samchain/econo-pairs-v1 huggingface dataset:
Last autumn, for instance, the then SFBC issued decrees imposing tighter capital adequacy requirements on the big banks. In future, the capital base at these institutions will have to exceed, in good times, the minimum risk-weighted capital requirements by 100%. As a complement to this, FINMA has also introduced a “leverage ratio”, i.e. a limit to the banks’ leverage. The SNB considers that leverage of over 20 in the banking sector is not prudent and thus is undesirable in good times. In other words, we consider that, in good times, the capital base should account for at least 5% of the balance sheet total. This is in line with FINMA’s requirements. FINMA expects the big banks’ “leverage ratio” to be well over 3% at group level and well over 4% for individual institutions in good times. To prevent the capital requirements from having a procyclical impact, two steps have been taken. First, there will be a long time delay before they are implemented. The new FINMA targets will apply as of 2013 at the earliest, and an extension would be an option for the big banks if compliance becomes impossible due to the situation on the capital markets or the big banks’ individual earnings position. Second, an anticyclical element is explicitly built into the new Swiss regulations. In bad times, the big banks will be allowed to fall short of the new targets. In other words, a capital cushion will be built up in good times to absorb losses in crises.

Bank lending to households and firms is growing at almost 6% per year. This is good news, but we must avoid excesses. There are thus several efforts to be made in 2018 to ensure the smooth financing of our economy:  Remain vigilant to ensure financial stability, first and foremost. At last December's meeting of the Haut Conseil de Stabilité Financière (HCSF – High Council for Financial Stability), we decided to take a macroprudential measure to limit the sharp rise in the debt of certain large companies, including bond debt. It will apply as of 1 July after approval by the European authorities. If credit cycle risks persist – i.e. growth that is significantly higher than that justified by economic fundamentals – we stand ready to act further at any time in 2018, including if necessary by implementing a countercyclical capital buffer. Promoting the attractiveness of the Paris financial centre in the context of Brexit, second: irrespective of the possible transition, the City will most likely lose its EU passporting rights. The Paris financial centre must continue to develop, notably in the area of the clearing of financial instruments, and promote its numerous qualities, enhanced by the arrival of the EBA, in order to become the main euro area centre for market activities. This is our collective challenge, over and above announcements of welcoming registered head offices. Lastly, better channelling our savings. Overall, the French economy has no lack of financing, thanks also to the soundness of its financial institutions.
Joseph Yam: The Asian crisis - lessons for the future Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the HKMA Fifth Distinguished Lecture: “The Asian Crisis: Lessons for the Future”, Hong Kong, 21 May 2002. *  *  *  I am delighted to welcome all of you to this fifth HKMA Distinguished Lecture, and to introduce our speaker, Dr Stanley Fischer, and our discussant, Dr Stephen Grenville. The title of Stanley Fischer’s lecture is “The Asian Crisis: Lessons for the Future.” In a few weeks’ time we shall be marking the fifth anniversary of the outbreak of the Asian financial crisis - a day or so, incidentally, after we celebrate an entirely unconnected event, the fifth anniversary of the establishment of the Hong Kong SAR. Asia and the world have gone through many other ordeals since 1997, so that the crisis perhaps seems much further in the past than it really is. But its effects both physical and psychological - are still with us. It is important that we continue to study the causes and effects and to see what lessons there are for the present. I have spoken at length on many previous occasions on the Asian financial crisis, and I intend today to sit back and listen. Let me, however, make three very brief observations.

2  2 http://www.snb.ch/en/ifor/finmkt/fnmkt_benchm/id/finmkt_reformrates  Page 4/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Slides  Page 5/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Page 6/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  Page 7/7
In the baseline scenario, ECB staff projections predict notable downward pressure on inflation arising from the much larger shortfall in aggregate demand than 1/7  BIS central bankers' speeches  supply. As a result, headline inflation is not anticipated to be back on its pre-COVID-19 path by 2022 in that scenario, and underlying inflation is also expected to remain subdued in the medium term (see right chart on Slide 2). Given the unprecedented impact of the crisis on income and consumption, such disinflationary effects are not surprising. But uncertainty around these forecasts is exceptionally large: while measuring economic slack is already a challenge in normal times, it is currently exacerbated by the highly uncertain effects of the crisis on potential output, both in the short and in the medium to long run. In the short run, potential output is severely affected by disruptions in global value chains and social distancing measures, which constrain the full use of capital. Think of the hairdresser who may only be able to use half of his or her physical capacity. Such effects may partly offset the negative effects of weakening demand on inflation even in the short run. In the medium to long run, the impact of the crisis on potential output, and hence on inflation, will crucially depend on the response of firms and policymakers to the challenges we are currently facing. First, some sectors of the economy may never return to their previous size, requiring a large reallocation of capital and labour, also across borders.

