not limited to QE. Our monetary policy is based on a set of instruments [slide]: it is not a solo, but a quartet.
Chart 3: Share of bank and non-bank financing in total non-financial corporation debt financing in the euro area and the United States (outstanding amounts; percentages)  3 / 12  BIS central bankers' speeches  Chart 4: Total debt financing of NFCs and MFI loans to NFCs in the euro area (annual changes in percent)  4 / 12  BIS central bankers' speeches  Such diversification in financing sources is good for the economy, making business investment more resilient throughout business cycles. The underlying strength of the euro area economy continues to support our confidence that the sustained convergence of inflation to our aim will proceed. Euro area annual HICP inflation has continued to increase and stood at 2.2% in October 2018, mainly reflecting higher energy price inflation. On the basis of current futures prices for oil, headline inflation is likely to hover around current levels in coming months. While measures of underlying inflation remain generally muted, they have been increasing from earlier lows, amid high levels of capacity utilisation and tightening labour markets. Looking ahead, underlying inflation is expected to increase further over the medium term, supported by our monetary policy measures, the ongoing economic expansion 5 / 12  BIS central bankers' speeches  and rising wage growth. Overall, though, significant monetary policy stimulus is still needed to support the build-up of domestic price pressures and headline inflation developments over the medium term.

Peter Praet: Preserving monetary accommodation in times of normalisation Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, on "Herausforderungen für die Europäische Geldpolitik 2019" at 33. Internationales ZinsForum 2018, Frankfurt am Main, 26 November 2018. * * *  Introduction In the aftermath of the global financial crisis, central banks have successfully fended off deflationary forces and supported economic recovery. 1 They have brought down policy rates to their effective lower bound and, importantly, have made use of a broad set of unconventional monetary policy measures in pursuit of their statutory objectives. In advanced economies, monetary policies have borne fruit, but their monetary policy cycles clearly differ substantially, reflecting different stages of recovery and degrees of progress towards achieving the central bank’s statutory objectives. In a number of places, central banks have already tightened their monetary policy stance; unconventional monetary policy measures have been wound down and policy rates have been gradually increased. In the euro area, however, significant monetary policy stimulus is still needed to support the further build-up of inflationary pressures and headline inflation developments over the medium term. At the meeting of the ECB’s Governing Council in June, we gave an important signal of a normalisation of our policy instruments. We communicated our anticipation that, subject to incoming data confirming our medium term inflation outlook, we would end net purchases under our asset purchase programme (APP) after December 2018.