samchain/econo-pairs-v1 huggingface dataset:
There was considerable uncertainty over who was actually holding the bad loans and the problems quickly spread around the world. The uncertainty increased over the summer when credit rating agencies downgraded many of these products. During the third quarter of last year several investment banks reported large write-downs as a result of the bad loans, and in connection with this uncertainty once again increased. In recent months the situation in the financial markets has been characterised by considerable uncertainty over future risks, large write-downs and funding problems for financial institutions. The instability has led to a fear among the banks that they may face liquidity problems, that is, experience difficulty taking new loans when the old ones fall due for payment. It has also lead to fears of an increased credit risk when lending to other banks. This means that the banks have preferred more liquid and risk-free investments, while more banks have experienced difficulties in financing themselves in the interbank market. As a result, government rates have been pushed down, while interbank rates have risen. We have seen this development in many large economies. The interbank markets have been much more volatile than normal. In many countries they have at times functioned poorly in the sense that there has been reluctance to lend money to some banks. In some countries, such as the United Kingdom and the euro area, the considerable uncertainty has led banks to prefer to invest safely in the central bank instead of on the interbank market.

Greece, Ireland and Portugal are the three countries that have benefited from EU and IMF rescue packages. I will return to this in greater detail in a minute. The financing conditions of a number of other euro area countries have been extremely tight for the past few months, but they have not required bail-outs. This is particularly the case of Spain and Italy. Here too, certain economic or political weaknesses along with deteriorated public finances are stoking fears in financial markets, which – I should say in passing – have the unfortunate habit of lumping all players together and always expecting the worst. I would like to stress one point: the current crisis is not a crisis of the euro but a sovereign debt crisis. Moreover, we can see that all the turmoil that has been affecting the economy for the past few years is ultimately due to indebtedness: first, US household indebtedness and then sovereign indebtedness. Nevertheless, since end-2009, the crisis has revealed major shortcomings in the implementation of fiscal discipline and, more generally, in the economic governance of the euro area. The founders of the single currency had put in place the Stability and Growth Pact because they knew that a monetary union could not work without a common fiscal discipline. Its principles were sound, aiming to achieve a long-term balanced budget. But its implementation was greatly lacking.
Where necessary, the SNB may also, for example, sell an unlimited amount of Swiss francs against foreign currency in order to prevent an appreciation of the Swiss franc or even to bring about a devaluation of the national currency. The SNB is very well aware that the determined route it is pursuing in fighting this historic crisis is associated with long-term risks. At the same time, it is firmly convinced that the risks involved in not following this course would be considerably greater. In this spirit, it is facing up to the task of fighting the crisis while at the same time maintaining a watch on the longterm aspects. At some point, the moment will come when the National Bank decision-makers will need the courage to do what is right in the long term even if it is not popular in the short term. BIS Review 6/2009  1

