samchain/econo-pairs-v1 huggingface dataset:
Extending liquidity support to insolvent banks is a case in point. But, even in this admittedly fuzzier terrain that separates liquidity provision from solvency support, the ECB operates in a sound framework that has passed multiple resilience tests in recent years. In the case of Greece, for instance, the choices of the Governing Council were another example of strict adherence to this framework. In keeping with Article 123 of the Treaty, which prohibits the ECB from monetary financing, the Governing Council imposed strict limits on the use of government securities as collateral for loans that the Greek banks received from the ECB. We nevertheless continued to supply the necessary liquidity so as to ensure the functioning of the Greek banking system and the continuation of lending to businesses and households. This was in line with the principle by which the Eurosystem may lend to banks which are solvent and have sufficient collateral. To sum up, the balance we achieved with our interventions during the 4/6  BIS central bankers' speeches  Greek crisis was fully within our mandate; it respected the political commitment to the single currency contained in the Treaty, but at the same time we implemented that commitment within the limits of our Statute. The Treaty prohibition of monetary financing has been a key element in preserving the monetary policy nature of OMTs and the public sector purchase programme (PSPP). The technical features of OMTs imply that they would only be considered if warranted from a monetary policy perspective.

There is no doubt that monetary policy has had beneficial effects on government finances; monetary policy has unavoidable implications for public budgets. The same kind of indirect support occurred during the easing cycle in the early 2000s, when our main refinancing rate was reduced to 2% – a very low level at the time – and was maintained at that level for more than two years. The fiscal ramifications of monetary policy that we see today (and in the early 2000s), however, differ fundamentally from the deliberately coordinated strategy of monetary financing that we observed in some countries in the 1970s. Today the use of any central bank instrument has to be justified solely on the basis of the central bank’s narrow price stability objective, and not on any fiscal consequences thereof. Borrowing from the theory of monetary regimes, it is the dominance of the central bank mandate over the objective governing fiscal conduct that differentiates the setting of monetary policy today from anything we saw prior to monetary union. The ECB continues to have the necessary institutional independence, the financial resources and operational capacity to take all appropriate measures, if and when needed, to counter upside or downside risks to price stability in a truly symmetric fashion. It could be argued that there are multiple channels through which the central bank could take on tasks and obligations that pertain to the fiscal authority, and some of these channels are both more subtle and less apparent than outright financing of public deficits.
Further innovations are needed if the sector is to come to terms with the new business models that Andrew Bailey and others have mentioned today. For example, innovations in the way banks are organised that are consistent with orderly resolutions. Separately, and as noted in a number of panels today, asset managers also need to innovate to adapt to the new realities of market liquidity. The increase in the scale of the asset management sector since the crisis has been notable, as has been the emergence of investment funds that offer daily liquidity while investing in securities that only appear liquid. The Bank, the Financial Conduct Authority and the Financial Stability Board are keenly aware of these risks, and we are working to resolve them in an orderly manner. The area of market liquidity is one place where there may be duplicative regulations and scope for adjustment. Market participants should rest assured we have made adjustments in the past where we have gotten things wrong. We adjusted the liquidity coverage ratio. President Draghi noted the joint work between the Bank and the European Central Bank to change securitisation – an example of fixing something we had not gotten exactly right. We will continue to adjust our market operations. Let me move towards the conclusion of my conclusion. The point about reform and review being a continual effort came through in spades. David Kynaston noted that there have been four big bursts of reform in the last 150 years.