These flexibilities allow us to adapt rapidly and without undue stress to new developments and shocks. Among its other virtues, inflation targeting is purported to improve the transparency and accountability of monetary policy and to help enhance the central bank’s credibility. These were also what we hoped the new framework would deliver for us. On the transparency front, the establishment of the Monetary Policy Committee as the decisionmaking body has transformed the way we conduct monetary policy. Today, the public can see what decisions have been taken, by whom, against what objectives, and for what reasons. On the accountability front, we have now learned to operate in the environment where the public expects us to keep inflation within the target range. This makes us extremely conscious of every policy decision we make, which in turn allows us to avoid potentially costly policy mistakes. But perhaps the biggest change is on the credibility front. The way we conduct policy and our track record have helped us to regain any credibility we may have lost following the unsuccessful defense of the baht. Public confidence in the Bank enables us to anchor private-sector expectations about future inflation, which in turn reinforces the effect of our policy. Yet despite all the good things inflation targeting has brought us, it is not a panacea. In other words, there are limits to inflation targeting. An apparent example here is development of asset prices. Also, past successes do not guarantee future success.
Peter Pang: Recent financial and economic developments in Asia Statement by Mr Peter Pang, Temporary Alternate Governor of the Hong Kong Monetary Authority, at the 38th Asian Development Bank Annual Meeting, Istanbul, Turkey, 4-6 May 2005. *  *  *  Mr President, let me first of all congratulate you on your election as President of the Bank. I must next thank Turkey for graciously hosting this year's Annual Meeting. I also join other Governors to thank the Bank's management and staff for the excellent arrangements. I would like to take this opportunity to welcome the successful conclusion of the 8th replenishment of the Asian Development Fund. This would enable the Bank to continue with its programme in offering much needed relief to the poorest people in Asia. However, while real GDP growth in the region has been impressive, up 7.3% in 2004, income distribution remains highly uneven. The toll on human lives, and the massive destruction left behind by the Tsunami attack last December, reminded us that fighting poverty remains both a continuing – and daunting – task for the Bank. While the Bank has done a commendable job in reducing poverty in the low-income economies, those members who have attained a reasonable level of development have a different set of needs. With global financial markets awash with liquidity, many of them have ready access to private capital, and have less of a need to turn to the Bank for lending.

The Initiative includes studies on issues such as new securitised debt instruments, issuance of debt by international financial institutions, regional credit guarantees and enhancement facilities, and the establishment of local and regional credit-rating and credit-enhancement agencies. Another initiative, known as the Asian Bond Fund project, represents collective efforts of the Executives' Meeting of East Asia-Pacific Central Banks, or EMEAP, to broaden and deepen the bond markets in the region. The ABF project will bring about many benefits. First, it introduces and promotes new fixed-income products to the Asian markets. Secondly, it helps improve market infrastructure. Thirdly, the initiative has helped accelerate tax and regulatory reforms in both the regional and domestic markets. The Bank, with its mission as the region's development bank, is well positioned to assist emerging market economies in Asia to cope with the challenges of globalisation. In the past year, the Bank has contributed to the issuance of local currency-denominated bonds in India, Hong Kong, Malaysia and Singapore. The Bank is also providing valuable support to the Asian Bond Markets Initiative through the former Regional Economic Monitoring Unit, which is now known as the Office of Regional Economic Integration. Mr President, your decision to expand this Office and dedicate it to regional cooperation matters is most timely and welcome, as a well defined agenda for the Bank on regional cooperation will enhance financial stability by strengthening regional surveillance and cooperation. Despite these efforts, developments, and - dare we say it - successes, there are many challenges lying ahead of us.
This measured was introduced in June 1991 with a rate of 20% that was raised to 30% in 1992. It was subsequently lowered to 10% in June 1998 and further down to 0% in September of the same year. Empirical evidence indicates that the reserve requirement had a small, short-lived effect on interest rates, probably because agents adjusted their portfolios toward longer maturities and found their way around the measure (Cowan and De Gregorio, 2007). The effect on volumes was also small, around 2% of GDP, with total capital inflows that amounted to nearly 27% of GDP in the period 1991–1997. No material effects have been perceived on the real exchange rate. Where a significant effect did occur was in the composition of total inflows: the share of short-term debt dropped dramatically as a percentage of total debt. However, financial fragility was not completely eliminated. Severe speculative attacks against the peso in 1998 showed that the reserve requirement policy did not isolate the economy from global financial turbulences (figure 9). Lastly, it is possible to contend that the reserve requirement did have significant distributive effects, because large firms continued to access the international bonds market directly to obtain long-term funding, while smaller firms could only access short-term banking loans, which were made more costly due to the reserve requirement.

