samchain/econo-pairs-v1 huggingface dataset:
This would give the financial authorities the ability to limit leverage and more directly influence risk premia and this might prove useful in limiting the size of future asset bubbles. 4  BIS Review 83/2009

Another example is Apple, which is restricting which payment services can be offered on its mobile devices. In addition, plans are constantly being launched for new kinds of money and payment systems that offer both customer services and settlement, most recently Libra, a venture backed by Facebook and other investors. As an authority responsible for promoting an efficient payment system, Norges Bank needs to consider the whole payments chain. We also need to ask ourselves whether it is enough to be a promoter and regulator or whether we need to take on greater operational responsibility in order to perform our social mission. Second, changes are taking place in the ownership of critical parts of the payment system. A relevant example is Mastercard’s planned acquisition of one of the key parts of Nets. The Nordic P27 initiative is hardly the last push for more international ownership of infrastructure for payments in Norwegian kroner. At Norges Bank, we need to assess the best way for us to ensure that society’s interests are being safeguarded. Future structure of real-time payments Norway was an early adopter of digitalisation and its payments infrastructure has been worldclass. We have reaped the benefits for many years. But then the development of common infrastructure came to a halt. A number of neighbouring countries have built payment infrastructures that in some areas are now ahead of ours. Common infrastructure makes sense. It enables us to realise economies of scale, a wellfunctioning payment network and a level playing field.
Although it is not yet possible to know whether the measures will succeed in full, my assessment is that they have been sufficient to counteract the most acute problems. The measures create a basis for restoring confidence among the general public and between participants in the financial markets. If one tries, one can see some signs of normalisation in the form of falling interbank rates and improved liquidity in the form of higher turnover on some markets. But progress is slow. I consider it rather surprising that market functioning has not normalised to a greater degree, despite the extensive and forceful measures taken by central banks and governments. It is possible that the authorities have not succeeded in communicating the fundamental message that all who lend money to a bank will get their money back. A remaining problem is that, as a result of the crisis, the market is requiring that the banks reduce their risks in relation to equity capital. The banks are therefore selling financial assets, which squeezes the price in the entire world market. This is why the banks want to reduce their balance sheets by cutting back on lending. The process will continue until the banks have reduced their balance sheets sufficiently or acquired new risk capital. The Riksbank will contribute liquidity as long as is necessary The Swedish interbank market functioned satisfactorily up to mid-September, although the cost of the banks’ international borrowing rose, of course.

The 1946 Bank of England Act conferred upon us powers, subject to the agreement of the Chancellor of the Exchequer, to issue directions to bankers - though the term “bankers” was not defined; and it provided for the Treasury to give such directions to the Bank as, after consultation with the Governor, they thought necessary in the public interest. Such directions would necessarily have been made public: none were in fact ever given. In any event the Bank of England was in a formal, statutory, sense throughout this period well along the spectrum towards the subservient polar extreme which I described earlier, in relation to policy making, although we did enjoy elements of independence, for example, in relation to security of tenure for the duration of fixed term appointments for Governors and Directors, and in some degree in relation to our finances. I am bound to say though that this was not at all how it felt in practice. Even within this statutory framework independence is rather like age - you are as independent as you feel! The question really came down to how far we were able to influence the Government, which in turn depended upon how far they themselves valued our advice and how far they felt a need to take account of it in the light of possible public - including importantly financial market - reactions in the event of disagreement.
I was able to point to the preceding four years - during which inflation had averaged just under 3¼%, compared with almost 10% over the previous 20 years. I was able, too, to point to sixteen consecutive quarters of positive economic growth. And I was able to point to a continuing, relatively steady fall in unemployment from its peak - in terms of the claimant count measure - of almost 10% in 1993. Then I held out to you the prospect of continuing stability - with low inflation and sustained economic growth - as far ahead as I could see. You didn't believe a word of it! You listened - very courteously, as I would expect from the members of your very professional association - but you listened with a good deal of scepticism, which, I confess, I could perfectly well understand. As I left that evening, one of your members said to me "I do hope you're right, Eddie, but we've heard it all before. We'll believe it when we see it!" I suspect he spoke for most of the rest of you. Well, tonight I can tell you that inflation - on the Government's target measure - has averaged just 2.5% over the past 10 years. We have now had 42 consecutive quarters of positive economic growth which is much the longest period of continuous growth since quarterly data became available in 1955.

