samchain/econo-pairs-v1 huggingface dataset:
Conversely, throughout this speech, more favourable outcomes are when GDP-at-risk is smaller / low. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  potentially important impacts on longer term trend growth, both because financial crises have permanent scarring effects and because promoting productive finance can improve longer run productivity. 3. Time horizon. The time horizon for FPC optimisation is longer than that of the MPC reflecting the longer duration of the financial cycle, the permanent impact of structural macroprudential policies, and long-run monetary neutrality. Whereas the impacts of macroprudential policy could easily extend out a decade; in practice, the relevant time horizon for monetary policy would rarely extend beyond 3-5 years. Taking these in turn. 1. Clarity of objectives A term-by-term comparison of the monetary loss function: 𝐻 ∗ )2 ]} min𝑇 ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [(𝜋𝑡+𝑖 − 𝜋 ∗ )2 + λ(𝑦𝑡+𝑖 − 𝑦𝑡+𝑖  {𝑟𝑡+𝑖 }𝑖=0  𝑖=𝑜  and the macroprudential loss function: 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝑡+𝑖 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  underscores the greater uncertainty inherent in macroprudential policy. The monetary policymaker’s loss function is based on two clearly specified and observable variables – inflation and output. Monetary policy has a single, quantifiable inflation target, 𝜋 ∗ , and while potential output 𝑦𝑡∗ must be estimated, there are well-developed and reasonably robust methods to do so.

With due respect to our friends from the Pacific, I am very pleased to mention that these Games was a great success and an extraordinary achievement for our country and for all those who attended. I understand that some of you were very keen to hold this Seminar to coincide with the Games. But I guess the potential risk from a prudential supervisor’s view of losing participants during the two weeks of the Games may be considered critical and detrimental to achieving the objectives of our Seminar. That aside, the Central Bank of Samoa is very grateful for the opportunity to be co-hosting this years’ event with the Financial Stability Institute in Basel, Switzerland; the Pacific Financial Technical Assistance Centre in Suva; and the Association of Financial Supervisors of Pacific Countries. This Seminar is part of a continuing series of trainings which could only contribute towards enhancing and strengthening our capability as supervisors in the development of our economic and financial systems. This is indeed a great opportunity to learn and share issues of common interest, in particular, the potential risks and threats that could adversely affect the confidence in our banking and financial systems. As you all know, banks and non-bank financial institutions play a vital role in the economic development of any country. Therefore, there is strong public interest in maintaining the stability and financial soundness of these institutions. And recognizing such importance, central banks have been entrusted with the responsibility of not only licensing but supervising them as well.
However, while it may be necessary to take active policy measures in the short run to solve the crisis, it is equally important to learn from historical lessons of the past so we can be better prepared for the future. Why are we here? Why has Norges Bank taken the initiative to this workshop? To answer this we have to turn the clock back to the time of the birth of Norges Bank right after the end of the Napoleonic wars in Europe. Six laws about the Norwegian monetary system, passed by the Norwegian Parliament in 1816, paved the way for the establishment of Norges Bank. The Norwegian Constitution of 17 May 1814 specified that the Parliament should oversee the monetary system but made no explicit reference to a central bank. The Constitution was modified in November 1814 after Sweden showed some military muscle to enforce the Treaty of Kiel. The revised Constitution was in place on 4 November 1814, and the main changes reflected the fact that Norway had entered a loose union with Sweden under a common King. A change, often overlooked, was that a new paragraph had been added which explicitly stated that Norway should keep its own bank and monetary system. Hence the Norwegian Parliament preserved an independent legal authority to decide on Norway’s monetary system and institutions under the union with Sweden. Norges Bank is thus celebrating its 200-year anniversary in 2016 and has announced ambitious targets for its Bicentenary Project.

