samchain/econo-pairs-v1 huggingface dataset:
Today, the SNB is no longer in the spotlight with regard to its gold policy. This makes my task today easier than President Roth's seven years ago. I have no newsworthy information to present to you regarding our gold policy. Instead, I will briefly reflect on six commonly held arguments related to commodities and, more specifically, to gold. The point of considering these arguments is not to either reject or confirm them definitely but rather to illustrate the likely speculative nature of long-term gold price forecasts. Since it was freed from central bank intervention, the gold market has been quite volatile. Historical evidence as well as analytical considerations suggest that price volatility will likely remain an important feature of the gold market. First argument: gold is a commodity like any other Since the collapse of the Bretton Woods System, gold has lost its role as an anchor for the international monetary system. Does that mean that it has become a commodity like any other? Before trying to analyse fundamental differences or similarities between gold and other commodities, lets look at what prices tell us: At first sight, gold and other commodity price cycles indeed look similar: the  1  For a detailed overview of SNB's sales program, see Hildebrand (2005), SNB Gold Sales - Lessons and Experiences, Institute for International Economics, Washington. BIS Review 61/2006  1  boom in the gold market since 1999 clearly has parallels in other commodities as well.

Unlike currencies, the value of gold does not depend on a national sovereign. Moreover, payment transactions with gold are fully under a central bank's control. These are two important reasons why gold, more than any other type of investment, serves to ensure the capacity to act in extreme crisis situations. From an investment viewpoint, the price of gold often moves in the opposite direction to other financial assets, in particular to the US dollar. The price for this 'insurance function' is reflected in the fact that gold is less profitable in the long term than other financial assets. It is not surprising that Switzerland, a small open developed country with a highly integrated financial sector and an ageing but relatively wealthy population, continues to invest a significant proportion of its reserves in gold. At present, the SNB holds 1,290 tonnes of gold or roughly 30% of its assets. Price fluctuations in both directions are to be expected and may be strong and sustained. As was the case in the past, such price fluctuations will modify the proportion of gold on our balance sheet from year to year. These short-term fluctuations should not give rise to great concern. Experience has shown that extreme movements in markets tend to level out in the long run. BIS Review 61/2006  5
The Financial Cycle The global financial crisis was a painful reminder that the business cycle is not the only source of imbalances. Indeed, imbalances at the heart of the financial cycle have been the best predictors of downturns in recent decades. The financial cycle tracks the rise and fall in leverage and financial conditions around their sustainable levels. Compared to the business cycle, the financial cycle is greater in amplitude, slower moving and longer lasting, sometimes taking up to 20 years between peaks. As an economy expands, risk taking increases and lending constraints are relaxed. Debt and asset prices rise, reinforcing each other. Towards the top of the cycle balance sheets appear strong but are increasingly fragile. Equity and asset valuations are flattered by mark-to-market profits. Debt sustainability is vulnerable to shocks. At the very top irrationality sets in. Current conditions are assumed to continue forever. “House prices can only go up.” “Financial innovation reduces risk.” “Markets always clear.” People fall for the old lies and unknowingly take great risks secure in the belief that this time is different. To find a silver lining in the storm clouds of the financial crisis, there has been an explosion of work into how best to track the financial cycle and avoid its damaging extremes. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  A range of indicators are now monitored routinely by bodies, such as the Financial Policy Committee (FPC), tasked with maintaining financial stability.