As Elizabeth Corley highlighted, there is a disconnect between how we in finance – and I include the public sector here – see the sector and how the general public sees the sector. Interestingly, that disconnect is much less prompted by questions over the health of our banks. Alex Brummer made this same point in terms of a sense of optimism around institutions. That is a good thing because a tremendous amount has been done over the past seven years in order to make banks much stronger. I will not go into all the details, but banks are indeed now beginning to adjust their business models. I’ll add a very clear message on behalf of those of us on the regulatory side to the bankers in the room and those watching from outside: there is no Basel IV. There is no other big wave of capital regulation coming. With the agreement on Total Loss Absorbency Capacity, the last pieces of the puzzle have been put in place. It is true that we do have to make some adjustments to risk weights; and there will always be things to iron out, but I repeat there is no big other prudential regulatory wave for the banking sector. As Andrew Bailey made clear in one of the break-out sessions I attended, the focus now is about greater certainty and adjusting business models to these new realities.
The earlier adjustment of the Chilean economy, in terms of both private expenditure and the monetary policy reaction, meant that for the larger part of 2014 our currency was one of the most depreciated globally. Subsequently, as the rest of the emerging economies entered a more marked adjustment cycle, those differences narrowed and the peso even appreciated in multilateral terms (figure 4). As of March, the real exchange rate is somewhat above its average for the last two decades (figure 5). Domestic activity has behaved as foreseen in December, although last year closed with somewhat higher growth than forecast in the previous Report: 1.9 percent. Revisions to earlier figures and a somewhat stronger fourth-quarter growth explain this result. Partial firstquarter figures continue to reveal moderate growth, but definitely better than the figures it showed since mid- 2014. On the demand side, there is no big news either with respect to the end of last year. Aside from specific factors, consumption and investment remain weak. Durable consumption and investment in machinery and equipment continue to grow at low or negative annual rates, albeit with some marginal stability. Anyway, it is worth noting the greater impulse from fiscal spending, particularly public investment, and the positive effect of the peso depreciation in the productive performance of some tradable sectors. The labor market continues to show more strength than previously foreseen. The unemployment rate, despite a marginal increase, is still low.

Last but not least, our free floating exchange rate system has permitted the exchange rate to depreciate nearly 11 percent in real terms with respect to its trough of 2013, helping adjust the current account and favoring the competitiveness of our export sector. The saying goes that what is obvious is not talked about, and what is not talked about is forgotten. So I have thought relevant, especially in this environment that at times becomes overwhelmingly pessimistic, to stress how well equipped our economy is to deal with adverse situations. I think that the comparison with other economies of the continent, which have also suffered the brunt of the fall in the prices of our commodities, is revealing: most of them have high current account deficits and several show fiscal situations that are worrying to say the least. In many of them, high levels of dollarization or currency mismatches in the financial sector, restrict the room for exchange rate adjustment and force authorities to use less efficient instruments to achieve their goals. Chile’s reality is different: our economy’s adjustment occurred sooner than in other countries and it did so rapidly and deeply. This situation allows us to look into this and the coming years with some peace of mind. In this context, and as we projected in December, output growth has tended to stabilize around 2.5 percent annually, which is low, but in line with our baseline scenario should increase gradually through the year.
It would also be conducive to the stability and integrity of the financial system. I would emphasise the word “international” as there is no reason to develop regional standards different from those that have already been developed by international financial institutions and professional bodies, together with supervisory agencies. 17. The fourth element concerns the strengthening of co-operative efforts in financial system development. As I have already noted, in Asia we have been making good progress in our efforts to develop the domestic and regional debt markets through various regional forums and involving the international financial institutions. In the context of developing Asian Bond Fund 2, for example, we have achieved a few firsts, including the introduction of the first exchange-traded bond index fund in Asia, arranging for two Asian markets to allow exchange-traded funds for the first time, and opening up the renminbi inter-bank bond market for the first time to foreign investors. 18. The final, and probably most difficult, step towards creating an integrated Asian financial market involves the relaxation of statutory restrictions on cross-border capital flows. It is likely to be the most difficult, in part because it depends on the ability of the financial system in individual jurisdictions to cope with the ensuing risks. 19. This last point brings me to the next issue I wish to touch upon in my remarks, namely, the need for a strong and efficient regulatory framework that is adapted to the integration of the domestic financial system with that of other jurisdictions. 20.

