samchain/econo-pairs-v1 huggingface dataset:
Interest on reserves represents the rate of return on a riskless overnight deposit at the Fed.7 Accordingly, the interest rate paid on reserves represents the sure return a bank can earn and therefore the opportunity cost for the bank to make an alternative investment, such as a loan or the purchase of a security. Theoretically, if all money market participants had access to deposits earning the IOER rate, the IOER rate should set a minimum rate – or floor, so to speak – on short-term interest rates, as there would be no incentive for institutions to make loans to any institution at a lower rate. Even in a market without universal access to IOER, depository institutions with access to it could borrow funds or take deposits from institutions that cannot earn it, then leave funds invested at the IOER rate until there’s no further economic advantage to borrower or lender. Competition among banks that can earn IOER would thus pull up other money market rates close to the IOER rate. Money market dynamics in recent years generally reflect these changes. In a world with significantly elevated reserve balances and a ¼ percent interest rate paid on those balances, IOER has kept the federal funds rate and other money market rates at positive levels within the FOMC’s zero to ¼ percent target range.

Norman T L Chan: 3Ds – an era of awakening? Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the 4th Santander International Banking Conference: “A Global Financial System for a Global Economy”, Madrid, 18 October 2011. *  *  *  Good afternoon ladies and gentlemen, I am honoured to receive the invitation to attend and speak at the 4th Santander International Banking Conference today. It is only a few short years ago that the world economy was shaken to its core by the Global Financial Crisis. That we again face the threat of profound and traumatic disruption so soon is a measure of the urgency that governments must employ to correct the structural imbalances necessary to get the economy back on song for the long term. Today I want to take up a little bit of your time explaining what I see as fundamental to righting the ship so that it can survive in the roughest of seas. Collapse of Bretton Woods System After World War II, the World’s Superpowers tried to maintain a system of semi (or quasi) Gold Standard in which major currencies were fixed to the US dollar, which was in turn fixed to Gold at $ an ounce. This global monetary system was basically a fixed rate regime, which imposed an external discipline to restrain monetary expansion globally.
Once the risk management Committee has been established, the Board will be able to control risks through this Committee and define types of risks that have to be closely monitored. In addition, the Committee would also responsible for setting up measures to deal with those types of risk, including the process on risk assessment and control. The contingency plan is needed to control risks in timely manner and minimize those risks to be at the acceptable level. This includes the reporting process on risk status to the Committee and Board of Directors with simple and clear message. With such practices, the Board of Directors could fully monitor risk management with appropriate decision, supporting by the Risk Management Committee. On the division of responsibility between the Board and the Risk Management Committee, the Committee should have authority to directly oversee all risks arising from normal course of business, while the Board of Directors should be responsible for approval of the risk management policy framework proposed by the Risk Management Committee, such as approval of aggregate exposure limit to FX risk, and individual limit by transactions and traders; maximum value at risk for interest rate risk; on credit risk, setting aggregate, individual, as well as group large exposure limit to certain types of credits and borrowers, or certain groups, to prevent over concentration. BIS Review 25/2006  3  On top of setting proper risk management framework and risk limits, the directors should also be on guard against situations where normal risk management cannot fully cover.

They are detrimental to financial integration and, therefore, curb the Banking Union’s aspirations to act as a single jurisdiction. It does not seem reasonable that the implications, in terms of capital and liquidity, for a banking group that has a subsidiary in a Latin American country should be very similar to those that would prevail were the subsidiary located in another euro area country. 8/10  Naturally, the introduction of a genuinely European deposit guarantee scheme would complement and largely provide for this step forward in integration. Also, from a regulatory perspective, a sufficiently uniform legal basis is notably lacking in the euro area. Just as specific national regulations had to be harmonised, or recognised as equivalent, to enable the creation of the single market, it is necessary to change specific rules that prevent the development of a truly single market for financial services. It may well not be possible to achieve full harmonisation, but this will probably not be necessary. There are some critical areas, such as the prevention of money laundering, fit and proper rules and bank insolvency regulations, where a common, euro area-wide set of rules would boost market integration. And that would also improve the efficiency of supervision and resolution. The question of doing away with these barriers and harmonising regulations is gaining in importance.
What ought to matter more is whether efforts are being stepped up to achieve sustained growth over the medium-term – by reducing vulnerabilities in the system and implementing structural reforms. Second, markets seem to be under-estimating the pace of monetary policy normalisation, particularly by the US Fed. The Fed’s guidance suggests one more rate hike in 2017, and three each in 2018 and 2019. But markets are pricing in less than three hikes in total for the rest of this year through 2019. Granted – with lower oil prices and muted wage growth, the risk of inflation surprising on the upside is low. But what if that risk materialises, especially if the labour market tightens further? Unemployment is already around its natural rate. Past experience suggests that the pass-through from labour market tightness to inflation tends to accelerate as unemployment falls below the natural rate. That could well lead to a faster pace of monetary policy normalisation than the market currently anticipates. Finally, there is a conundrum between volatility and uncertainty. Why is volatility so low in financial markets when uncertainty is high on the policy front? Perhaps it is because uncertainty about economic growth is lower. - The size and number of revisions to global growth forecasts have clearly come down. But surely, political uncertainty is at elevated levels? And when politics is uncertain, can the economics remain unaffected? A disorderly Brexit could lead to increased market turmoil and trigger sharp asset price corrections.