That’s why the FPC has acted to limit the share of high loan-to-income mortgages UK banks can originate, the PRA has tightened standards on consumer credit and the Bank is monitoring closely the growth in leveraged lending. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  The second reason for caution is the possibility of a more material slowdown in China. China is the one major economy in which all major financial imbalances have materially worsened. It may be the exception that proves the rule that financial imbalances cause recessions. While China’s economic miracle over the past three decades has been extraordinary, its post-crisis performance has relied increasingly on one of the largest and longest running credit booms ever, with an associated explosion of shadow banking. Total Social Financing has increased from 120% to 223% of GDP since 2008. In parallel, the non-bank financial sector has increased from around 20% of GDP to over 70% today, with developments echoing those in the pre-crisis US including off-balance sheet vehicles with large maturity mismatches, sharp increases in repo financing, and large contingent liabilities of both borrowers and banks. Chinese authorities have begun taking measures to manage these risks. Growth in Total Social Financing is now in line with that of nominal GDP (Chart 10). The shadow banking sector is being restructured. But there is a tension between reducing the risks from high debt and supporting the economy.
If we plant the financial literacy seed now, we will watch as our children and students grow and bloom into responsible economic citizens. As parents, teachers and educators, we can do this by sharing and talking directly with our children about money matters, teaching them of the things to improve their money management skills, and be role models for them. To the winners of the 2014 Be Money $ poster competition, I offer my heartfelt congratulations! You have done a magnificent job with these posters – your entries were chosen out of 550 entries submitted to us! I only pray that you will exercise some financial literacy with your cash prizes received today!! I would also like to acknowledge the principals and teachers for encouraging your students to participate in the competition and for incorporating financial literacy in your lessons. With the BIS central bankers’ speeches  1  rewards that your individual schools will receive today I hope you are now ever more convinced that financial literacy is worth it and that it $ off! At this point I would like to acknowledge Meilan Meredith and her team at Business System Limited for the wonderful partnership in the poster competition and kindly donating prizes and trophies for our winners today. Your partnership is greatly appreciated and we look forward to another opportunity to work with you in the future. And lastly, a big faamalo to the Financial System Development team for coordinating this year’s poster competition. I wish you all, a very blessed weekend.

Therefore, it's critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation and central bank balance sheets. In addition, we must think carefully about proper regulation to protect consumers and investors and ensure the stability and safety of the financial system.1 So, what are some of the things that the New York Fed should be thinking about? To start, digital transformation could have implications for markets and for our interactions with counterparties, as well as how we carry out monetary policy. Like in the example of music, change is already underway. Take the Fed's overnight reverse repo (ON RRP) facility, for example2. The ON RRP facility has broadened the set of our counterparties and diversified the type of instruments on the liability side of our balance sheet. This facility has supported the control of short-term interest rates according to the FOMC's policy direction. This has had profound effects on the composition of liabilities on our balance sheet. Traditionally, the Fed's liabilities have primarily been paper currency and reserves held by banks at the Fed. For example, a decade ago, paper currency totaled $ trillion and bank reserves $ trillion. But since then, we've seen a dramatic change in the makeup of the liability side of our balance sheet. Today, in addition to $ trillion of currency and $ trillion of bank reserves, there are $ trillion in overnight reverse repos, representing funding from nonbank sources such as money market funds.
This must be done without haste, but no stone should be left unturned. Improved regulation appears to be necessary in several domains, from rating agencies to risk management, the organisation of financial markets and even the question of compensation. As a contribution to this debate, I would like to make two sets of remarks. One has to do with the fluctuations of financial systems. The other concerns financial supervision. Financial systems that operate in the context of a developed market economy are, by nature, subject to cyclical forces. Some are a consequence of the business cycle. Credit activity is an obvious example, as credit demand is heavily influenced by economic activity. Others are from within financial systems. For instance, financial institutions’ equity position moves in line with asset prices specially in a fair value world where fluctuations result in capital gains or  BIS Review 143/2008  3  losses. This effect tends to be exacerbated when financial intermediaries actively manage their balance sheets to target a preferred degree of leverage. The challenge for the authorities is to assess whether and to what extent regulations reinforce these dynamics and impact the entire financial system. With these questions in mind, work is being undertaken to examine the impact of prudential standards. It is also on this basis that the accounting adjustments that I mentioned earlier have been made. We will have to set up supervisory systems that are more suited to economic developments. The need to develop a “macro-prudential” policy is now under debate.

