samchain/econo-pairs-v1 huggingface dataset:
So it was that, once the problems posed by the establishment of a banknote monopoly had been solved, the youthful SNB was quickly confronted, in 1914, with the problem of financing the military expenditure caused by the First World War and, after the end of hostilities, the difficulties related to normalisation. The social disruption of 1918 and the high level of inflation at the end of the war were bitterly felt and attributed to a failure of monetary management. This setback had a lasting effect on morale at the SNB and accounts to a considerable extent for the orthodoxy of the policies adopted in the decades that followed. This accounts for the determination with which the SNB worked to restore the rules of the gold standard once peace had returned. The pre-war gold parity was re-established in 1924. However, after a few good years, the economic situation again deteriorated, culminating eventually in the crisis of the 1930s. The devaluation of sterling in 1931, followed by that of the dollar in 1933, were the first episodes in the eventual collapse of the gold standard. In 1936, following the devaluation of the French franc, the Swiss federal authorities were forced, in their turn, to reduce the parity of the Swiss franc. A few years later, the challenge of administering a war economy again arose. The story of the Second World War, with its doubts, agonies and errors of judgement has been extensively analysed by historians over the past few years.

Much reflection has also been carried out on the matter within the Swiss National Bank in order to better understand this difficult period in our own history. The postwar period was characterised by a fierce determination to start afresh, to avoid the reappearance of the misleading thinking that had led to pre-war protectionism, and to reconstruct the economies that lay in ruins. A phase of intensive work began, with the aim of reorganising the international monetary order. Still isolated, both economically and politically, Switzerland participated in the efforts without becoming a member of the Bretton Woods Institutions. The gradual liberalisation  BIS Review 40/2007  3  of payments and trade rapidly led to a period of prosperity but also to a situation of disequilibrium in the operation of the international monetary system. Inflation and speculative movements of funds became common features during the 1960s and the monetary arena was disturbed by multiple devaluations, particularly in Europe. Suspension of gold convertibility for the dollar, in 1971, hailed the collapse of the system of fixed exchange rates that had been put into place after the war. Faced with a massive flow of speculative funds, the SNB was forced to abandon stabilisation of the Swiss franc in 1973. The transition to sustained floating for the Swiss franc was definitely the most important change of direction in the monetary policy strategy pursued by our bank in its hundred years of existence.
Consequently, the new rules are being designed to recognize the underlying risk while not discouraging or penalizing banks that wish to remain involved in venture capital and equity investing. Our goal is to create a capital approach to equity exposures that builds upon sound internal bank practice and remains flexible enough to apply in any country. Our challenge is to develop a treatment that makes sense today and that will be responsive to the evolution of banks’ practices in equity funding. An equally important consideration is implementation, given significant differences in the nature of banks’ equity holdings across countries and in the ways in which capital markets have evolved over time in each country. The Committee wants to avoid disrupting equity holdings that have developed under existing capital regulations --- whether these are long-term holdings, such as in Germany, or those associated with small business investment corporations in the United States. To this end, only new equity investments would be captured under the internal ratings-based approach for the first ten years after the date that the new Accord is implemented. This is an area where the Committee has tried to navigate differences between national practices. We see the best way forward as offering two approaches to calculating regulatory capital for banks’ equity exposures, one based on measures of market risk and a second based on the treatment of corporate loans. In either case, we intend for both methods to result in comparable capital requirements, which we will seek to confirm through our next impact study.

