samchain/econo-pairs-v1 huggingface dataset:
Also, the risk of funding runs should be reduced by the increase in the quality of information on firm exposures that can be made available to regulators, and, in principle, through increased disclosure to market participants. I also think that OTC derivatives reform is an important complement to the emphasis placed on strengthening individual institutions, which is part of the broader reform agenda. Financial stability is not just about individual institutions but also about how the entire system interacts. For example, are the incentives in the system appropriate and does the system amplify or dampen shocks? Thus, it is important that reform efforts not concentrate exclusively on the systemically important financial institutions, but also that these efforts focus on the market products and practices and the linkages among markets, market participants and infrastructures. Despite the progress made to date, I do have some concerns about the OTC derivatives reform effort. My first concern is about pace. For example, it seems to me that we have made much more progress in strengthening individual institutions through higher bank capital and liquidity requirements than we have made in reducing risk in the OTCD space. Now some of this is inevitable because OTCD reform is harder and we are not as far along. It requires the creation of new institutions to clear such trades or to house the trade information. It also requires national legislation to be flexible enough so that it can work coherently on a global basis.

So far, the BNB Governing Council has adopted concepts for the work in the main areas of activity; a package of amendments to the internal rules and regulations, as well as specific measures for resource and capacity improvement. Our full participation in the institutions of the Banking Union plays an important role in consolidating the integration process. Obviously, this is a topic that will be on the agenda in the next few years and one we will have many occasions to discuss. Meanwhile, maintaining the capacity of the banking sector for continuity of lending activities will be our joint contribution to supporting each individual bank customer and the country’s economy. As during the most difficult phases of the crisis, the banking sector should be able to take on the supportive role as a source of credit in the subsequent period of recovery and growth as well. Despite today’s crisis picture, such a period may occur relatively soon. The challenges arising from COVID-19 appeared unexpectedly and the negative results in the economy manifested themselves quickly; yet overcoming the crisis may just as likely occur in the foreseeable future, if solutions are found to effectively restrict the pandemic. Let us mark the Banker’s Day in the difficult and unprecedented 2020 on such a note of hope and optimism! 3/3  BIS central bankers' speeches
Of course, any such support policy, if anticipated, will be taken into account when banks establish their risk management frameworks for “tail” events. Still, one cannot generally conclude from this that central banks should not re-act and support the system in the case of severe tensions. To rigorously analyse moral hazard issues relating to financial crisis management by central banks, one first needs to distinguish between different but interrelated types of policy interventions. The reason for this is that the possible effects on incentives of different measures can be very diverse. However, this differentiation has often been missed when criticising central bank actions on the grounds of moral hazard considerations. 3  A. Giovannini and L. Spaventa (2007), “Subprime lessons: fix the information gap”, 5 November 2007, http://www.voxeu.org/index.php?q=node/690. BIS Review 143/2007  5  Let me distinguish briefly between four possible types of central bank measures: First, moral hazard issues have been raised in relation to the case in which the central bank lowers its key policy rate in response to financial turmoil. It has been argued that, if central banks lower interest rates at a time of market corrections and declining asset prices, economic agents may believe that the policy-makers are prepared to use monetary policy to support asset price valuations in order to prevent market downturns. If such belief becomes widespread, investors are likely to engage in excessive risk-taking behaviour, thereby sowing the seeds of future financial crises.

Events like this conference can prove of great help for the purpose of defining more precisely those gaps and to show the way forward. Thanks very much for your attention. 8  BIS Review 143/2007
2/4  BIS central bankers' speeches  Furthermore, we have lifted the 2% countercyclical capital buffer on financial institutions. The buffer has been reset to 0% and will remain there for at least the next two years. Lifting the countercyclical capital buffer requirement will make it easier for the banking system to support households and businesses by creating the scope for new lending in an amount ranging up to 350 b.kr., or 12.5% of the current loan portfolio, all else being equal. Moreover, it was decided this past Sunday, at an extraordinary meeting of the Monetary Policy Committee, to begin direct purchases of Treasury bonds in the secondary market. This will both support fiscal policy and ensure that lower interest rates are transmitted out the entire yield curve, thereby lowering households’ and businesses’ financing costs, which is the Bank’s objective. Honoured guests: In Iceland’s campaign for independence, currency issues were never mentioned. It was automatically assumed that Iceland would continue to participate in the Nordic currency union as an independent member, as the Norwegians had done after separating from Sweden in 1905. Participation in Nordic currency cooperation was actually written into the agreement made when Iceland was granted sovereignty in 1918. This currency cooperation was based on the gold standard, as were most of the world’s currencies at that time. However, the Nordic currency union fell apart during the post-war years, and Icelanders were forced to rely on themselves as they endured the shocks that pummelled the country during its first years of sovereignty.