This inflation corrodes the households' purchasing power, increases the uncertainty for the future in every cell of the economy, heightens the volatility of financial markets, and damages the long-term perspective of development. Therefore, the primary focus of economic policies should be the undertaking of coordinated measures to mitigate the cost borne by inflation, and control and return it to its target, in the shortest time period and with the lowest cost possible. Against this backdrop, the Bank of Albania has embarked on the gradual normalisation of the monetary policy. This normalisation is undertaken in parallel with all the other central banks, across the region and around the world, which are facing the same high inflation phenomenon. It engenders a progressive raise of the key interest rate, by slowly changing the nature of the monetary policy stance from the current position, which has been stimulating, towards a more neutral position, which provides a more sustainable support for the long-term growth of Albania. During the discussions of the past two weeks, we have gladly observed that our viewpoint is also shared by the IMF Mission and the Ministry of Finance and Economy. 1/2  BIS - Central bankers' speeches  Our future projections suggest that inflation will continue to remain high in the two next quarters as well. Furthermore, the stabilisation of prices in foreign markets and the normalisation of the monetary policy stance will induce a progressive reduction of inflation, until its return to the target in 2024 H1.
Real one-year interest rate in Sweden, the euro area, the United Kingdom and the United States Per cent 8  8  6  6  4  4  2  2  0  0  -2  -2  United States Euro area  -4  -4  Sweden United Kingdom  -6  -6 94  96  98  00  02  04  06  08  10  12  Sources: The IMF, the OECD and the Riksbank  Figure 2. Inflation in Sweden, the euro area, the United Kingdom and the United States Per cent 6  6  United States Sweden (CPI)  5  5  Sweden (CPIX/CPIF) United Kingdom  4  4  Euro area  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3 94  96  98  00  02  04  06  08  10  12  Note. CPIX/CPIF for Sweden shows the CPIX to the end of March 2008 and thereafter the CPIF. For the United Kingdom, the RPIX is shown to the end of 2003 and thereafter the CPI. The HICP is shown for the euro area. The PCE deflator is shown for the United States. Sources: The Bureau of Labor Statistics, Eurostat, the Office for National Statistics, Statistics Sweden and the Riksbank. 12  BIS central bankers’ speeches  Figure 3.

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.
The implication is that central banks need to have a watchful eye on developments in the repo market to ensure that it transmits and reflects the intended monetary policy stance. This includes monitoring the impact of their own actions on repo market activity, as well as the effects of other, external factors that could potentially drive a wedge between central banks’ own intentions and actual financial market conditions. In fact, two watchful eyes are not too many, in view of the risks that this market may pose to financial stability. Because repo trades are predominately of a very short-term nature, and secured funding can create a false sense of security when collateral prices are in fact often procyclical2, excessive reliance on repo market funding may quickly turn into a source of instability for the financial system as a whole. The scars from the great financial crisis are still visible today. In my remarks today I would like to discuss two factors that have recently been highlighted by market observers, practitioners and academics alike as potentially challenging the intermediation capacity of repo markets, namely central bank asset purchases and post-crisis prudential regulation.3 I will show that the ECB’s asset purchase programme (APP) left a visible footprint in the repo market, but that last year’s modifications to our securities lending facility contributed to restoring an appropriate balance between ensuring the effectiveness of our measures and the smooth functioning of repo markets.

According to MMSR data, euro area government bonds represent more than 80% of the collateral used. Second, the supply of safe private collateral is necessarily scarce12, while the supply of safe public collateral has fallen on account of both a decline in net issuance and the downgrades in sovereign credit ratings. For example, the share of euro area bonds rated AAA by at least two rating agencies has fallen from levels around 60% before the great financial crisis to around 20% today. In other words, safe debt is in short supply and debt in long supply is less safe.13 This is also why the Governing Council’s decision of 26 October, when it decided to extend the horizon of its asset purchases by another nine months, and to reduce the pace of monthly purchases to € billion, emphasised the contribution of the stock of acquired assets, together with forthcoming reinvestments, to providing continued monetary support. 6 / 10  BIS central bankers' speeches  Financial regulation and repo market activity Asset purchases are not the only factor affecting supply and demand conditions in cash and repo markets. This brings me to the second part of my remarks. As you know, a number of liquidity regulations affecting banks, such as the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR), require banks to hold a sufficient quantity of high-quality liquid assets.
Finally, the weight of credit to construction and real estate promotion activities, which at one point accounted for 27% of total credit to the non-financial private sector, now stands at around 10%. Turning to solvency levels, Spanish banks increased their ordinary - or Tier 1 - capital. This rose from € billion in 2007 to € billion at present, entailing an increase of slightly more than 35%. In terms of total assets, the increase was of the order of 1 pp between these dates, to 5.8%. The increase in capital has meant a notable extension of absorption capacity for the losses that will emerge as a result of the growth of bad debts that the crisis will cause. Almost half this total amount of capital is in the form of buffers above the regulatory minimum level. These may be released, as I will explain later, as part of the prudential response to the crisis should it prove necessary. The amount involved - some € billion could cover a volume of losses equivalent to almost twice the current volume of doubtful loans in the system, i.e. approximately 8.2% of the total credit to the resident private sector. As I said, the risks to financial stability have been mitigated by the various economic policy measures adopted. In particular, these measures should provide for more benign developments in NPLs by directly supporting the financial position of households and firms and through macroeconomic stimulus.