In this way, experimentation allows us to send the right signals for the ecosystem to realise the potential of new technologies without fearing a delayed and unexpected “backlash” from the Supervisory Authority. The experiments underway at the Banque de France on a central bank digital currency (CBDC) are an illustration of the same experimental approach in the field of work specific to central banks. They present with issues directly related to the need for the Eurosystem, should circumstances require it, to be ready to issue a CBDC in order to ensure that central bank money is accessible to the general public and to preserve their freedom of choice of means of payment and their confidence in our currency. By testing the possible uses of a CBDC, we investigate not only the potential of blockchain technologies but we also question the players in the ecosystem on what tomorrow’s landscape could look like, on subjects as fundamental as the methods of exchanging financial instruments for CBDCs, the improvement of the conditions for executing cross-border payments or new ways of making CBDCs available to financial sector players. 2/4  BIS central bankers' speeches  *  *  The second thrust of our work is to promote a regulatory framework and appropriate supervisory practices. In this respect, our immersion, as a player, in the innovative FinTech ecosystem is a valuable asset that we intend to build on in order to contribute to the impending and necessary changes in regulations and supervision.
Sweden is one of the world’s best examples of the forces for growth that are generated by innovations, experimentation and creative processes. Companies like Ericsson, AGA, SKF, Atlas Copco and Electrolux are just a number of the instances of inventions that have contributed to our country’s long-term growth. The old Austrian school of economics, with its roots in the period before World War I, had an analytical focus on growth and the business cycle that is relevant for an understanding of the present situation. One insight is the crucial part innovations play for the path of long-term growth. This has been elucidated not least by Joseph Schumpeter and Erik Dahmén. However, the significance of innovations and technology for growth is not a straightforward matter. They often raise productivity and generate windfall profits. The new products that result from innovations give some firms a monopoly, while other firms that are relying on older technology are pushed to the wall. In such a process there is, of course, a large risk of making the wrong decisions. The Austrian school also regarded investment as the linchpin of the business cycle. In the event of a technological breakthrough, firms are liable to overestimate the size and duration of the resultant improvement in productivity. That is why an upward phase not infrequently culminates with excessive optimism and faulty investment. When profit expectations then fall back to more realistic levels, share prices fall and corporate investment takes time out until capital stocks have adjusted to a more reasonable view of long-term yields.

Although optimism everywhere else did not become as excessive as in the United States, decisions were no doubt made about consumption, investment and shareholdings that possibly would not have occurred if more lasting economic considerations and more realistic expectations had prevailed. Importance of learning from history History teaches us that in business, euphoric phases tend to be followed by a clear change of mood. The fact is that a similar wave of over-optimism attended the era of railway-building in the nineteenth century. The invention of the electric motor and the combustion engine likewise generated a high degree of over-confidence in the early twentieth century. In Sweden it was the possibilities of using the new technology to reap large profits from such natural resources as hydroelectric power, timber and ore that were exaggerated. In the late 1990s the jubilance was about the huge profits that were going to be reaped instead from computer and telecom technology. Once again, the expectations of rising profits and incomes overshot the mark. We should bear in mind, however, that the major innovations did play a tremendous part in the emergence of industrialised society and the welfare state. Railways have been of lasting importance, not least in Sweden. Without those investments in the early twentieth century, the mining and forest  BIS Review 82/2001  1  industries could hardly have done what they did to launch Norrland and other parts of our country on the world market.
Changing the regulation too late will contribute more towards making the fall greater than braking the build-up of the imbalance. Neither do we have much practical experience of using regulations to prevent bubbles – even if it should be mentioned that we actually do not have particularly much experience of using policy rate increases for that  BIS Review 68/2010  17  purpose either. Consequently, it may be difficult to determine the appropriate “dosage”. One potentially fairly serious problem with regulations is that experience has shown us that it is relatively easy to circumvent them. Possibilities for regulatory arbitrage can be particularly great when the regulatory framework is applied in a more differentiated manner. The role played by the “shadow banking system” in this crisis is an example of the consequences of circumventing regulations. Is a combination of policy rate and regulation needed? I mentioned earlier that it seems as though more and more are advocating that something may need to be done when it seems as though a credit-driven imbalance is building up. I do not believe that the increasing popularity of this view has so much to do with the fact that the identification of an excessive credit expansion is now considered to be easier. Neither is it because we have identified tools that can effectively and accurately brake an unsustainable credit growth. Rather, I believe that it is due to society’s increased unwillingness to live with the real economic risks entailed by such imbalances.

