samchain/econo-pairs-v1 huggingface dataset:
However, the transformation of this general intention into specific objectives and policies has been, and remains, a complex matter that often involves options or dilemmas that are not always easy to resolve. To start with, the concept of financial stability is difficult to define precisely, nor do we have a sufficiently solid analytical framework equivalent to that used to conduct monetary policy. Moreover, responsibility for preserving stability is normally shared among different authorities, each with its own approach to the issue. As a result of the current global financial crisis, financial stability is very much at the center of debate, prompting an in-depth review of institutional arrangements, authorities’ responsibilities, policies and the instruments that can be used for this purpose. In developed countries, where the crisis had its origin, financial reforms are underway in a bid to overcome the weaknesses that were detected. Emerging economies, although they did not experience the same problems, must take advantage of the opportunity to review their own situation, draw lessons and advance in perfecting their financial systems. From this point of view, the exchange of opinions that is the purpose of this seminar may help in drawing up recommendations. 2. The Central Bank of Chile and financial stability  The concern of the Central Bank of Chile (BCCH) for financial stability is anchored in its legal responsibilities and the powers or instruments assigned to it.

For coordination with the SBIF, a mechanism similar to that which already exists requiring a prior report or authorization from the BCCH when the supervisor exercises its regulatory power, could be used. BIS Review 142/2010  7  8  BIS Review 142/2010
A financial crisis or unrest in the financial system means, as I mentioned earlier, that we will find it more difficult to affect the economy through monetary policy, as the transmission mechanism changes. Changes in the repo rate then do not affect the interest rates that households and companies meet in the same way as under more normal circumstances, which we of course must take into account in our monetary policy decisions. The dependency goes both ways. The monetary policy conducted can affect the risk of a financial crisis, and we must also take this into account. For example, the repo rate influences housing prices, credit granting and general financial risktaking in the economy. To create an adequate basis for making the monetary policy decisions, the Riksbank needs to analyse these effects. One recent example is the question of how the market for government bonds is affected by the Riksbank buying a large percentage of the outstanding stock. The Riksbank's purchases have meant that a relatively large share of the government bonds have not been available for trading in the market. The Riksbank therefore analyses regularly whether this might affect market functioning and ultimately financial stability. We can thus draw the conclusion that the Riksbank’s work on promoting financial stability has close links to monetary policy, both in operational and analytical terms. Financial stability is a prerequisite for a smoothly-functioning monetary policy, at the same time as monetary policy can impact the risk of a financial crisis.

I would encourage each of you to consider not just specific examples of misconduct, but the patterns within them that point to underlying causes. I suspect we will see a strong overlap with those factors that contributed to the financial crisis. I think your focus should be less on the search for bad apples and more on how to improve the apple barrels. Role of the official sector Dodd-Frank strengthened bank balance sheets, and banks have become more resilient to systemic shocks. This is a positive development. At the same time, it is also important to mitigate the sources of systemic shocks. Dodd-Frank apparently did little to curb misconduct – a possible source of systemic risk. If the people managing capital cushions and liquidity buffers view these tools as sufficient mitigants for the costs of misconduct, or if powerful incentives encourage workarounds of the new regulations, then the connection between post-crisis reforms and greater financial stability becomes threatened. In the last year, we have seen emerging approaches to supervision that aim to address culture, conduct and governance. These methods are being developed in a number of jurisdictions. 8 I am pleased to welcome representatives of 15 foreign supervisors and other official sector agencies who are joining the many representatives of U.S. supervisory and regulatory agencies here today. The topic of culture and conduct has truly become a global dialogue. We have a lot to learn from each other.
We have also expounded upon new realities in endpoint security, borne of painful experience, in which endpoint breaches can have serious implications for public confidence in the integrity of a network as a whole, even in circumstances when an operator’s infrastructure, applications, and security perimeter have not been compromised. Historically, market infrastructures have operated on the presumption that endpoint security is principally the responsibility of the endpoint, and infrastructure security is principally the responsibility of the operator. In the present threat environment, that bifurcation in responsibility is no longer so clear: the fates of operator and 1/5  BIS central bankers' speeches  endpoint are inextricably linked. The Wholesale Product Office’s efforts to strengthen resiliency and enhance endpoint security remain a consuming preoccupation, inspired meaningfully by international policy guidance promulgated by the Committee on Payment and Market Infrastructures (CPMI) and the Board of the International Organization of Securities Commissions (IOSCO). I want to commend our colleagues in the policy realm for their clarion call and practical guidance which have goaded the industry to action across both of these critical fronts and resulted in demonstrable progress. Rather than provide mere updates on the status of our local resiliency and security initiatives in response to this charge, which have been the focal point of prior remarks, I hope instead to frame a few forward oriented, even provocative, questions to advance the industry discourse and to consider measures to meet the present challenge.