Michelle Neal: Advances in digital currency experimentation Remarks by Ms Michelle Neal, Executive Vice President and Head of Markets of the Federal Reserve Bank of New York, at the Singapore FinTech Festival 2022, Singapore, 4 November 2022. ***  As prepared for delivery Good afternoon. It is a pleasure to be here with you at the Singapore Fintech Festival. It is exciting to be a part of this gathering of industry professionals, policy leaders, and investors to discuss key developments in the fintech industry. Digital innovation has the potential to benefit the financial system writ large by reducing transaction costs, increasing competition, and broadening access to a wider range of participants. However, harnessing the full potential of financial innovation and related technologies – especially regarding cross-border settlements and payments – will require collaboration across a range of international partners. In my remarks today I will discuss the landscape of digital assets and some of the ways that the Federal Reserve System is engaging in research and experimentation that support ongoing innovation. As always, the views I express today are my own, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Digital Assets and the Federal Reserve We are all experiencing the incredible pace of growth and change within the digital asset domain, which encompasses a range of opportunities and risks.
This is around 0.2 percentage points higher than forecast in the Bank’s May Inflation Report. This pick-up in wage growth is welcome. Indeed, this rise is a necessary ingredient for getting inflation back to target in the period ahead. Equally, were wage inflation to continue to surprise to the upside as the labour market tightens, this could pose an upside risk to inflation, with corresponding implications for the MPC’s monetary policy stance. 8  8  See Bunn and Rostom (forthcoming). BIS central bankers’ speeches  It is important also, however, to place this wage news in context. This most recent upside surprise comes against a backdrop of wage growth having surprised to the downside for much of the past two years. Up until last month, wages had surprised to the downside in 11 of the past 18 months. That has left the level of regular pay in the economy 2% lower than we expected 18 months ago, even with the recent news. Second, one explanation for the recent weakness of wages has been the compositional effects of a greater number of lower-skilled, lower-paid workers entering the job market. This has clearly had some, probably temporary, depressing effect on wage growth. Over the postcrisis period as a whole, however, compositional effects have not depressed wages. Rather, they have inflated them. Without composition effects, the level of wages today would be around 1% lower, not higher.

Large recessions are significantly more likely than, for example, the normal (or bell) curve might lead us to expect. Based on historical data, the probability of a recession (defined here as a negative rate of annual GDP growth) over the following year lies between 17% (taking cross-country evidence since 1870) and 30% (if we take the UK since 1700). In other words, a recession should be expected one in roughly every 3 to 6 years. Of course, the distant past might be a poor guide to the future. But even if we took the period since 1945, the probability of recession would only fall to 12%, or one year in around every 10. These are probabilities over a one year horizon. In practice, what matters for spending and saving are people’s risk perceptions over a longer-term horizon. By making some assumptions about how these probabilities evolve over time, it is possible to construct cumulative probabilities of recession. Chart 11 shows the cumulative probabilities of recession over a ten year horizon using two long-run cross-country GDP samples. 5 Over the course of a decade, the risk of experiencing at least one recession rises steadily, reaching between 85–90% after ten years. Using post-war data, this cumulative probability is just less than 80%. So over any plausible sample period, a recession remains considerably more likely than not over the course of a decade. 6 That is not to say longer periods of interrupted growth are impossible.
The Banco de España will assign more resources to complementing traditional supervision with the evaluation of the foregoing qualitative  BIS Review 38/2002  9  aspects, including corporate governance codes of practice, procedures and structures. The results of this evaluation will bear on our determination of each institution’s risk profile. Let me conclude this section with a reference to the greater demands made of supervisors by society for information and transparency. The obligation of professional secrecy imposed on supervises by national and international standards and the necessary discretion with which constructive banking supervision must be pursued are compatible with greater supervisory transparency. Indeed, that will allow for better knowledge, and thus control, of what are, at each moment in time, the priority goals of supervision, the problems it faces, the procedures to which it resorts, the means it assigns and the resulting measures drawing the foregoing elements together. In order to meet this - in my view - fully legitimate demand, and to foment knowledge and discussion on these matters, a Banking Supervision Report, which is at an advanced age of preparation, is shortly to be released. This will complement the new publication "Estabilidad Financiera" ("Financial Stability") launched in September last year. In our capacity as a Eurosystem central bank to which additional functions of great importance are entrusted, we continued to make progress in 2001 along the lines marked out for the future last year.