Joseph Yam: Financial integration and regulation Remarks by Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the conference: The Euro: Lessons for European and Asian Financial Markets, Hong Kong, 24 February 2006. *  *  *  Ladies and Gentlemen, 1. It is a great pleasure for me to open the proceedings of this conference on “The Euro: Lessons for European and Asian Financial Markets”. It is also an honour for the Hong Kong Monetary Authority to be co-sponsoring this event with the European Commission. The programme is a very rich one and it will be impossible for me, in these opening remarks, to cover all the topics to be discussed later this morning and in the afternoon. I do notice, however, that the words “financial integration and regulation” appear in several of the session titles. These are topics close to my heart, because I have come to believe that they can influence profoundly how Asian economies develop in the years ahead. Well managed financial integration, combined with sound regulatory practices, can help the region maximise its economic growth potential while maintaining financial stability. I have chosen therefore to focus on these topics. 2. I will try and lay out a case for closer financial integration in Asia, both as a means of achieving more efficient allocation of resources in the region, thereby contributing to continued economic growth, and as a means of supporting financial stability.
We have recently discussed this subject at the Bank Association forum, because we are convinced that consumer rights to clear, appropriate and fair financial products are being violated in this case. At this juncture, protecting financial consumers is top priority. We will only stop tightening our conduct supervision when we signal to the financial industry our satisfaction with interactions between financial institution and consumer being transparent and beneficial to both parties. In that area, we intend to take advantage of the legislative changes that have passed, including in the spring session. A very important law, passed recently at the initiative of senators, specifies financial instrument sales rules, including the right to ban sales and demand the repurchase of non-transparent products that are unprofitable for buyers. Thank you very much for this law. From 1 October, testing will be open to unqualified investors who want to buy complex instruments. As you remember, Ms Speaker, you and I discussed this matter with banks. With your support, that law passed very quickly. We understand that the problem is more than just sales of non-transparent financial products to consumers, but also about additionally imposed services and insurance sold together with standard financial products. That problem remains relevant. To stop the practice, a law was adopted to introduce a so-called end-to-end cooling period. Consumers have two weeks to cancel any tied services and receive a refund after they realise that they were misled or deceived.

If leveraged loans experienced loss rates in line with the financial crisis, the equity tranches of CLOs would lose all their principal. Before everyone takes fright at the ‘s’ word, some important context is needed. These securitisations are very different beasts to their ancestors of 2008. CLOs now have much less embedded leverage than they did before the crisis, with equity tranches around 25% thicker. And they are not held in ‘shadow banks’ like investment vehicles that turn out really to be a part of banks. They are held properly outside the banking system, on the balance sheets of non-banks like hedge funds and open-ended funds. Chart 17 shows our map of who holds the loans and in what form. 9  These are estimated five-year loss rates based on observed default rates during the global financial crisis on the S&P leveraged loan indices for the US and Europe and Moody’s data for all corporates. We assume a recovery rate in line with the average on first lien loans.
In exercising its authority, following its published approaches, the PRA also makes judgements around a broad set of firm-specific factors that the FPC would not be involved in: risks not captured in the formal capital definitions, senior appointments, approving specific transactions, risk and governance controls etc. In short the FPC makes decisions to ensure financial stability in the system as a whole and the PRA acts to support the safety and soundness of individual firms. But the PRA approach to supervision also involves other considerations. I have already mentioned that we must not operate a “zero failure” regime. That was in the context of not taking extreme decisions in over-zealous pursuit of our objectives. But if investors and other market participants believe that supervisory effectiveness leads to a situation in which a firm cannot fail, then they will likely take inappropriate exposures to those firms and the market will become distorted. In particular if a firm is likely to be bailed out by the public sector then that reduction in risk means that firms will have to pay less for their liabilities – giving them an implicit subsidy. That has been discussed at length in a number of Bank publications, but a key point for today is the Bank’s continuing commitment to end the “Too Big to Fail” problem and, specifically, to seek to establish realistic recovery and resolution plans for the firms it authorises. That consideration also affects supervisory decisions on legal entity structures, transactions, senior persons and so on.

This vicious circle also works in the opposite direction: problems in the banking sector spill over into lending and growth, which weakens public finances and the state’s ability to back up the banking system when necessary. Incidentally, this pattern of interaction between problems in the financial, real and public economies recurs throughout history. Reinhart and Rogoff have described how economic problems and bursting speculation bubbles have led to financial crises and subsequent sovereign debt crises time and again over the last 800 years. Developments in the banking system, 2007 and on So far, the European banks have not regained their credibility in the same way as the US banks did in 2009 and the Swedish banks did in 1992 and 1993. A great deal of uncertainty still prevails over which European banks are robust in the long-term. According to one estimate, the total decline in the value of assets on the European credit markets amounted to EUR 184 billion by the summer of 2011. The same publication made the assessment that losses over the years to come could amount to over EUR 200 billion, of which EUR 125 billion would derive from losses linked to government securities.6 The IMF has calculated that the effects of the sovereign debt crisis may amount to EUR 300 billion.7 Even so, the European banking sector was reported to have a larger balance sheet total in 2010 than in 2008. This reflects the fact that the problem assets have still not been addressed.
Of course, any subsequent bad news could lead me to favor dialing them back up again. As Chairman Bernanke said in his press conference following the March FOMC meeting “when we see that the…situation has changed in a meaningful way, then we may well adjust the pace of purchases in order to keep the level of accommodation consistent with the outlook.” Conclusion Let me reiterate how pleased I am to be here on Staten Island and to have the opportunity to speak to the members of the Chamber. Parts of Staten Island were among the most devastated areas in the region and we at the Federal Reserve Bank are committed to doing all that we can to help people and businesses recover. Many obstacles remain to be overcome but I am confident that Staten Island will meet the challenges that lay ahead. BIS central bankers’ speeches  5