Richard Dzina: Four questions on the state of cyber resilience and endpoint security Remarks by Mr Richard Dzina, Executive Vice President of the Financial Services Group of the Federal Reserve Bank of New York, at the Clearing House and Bank Policy Institute's 2018 Annual Conference, New York City, 26 November 2018. * * * As prepared for delivery I want to thank The Clearing House for this generous invitation and, especially, for assembling such a compelling and topical program. The relationship between The Clearing House and the Federal Reserve is multi-faceted: across one plane competitor, as CHIPS and the Fedwire Funds Service, and EPN and FedACH, vie for volume across common service lines; across another plane collaborator, as peer infrastructures seeking to maximize the value and minimize the disruption to customers in response to common industry initiatives, with our coordinated plans for adoption of ISO 20022 standard message formats representing a cardinal example; and across a final plane as overseer and overseen. When it comes to the resiliency and security of our infrastructures, however, there is no ambiguity in role or relationship: we rise, or fall, as one. Standing before an audience like this never fails to elicit a visceral sense of accountability. When the subject is the resiliency and security of the foundational elements of our nation’s financial system, on which market function and economic vitality ultimately depend, that sense of accountability resonates even more keenly.
Mr Duisenberg discusses the challenges posed by economic divergences in the euro area: the consequences for economic policies  Speech delivered by Dr Willem F Duisenberg, President of the European Central Bank, at ‘Nieuwspoort’ in The Hague, Netherlands, on 5 November 1999. *  *  *  First, let me thank you for this rather special calendar for the year 2000. As you are undoubtedly aware, the President of the ECB has a very full schedule, not least in explaining the role of the Eurosystem and communicating its decisions to the general public (through the media). It is therefore a very suitable gift. It is also, however, if I may say so, a very symbolic gift. Next year marks the start of a new millennium. The introduction of the euro also marks the beginning of an important and historic step forward in European integration. The introduction of the euro poses some new questions and challenges for the ECB and other economic policymakers in the euro area, and I would like to take this opportunity to deal with one particular issue which has been raised on a number of occasions in the past year - also here in the Netherlands - that is the challenges posed by economic divergences across regions or countries within the euro area. The single monetary policy and economic conditions in the euro area as a whole The primary objective of the single monetary policy is to maintain price stability.

There is a relatively high degree of correlation in the cyclical developments of euro area countries over a longer time period, and recent differences in growth rates have not been particularly unusual. Nevertheless, different cyclical positions may lead to variations in price pressures. Longer-term factors leading to national differences Turning to the longer-term factors, the trend rate of growth may be higher in some countries due to the process of “catching-up” in terms of productivity and living standards with other euro area countries. It is likely that this has been happening in some euro area countries over the past few decades. In others, the trend rate of growth may be higher due to the fact that the economy is at a more advanced state of liberalisation and deregulation. In terms of the current differences in inflation rates across euro area Member States, longer-term factors are important. It may first be noted that even if inflation rates for all individual goods were identical across countries, the overall rate of increase in consumer prices would differ because there are differences in tastes and preferences across countries and therefore the bundle of goods consumed, and thus the weights of the various goods in the overall price index, differs from country to country. This can also, of course, have consequences for short-term divergences in inflation rates across euro area countries. The “catching-up” effect for countries whose living standards are rising towards the average euro area level also has consequences for inflation differentials.
This is the key factor for a reduction in interest rates on housing mortgage loans. We believe it is entirely plausible to reduce mortgage interest rates to 8% within the period stipulated in the Presidential decree. Bank lending is certainly an important, but not the only source of financial resources for businesses. Both debt (loans) and equity (capital participation) instruments are important so that companies can raise funds to deliver on the national objective of raising fixed capital investment to 25%. We have already expanded the range of such instruments. We revise regulations to simplify and accelerate the process of security issue for issuers. They already can register bond programmes, which considerably reduce procedural costs. In the near future, they will be able to register issues electronically. Currently, bonds account for 18% of total corporate borrowing, which is more than 7 trillion rubles. Therefore, the accessibility of borrowings for our companies should mean not only bank lending, but also expansion of corporate bonds. However, companies need to expand their capital stock along with the use of debt financing. An improved approach to corporate governance is of paramount importance in raising equity financing. Investors will only invest in enterprises whose operations they can understand, where their rights are protected, and there is a clear picture of how they can earn money. Public companies have, therefore, enhanced the controlling and strategic functions of their board of directors, and will continue further enhancement.