The NBP projection released in April - which assumes unchanged interest rates at 4 percent - points to economic growth within the range of 4.5 to 5.5 percent in the years 2006-2008 and inflation gradually returning to 2.5 percent target sometime in 2008. The statement issued after the April Monetary Policy meeting stated, and I quote 14 : “The Council maintains its assessment that with large probability inflation will in 2006 Q2 and maybe Q3 remain below the inflation target mainly due to short-term factors. If the developments in the economy were consistent with the April NBP inflation projection, then the current level of the reference rate of the central bank would support a gradual return of inflation to the target over the projection horizon and would also be conducive to keeping economic growth at a pace, which is consistent with the potential output growth, determined by the structural features of the Polish economy. The fact that inflation and core inflation has stayed below the previous forecasts for a relatively long period may be an indication that the impact of the factors which may slow down the returning of inflation to the target in relation to that accounted for in the projection is stronger than previously assumed.
The challenges come from the cost and effort of putting in place the necessary systems and personnel to handle what is a complex business and which carries a high degree of reputation risk if something goes wrong. Success in the MPF business also requires an established customer base, good distribution networks and strong brand image. All this means that the MPF is not a business where small players can hope to be successful on a stand-alone basis. Even for the large companies that have captured the lion's share of the business, the start-up costs and the ongoing expenses mean that it will probably take a few years for them to break even and still longer to achieve a reasonable return of capital. However, this should not blind us to the strategic importance of the MPF for the banking and financial services industry in Hong Kong. This is why it was vital for the smaller banks to pool their resources in the Bank Consortium Trust. This has enabled them to establish a credible vehicle and win a market share that is probably larger than the shareholders could have achieved if they had acted independently. The strategic appeal of the MPF lies not simply in the long-term profit opportunities that it offers directly. It is also that it will help to build a relationship with both employers and their employees that can be used to generate cross-selling opportunities.

Deregulation has been the catalyst – the more cynical would say the excuse – for banks to introduce fees and charges on deposit accounts. Most banks have also introduced tiered savings accounts, with higher interest rates being paid on larger balances. Sometimes the rate depends on the range of the bank's products and services that the customer uses. The converse is that some banks are now paying less than the standard rate on small deposits. A further innovation is that in a few cases there are savings products that are linked to HIBOR. Banks have not rushed to pay interest on conventional current accounts, though some have offered combined savings and deposit accounts that pay interest. At least one bank offers an auto-sweeping service from savings to current accounts. Such products are effectively offering interest on current accounts. Generally speaking, the amounts deposited in the innovative current and savings accounts are still quite small. Perhaps the biggest surprise so far has been that some of the banks have been able to lower their benchmark savings account rate to 1.75%, which is probably 25bp below what it would have been without deregulation. A few years ago, when the debate about deregulation was taking place, the conventional wisdom was that the savings rate was artificially depressed and would rise closer to time deposit rates after the cap was lifted. So far this has not been the case. Indeed, it appears that the interest rate rules effectively imposed a floor as well as a cap.
Bottomry, it turns out, was a type of contract whereby a lender would, for a fee, put up money (either in the form of a loan or sometimes a joint stake in the stock) for the purpose of advancing trade. This was on the understanding that “the borrower should, in consideration of a high rate of interest, be freed from liability in the event of certain accidents happening, e.g. failure of goods to arrive at their intended destination” 2. This looks to me rather like a Babylonian version of today’s catastrophe bond. 1  Plantin and Rochet (2007). See also Thoyts (2010). 2  Clayton (1971). See also, Bernstein (1996). 2  BIS central bankers’ speeches  The practice of bottomry flourished due to the proximity of another group of great traders – the Phoenicians, who adapted the basic concept to support trade expansion on the Greek coastline during the 10th and 9th centuries B.C., and to the increasing domination in the Aegean Sea after 800 B.C. of Greek traders who needed indemnity against their cargo. Hop westward across the Mediterranean Sea to ancient Rome, and citizens were paying subscriptions to so-called “burial societies” to cover the cost of expenses associated with their death – a kind of latter-day funeral insurance. This activity evolved such that by the second century A.D. it became common practice instead to pay the relatives of the deceased person a lump sum (the funeraticium), provided their subscription was not in arrears and the deceased had not committed suicide 3.