François Villeroy de Galhau: Presentation of the 2016 Annual Report of the ACPR Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the press conference, Paris, 29 May 2017. * * * I am pleased to welcome you today for the presentation of the 7th activity report of the Autorité de contrôle prudentiel et de résolution (ACPR), with Bernard Delas, Vice-President of the ACPR, Rémi Bouchez, President of the Sanctions Committee, and Edouard Fernandez-Bollo, Secretary General of the ACPR. As you know, the ACPR and its 1,046 staff members have a broad field of action. The ACPR guarantees the stability of our financial system, through the supervision of banks and insurance companies, but it also guarantees the protection of French customers and savers. First of all, I would like to mention our essential involvement both at the European and the international level. I will then present the results of the main French banking and insurance groups, before addressing four major challenges that strongly shape the ACPR’s action: low interest rates, digital finance, customer protection, the fight against money laundering and the financing of terrorism. * * *  I. The ACPR’s action at the European and international level At the European level, the ACPR has taken an active part in furthering the deployment of the Banking Union.
The good news is that today isn’t the beginning of this process. Over the past seven years, a huge programme of reform has been underway to fix the fault lines that led to the crisis and to build more resilient sources of finance to serve the real economy.3 The UK has played a leading role, consistent with our position as the pre-eminent global financial centre. 40% of global foreign exchange trading goes through London. Half of all trades in OTC interest rate derivatives. Two-thirds of trading in international bonds. And more international banking activity is booked here than anywhere else. 2  Bank of England survey results. Bank of England survey results. Respondents were asked for their views on the statement ‘I believe that financial markets work in the interest of society’. Possible responses were: strongly agree, agree, neutral, disagree, strongly disagree. 3  See the FSB Chair’s letter to G20 Leaders, available at http://www.financialstabilityboard.org/2015/11 /financial-reforms-achieving-and-sustaining-resilience-for-all/. 2  BIS central bankers’ speeches  Great strides have been made in making the system more resilient. The banks that sit at the centre of many markets are safer, with capital requirements that have increased ten-fold and liquid assets on balance sheets that have risen four‐fold. A new, simple leverage ratio requirement protects the system from risks that we think are low but in fact are not. Banks’ trading assets have fallen by a third since the crisis, and their interbank borrowings have been cut by almost a half.

Banks’ newfound resilience has been demonstrated recently, as they have dampened – rather than amplified – short-lived but significant financial market volatility. And those banks must be resilient because they can no longer rely on the support of the state. This week the Financial Stability Board proposed to G20 Leaders a landmark agreement on the Total Loss Absorbing Capacity which is central to ending Too Big To Fail in the banking system. Once implemented, it will ensure that large financial institutions can fail without disrupting the financial system or calling on taxpayers to bail them out. The era of heads-I-win; tails-you-lose capitalism is drawing to a close. Complex webs of derivatives are being simplified and made safer. We are also working to turn the tide of ethical drift. Market benchmarks have been reformed to end abuse. Most importantly, market participants are being made accountable for their actions. Misconduct will be met with genuine penalties. By holding individuals accountable, authorities are ending the Age of Irresponsibility. The best in industry are playing a leading role, for example, by getting the FICC Markets Standards Board up and running. The Board will establish clearly understood standards, keep them up-to-date with market developments and promote adherence. In parallel, the Banking Standards Board is promoting higher standards of conduct and competence across the UK banking sector. To give these measures teeth, Her Majesty’s Government is extending the Senior Managers Regime to all firms in FICC markets and putting them on a common basis with banks and insurers.