We are prepared, and we have the capacity to meet the shock sweeping the country head-on – and then, before too long, we will turn defence into offence once again. Since the onset of the Great Recession in 2008, we have rebuilt a new financial and monetary system designed precisely to withstand headwinds like those we are facing today. We have built a banking system that is funded almost entirely with domestic savings, with a capital adequacy ratio of 25%, and with abundant liquidity. We have also built up a new export-driven economy where both businesses and households have a strong equity position, and where strong national saving is reflected in a large and sustained current account surplus. For the first time in Iceland’s modern history, its international investment position is positive; i.e., our foreign assets exceed our foreign liabilities. 1/4  BIS central bankers' speeches  We have also enjoyed stability and robust GDP growth for the past seven years, with GDP increasing by a third and real wages up 35%. Iceland is now among the wealthiest countries in the world in terms of GDP per capita. We are prepared – and now we must face the challenge firmly, calmly, and stoically. Honoured guests: One of the things that were not done during the prelude to Iceland’s sovereignty was the establishment of an independent central bank. It wasn’t until 1961 that the Central Bank of Iceland formally began operation, and at that time it was not nearly as independent as it is today.
However, if the domestic financial system is underdeveloped and financial institutions are not adequately supervised, as external hot money increases the deposit base of domestic banks they may be lured into fueling domestic asset price bubbles. These have two major consequences. First, asset price inflation eventually leads to domestic inflation and erodes external competitiveness. Second, excessive lending concentration in real estate exposes financial institutions to large non-performing loans when oversupply of property emerges. Indeed, banks are absorbing credit risk on top of interest rate and exchange rate risks. In some Asian economies, weakness of the financial system has constrained the ability of the monetary authorities to raise interest rates to defend their currencies when the exchange rates are under pressure. Conversely, to allow the currency to depreciate exposes banks and other borrowers to exchange losses on their unhedged foreign currency liabilities. 26. At the same time, the external environment has been changing. Whilst Asia was enjoying an unprecedented boom, the global competitive environment was subtly but surely shifting, which led to portfolio rebalancing by global asset managers. The adjustments in the US economy, through fiscal and monetary tightening, and technology and corporate restructuring, had brought substantial benefits in the form of lower budget deficits, and the lowest levels of unemployment and inflation for decades. In case anyone forgets, the US equity market has in the last three years outperformed almost all Asian equity markets with the exception of that of China.

Il Sole 24 Ore: The EU plan to help Greece relies on bilateral aid from EMU countries and on the involvement of the International Monetary Fund. The ECB was clearly against the IMF participation. What do you make of the EU plan? Trichet: I was not against the IMF involvement in itself. I was against the involvement of the IMF alone. I have always been in favour of the maximum level of responsibility exerted by the governments of the euro area as is prescribed by the Stability and Growth Pact. The pact is at the very heart of EMU: it calls for member countries to assess and judge the fiscal policies of their peers; this peer’s surveillance can impose sanctions. In the days preceding the EU meetings, I called all governments to live up to their treaty responsibility and to the provisions of the Stability and Growth Pact which is essential for the EMU to function well. From this point of view, the declaration of the euro area Heads of State or Government is appropriate. It is also a good and workable solution. Il Sole 24 Ore: Do you expect it will be used? Trichet: At this moment in time I don’t expect this mechanism to be necessary. Greece should proceed with its recovery program in a very determined way as committed in front of the Eurogroup. Il Sole 24 Ore: Is a default of Greece a distinct possibility as some commentators seems to expect?
Despite the slowdown in economic activity, employment increased strongly and unemployment continued to fall. However, the labour market is split into two parts, with falling employment in manufacturing and an increase in the services industry. At the same time, the floating exchange rate regime has contributed to a significant change in the pattern. Historically, a devaluation of the krona has been necessary at the climax of a crisis and on several occasions during the 1970s and 1980s crises were caused by the fixed exchange rate in combination with cost developments leading to a cost crisis. The slowdown in 2001 was different to the extent that industry’s competitiveness was very strong. The weakening of the krona began, fortunately, a year before industrial activity slowed down. This contributed to a very strong development in net exports during 2001. This is probably an important factor behind the slowdown being a slowdown rather than a recession in Sweden. Although there are otherwise major differences, it can be noted that the decline in GDP and exports in Finland was much greater than that in Sweden. While industrial production in Sweden decreased at most by 5 per cent, it fell by over 10 per cent in Finland. Whether this is due more to other factors than to the exchange rate is an open question, but it is reasonable to assume that the development of the krona subdued the decline in the Swedish economy. Certainly, it may have at the same time have aggravated the inflation problems.