The first is that central banks use their balance sheets not, like commercial banks, to generate economic returns for their shareholders, but to deliver the policy goals of monetary and financial stability. That may sound innocent enough: dull even. But that would be misleading – because  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  maintaining stability means central banks must be prepared to act like financial firefighters – rushing into burning buildings (taking on certain types of financial risk) when everyone else is rushing out. That dynamic is clearest when central banks act as lenders of last resort: stepping in to provide temporary liquidity (to individual firms, or the market as a whole) when private liquidity providers take fright. They are uniquely able to do this because their ability to create fiat money means they face no liquidity risk in their own currencies of issue. Of course, central bankers go to great lengths to limit the other forms of risk they take on in such circumstances: lending only to institutions assessed as solvent and viable; taking high-quality collateral, with conservative haircuts; charging suitably penal interest rates; and typically lending only for limited periods. But they can still find themselves lending, sometimes in large size, when everyone else prefers not to, in order to limit the financial instability that would be caused by wider contagion. That inversion of the normal definition of risk tolerance – illustrated schematically in Chart 1 – is strike one against the risk professional’s standard operating manual.
Ladies and Gentlemen, Let me take a moment to say a few words on Islamic banking. Today, Islamic banking in Malaysia has firmed its position as a viable and vibrant component of the banking system. Bank Negara Malaysia has been in the forefront in providing the necessary and required infrastructure for the sector to grow further. From a market share of virtually nil a decade ago, Islamic banking has captured more than 8% of the assets of the banking system and is poised to reach 20% by 2010. We capitalized on the dual banking system which we believed is the right approach, and we will continue to embark in this direction. There are currently two Islamic banks and 33 conventional banks with Islamic windows offering the full range of Islamic financial services, and the industry has recorded commendable growth at an annual rate of 48% in terms of assets. At the end of March 2002, the assets mobilised by the Islamic banking sector amounted to RM 59 billion. Deposits and financing mobilized during the same period amounted to RM 48 billion and RM 30.1 billion respectively. Islamic banking in Malaysia is now at the threshold of entering its next stage of development, to expand on a global basis, to gain greater acceptance as an effective and efficient means of intermediation and to contribute to the overall wealth creation.

Ladies and Gentlemen, In these competitive and challenging times, excellence in marketing capabilities, innovative and efficient distribution network, product development capabilities and customer relationship and care require the ability to harness these different competencies, formulate a coherent enterprise-wide strategy, that is then executed effectively. For that to happen, banks have to look within their organisations for the answers. Before resources are allocated, before a marketing direction and strategy is established, before the organisation is restructured, the bank needs to decide what its strategic business will be within the context of its markets - exactly what type of financial service provider it will be. As part of the efforts to enhance efficiency and thus alleviate the level of competitiveness, significant strategies were initiated during the year. This included the consolidation, the rationalisation of common functions and operations across institutions in the group, outsourcing of non-core activity and leveraging on cross- selling of the products and services within the group. Following the consolidation of the 54 domestic banking institutions into ten banking groups, there was significant rationalisation of the wide range of common functions and operations across institutions in the group. Six banking groups have also now leveraged on cross-selling of their products and services across institutions in the group. A further impetus towards achieving this would be the merging of the commercial banking and finance company businesses in the banking group into one single entity.
Irrespective, perseverance and patience are required if we are to achieve results. We should not allow the management of the Fund to be ruled by the impulsive and changing priorities that beleaguer so many public programmes and sectors. When we invest the Pension Fund’s assets, we are guests in our neighbour’s house. The requirements for the exercise of ownership rights cannot therefore be based solely on Norway’s values and culture. We must acknowledge that the dividing lines between politics, ethics and management may be different in other countries. When we point a finger at a company, we are also pointing a finger at the laws, regulations and practices of countries where the company is based and operates – and we are pointing that finger as a representative of the Norwegian state. 8  BIS Review 18/2008  When other countries look at Norway, they may agree with another Norwegian poet whose 100th anniversary we are celebrating this year, Olav H. Hauge, when he wrote that “selfesteem grows with the size of your bank account”. 7 We have enjoyed great economic prosperity over the past 10-15 years. But perhaps a warning can be found in one of Hauge’s poems. Allow me to recite: “Too happy by half – the pot’s boiling over, the scale arm is pointing sky-high! I must do something contrary, throw cold water on the pot, hang a stone on the scales, fell the biggest pine I’ve got. 8 Thank you for your attention!