In 2016 we want to see that this project has produced three high quality books on The History of Norges Bank 1816-2016, The Monetary History of Norway 1816-2016 and on selected Topics in Central Banking in an international historical perspective. The aim of the workshop is to bring together international experts from central banks and academia for informal discussions and an exchange on topics related to the writing of central bank and monetary history. We expect discussions to be active and lively and we want this workshop to kick-start research activities in these important areas. I want to thank the Graduate Institute here in Geneva and Professor Marc Flandreau in particular for their hospitality and for allowing us to spend almost two days discussing research in central bank and monetary history. Previous books about the history of Norges Bank have been written in Norwegian, and predominantly by previous central bank governors. But “the times they are a-changin”, to  BIS Review 131/2008  1  phrase Bob Dylan (Dylan, 1964), 1 and today we believe that best practice in writing central bank and monetary history is achieved by contributions from professional academic experts in relevant areas. The research should be brought up to international quality standards through the usual peer review process.
That means it is also the best contribution monetary policy can make to combating unemployment. A short-run increase in employment can be obtained by stimulating demand, even if this entails a risk of higher inflation. But this short-term exchange can be risky, as we know not least from the experiences in the 1970s and 1980s I referred to earlier. And just the fear of an unduly expansionary policy that may lead to rising inflation is liable to push interest rates up, leading to weaker growth and employment. For monetary policy it is therefore crucial that confidence in the low-inflation regime is strong. The construction of the inflation target automatically involves some allowance for economic activity. Weaker growth that leads to a capacity surplus normally implies diminishing inflationary pressure from demand. This in turn leaves room for a more expansionary monetary stance: the interest rate is lowered, thereby stimulating demand. Conversely, unduly high demand involves a risk of excessively high capacity utilisation, with upward pressure on prices and wages. To prevent this, the monetary stance has to be tightened by raising the interest rate. In this way, the Riksbank’s endeavour to fulfil the inflation target normally contributes to economic stabilisation. There are, however, situations in which this relationship does not apply. One case is when inflation is being driven from the supply side, for example because an isolated oil price rise is pushing prices up. There may then be grounds for accepting a temporary increase in the price level instead of acting swiftly to push inflation down.

This immediately raises the difficulty of determining when an asset market can be said to be over-valued. And if one does decide to intervene, how can one  5  BIS Review 98/2000  be sure of deflating the bubble in an orderly manner? Just mentioning these two problems often leads those concerned with central banking to conclude that intervention is not advisable. I should like to broaden the argument. In addition to the objective of price stability, as the central bank of Sweden the Riksbank is responsible by law for the payment system and financial stability. Without prejudicing these aims, we should also strive to support economic policy’s other goals, such as high growth and employment. This means, for instance, that we should take pains to avoid unnecessary fluctuations in output and employment. So if we see what we believe to be mounting financial imbalances and judge that in time they will jeopardise a stable economic development, I consider that in principle, at least, there is a case for acting with the repo rate even if we do not perceive a direct threat to the inflation target. The difficulty in practice lies in deciding when an intervention is called for. To some extent, this is made easier by the risks being normally inherent in the growth of credit in the economy rather than in the actual development of asset prices. In conclusion I can mention that the Riksbank has been working on these matters a great deal in recent years.
As Friedman’s example shows: symbols may be important in monetary matters. At the same time, irrespective of the particular symbols and media to which money functions are attached - be it stone wheels or computer chips - money is ultimately a question of trust. The euro’s current existence as a “non-tangible currency” perhaps makes this point - which is valid for any fiat money - more plain and obvious. No matter what specific medium of exchange a society might wish to adopt, the efficiency of money in facilitating economic transactions via the price mechanism depends on its stability as a unit of account, i.e. as a common financial denominator, for the economy. In order to hold and accept money economic agents must not only be confident that money remains accepted as a medium for exchange, but also be confident that money will retain its value over time, thereby ensuring that price signals can provide accurate guidance for markets to function efficiently. In contrast, if money loses its value, this also undermines its usefulness for exchange. Indeed in periods of very high inflation currency tends to be replaced, for example, by cigarettes or other goods - or, perhaps, “bads” - in everyday transactions. An inflationary currency will simply cease to be accepted in transactions notwithstanding any legal tender provisions such as those written on the dollar bills. I am old enough to remember such a period in post-war Germany, before the currency reform of 1948.

