samchain/econo-pairs-v1 huggingface dataset:
Across the banking book, a large bank might need to estimate several thousand default probability and loss-given-default parameters (Table 1). To turn these into regulatory capital requirements, the number of parameters increases by another order of magnitude. It is close to impossible to determine with complete precision the size of the parameter space for a large international bank’s banking book. That, by itself, is revealing. But a rough guess would put it at thousands, perhaps tens of thousands, of estimated and calibrated parameters. That is three, perhaps four, orders of magnitude greater than Basel I. If that sounds large, the parameter set for the trading book is almost certainly larger still. To give some sense of scale, consider model-based estimates of portfolio Value at Risk (VaR), a commonly-used technique for measuring risk and regulatory capital in the trading book. A large firm would typically have several thousand risk factors in its VaR model. Estimating the covariance matrix for all of the risk factors means estimating several million individual risk parameters. Multiple pricing models are then typically used to map from these risk factors to the valuation of individual instruments, each with several estimated pricing parameters. Taking all of this together, the parameter space of a large bank’s banking and trading books could easily run to several millions. These parameters are typically estimated from limited  10  Basel Committee on Banking Supervision (2004). 11  Basel Committee on Banking Supervision (2010).

13 To sum up, from a global perspective, the establishment of EMU in January 1999 represents a fundamental institutional change in the world economy, and could in part help explain the large reallocation of capital that has taken place worldwide. 11  A more sophisticated analysis based on an international portfolio choice model reaches the same conclusion (see De Santis and Gérard, 2006). EMU has enhanced regional financial integration in the euro area in both the equity and bond markets. There is evidence of active trading among euro area Member States, with euro area investors assigning a higher weight to portfolio investment in euro area countries. Over the period 1997-2001, the average increase in weights - on top of the world average portfolio weight increase in euro area assets - amounts to 12.7 percentage points for equity holdings and 22.4 percentage points for bond and note holdings. 12  See ECB (2005). 13  On international risk sharing and EMU see for example Sorensen and Yosha (1998). 6  BIS Review 43/2006  The euro area – a zone of stability Before concluding, let me emphasise that since 1999 we have experienced a number of important shocks to the global economy, such as the Y2K problem at the turn of the millennium, substantial oil price increases, the fall and the rise of the euro exchange rate, the boom and burst of the equity market bubble, global imbalances and the clouds of war and terrorism.
The idea is to avoid unnecessarily large fluctuations in output and resource utilisation at the same time as inflation approaches the target within a reasonable time horizon. The Riksbank's other measures, such as lending denominated in both Swedish krona and US dollars, have resulted in a general functional improvement, primarily in the Swedish credit markets, thereby also creating conditions for the markets to return to more normal conditions and allowing financial stability to be maintained – which in turn is a requirement for conducting an effective monetary policy. During the current crisis the Riksbank cooperates closely with other regulatory authorities to handle situations that arise to achieve the best possible outcome. The Riksbank's frequent contacts with Finansinspektionen, the Swedish National Debt Office and the Government Offices play an important role in crisis management. Like other regulatory authorities, the Riksbank also has frequent contacts with its foreign colleagues. Central banks around the world are also working to improve the functioning of the financial markets. In addition, governments in the United States and the EU have adopted bailout packages to support the financial system. In Sweden, the government launched a guarantee programme and a regulatory framework that improves the ability to handle banks in crisis in an orderly manner. Having such regulatory frameworks in place is extremely important. It is still too early to say how soon all the measures that have been taken will have an effect and result in a return to more normal conditions in the financial market.