So far this year, the market capitalisation of the Oslo Stock Exchange has declined by more than 15 per cent, or more than NOK 300 billion. When the interbank market seized up, many central banks injected extra liquidity. In periods, Norges Bank has also provided additional loans to banks. This has reduced swings in interbank rates. Norwegian banks borrow dollars short in the European market for their interbank trading. Banks also borrow in foreign markets to finance lending in NOK. The banks raise foreign currency loans, which are exchanged into NOK. The premia on such loans are passed on to customers that borrow in NOK. This is why the increase in US and European premia has quickly fed through to Norwegian interest rates even though Norwegian banks are profitable, retain confidence and have limited loss exposures. In recent years, debt accumulation among Norwegian businesses and households has increased markedly. At the same time, Norwegian banks’ foreign short-term liabilities have tended upwards. The banks hedge against the exchange and interest rate risk associated with these loans. But the turbulence in the latter half of last year showed that banks cannot as readily hedge against liquidity risk. Norges Bank supplies NOK to the Norwegian banking system. In that respect, we can be generous when the markets are seized by fear and uncertainty. But when banks borrow in foreign currency, they are more on their own. Crises and turbulence are built into the workings of the market.
2  BIS Review 9/2001  Domestic and International payments liquidity in the Republic of Macedonia In 2000, the liquidity of the banking system considerably improved. In January – December 2000, compared to the same period of 1999, the average daily liquidity of the banking system was by 42.1% higher. This resulted in decrement of the demand for liquid funds by the banks, which was reflected upon the movement of the interest rate on the Money Market. In December 2000, the average weighted interest rate on the Money Market amounted to 7.1% and was by 4.5 percentage points lower compared to the same month of 1999. The international liquidity in the payments is visible through the ability of servicing the external debt. On September 30, 2000, the external debt of the Republic of Macedonia, based on disbursed medium-term and long term foreign credits, amounted to USD 1,400.8 million. Compared to the end of 1999, the external debt of the Republic of Macedonia was reduced by USD 37.7 million, as a result of the repayment of the regular liabilities, as well as the exchange rate differentials. According to the payment schedule, liabilities in the total amount of USD 43.3 million are projected to be paid in the last quarter of the year. At the end of September 2000, the short-term debt of the private sector of the Republic of Macedonia amounted to USD 42.9 million, and compared to the end of 1999 was by USD 10.8 million lower.

Swiss Interbank Clearing, for example, has admitted participants from abroad since the late 1990s. Second, the consolidation of infrastructures is in full swing, especially in Europe. In some cases, consolidation takes place through mergers between formerly independent systems. For example, Euroclear group integrated the formerly independent central securities depositories of the Netherlands, Belgium, France and the UK. In other instances, consolidation takes a less direct form. National infrastructures may, for example, set up mutual links to facilitate trade, i.e. the settlement of cross-border transactions. The internationalisation of stock markets has also made it possible to trade an increasing number of stocks on several different trading platforms. And finally, we have also witnessed the emergence of a few completely new infrastructures which have adopted an international – and in some cases even global – focus from the outset. A classic example is the Continuous Linked Settlement (CLS) system, which was designed for the settlement of foreign exchange transactions and started operations just over four years ago. It now settles transactions in as many as 15 currencies. But how has the opening up of trading centres and settlement channels, which traditionally had a domestic focus, impacted on financial stability? On the one hand, it is obvious that the adjustment of the financial market infrastructures to the special features of global financial markets may contribute to reducing risks related to the settlement of cross-border transactions. For example, the risk associated with traditional foreign exchange transaction settlements (Herstatt risk) can be largely eliminated through CLS.
Benoît Cœuré: Financing the economy of the euro area – the European Central Bank’s role Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Association Française des Tresoriers d’Entreprises (AFTE), Paris, 11 April 2012. *  *  *  I wish to thank Simone Manganelli for his contributions to the speech. I remain solely responsible for the opinions contained herein. Ladies and gentlemen, It is a pleasure for me to be here at the Association Française des Trésoriers d’Entreprise. The topic I have chosen for my address today is the role that the ECB has played – and will play – in ensuring that the real economy of the euro area continues to receive the funding it needs to function properly and how this is linked to the ultimate objective of maintaining price stability in the medium term. I will focus in particular on the latest round of non-standard measures – the three-year refinancing operations which were conducted in December and February. I will start by describing the risks that the euro area economy was facing in the last quarter of 2011. At that time the banking system had funding difficulties, and we were on the brink of a credit crunch. If a crunch had occurred, it could have had devastating consequences for many firms and households; their access to financing would have been restricted.