The role of the PRA is to make sure that the risks for which insurance companies provide protection do not revert to the customer when bad outcomes happen. It would be grossly unfair if you had paid somebody to take your risks away, only to find that you had unwittingly acquired a huge credit risk by giving your money to a financially unsound company. Our main job at the PRA is to ensure that firms are safe and sound, and contribute to policyholder protection. That way, the shareholder can reap the rewards if the risks pay off, but will bear the cost if the firm loses money. This public policy case is well established in many countries, such that the approach of different regulators is often founded in commonly agreed principles. For instance, in the 1970s, the introduction of Solvency I codified these principles into a set of requirements across the EU. The birthplace of insurance However, looked at across the sweep of insurance history, this public policy case is a newfangled set of ideas. I have tried to find out what, if anything, public authorities have thought about insurance through time. In my quest to find the answer to this question, I ended up going back further than anticipated – to around 3000 B.C. – and came across the curiouslynamed practice of “bottomry” in the era of Babylon.
Mervyn King: The international monetary system Speech by Mr Mervyn King, Governor of the Bank of England, at the “Advancing Enterprise 2005” conference, London, 4 February 2005. *  *  *  Later today the G-7 finance ministers and central bank governors meet in London. Markets are speculating on what the communiqué will or will not say about exchange rates. On such matters a private exchange of views might serve us rather better than a public statement. What is a matter for public discussion, however, is the mix of exchange rate regimes we see in the world today, and the consequences for international monetary stability. The current international monetary system comprises three large currency blocs: the dollar, the euro, and an Asian bloc of currencies that are to varying degrees fixed against the dollar. These blocs, of broadly comparable size, produce more than twothirds of world output in total. Given their size, the choice of exchange rate regime of one bloc has a significant effect on the options available to the others. Countries have always faced constraints in choosing their exchange rate regime. Any country can have only two out of the following three – an independent monetary policy, a fixed exchange rate and an open capital account. At various times countries have tried – and failed – to have all three. But in a world of large currency blocs decisions about exchange rate policies are interdependent.

The Albanian banking sector bore a considerable part of the financial bill of the pandemic and provided a continuous financial support to enterprises and households. In addition, the banking system carried out its function without jeopardising the main parameters of its financial soundness: the level of liquidity; profitability and capitalisation. Nowadays, the public considers our banking system a safe destination to hold their savings; enterprises find a source of funds, services and consultancy, while the economy finds a promoter of development and absorber of shocks. In parallel with these main directions, the Bank of Albania has worked and has achieved successful results in other fields as well, among which I find it appropriate to highlight: The payment system, which is already operating within a legal and regulatory framework in full compliance with the EU standards and with a payment infrastructure in an ongoing modernisation process. Here, I mention the approval of the new Law on the Payment System, which transposes the relevant directive of the European Union and paves the way for increasing the number of actors and strengthening the market effectiveness. Also, in 2/5  BIS central bankers' speeches  January 2022, the Bank of Albania has started operating the complete infrastructure for the processing and settlement of euro denominated payments within Albania. This development will result in lower costs and considerable reduction of the time for the realisation of payments, with a considerable benefit to both the Albanian enterprises and households.
There is a strong case to place them to a higher level of responsibility. This is understandable. Banking, or credit in particular, is deemed to be the lifeblood of the economy. Through provision of credit to businesses and consumers, the banking system spurs productive economic activities. Lack of trust and confidence in the banking system might lead to disintermediation and cause slower economic growth, rise in unemployment and decline in wealth generation, just to name a few. The consequences are dire, and the stakes are high. Since the financial crisis, more than $ billion have been levied on banks for various cases of misconduct and breach of trust. As recent as three weeks ago, a major bank was fined $ billion. Both of these are astronomical amounts. In Malaysia, over the past three years, Bank Negara Malaysia has imposed close to RM110 million in penalties. To strengthen the system against these abuses and breaches of rules and regulations, a Code of Conduct and Principles was issued last year by Bank Negara Malaysia. In a more positive light, there is evidence that public trust in banks around the world is improving. This is something we can build upon. The right place of finance is to be the catalyst for the economy. As guardians of public trust, bankers must protect the system against any threats. This means protecting against abuse, misconduct and exploitation. No banker should tolerate misselling of products to customers which are not suited to their needs.

The ECB’s entire range of instruments, characterised by a wide corridor between the interest rate on the marginal lending facility and the rate on the deposit facility, weekly repurchase agreements, the acceptance of a large number of counterparties and a wide range of collateral, is based on the money market functioning. If the money market doesn’t work, the mechanism for transmitting monetary policy doesn’t work. The only solution remaining for a central bank at this point is to stand in for the market and perform the role of the banks, even by lending directly to the private sector. Maybe this solution is the most preferable? I don’t believe so. In my opinion, the functioning of the market is a statutory objective for a central bank. It should therefore intervene to guarantee the liquidity of the market. It should be remembered that every injection of liquidity is guaranteed by the collateral deposited by the counterparty banks. This means that banks’ assets are made liquid. It’s obvious that without such a liquidity intervention, the market would collapse, taking the banking system with it. This is always true for last-resort interventions whose objective is to keep a solvent but illiquid system alive. It is at the heart of the role of central banking, particularly in times of systemic crisis. There can be no doubt that the ECB had to take on this role and I believe it has done so in an appropriate way.