Its successful realisation will enable our economy to grow at a fast and steady pace, and will mark a step forward in our journey towards EU integration. On behalf of the Bank of Albania, let me affirm our readiness to rise to the challenge. I am also confident that today’s conference will provide a significant contribution to finding optimal solutions. Hoping that you will find the Conference and your stay in Tirana both valuable and enjoyable, I wish the conference a great success! Thank you for your attention! 4/4  BIS central bankers' speeches
The players in financial markets had found ways of getting round the regulations, which in some cases had thereby become virtually toothless. In Sweden, for example, the capital controls had gradually lost much of their bite; companies were able to take up exchange positions, for instance, by shifting trade credits over time. There was also a growing awareness that economic growth would benefit from fewer controls. The interventionist line of economic policy had not been particularly successful. The pace of deregulation varied from country to country and the process was rather protracted. Britain and  1  BIS Review 52/1999  the United States led the way. Sweden was one of the last countries to abolish controls on crosscountry flows of short-term capital. Since the 1970s, financial market turnover has risen markedly and is now very much larger than the flows generated by global cross-country trade in goods and other services. According to the latest BIS study, from 1995, global exchange market turnover, for instance, was 1200 billion dollars, which is approximately five times the value of Sweden’s annual GDP. The figure is roughly twice the level at the end of the 1980s. A new BIS study, for 1998, is due next week and can be expected to show a further increase in global exchange market turnover. Equity and bond market turnovers have also risen rapidly. To some extent, the nature of the flows as well as the players in international financial markets have changed.

The standard for countries wishing to participate in the international capital market—the Special Data Dissemination Standard—is being revised to give a better account of the level of foreign reserves and the debt position in individual countries. At country level, moreover, a code for monetary policy transparency and measures for maintaining financial stability is being drawn up by the IMF together with the BIS, central banks, supervisors, the World Bank and the OECD. A fiscal policy code is already in place. 4. Managing future crises Even with these measures, we have probably not yet seen the last financial crisis. A readiness for the management of future crises therefore needs to be created. A central issue in international discussions is the distribution of risks among the parties concerned. While the IMF has been provided with additional financial resources, it neither can nor should be prepared to contribute the main part of what may be needed in a crisis. This is because expectations that any costs will always be carried by someone else can result in an overall increase in exposure to risks, the problem of moral hazard. Such expectations are liable to drive up credit supply and demand and can influence private agents as well as national policy-makers. One way of dealing with moral hazard among private investors is to arrange for them to carry a larger share of the burden in a crisis.
William C Dudley: Panel remarks at the Brookings Institution Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at “The Fed at a crossroads: Where to go next?”, Brookings Institution, Washington DC, 15 October 2015. *  *  *  It is a great pleasure to be here today to participate in this panel with John Taylor. I am going to take today’s topic – “Where to go next?” – to address the issue of how monetary policy should be conducted. This is an issue that is getting considerable attention among policymakers here in Washington, D.C. To put succinctly the question I wish to tackle: Is it better for policymakers to start with a formal rule as the default position, or for policymakers to have a more flexible approach that considers a broader set of factors in setting the monetary policy stance? As always, what I have to say today reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. 1 To get right to the punch line, I favor a more flexible approach that incorporates a broader set of factors into the monetary policy decision-making process. The world is complex and everchanging. There are many factors that can affect the economic outlook and the attainment of the Federal Reserve’s mandated objectives and, thereby, the appropriate stance of monetary policy.

Just as a k-percent rule requires a stable relationship between a monetary aggregate and nominal GDP (i.e., stable money velocity), a Taylor Rule needs a stable relationship between the policy rate and financial conditions. BIS central bankers’ speeches  3
I have no doubt that they will act equally positively on the proposed $ billion loan guarantee scheme for small and medium enterprises recently announced by the Government. Such schemes, like the various other relief measures announced in the annual policy address a couple of weeks ago, will provide some palliative, and perhaps some stimulus, during hard times. Ultimately, however, sustained recovery will come only when the external situation improves. In the meantime, we should take what measures we can to control the damage, maintain stability and strength in our financial and banking systems, and position ourselves as best we can to get the best advantage out of recovery. BIS Review 88/2001  3  The link One question, raised by a few commentators, is whether Hong Kong would be benefited if we were to change, or even abolish, the Linked Exchange Rate system. Some have simply recommended a thorough, but not urgent, review of the system. Some have suggested a repegging - at a lower value or an abandonment of the peg when times are less unstable or when the economy is booming again. Others have called for action now. Still others, though not very convincingly, and not very constructively either, have criticised the Government for not introducing changes in the 1990s. The reasoning behind most of these commentaries claims that the Link hinders Hong Kong's competitiveness, and therefore our recovery; that the Link removes from us control over our monetary policy; and that the Link is fuelling deflation.