BIS Review 68/2010  3  Figure 3 Different measures of resource utilisation Per cent 6  6  4  4  2  2  0  0  -2  -2 -4  -4 The Riksbank, April -10 NIER, M arch -10 European Commission, M ay -09 OECD, November -09 IM F, April -10 M inistry of Finance, April -10  -6 -8 -10 00  02  04  06  -6 -8 -10 08  10  12  14  Monetary policy has contributed to increased macroeconomic stability The trend towards inflation targeting, or policies resembling inflation targeting, and increased openness and clarity has had positive results. In Sweden and other countries affected by high and fluctuating inflation during the 1970s and 1980s, inflation has become lower and more stable. Similarly, inflation expectations have been significantly better anchored than before (Figure 4). In these cases, I believe that countries with explicit, quantified inflation targets have had a particular advantage. These days, actual inflation can differ quite considerably from the inflation target, for example due to temporary increases in energy prices, without households and companies finding it particularly alarming. They rely on the Riksbank to return inflation to target within a couple of years.
Conditions for long-term sustainable growth The recent history of the UK life sector has shown us conditions that were not supportive of sustainable growth – or indeed policyholder protection. We need only cast our minds back a couple of decades to the existential challenges faced by some with-profits firms and the impact this had on benefits paid to policyholders. These challenges resulted from the inadequate capital resources supporting the promises they had made (or were deemed to have made) to their policyholders. Whilst BPA balance sheets look very different, this nonetheless underlines our strong motivation for and expectations of effective governance, risk management and resilience, underpinned by a robust, transparent and risk-sensitive solvency system for long-term business. We see these elements as necessary conditions for success and for the purposes of today, I’ve boiled them down to four Rs: Responsibility of the Board  Page 4  Risk management Resilience; and Regulation Fundamentally, the PRA and BPA firms should be aligned in their interest in the growth of the sector happening in a sustainable way. And there is more agreement than not on the conditions needed for success. As we move from the fundamentals and start delving into the detail, differences of views emerge between BPA firms and the PRA on the extent, nature and relative importance of these conditions; not unexpected given our respective objectives.

Insurers may be sole or significant investors in specialised lending and will require a commensurate level of expertise to assess, maintain and potentially work-out such assets. Rationale for the MA Before discussing our supervisory analysis on MA portfolios, I will recap on the rationale for the MA. There are several schools of thought on whether illiquid liabilities should be discounted at a “risk-free” rate, or if it is appropriate in some cases to allow for some addition to the risk-free rate. The PRA accepts that a component of the credit spread represents an illiquidity premium, and that an allowance may be made for this where firms: hold debt-like instruments to back annuities; are able to hold those assets to maturity; and they closely match asset and liability cashflows. Solvency II has formalised the conditions for when that illiquidity premium can be recognised, often referred to as “eligibility”. Under Solvency II this increase to the discount rate is called the MA. The MA reduces the value of liabilities in the base balance sheet, and hence increases own funds [Chart 5]. The MA performed its expected function in 2020, allowing insurers to look through the sharp spike in credit spreads. And the MA also served broader financial stability as insurers did not behave in a procyclical way, as they did not need to sell assets as market prices fell [Chart 6]. Asset eligibility On the eligibility side, Solvency II requires that the assets backing MA eligible liabilities should be ‘fixed’.
The losses of CHF 3 billion announced by the bank for the fourth quarter show how important it was to reinforce the capital base. At UBS, the government package provided significant relief to the balance sheet from the burden of illiquid positions particularly affected by the crisis. With this package, the SNB made it possible for UBS to transfer illiquid positions to a special purpose vehicle. The UBS provided this special purpose vehicle with equity amounting to USD 6 billion. The Confederation compensated UBS for the capital requirement arising for this purpose by  BIS Review 157/2008  1  subscribing to mandatory convertible notes (MCN). Since the announcement of the package, the UBS liquidity situation has stabilised. The numerous international measures aimed at stabilising the financial system have also had a positive effect on the position of the Swiss big banks. Nevertheless, further losses cannot be ruled out in view of the difficult market conditions. The situation remains serious, and the SNB will continue monitoring it closely together with the Swiss Federal Banking Commission (SFBC) and the Federal Department of Finance. Lessons from the crisis and reforms in Switzerland I would now like to speak about the lessons learned from the crisis. The continuing financial crisis is almost unprecedented, in terms of both extent and duration. It is also unprecedented in terms of the measures taken by the authorities and the central banks with the aim of stabilising the situation and minimising the impact on the real economy. This also applies to Switzerland.