As a complement to a good corporate governance structure, credit institutions should be equipped with a sound risk culture. Such a culture should infuse the design and workings of the organisation and its management criteria, systems and methods; it should be founded on control procedures whose reliability has been duly tested; and its application should be overseen by departments possessing sufficient power and independence. All this should be substantiated by internal and external auditors and be highly visible to the market. Finally, I would like to stress the need for all types of financial institutions to apply due diligence. They should know their clients and systematically monitor their operations so they might prevent, and where necessary curb, not only money laundering and the funding of terrorism but also any other attempt to use the financial system for illegal or unethical purposes. Beyond the obligation all individuals and corporations have to observe and comply with the law, good practices in this area have an important supervisory dimension, as they play a decisive role when preventing or curbing such serious risks as those pertaining to reputation, legal risk, and so on. Despite the unquestionable importance of market discipline and good corporate governance, these are complements to banking supervision and, therefore, cannot replace it in respect of its essential task, namely "to promote the sound functioning and stability of the financial system", as stipulated in article 7 of our Law of Autonomy.
I can only wish for a holistic approach someday; but we certainly cannot wait until we know everything on all nature-related risks before we act on climate. Page 6 sur 13 B. What we don’t know yet Drawing a parallel with the progress made on climate, we face two significant challenges ahead for biodiversity issues: metrics and scenarios (“IPCC type”) and macroeconomics and finance (“NGFS type”). 1. Biodiversity metrics and scenarios Biodiversity – and even more so nature – is complex and multidimensional: for example, biodiversity measurement cannot be reduced to a single metric like the concentration of greenhouse gas in the atmosphere and the associated rise in temperature for climate change. We still lack understanding on, and especially awareness of, this phenomenon. Thankfully, the IPBES, which we could describe as the IPCC equivalent for biodiversity, is advancing knowledge and raising awareness about biodiversity. It provides landmark assessments of biodiversity loss and ecosystem services, including work on scenarios that we could explore further as we aim for improved risk assessment by the financial sector, just like we did with IPCC scenarios.

We are facing an alarming loss of biodiversity We can no longer ignore the warnings of a “Silent Spring”.i We are currently facing a global change in fauna and flora: some are rarefying or disappearing, while others are now thriving in environments that were until recently not suited for them. The figures are quite telling: 25% of studied species are threatened with extinction; scientist are talking about an ongoing 6th mass extinction, the first one caused by humankind. Yet, biodiversity is key to the resilience of ecosystems, which provide unaccounted for but essential services that sustain life on our planet, what we call “ecosystem services”. To put it in economic terms, they include the provision of basic but essential goods such as food, wood, water, etc., but also regulation services such as climate regulation, water purification or pollination. The deterioration of nature through deforestation, plastic and chemical pollution and overconsumption obviously alters the provision of those services. Since  Page 2 sur 13 1970, 14 out of the 18 categories of ecosystem services have declined according to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). Some of these ecosystems are critical to human life and activity: pest and disease control is an alarming example, with scientists warning of an “Era of pandemics” if we do not tackle the biodiversity crisis.ii  2.