Andrew will speak for the FCA, but speaking for the Bank, I can say we will:  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  I. Ensure a strong focus on the markets’ transition to SONIA through the RFR Working Group and its Senior Advisory Group;  II. Continue and, if needed, intensify supervisory engagement on individual firms’ plans and  III. Continue to work together with other authorities internationally through the FSB; this is a global issue. To conclude, the time for ‘last orders’ is now. Firms need to be focussed on what they need to do to be able to transact SONIA based products; and stop adding to their post 2021 Libor exposures. There is a growing recognition across market participants of what transition entails. But we need to get the message to all Libor users – firms need to educate their customers. There is much to welcome in sterling markets but progress needs to accelerate. The developments in the sterling FRN market have demonstrated that change can be rapid once the conditions are right. But firms should not leave it to the last moment, relying on the efforts of others. Firms need to invest in the necessary changes now. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5
Solvency II review, internal models and the solvency capital requirements calculation Having mentioned the Solvency II review, I do not propose to try and cover the many topics that it encompasses. I do want to talk about one aspect which risks being overshadowed by the familiar headline topics of risk margin, regulatory reporting, and matching adjustment. That is, the overall approach to setting capital requirements, and the potential role of sector-wide stress testing in that. Under the existing implementation of Solvency II, there are many firms for which the standard formula is not appropriate, and internal models are the near-exclusive determinant of capital requirements for all or part of the business. And those models either have to be approved or, if not, rejected in their entirety, using a bottom up approach of assessing compliance with a large number of technical tests and standards. The philosophy is, in effect, that everything can be modelled, and that determining capital adequacy is essentially a technical exercise. This denies the reality: first that some risks are simply not conducive to modelling; and second that even for those that are, there will always be a chance that the model is wrong. It hinders supervisors in responding flexibly to risks not well captured by a specific model, or by modelling in general. And it has led to huge expenditure of effort by both firms and supervisors in the approval of models and model changes.

But thanks to that off the cuff remark by a colleague, I have learned that at least one Greek has much more to tell us about ways of thinking about risk. The detailed, fox-like analysis of individual risks and threats and how to respond to them is essential. And it is just as important to step back and ask ourselves, does all that industry add up to an effective defence against what the world could throw at us? Neither the fox nor the hedgehog has a monopoly on wisdom: as we look forward to 2021, the PRA is determined to learn from these and no doubt from other more exotic creatures. Thank you. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7
This difference is primarily due to the even more expansionary monetary policy compared with last December. With the global economy improving and Swiss business activity picking up, an enduringly expansionary monetary policy will in time lead to higher inflation rates. We consider the current level of the three-month Libor rate as appropriate for the time being to enable the economy to return to sustainable, inflation-free growth. Monetary policy decision-making is difficult under present circumstances. Given the strength of the Swiss franc we have very considerably relaxed monetary policy and cut interest rates much more than the European central bank. We are aware that our expansionary policy entails certain risks. Yet we believe that in view of the sluggish development of the Swiss economy and the strength of the Swiss franc we are conducting a reasonable policy. To adopt a more restrictive monetary policy would be premature at the present time and might jeopardise the still fragile economic recovery, notably in the export sector. We are also of the opinion that we still have sufficient leeway to counter any increased price pressures in good time and that price stability is currently not threatened. The National Bank must be ready and willing to react to changes in the world economy. At the moment, we see mainly two risks which might compel us to reassess the situation and to adjust our monetary policy course. For one thing, the economic recovery in Europe might be delayed somewhat. For another, the Swiss franc could again come under upward pressure.