They are associated with the fact that expanding demand in many industries exceeds their potential to ramp up output and imports. This accelerates price growth as well. As to the product groups where prices rose the most in the second quarter, these are construction materials, furniture, and cars. When people expect prices to rise faster, they decide to make large purchases earlier. To do this, they use both savings and borrowings. Growth in consumer lending again sped up to a quite high rate, which was driven by accommodative monetary policy, among other things. On the other hand, accommodative policy lowered the demand for bank deposits, especially given accelerated inflation. There are also other markets where price growth was rather caused by one-off factors and limited supply. This is tourism, for instance. Only a part of foreign destinations have been reopened, whereas Russian resorts’ infrastructure is still insufficient to accept the entire tourist flow. As a result, prices for tourism services soared, which also sped up inflation in June. Furthermore, May—June recorded a surge in prices for such vegetables as cabbage, potato, carrot and beetroot, which was because 2020 harvest stocks started to end before the new harvest supply. However, the contribution of such one-off factors to overall inflation is smaller than that of steady factors. The increase in prices for these everyday products is very noticeable and significantly impacts inflation expectations.
12 Institute of Internal Auditors, “The IIA’s Three Lines Model: An Update of the Three Lines of Defense,” July 2020. 13 For a “multiple roles” perspective of risk managers, see Matthew Hall, Anette Mikes, and Yuval Millo, “How Do Risk Managers Become Influential? A Field Study of  Toolmaking and Expertise in Two Financial Institutions,” April 2012. Also, see, Ben W. Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016, American Bar Association. 14 Board of Governors of the Federal Reserve System, Division of Supervision and Regulation, “SR 20-24: Interagency Paper on Sound Practices to Strengthen Operational  Resilience,” November 2020. Also, see Striving for Operational Resilience: The Questions Boards and Senior Management Should Ask,” Oliver Wyman, 2019. 15 Basel Committee on Banking Supervision, “Revisions to the Principles for the Sound Management of Operational Risk,” March 2021. 16 Nathan Furr, Andrew Shipilov, Didier Rouillard, and Antoine Hemon-Laurens, “The 4 Pillars of Successful Digital Transformations,” Harvard Business Review, January  2022. 17 Bank for International Settlements, “Cyber-Resilience: Range of Practices,” December 2018. By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.

Part 3 At this point, allow me to offer some reflections on the changing economic and financial landscape for internationally active financial institutions. Asia is host to a diverse group of foreign financial institutions, many of which have a long history and entrenched presence in the region, with strong roots in our local economies. For the most part, these institutions have made important contributions to the development of domestic financial systems and economies. This includes meeting the demands for financial services in areas not being extensively served by the domestic financial system. While the international policy response to the global financial crisis has been extensive and on an unprecedented scale, an area that has not been as extensive is the cross-border dimension of policy making. More specifically, the global financial crisis has highlighted the gaps in the international framework for the regulation and supervision of the cross-border activities of financial institutions. This has generated renewed concerns on the extent to which external shocks might be transmitted to the domestic economies as a result of the presence of such international foreign financial institutions. As part of the international regulatory reforms, significant progress has been made to ensure that systemically important financial institutions have a higher degree of resilience and stronger incentives to reduce their systemic risks over time. This includes through the holding of higher capital, and requirements for all global SIFIs (systemically important financial institutions) to develop recovery and resolution plans.
Under the new monetary framework, the Central Bank of Iceland has been  4  BIS Review 95/2001  provided with the same mechanisms as central banks in most industrialised countries for creating such an environment. The Central Bank takes this role seriously and will strive to fulfil the conditions laid down by the new legislation and in the joint declaration which it issued with the Government on March 27. The global economic climate has been dramatically transformed in recent years and is still changing in the wake of the terrorist attacks on the USA on September 11. It is quite obvious that we in Iceland do not carry much weight in global economic terms. However, the situation in our immediate environment, especially among our main trading partner countries, is crucial to us. At the moment we are having a somewhat stormy ride. In this new environment, the role of everyone involved in economic policy-making in Iceland will be to act in a disciplined and responsible fashion. Doing so will be the main way to contribute to economic growth and prosperity in Iceland. BIS Review 95/2001  5

UK CCPs were able to provide clearing services without disruption. However, the episode highlighted a feature of the reformed system: in periods of stress, losses are realised faster. Market participants are forced to post sufficient collateral that reflects the market volatility promptly. This is key to addressing the build-up of counterparty credit risk that had been at the root of the devastating global financial crisis. But it also meant that some market participants faced a liquidity crunch and a different type of panic as investors scrambled to get their hands on cash (and particularly U.S. dollars). Margin calls in aggregate were large over the stress period. Initial and variation margin increased significantly, with the increase in initial margin (IM) at major global CCPs totalling around $ in March 2020 and the increase in variation margin (VM) flows peaking at $ during the height of the stress in mid-March. [4] Central banks had to step in to restore market stability in a big way. Over the course of 2020, G10 central bank balance sheets rose by $ trillion. [5] Had central banks not acted, the financial stability consequences could have been severe. Russia-Ukraine The first quarter of 2022 saw another episode of unprecedented volatility across financial markets as Russia invaded its neighbour. Once again, we saw shocks, this time in some commodity and energy markets. Again, we saw big margin calls at CCPs. Losses (and corresponding gains) on derivative positions spiked across February and March 2022, primarily in markets experiencing the largest shocks.
This allows the value-added of each sector to be measured more or less directly. For example, gross output of a second-hand car dealer can be calculated as the cash value of all cars sold. The value added of that dealer would then be estimated by subtracting its intermediate consumption (the value of cars bought) from gross output. This is also the case for some of the services provided by the financial sector. 1 For example, investment banks charge explicit fees when they advise clients on a merger or acquisition. Fees or commissions are also levied on underwriting the issuance of securities and for the market-making activities undertaken for clients. But such direct charges account for only part of the financial system’s total revenues. Finance – and commercial banking in particular – relies heavily on interest flows as a means of payment for the services they provide. Banks charge an interest rate margin to capture these intermediation services. To measure the value of financial services embedded in interest rate margins, the concept of FISIM – Financial Intermediation Services Indirectly Measured – has been developed internationally. The concept itself was introduced in the 1993 update of the United Nations System of National Accounts (SNA). The SNA recognises that financial intermediaries  1  For further details refer to, for example, Akritidis L (2007). BIS Review 95/2010  3  provide services to consumers, businesses, governments and the rest of the world for which explicit charges are not made.