At that point, I look forward to hearing and learning from you in what I hope will be a rich discussion session. Purpose of regulatory capital First, let’s look back for a moment to understand the path we’ve taken. The Basel Committee has long sought ways to ensure that banks hold sufficient capital relative to the risks they face. Capital, of course, helps individual banks to weather unexpected losses. On a macro scale, requiring all banks to maintain adequate levels of capital helps to safeguard the stability of the financial system. When a financial system is more stable, banks are better able to provide businesses and consumers with funding and credit through good times and bad, which promotes the long-term growth of the economy. The risks involved in lending and borrowing have long been recognized, “For [a] loan oft loses both itself and friend,” warned Shakespeare some centuries ago. For their part, banks – like all companies  BIS Review 27/2002  1  – seek a healthy balance between risk and opportunity. Because banks serve as key intermediaries of credit within the economy, poor credit decisions harm not just banks, but borrowers as well. Overly restrictive terms for credit make loans less accessible to all businesses, impeding their ability – and that of the economy – to grow. If the terms for credit are too lax, loans may be extended in volumes that borrowers ultimately may be unable to repay in full.
8  As I have pointed out in an earlier speech (Sentance, 2011), UK inflation has persistently run ahead of the euro area, Sweden and Switzerland since the financial crisis,  BIS central bankers’ speeches  11  Chart 11 – UK goods and services inflation Annual percentage change in consumer prices 7  Goods inflation  6  Services inflation  5 4 3 2 1 0 -1 -2 -3 2000  2001  2002  2003  2004  2005  2006  2007  2008  2009  2010  2011  Source: ONS For these reasons, I have been arguing for the past year that the MPC should embark on a policy of gradual interest rate rises and that delaying this process exposes us to greater inflationary risks in the future – which would not be good for economic growth in the medium term. Continuing to accommodate inflation makes it more likely that a future sharp policy correction will be needed, particularly if persistent high inflation becomes embedded in wage and price-setting. That not only poses a threat to the recovery further down the track, but it could erode the hard-earned credibility of the UK monetary policy framework – which would be very damaging for economic growth over the longer-term. Here in Jersey you are in a monetary union with the UK. So you too have a strong interest in the MPC getting its policy judgements broadly correct.

The banks in Bulgaria have an important year ahead, which we expect to be overall successful for the sector. Banks’ operations continue to take place in an environment of rather optimistic attitudes of enterprises and households amidst a relatively high growth of the Bulgarian economy. At the same time, the external environment holds risks and insecurity that, due to the openness and international integration of our economy, could potentially affect the economic 1/2  BIS central bankers' speeches  situation in Bulgaria. Some adverse scenarios could exacerbate aspects of the risk profile of the banking sector. Therefore, it is essential that in their behaviour banks continue to take into account the main risks, including profitability risks and asset quality risks. 2/2  BIS central bankers' speeches
Nevertheless, the Thai banking system will be able to handle these challenges given a strong capital base as a result of continued profitability in the past ten years, a good risk management system, and strong risk-based supervision. Therefore, Thailand’s key fundamentals remain resilient in the face of these challenges. Most importantly, human resources and know-how remain intact. History shows that no matter how severe the natural disaster, roads can always be rebuilt and buildings restored in a relatively brief span of time should the human spirit remain, as it does in Thailand. The growth rates I have mentioned for 2012 and 2013 are consistent with the medium-term trend, as strong fundamentals mean that Thailand’s long-term growth trajectory remains intact despite the flood and volatile external environment. An important reason for this is  BIS central bankers’ speeches  1  that Thailand is well positioned geographically to reap the benefits of growth in Asia. The rise of China and the ASEAN Economic Community (AEC) provide enormous growth opportunities from economic integration. For sure, there will be more competition. But our research shows that trade gains will be substantial, from both inside and outside the region. However, there is a catch. To reap these gains, the Thai economy will have to undergo structural adjustment, that is, the flow of labor and capital from sunset to sunrise sectors. The exact form of adjustment is uncertain, as it depends on global developments.

It is just as important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. Economic policy in the euro area The introduction of the euro on 1 January 1999 also meant the introduction of a single monetary policy in the eleven member countries. Greece joined as the twelfth country on 1 January 2001. The population of the euro area is a little more than 300 million and the euro area economy accounted for about 16 per cent of world GDP last year.1 Price stability is the primary objective of the single monetary policy in the euro area. The Governing Council of the European Central Bank has defined price stability as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2 per cent. The project will be completed in January and February 2002. On 1 January, euro banknotes and coins will be put into circulation. During a changeover period, national currencies can be used as a means of payment alongside the euro. This period is no longer than two months in any of the member countries. As from the beginning of March, the euro will be the only legal tender in all euro area countries, and all prices will be in euros. The objective of monetary policy in the euro area is price stability in the euro area as a whole.
  The money markets are in much better shape as well: EURIBOR-OIS spreads have narrowed substantially, signalling a lowering of risk premia; the US money market funds seem to be re-opening access for euro area banks.   Tensions on sovereign debt markets have also eased: 10-year Italian bond rates have shed around 200bps since early December; Spanish rates have also decreased significantly in spite of recent renewed tensions.   Although at a low level, overall economic activity is stabilizing, as is bank lending. All these elements indicate a trend reversal. How has this come about? All of the players have proved their commitment and ability to restore stability. National authorities, especially in the most troubled countries, have taken far-reaching measures both to consolidate their public finances and to enhance long-term growth. The new Greek program has been launched. At the European level, a strong new fiscal compact has been agreed upon, as well as the rapid implementation of a powerful financial stability instrument. Banks are meeting their new capital requirements in an orderly way. And – I saved the best till last! – the Eurosystem has taken measures that have been absolutely decisive for this whole process to take place. Unquestionably, the steps already taken by the euro area to exit the crisis have been numerous and important. But recent market developments have reminded us that there is still a tremendous need for further demonstration of the determination of all the players in the European crisis to rise to the challenges facing us.