But the precautionary measure has served us well. We will continue to be vigilant in anticipating issues, and in taking proactive measures to strengthen the resilience of our system. With regards to the flow of credit from banks to corporations, we believe this is best facilitated through government schemes to co-share some of the risks with banks. In February, the Government announced the Special Risk-Sharing Initiative (SRI). Under this Initiative, the Government will absorb 75% of the risk for insurance covering working capital and trade-financing loan facilities. The Government will also absorb 80% of the risk for bridging loans which go towards meeting firms' working-capital needs. We also have schemes for SMEs and micro-loans. Apart from ensuring that the financial system continues to function effectively, the Government has, as in past periods of downturns, used fiscal measures to minimise the impact of the crisis. This involves targeted help for families and companies, while continuing to build capabilities to prepare for the upturn. This time, a creative Jobs Credit Scheme has been added to help companies keep their workers. Conclusion Ladies and Gentlemen, these are very challenging times. The global economy is in recession, and the financial system remains fragile. We need tough, decisive and forwardlooking actions in the core economies that are deeply affected. Asian economies have also been severely affected, and policy adjustments are necessary. However, the medium-term prospects for growth remain strong.
5  See also Siven, C-H. (1998) "Penningteori utan pengar – hundra år med Knut Wicksell", Ekonomisk Debatt 1998, year 26, no. 6. 6  Wicksell, 1898 [1936], p. 189. 7  See also Orphanides, A. (2207), "Taylor Rules", Board of Governors of the Federal Reserve System, January 2007. 16  BIS Review 41/2009  lending. In the same way as the policy rate can be expressed as a Taylor rule, it should be possible to express the banks’ capital adequacy requirement as a function of, for instance, the lending gap, or growth in lending in the economy and the output gap. Image 10: A ”Taylor rule” for capital adequacy  (  )  (  c t = c + α L Lt − L* + α Y Yt − Y  )  Here the capital adequacy requirement the banks are subject to depends on the development of total lending in relation to a long-term trend and economic activity. The idea is that the capital adequacy requirement will increase when lending increases too substantially, and will decrease when lending declines. In this way the banking system will be forced to build up capital reserves in good time, which can in turn be used to cover losses when times are hard. One creates a model that evens out cycles rather than reinforcing them. The current capital adequacy rules are sometimes accused of being procyclical.