Countries that have attempted to shield their economies from the rest of the world have fallen back into stagnation. Nascent signs of increased protectionism are again giving cause for concern. If this tendency intensifies, international trade and prosperity will be undermined. With its open economy, Norway would be severely affected. It is in our own interest to make an active effort to counteract such a development. Monetary policy – a nominal anchor Against the background of an economic downturn and low interest rates among Norway’s trading partners, the conduct of monetary policy in Norway is challenging. A higher key policy rate might have curbed debt growth and demand pressures in the Norwegian economy. But in an environment of persistently low external interest rates, such a policy would likely have led to a sharp appreciation of the krone, resulting in too low levels of inflation and economic activity. Thus, the crisis in Europe and weak growth in the US are also contributing to keeping interest rates in Norway at a low level. BIS central bankers’ speeches  3  The main objective of monetary policy in Norway is low and stable inflation. This objective provides the economy with a nominal anchor. With firmly anchored inflation expectations, monetary policy can contribute to stable developments in the real economy. Chart 7: Rise in consumer prices The operational target of monetary policy is annual consumer price inflation of close to 2.5 percent over time. Over the past ten years, average inflation has been somewhat below, but close to, 2.5 percent.
Based on the examinations and assessments it undertakes, the NBR ascertains to what extent the management framework, the strategies, processes and mechanisms implemented by a credit institution ensure the proper management of risks given the particular risk profile of the credit institution. Thus, the supervision carried out follows the risk-based approach rather than the compliance-based one. In exercising its supervisory task, the NBR issues recommendations, adopts measures and imposes sanctions on the credit institutions themselves or on their executive and governing bodies in order to ensure that the proper remedial measures are adopted and compliance with the regulations in force is restored. D.  Implementation of recommendations of the European Systemic Risk Board (ESRB) on lending in foreign currencies  At EU level, the first recommendations on lending in foreign currencies were issued by the ESRB in 2011 (with implementation deadline in December 2012). The recommendations were not aimed at banning foreign currency-denominated loans by way of administrative measures, but at setting forth measures that would ensure borrowers have the capacity to service their debt even in the context of adverse developments. With some of these recommendations already regulated, the NBR supplemented the national legislation with the required provisions. Following up on the action steps of the Romanian authorities, the ESRB concluded that the aforementioned recommendation had been fully implemented by Romania.

On the one hand, the global economy has continued and is expected to expand robustly, driven mainly by strong growth in the euro area and the emerging market economies, particularly China and India. Financial stability has, on the other hand, become more vulnerable than a few years ago. Recent developments in the US economy and sub-prime credit markets may indeed be an early wake-up call for policymakers and market players worldwide. The US sub-prime related problem has prompted a retrenchment from risky assets and de-leveraging, causing wider credit spreads for riskier assets classes and higher volatilities in bond and equity markets  BIS Review 104/2007  1  around the world. The unwinding of carry-trade and flight to quality of international capital have also been observed. Importantly, the resulting disruption has already required extraordinary liquidity injections by a number of central banks to smooth market fluctuations. Beside the financial sector, turmoil in the sub-prime markets also posed negative impact on the real sector, denting US growth prospects going forward. I would like to digress briefly to tell you that the direct exposures of Thai financial institutions in collateralized debt obligations (CDOs) are relatively minimal, in terms of shares of their total assets. I also like to reassure you that we are keeping vigilance on potential indirect repercussion that may arise further from the impacts of US sub-prime markets to the global economy and financial markets, as the adjustment process is likely to be protracted.
Jean-Pierre Roth: The creation of the euro and the new international monetary order - a view from Switzerland Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the 2nd Conference of the “Geld und Währung” Foundation on Financial Stability and Globalisation, Frankfurt, 3-4 June, 2004. *  1. *  *  Introduction  It is widely acknowledged that the birth of the euro on January 1, 1999 was a milestone in the process of European integration. Giving up national sovereignty in monetary matters was a very bold move of truly historical proportions. It will have long-lasting economic and political consequences. It should promote efficiency, transparency, and growth. The creation of a single currency should also act as catalyst towards further European integration. Moreover, and this is really what I would like to focus on today, the creation of the euro has changed the world’s monetary landscape. I believe that one can say without fear of exaggeration that it has led to a new international monetary order. And for most of it, this is very good news indeed. 2. Our pre-euro fears  To be honest, I must admit that prior to the introduction of the euro we were somewhat worried at the Swiss National Bank. Although we fully appreciated the benefits that Switzerland would draw from the creation of the euro in terms of increased transparency and lower transaction costs, we were also quite concerned about possible risks. We had three main fears.