Manuela Pfrunder, the graphic artist, has further developed her drafts and completed the design for the CHF 50 note, taking the technical aspects of banknote production into account. At its meeting of 29 August 2008, the SNB Bank Council approved the design of the new CHF 50 banknote and gave the go-ahead for the further work that is to be done. Preparations for the technical aspects of implementation of banknote production are now in full swing. A particular challenge is posed by the security features that will be used in the new banknote series for the first time. Based on the progress of work to date, the SNB is confident that the first banknote in the new series will be ready for production within the planned time period. The CHF 50 banknote will mark the beginning of the new series of banknotes and is scheduled to be issued in autumn 2010. The appearance of the new banknote and the security details for the entire series will be presented shortly before the scheduled issue date. 1  Nout Wellink, The Importance of Banking Supervision in Financial Stability, High Level Meeting, 17 November 2008, Beijing  BIS Review 157/2008  3
Real per capita incomes in the previously crisis affected economies (Indonesia, Korea, Malaysia, Philippines and Thailand) have significantly exceeded pre-crisis levels.” – World Bank’s “East Asia & Pacific Update – Ten Years After the Crisis” (April 2007) Asia is resilient. I am confident about Asia’s future. I do not expect military conflicts as all countries are concentrating on economic growth and building cross-national and cross-regional ties. Tensions may arise in cross-strait relations due to forthcoming elections in Taiwan but so long as the US Administration maintains its clear stand that it will not support Taiwanese independence, the situation can be managed. Terrorism remains a long-term threat but will not topple governments or drag economies down. But an avian flu pandemic will be a different threat altogether. It will tank many economies. Barring this unpredictable risk, Asia will continue to surge over the next 20 years, powered by the twin engines of China and India. The story of China is well-known and that of India becoming increasingly so. So I shall not elaborate on them. Instead, I want to remind you not to overlook the region that is strategically-positioned between these two giants – the ten Southeast Asian countries which form ASEAN. Let me elaborate. A revitalised ASEAN ASEAN is being revitalised. In response to the Asian Financial Crisis, ASEAN countries took concrete steps to tackle weaknesses in their financial and corporate sectors and implemented structural reforms. These reforms have strengthened ASEAN’s economic fundamentals and financial stability.

Yet, in the case of these countries, there is a real risk posed by speculative capital inflows. As long as negative real interest rates prevail in Europe, straying too far away from our regional peers in terms of policy rate would invite considerable appreciation pressures. While helpful in terms of taming inflation, these would not be welcome, given Romania’s increasingly significant external imbalance that is singular in the region in terms of size and trend. It owes to the faster growth of domestic absorption than that of domestic output, as well as to non-price competitiveness issues manifest in certain production sectors. Therefore, striking the right balance in terms of the interest rate differential is of the essence. After the tightening undertaken so far in Romania (including three policy rate hikes in the first half of 2018), it is probably wise to proceed cautiously in the future. 2/3  BIS central bankers' speeches  Which brings me to the last issue I would like to address: what is advisable in terms of economic policies in order to cope with any future adverse developments. For the sake of simplicity, allow me to try to formulate three general rules that are instrumental in dealing with such developments. First of all, irrespective of the possible scenarios, it is wise to put your house in order before the storm comes. One example is fiscal consolidation, which is paramount for the economy.