Others present considerable uncertainty: for example, the extent and duration of the collapse in business and consumer confidence, and the question of how far monetary and fiscal stimulus will contain the collapse; and the scope and economic effects of the war against terrorism, which, we have been told, will be long and unlike any other war. The effects on our regional economy are likely to be severe. We are heavily dependent on exports to the USA, at a time when these are declining and likely to continue to decline for some time to come. Capital inflows into the region are falling because of increased risk aversion. Within the region, many countries face persistent internal problems, in some cases - such as Indonesia - both economic and political. The big engine of the region - Japan - continues to falter, with declining exports, rising unemployment, a weak banking sector, and an economy officially teetering on the brink of yet another recession. The latest news from Singapore - in many senses our sister-city in the region - is not good at all. The bright spot in the region continues to be China, which has sustained real GDP growth of 7.6% and export growth of 7% for the first three quarters. It seems inevitable that exports, and in turn GDP, will be affected by the decline in consumer spending in the US, which accounts for around 20% of China's export market: the latest figures already suggest this.
A solution that at one point in time matches the requirements made of us will perhaps not work at all when conditions change. And the world around us is of course anything but static. Then there is also a measure of “learning by doing” in this. From unchanged repo rate… Up to October 2005 our inflation forecasts were made under the assumption that the policy rate would not change during the forecast period. The advantage of this method was that it illustrated in a simple manner when there was reason to change the policy rate. If the forecasts showed that inflation two years ahead would be lower than two per cent, this was a signal that the interest rate needed to be cut. If inflation would be higher, the interest rate usually needed to be raised. This rule was easy to understand and was therefore a good educational tool. This characteristic was particularly important when the rule was introduced. It was a question of winning back confidence in monetary policy and anchoring inflation expectations around the new target of two per cent. To succeed in this it was necessary for households, companies and the financial markets to understand the motives behind the monetary policy decisions. Here the simple rule probably played an important role. However, there were also considerable disadvantages. For instance, it is not a particularly realistic scenario for the policy rate to remain unchanged a couple of years ahead. It was therefore difficult to make forecasts that were totally coherent.

Jean-Claude Trichet: The great financial crisis – lessons for financial stability and monetary policy Introductory remarks by Mr Jean-Claude Trichet, President of the European Central Bank, at the Colloquium in honour of Mr Lucas Papademos, Vice-President of the European Central Bank, Frankfurt am Main, 20 May 2010. *  *  *  Ladies and gentlemen, Introduction The subject of this colloquium – “the great financial crisis”– could be no other since Lucas Papademos’ tenure will be remembered for the immense challenges for financial stability and monetary policy that have arisen since the trigger of the subprime crisis in 2007. Lucas played a key role at both the global and European levels in tackling these challenges. He was among those who were prescient about the considerable build-up of risks in the years before the crisis. He placed significant efforts in developing and adapting financial stability analysis to the fundamental and far-reaching changes in the financial system we have witnessed in the past decade, particularly as a result of increasing financial integration and innovation. When the crisis unfolded, Lucas was one of the foremost policy-makers in devising the actions required to stabilise the financial system. He also played a substantial part in setting the ground for regulatory reform, namely through his participation in the Financial Stability Forum, later Board, and in several European and Eurosystem fora, a number of which he chaired himself.
Ida Wolden Bache: FinTech, BigTech and cryptos – will new technology render banks obsolete? Speech by Ms Ida Wolden Bache, Deputy Governor of Norges Bank (Central Bank of Norway), Oslo, 11 May 2021. * * * Accompanying charts of the speech. Introduction “No state can endure without a well functioning monetary system.” The quote comes from the Constitutional Assembly at Eidsvoll in 1814.1 At that time, it was imperative to restore the monetary system and establish our own national currency. Two years later, Norway saw the birth of its first bank – Norges Bank. For many years, it was the country’s only bank. Today, more than 200 years later, Norges Bank is the bankers’ bank and forms the core of a network of small and large banks spread throughout the country. But the number of physical premises is steadily declining, and our national currency – the krone – is predominantly a number on a screen rather than a physical handheld object. And if things develop as some might believe, tomorrow’s financial system will not be made up of banks, central banks and national currencies – but of electronic signals that transfer cryptocurrencies – from one digital wallet to another. To quote a well know Norwegian businessman: “The direction is clear: finance will be disrupted as surely as fossil fuels will be. The question is not if, but when. "2 I think there is little chance that cryptocurrencies will make banks and Norwegian kroner obsolete anytime soon, but the financial system will change.