Over the past five years, the real exchange rate has moved within a relatively narrow band little more than five percentage points wide. Except for the post-September 11 period, when the Swiss franc appreciated markedly, the external value of the franc has largely reflected economic fundamentals. In fact, even the post-9/11 safe-haven effect was relatively mild compared to what we experienced in the past, during the seventies and the eighties, for instance. 4. A new international monetary order  I believe that one could make the case that the introduction of the euro has brought about a new international monetary order, that it has produced an element of stability that benefits many countries, not just Europe’s immediate neighbours, but nations around the globe. As we have seen, movements in the dollar/mark exchange rate were magnified as far as the Swiss franc is concerned in the past, but are much dampened today. When the euro depreciated against the dollar, the Swiss franc did so too, but by a much lesser degree. And later, when the euro appreciated against the dollar, the franc appreciated as well, but again to a lesser extent. In other words, our effective exchange rate has been less affected, the movement of the dollar being offset, at least to some extent, by a movement of the euro in the opposite direction.
The debt burden for households with the highest income (decile 10) has fallen markedly since the banking crisis. This is partly due to changes in the tax system at the end of the 1980s which led to a reduction in tax deductions for interest expenses, especially for high-income groups, and changes in the tax system in 1992. Debt is also unevenly distributed by age. In recent years, the debt burden has increased substantially in the younger age groups. The debt burden for the age group 25-34 is approaching the level prevailing at the time of the banking crisis. The rise in the debt burden must be seen in connection with the fact that they are in the start-up phase and with the rise in house prices. The high debt burden makes these groups vulnerable in the event of an interest rate increase. III. Consumer credit  Banks’ and finance companies’ exposures to household loans depend in part on whether loans are secured. Good collateral provides a buffer against losses and is therefore advantageous for a robust financial system. Mortgage loans account for the majority of household borrowing. The share of housing loans has increased since 1996, whereas the share of other repayment loans, which may be unsecured or secured with collateral in the form of a car or boat, has declined. Other loans include construction loans, bank overdrafts, operating credit, leasing and factoring. Their share is virtually unchanged. Norges Bank’s statistics do not provide the basis for estimating the total scope of unsecured loans.

The combination of a lot of money to be invested and low risk-free interest rates contributed to an increase in the demand for assets that were profitable to invest in and led to an intensified hunt for high yield. This type of environment often inspires great inventiveness in the financial markets and many new financial instruments were also created. These were often complex and difficult to valuate correctly. But in the optimistic climate prevailing then – everything had gone so well for so long – it was nevertheless easy to sell them. Those who invested in the new instruments disregarded, or failed to sufficiently understand, the risks that were “inbuilt” in them. The financial supervisory authorities and regulations also lagged behind this development. The problems in the international financial markets began to become more apparent as early as summer 2007. But the Swedish economy and the Swedish financial markets long appeared able to manage fairly well, despite the fact that the turbulence was having more and more effects on the world around us. Of course, economic activity in Sweden began to weaken as international economic activity declined, but this did not initially seem to entail any very serious downturn. However, when Lehman Brothers filed for bankruptcy in September  BIS Review 73/2009  1  2008 the situation worsened dramatically. The confidence that had existed between financial institutions was shaken to its foundations when no one was certain who might be next in line to default on their payments.