In some jurisdictions, such as the UK, the securities regulator is the listing authority. In others, such as the US, listing documentation is approved by exchanges, with minimum disclosure requirements set by the securities regulator. This is tied up with whether regimes retain an element of Self-Regulatory Organisations. 9  In the UK, although the FSA was given a “financial stability” objective in 2010, it did not apply to its functions as UK Listing Authority. The proposed objectives of the planned new securities and conduct regulator, the FCA, are intended to apply to the UKLA. 10  IOSCO Objectives and Principles of Securities Regulation (2010). 4  BIS central bankers’ speeches  whole in ways that are opaque to everyone. For example, in the USA, as the SEC has commented, a lot of structured-finance products, including pretty well all CDOs and AssetBacked CP, were issued privately and so were exempt from a panoply of disclosure requirements that apply to “registered” offerings.11 Reducing that opacity, and ensuring the integrity of these market mechanisms, could well be in the interests of investors in private placements themselves. This issue is not easy. On the one hand, it is reasonable for the regulatory regime to make allowance for private transactions amongst “consenting adults”. And the issuance of small amounts of any type of security cannot possibly jeopardise stability.
I want to stress two things here: •  The euro area has very rapidly and efficiently set to work to cure its fiscal weaknesses and can today boast some of the best results among the major developed economic regions: its public deficit has been reduced from 6.3% of GDP in 2009 to approximately 3% today; by the end of 2013, the euro area should show a positive primary balance;  •  While the commitment to progressively achieve sustainable levels of public debt and deficit has to be achieved; the measures need to be designed in such a way as to limit the negative side-effects on growth. For instance, efforts need to be focused on non-productive spending. In fact, there is only one way to durably raise the growth potential of our economies, and that is by structural reforms that enhance competitiveness. It is clear that the euro area is well equipped to confront the challenges of the 21st century. With 370 million consumers and high purchasing power, it remains the biggest market in the world. It is also the most economically integrated area, with highly qualified manpower and very good infrastructures. Too often, however, euro area countries are prevented from reaping the benefits of their position by the rigidities that have accumulated over time, during the periods of easy growth. Now, the international environment is more challenging: new and powerful competitors have emerged and comparative advantages are shifting. There is no alternative to adjustment.

Paris has the potential, the expertise and the infrastructures to do so. To introduce your two-days Forum on “Growth and Investment Opportunities in Europe”, I wish to first give you an overview of the current economic and financial situation in the euro area and then discuss the major changes currently underway that are considerably strengthening our monetary union. 1. Overview of the current economic and financial situation in the euro area  Before I start this overview, I would like to quote a famous sentence by Jean Monnet, one of the founding fathers of Europe: “what matters is neither to be optimistic nor pessimistic, what matters is to be determined”. In other words, what the euro area needs is neither euro-bashing nor celebration, but awareness and action. As you all know, overall growth in the euro area has been very weak for a few years. The most recent figure is a 0.3% contraction in GDP in the first quarter of 2013, following a decline of 0.6% in the fourth quarter of 2012. Output has thus declined for six consecutive quarters, with labour market conditions remaining very weak. The euro area economies were badly affected by the crisis (first financial, then economic, then sovereign debt), and the fiscal adjustment that became necessary to overcome it has had a negative impact on growth as well. ECB projections see a gradual recovery taking shape later this year.