Important work is underway at an international level to adapt regulation, supervision and oversight to the new landscape. Norges Bank supports this work. Two of the main considerations are that society as a whole must reap the benefits of the new solutions, while the associated risks must be contained. We also want to be a driver behind changes that enhance the efficiency and safety of the payment system. An example is the work on developing real-time payment solutions, which today allow payments to be sent within seconds to the payee’s account. We are also considering whether Norges Bank should take on a more operational role in the real-time payment infrastructure. In our work, we have to take a precautionary approach and keep a close eye on the potentially far-reaching implications for the financial system of some of the changes underway. We must ask ourselves whether measures will be needed so that we can continue making payments in Norwegian kroner efficiently and securely in the future. Chart: Central bank digital currency A key issue is whether Norges Bank should launch a central bank digital currency (CBDC).13 Unlike central bank reserves, which is electronic money for use solely by banks, a CBDC will be available to everyone, just like cash. And unlike e-money platforms or cryptocurrencies, a central bank will stand behind it and guarantee its value. If we introduce a CBDC at some point in the future, the purpose will be to safeguard confidence in the monetary system and to promote an efficient and secure payment system.
If these millions of workers remain unemployed in Spain for any lengthy period the banking system, having served to underpin the economy during the crisis, might turn into an obstacle to achieving economic recovery. These are the issues I believe we should pay greatest attention to at present. But I shall focus today on the changes taking place in the regulation and supervision of the financial system globally. While not so immediate, these changes will ultimately exert effects on the Spanish banking system and we should all prepare for this new regulatory setting. *** Nobody with responsibilities for the financial system will be able to forget 14 November 2008. It was on that day, on a European initiative, that the Washington summit was held. This date will go down in history as the start of a sea change in the style and substance of financial regulation. In terms of style, because the summit marked the beginning of a radical turnaround in the governance of the global financial system with the creation of the enlarged G20 – to which Spain was invited – that would culminate in the transformation of the Financial Stability Forum into the Financial Stability Board (FSB), a “club” of which Spain became a fully fledged member for the first time.

The principle underlying this single supervisory mechanism is that the severity of the crisis in the euro area has largely been due to the vicious circle that developed between banking and sovereign risk. To break this link, we need to have a genuine institutionalised banking union that ensures not only the same supervision throughout the euro area, but also identical rules, an integrated bank crisis resolution mechanism and a common deposit guarantee scheme. We are moving towards the banking and financial union that was missing from monetary union. 3. The Eurosystem is providing valuable support during this period of necessary reforms  It is clear that the ultimate responsibility for exiting the crisis lies with governments, at national level – implementing reforms, consolidating public finances and restoring competitiveness – and at the collective level – agreeing on and implementing a more coherent and comprehensive institutional framework around monetary union. These reforms are obviously – and fortunately – the fruit of a democratic process and can only be that. But  BIS central bankers’ speeches  3  the corollary to this is that these necessary reforms cannot be immediate: they take time, first to be implemented and then to yield their effects. And the time of the markets is not that of democracy, as you know. Doubts and delays create nervousness, volatility and worry in financial markets, which often leads to sharp rises in interest rates for countries deemed to be vulnerable.