I will mention three of these challenges. BIS central bankers’ speeches  1  2. But challenges remain to be addressed. 2.1. The challenge for each individual euro country: achieving strong fiscal consolidation while ensuring long-term growth  The first challenge is the seeming dilemma between fiscal consolidation and long-term growth. One thing is very clear: this crisis is fundamentally a sovereign debt crisis; hence the priority in order to exit it once and for all must be a return to a sustainable fiscal path. In fact, an impressive effort has already been made. The Portuguese deficit shrank from around 10% in 2009 to around 6% last year. The Italian deficit has been reined in from 5.4% in 2009 to 3.9% in 2011, and Italy actually ran a primary surplus of 1% last year, which is very rare among developed economies. The French deficit has been cut from 7.5% in 2009 to 5.3% in 2011. If we look at the aggregate picture for the euro area, we see that it is the economic zone that has tackled fiscal consolidation with the greatest intensity and the best results. According to the IMF (January 2012 fiscal monitor), after peaking at 6.5% of GDP in 2009, the public deficit in the euro area started to decline in 2010 and stood at around 4% by the end of 2011 (down by 40%). Over the same period, the US deficit was reduced from 13% to 9.5% (down by 27%) and the UK deficit from 10.4% to 8.6% (down by 17%).
As has been widely discussed in the academic literature, one of the most important channels is the portfolio balance channel.5 This theory relies on the premise that financial assets are imperfect substitutes in investors’ portfolios, and, as a result, a rise in the demand for a particular financial asset relative to its supply – reflecting the Federal Reserve’s asset purchase programs, for example – will increase its price and reduce its yield. After selling that asset to the Federal Reserve, investors may rebalance their portfolios by investing in other assets, raising the prices of those assets, lowering their yields, and easing overall financial conditions. The Federal Reserve’s asset purchase programs were designed to remove risk from the portfolios of private investors. For example, Treasury and agency MBS purchases remove duration risk, thereby lowering longer-term interest rates and reducing private sector borrowing costs. Furthermore, agency MBS purchases also remove prepayment risk in the market. Since homeowners can prepay their mortgage at any time, MBS investors do not know when they will receive their cash flows. Investors generally demand an extra return to bear this risk, which is incorporated into MBS yields and in part passed along to borrowers. The removal of a considerable amount of this risk by the Fed’s purchases would be expected to lower MBS rates by lowering this extra return, thereby reducing primary mortgage rates, stimulating demand for housing and prompting increased refinancing activity.

In fact the issue of central bank independence, Ladies and Gentlemen, is as old as central banking itself, having been debated on and off over the past couple of hundred years. Many of the “transitional economies” of Eastern Europe also have adopted reforms aimed at  BIS Review 136/2007  1  making their central banks more independent. 19th and 20th century economists such as, David Ricardo and John Maynard Keynes have all added their views to the subject. There seem to be consensus that central banks must be given a charter which includes a strong commitment to price stability, and the freedom and sufficient scope to pursue it. This means that while central banks may not have goal independence, they should have instrument independence. One need not dwell on the desirability of price stability. Economies work better if investment and wage decisions are not thwarted and confused by high inflation. However, the fears in some respects are associated with the financing of fiscal deficits that governments in the developing world from time to time have to run to meet, for instance, social obligations or indeed provide public goods. This indeed is a genuine fear (including others that may be identified) that this symposium must address. There are arguments that there is a fundamental conflict between independence and an obligation to finance the budget deficit – a conflict which often is resolved at the expense of price stability.
François Villeroy de Galhau: Bank of France - how the commitment to fintechs is being implemented 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 ACPR-AMF Forum Fintech, Paris, 11 October 2021. * * * Dear Minister, Ladies and Gentlemen, I am very pleased to welcome you to the Banque de France this morning for this annual ACPRAMF Fintech Forum – and I would also like to welcome Robert Ophèle, Chairman of the AMF. Mr. Minister, dear Cédric, you have once again given us the pleasure of being present for this second forum. The strong attendance of public officials testifies to our collective commitment to fintechs, which I am convinced are indispensable to the financial sector, as a driver of creativity, vitality and efficiency. Previously a garden in the making, the fintech ecosystem is now growing in leaps and bounds. This is especially the case since these start-ups have benefited from the acceleration of digitisation in finance resulting from the health crisis. Moreover, 2021 was a record year for fundraising in the sector: EUR 1.7 billion had been raised by the end of August 2021, which is already twice as much as for the whole of last year, and this year also saw the birth of the first French fintech “unicorns".