1/4  BIS central bankers' speeches  More will be done if necessary, of course, but the diagnosis that was reached yesterday by the Governing Council is that a little less is necessary today because growth is stronger and Europe is doing better. And to make this quite clear, how much will the ECB disburse in, say, 2017? The decision that was taken yesterday is to extend our asset purchases for a further nine months by buying € billion per month of various financial instruments, which makes an additional € billion euro. That’s the decision: we will add € billion to the € billion per month planned for the first three months of 2017, making € billion, so for the whole of 2017 that comes to slightly less than € billion extra compared with what we are doing already. And since March 2015? Asset purchases today come to around € trillion in total, so if we add 1,500 and 800 it means that, at the end of next year, we’ll be at just over € trillion. Yes, and you realise that with this € trillion growth is good, average, but it’s not stronger. What would happen without this € trillion? Well, without it, if the ECB wasn’t doing what it’s doing, growth would be between 0% and 1%, inflation would be close to zero and unemployment wouldn’t be falling in the euro area. But as you know, unemployment is now falling fairly quickly in the euro area.
François Villeroy de Galhau: Productivity - a collective enigma? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bank of France - France Stratégie Conference, Paris, 1 February 2017. * * * Welcome to all of you. It gives me great pleasure to be able to open this conference on French productivity, organised in conjunction with France Stratégie. The subject is one that is both topical and of great importance to central banks: productivity is one of the principal drivers of growth, and its dynamics are a strong determinant of potential growth, that which is compatible with price stability. As you can see [ slide], after the major wave of expansion witnessed during Les Trente Glorieuses, which was particularly marked in the case of France, productivity growth in advanced countries has slowed in successive stages since the 1970s. Today, it has fallen back to a pace that is historically weak. What are the common factors behind this slowdown in productivity? And is there anything specific to France? I don’t believe so: if there is one thing that is specific to France, it is the high level of hourly productivity – one of the highest in the world, alongside that of the United States and Germany. So, rather than being a French enigma, the enigma we are looking at this morning seems to me to be more of a collective phenomenon.

By way of introduction, I would just like to go back over the three collective hypotheses at the heart of today’s debate, before nonetheless going on to examine a few factors that are indeed specific to France. * * * 1. Does the problem lie in the measurement of growth? The first theory is that there is in fact no slowdown, as we are not measuring growth properly due to the rise of the digital economy. On 16 January this year, the Banque de France held a conference1 that notably discussed this issue in relation to the US economy. The main sources of measurement errors were: first, the estimation of quality-adjusted prices for new technology, as falls in prices tend to be underestimated in US national accounts; and second, product entry and exit, which makes it difficult to estimate changes in prices over time. This could lead to a significant upward revision to US productivity since 1983: by 1.1 percentage points per year at the top end of estimates, according to Philippe Aghion and his co-authors. Nevertheless, even allowing for these corrections, there has still been a slowdown since the mid-2000s. Indeed, the measurement errors were just as significant before this period. That said, this work does provide some grounds for optimism. First, growth in hi-tech sectors, and therefore technological progress, is stronger than we previously thought. Second, some of the gains in well-being linked to new technologies fall outside the scope of the market economy and, as a result, are not recognised in national accounts.
The real significance of those arrangements – in both cases – is that in introducing them the respective governments confirmed their common commitment to achieving and maintaining effective price stability in their respective currency areas. That role for monetary policy is not simply an end in itself, in some abstract, doctrinaire way. On the contrary it recognises that consistently and reliably low inflation, into the medium and longer term, is a necessary means to the end of sustainable growth of output and employment, which are, of course, the truly good things of economic life that we are all seeking to achieve. Our own new legislation defines the MPC’s objective as to maintain price stability and, subject to that, to support the Government’s economic policy, including its objectives for growth and employment. The Maastricht Treaty defines the primary objective of the European Central Bank as to maintain price stability, and without prejudice to that objective to support the general economic policies of the European Union. There are significant differences between the two statutory frameworks. In our case, for example, the precise definition of the stability objective is determined by the Government; and there are much more rigorous requirements for transparency of the MPC process and public accountability for MPC decisions. I am convinced that our arrangements are wholly appropriate to our particular circumstances. But the essence of what we and the ECB Governing Council are mandated to do is very much the same.

The position is complicated in the euro-zone by a reviving political debate about just how much of the unemployment reflects supply-side weaknesses requiring structural reforms, and how much it reflects inadequate overall demand. The outcome of that debate will be crucial to the future evolution of the euro-zone. But in the immediate situation there was no reason to suppose that continued growth of demand and output was inconsistent with effective price stability in the zone as a whole. So much for our different starting points. But over the past year, the world – and I mean the world – has changed quite dramatically for both of us in that we have both been affected by the international economic slowdown. This started, in fact, with the financial disturbances in Asia in the latter half of 1997, but even as late as the beginning of last summer it seemed as if it might have only limited impact on the overall world economy. The IMF, for example, was still then projecting 3–3¾% world growth in 1998 and 1999 respectively – which was certainly a setback compared with their forecast of over 4% just six months before – but it was hardly catastrophic. Since last summer it has become increasingly clear that things are likely to be significantly worse than that.