The decline in credit to the private sector was accompanied by an increasing reluctance on the part of the euro area private sector to invest in financial assets; it severely hampered banks’ access to financing via the secured money market, due to an increase in haircuts and a deterioration of the available collateral. While market-based funding was becoming ever scarcer for banks in the euro area (as investors were growing increasingly nervous about the escalation of the sovereign crisis), banks were also facing regulatory and market pressures to strengthen their capital position. In short, back in December 2011, even though there was significant cross-country heterogeneity, the overall picture was rather gloomy. There were clear signs that supply-side factors were making banks less willing to lend to the non-financial private sector, and that banks may have entered a vicious circle which could compromise their ability to supply credit to the economy, both in the short and the long run. The additional negative impact on banks’ balance sheets of rapidly declining sovereign bond prices made the situation even worse. Banks typically have three ways to adjust to pressures on their funding and capital positions: they can sell assets, raise capital or reduce lending. Let’s look at each of these options in turn. In an environment of extreme uncertainty and high risk aversion, risky assets can only be disposed of at very low prices, possibly considerably below their book value.
While a general set of rules for European banks was progressively established in successive capital requirements directives, substantial flexibility remained in how those rules was interpreted at the national level. The Lamfalussy process was launched in an effort to iron out these differences, but the process rested entirely on cooperation between national supervisors, with no possibilities for binding mediation or enforcement at the European level – and it was fiercely resisted by countries with financial centres. The divergence this permitted in the application of regulatory and supervisory standards allowed serious financial imbalances to build-up in some jurisdictions, which then of course created serious blowback for the euro area. But similar to fiscal policies, an inconsistent framework also undermined the value of prudential policy itself. As, for example, definitions of forbearance and non-performing exposures differed widely across countries, investors simply did not trust in banks’ stated asset values and provisions. In other words, the confidence effects that prudential policy is supposed to provide disappeared when they were most needed. For structural policies there were no binding European rules at all, as they were seen as having a primarily national significance. Inconsistency between policy areas These governance arrangements were not only internally inconsistent, however; they were inconsistent with each other.

Thus, there is a long intellectual tradition linking rule of law and sound money to functioning of free markets. But this connection found perhaps its clearest expression in the ordoliberal school that developed in Germany in the 1930s. Conceived at the University of Freiburg by Walter Eucken and Franz Boehm, the central understanding of ordoliberalism was that a stable and well-functioning market economy required a strong legal and institutional  1  “Moneta debt esse quasi quaedam lex et quaedam ordinacio firma”. Nicolas Oresme, Traité de la première invention des monnaies (ca. 1355). BIS central bankers’ speeches  1  framework. Pure laissez-faire capitalism was unstable and liable to capture by monopolies. Collectivist central planning, on the other hand, led towards waste and totalitarianism. Thus, as the ordoliberals saw it, the role of government was to frame markets in such a way that actual outcomes would approximate the theoretical outcome in a perfectly competitive market. Achieving such outcomes could imply de-regulation, if government was interfering too much in market processes, or re-regulation, if market failures were apparent – a feature that distinguished it from a laissez-faire approach. In other words, the role of government was both to untie the “invisible hand”, and to keep it firmly cuffed to the rule of law. At the same time, ordoliberalism recognised the crucial importance of monetary and economic stability to a well-functioning market.