This results in lower production costs. 6  BIS Review 47/2007  The strong growth in labour productivity does not seem to reflect an increase in the real capital behind each person-hour worked, but rather a considerable improvement in labour and capital efficiency. 2 Intensified competition in product markets may have contributed to the subdued rise in prices. New operators have entered markets that were previously fairly sheltered from competition, for example in the grocery trade, building materials, telecommunications, banking and insurance. With general confidence that inflation will be kept in check and that petroleum revenues are only gradually phased into the economy, low import prices, high prices and good market opportunities for our export goods, an ample supply of foreign labour and high productivity growth have made it possible to combine high growth with low inflation. It is possible that some of the driving forces that have boosted the growth potential of the Norwegian economy and restrained inflation may now diminish. Prices for imported goods are now falling at a slower pace. The shift towards imports from low-cost countries was less pronounced in 2006 than in previous years. The rise in prices for oil and other commodities over several years has resulted in a somewhat faster rate of increase in producer and export prices among our trading partners. Measured in foreign currency, prices for imported consumer goods rose in 2006.
In addition, the implementation of NSFR increases the costs of infrastructure financing as it asks these types of assets to be covered with longer term and more expensive funding. Albeit there are many other angles within the new regulatory reform which have been discussed in light of their consequences to the EE’s (for instance policy measures for dealing with systemically important banks, the impact of some other national and regional reforms 1, the two above elaborated dimensions of the Basel III, seem to depict, or to be a good represent of what the main impact boils down to. Rising cost of finance, restrained credit availability and more conservative treatment of some of the forms of financing, crucial for the growth of EE’s are the most important consequences being discussed, which should be seriously addressed. As for the quantitative impact studies, they do indicate a growth impact of the new regulatory changes, though with varying intensity. While BIS Macroeconomic Assessment Group finds rather modes effect, assessment of the International Institute of Finance and some assessments of the banking industry point to a non-negligible growth effects. A BBVA 2 research, conducted in early 2011 estimates the impact of higher liquidity and capital requirement on the quantity and price of credit, and hence its impact on the GDP per capita. The estimation results point to a larger effect of the regulatory changes on the GDP per capita of the emerging markets, compared to the one in the more advanced countries.

This has resulted in the intensification of our supervision on areas or businesses that are more prone to ML/TF risks, or where controls have been found to be lacking from past inspections. 17. We have organised and will organise more industry engagements to share supervisory findings on common lapses and good practices at the end of each series of inspections. This is intended to help level up controls over time. 2/5  BIS central bankers' speeches  18. Our inspections go beyond rules-based compliance. We focus on whether financial institutions demonstrate a good understanding of risks, and a good risk culture within the organisations. We much prefer that FIs adopt a proactive approach in meeting their regulatory obligations than a passive rule-based attitude. Let me elaborate on this. 19. One area relates to governance. You are all familiar with the common thinking of having three lines of defence. Recently, there are suggestions to augment this with a “four lines of defence” model for better governance in financial institutions. The first line involves frontline and management controls within business units; then compliance and risk management functions as the second line; and the audit function as the third line. A newer fourth line involves interactions of the FI with its external auditors and regulators. An FI’s senior management and board should monitor and be satisfied that these lines are effective. Senior managers should never “look the other way” on suspicious transactions, even if they involve major clients who are significant revenue sources.