Jean-Pierre Roth: Review of the Swiss economy Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Geneva, 14 June 2002 *  *  *  The National Bank has decided to leave the target range for the three-month Libor rate unchanged at 0.75% - 1.75%. For the time being, the three-month Libor is to be kept in the middle of the target range. Since the last assessment of 21 March 2002, the National Bank has again adjusted its monetary policy. On 2 May 2002, we lowered the target range for the three-month Libor by 0.5 percentage points to the current level. Some time earlier, on 27 March 2002, we had already lowered repo rates by approximately 10 basis points, which led to a corresponding change in the three-month Libor. In both cases, we acted in response to the appreciation of the Swiss franc, which had led to an undesirable tightening of monetary conditions. Since March 2001, the National Bank has eased its monetary policy substantially, lowering the target range for the three-month Libor by a total of 2.25 percentage points. After the cyclical downturn in the second half of last year, there are now signs that the world economy is starting to pick up, which will also benefit economic activity in Switzerland. However, uncertainties regarding the upswing in Switzerland persist. For the time being, the National Bank will thus maintain its expansive monetary policy stance. This does not jeopardise price stability.
Low policy rates, it is argued, generate leverage in the economy and can lead to asset price bubbles. These concerns have particular relevance for me given my responsibility as the current Deputy Governor for Financial stability. On the face of it, this ought to bias me more to err on the side of a faster and sharper approach to policy. The evidence certainly seems to suggest that previous occupants of my post may have had such concerns about the impact of monetary policy on financial markets. Since the post was established in 1998, previous Deputy Governors for Financial Stability have never voted against a rate increase, and have frequently been in the minority in calling for one. 22  The difference, however, is that it was only in 2013, six months prior to my arrival, with the formal establishment of the Financial Policy Committee that the Bank was given specific macro-prudential tools to manage risks to financial stability. And since the establishment of the FPC, we have used those tools not just to increase the resilience of the financial system but also to restrain the build up of leverage in the economy more generally. 23  I am very clear that monetary policy can and should serve as the last line of defence against risks to financial stability, even though that can come at a significant cost to the broad economy.

I have noted before the much greater degree of attention to the supply side given by the post-crisis MPC 4  relative to its pre-crisis predecessors. This is clearly accounted for by the much greater inability to forecast the evolution of supply and its impact on inflation (Charts 3 & 4). 2  Mark Carney’s recent speech illustrates that bank rate might have risen by 2-3 percentage points between August 2013 and the end of 2014 if the post crisis MPC’s had followed the reaction function of its pre-crisis predecessors. And the important role that forward guidance played in preventing financial markets and real economy agents acting in expectation of such tightening. 3 Miles (2015) 4 The rate of mentions of ‘supply’ and ‘productivity’ in the minutes of MPC meetings in the past decade has been about twice that in the decade prior to the crisis.
Michael C Bonello: Malta’s journey to the euro and beyond Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the European Economics and Financial Centre, London, 1 February 2008. *  *  *  A month has passed since the euro became Malta’s new currency. Euro area membership is a major milestone for any country for there are clearly long-term benefits associated with participation in the world’s second most important currency area. There is indeed much evidence that the macroeconomic framework which supports the euro has delivered price stability, job creation and economic growth. For a small, open economy like Malta’s with a heightened vulnerability to external and sector specific shocks, the benefits of the single currency can be expected to be even more valuable. From a central banker’s perspective, moreover, euro area membership means replacing the manifold risks inherent in managing a small, vulnerable currency such as the Maltese lira by the greater security afforded of major reserve unit. Where have we come from? Although the Maltese economy had responded fairly well to the closure of the British military base in1979, it still suffered from considerable structural weaknesses when the authorities applied for EU membership in 1990. These were reflected in the dominant role of the public sector – which at the time provided 40% of all jobs – and in the extensive use of protective trade barriers that only served to entrench inefficient and uncompetitive practices.

There was, moreover, no departure from the Bank’s prudent approach to reserve management and the reserves remained well above the minimum statutory level. This was the case even during periods of rising international oil prices, which inflated the import bill, and in 2007 when the public started to convert Maltese lira holdings into euro and to hold on to euro earnings in anticipation of the change to the euro. Another favourable element during the ERM II phase was the comfortable surplus position on the capital and financial account, which more than offset the current account deficit. A combination of substantial inflows of FDI and inward portfolio investment flows provided strong support to the Maltese lira. The Central Bank of Malta’s credibility - based on its track record in delivering exchange rate and price stability - as well as the small size of Malta’s financial market probably also helped to ward off any unwanted attention. The absence of volatile short-term capital flows into and out of the country during this period supports this impression. Finally, Malta’s experience points to the importance of a shared vision between the government and the central bank on policy objectives, as well as of a holistic approach to achieving them. In this regard, the continued acceptance by economic operators of the need to support the fixed exchange regime facilitated the authorities’ task in imposing the fiscal and monetary discipline necessary to meet the nominal convergence criteria.