samchain/econo-pairs-v1 huggingface dataset:
In the future, regulations will have to compel banks to hold sufficient assets which they can pledge or transfer at any time without restriction, and which they can thus deliver as collateral to existing liquidity facilities. This way, even in extreme situations, we would be able to provide the necessary liquidity via the LSFF or ELA without the need for emergency law. My second thought is also self-evident: UBS's takeover of Credit Suisse fundamentally changes the structure of the Swiss banking sector. It is important that Swiss households and businesses continue to benefit from a broad range of efficiently priced banking services. This requires competition and diversity. We are optimistic that our domestically focused banks, but also the foreign banks operating in Switzerland, will adjust their product ranges accordingly. We are also convinced that UBS will carry out its task of providing Swiss households and the wider economy with banking services responsibly. This brings me to my third point, on which I would like to close. Healthy competition in the banking sector is not only in the interest of Swiss households and businesses, but also very much in the interest of the SNB. For our monetary policy to transmit to the entire economy, interest rates on bank deposits and bank loans must respond swiftly, and strongly enough, to changes in our policy rate. The greater the competition among the banks, the more likely it is that this will occur.

I began by saying that the State Bank of Vietnam is currently in a situation similar to that of the Swedish Riksbank just over a decade ago. However, it is also the case that the conditions are different in certain respects. One difference is that the Swedish credit and money markets had been deregulated completely during the 1980s and early 1990s. This meant, for instance, that the central government issued bonds, through public auctions and at predetermined times, and actively attempted to promote the development of a secondary market. Thus, there was already a clear channel through which monetary policy could have an effect. Another difference was that we in Sweden had the support of a long tradition of comprehensive production of public statistics that made our work easier. These are factors that, as I understand it, do not apply to the same extent here in Vietnam, at least not yet. Vietnam has thus – like all countries – its own special conditions that may need to be taken into account and may make it difficult to formulate monetary policy as an exact blueprint of the system in  7  For a detailed discussion of “central bank transparency”, see, for instance, Chapter 1 of Blinder, A.S., (2004), The Quiet Revolution – Central Banking Goes Modern, Yale University Press. 6  BIS Review 52/2006  another country.
The uncertainty there is evident, for example, in the banks’ difficulties with borrowing at longer maturities and in investors’ preference for safe government paper over what they perceive as more risky securities such as mortgage bonds. Even the short-term interest rate on the interbank market has risen sharply as a result of mutual distrust between banks, causing them to avoid lending to each other. As a result, the banks’ borrowing costs rise, access to loans decreases, and companies and households pay more for loans. At times, moreover, trading on certain segments of the fixedincome market has ceased completely. When such disruptions occur, the Riksbank has considered that special measures are required to restore the functioning of the markets so that the supply of credit is not jeopardised and the financial markets, and therefore monetary policy, can work more normally. The first sign: a shortage of treasury bills … The very first, very concrete sign of the financial crisis in Sweden was an acute shortage of treasury bills. The high demand for safe investments, especially in the United States, caused interest rates on American treasury bills to fall almost to zero. Even foreign investors then turned to European countries, including Sweden, to get treasury bills that gave a higher yield. The Swedish National Debt Office decided to implement additional issues of treasury bills. The funds from these extra issues are being used for reversed repo transactions with mortgage bonds (purchase of mortgage bonds with agreements to resell them within a specific period of time).

The Riksbank provided the liquidity assistance to Kaupthing because it wanted to prevent the crisis that has afflicted the Icelandic banking system from spreading to the Swedish financial system. Common to both instances of liquidity assistance is that they occur in a situation in which the entire global financial system is characterised by great uncertainty. Against this background the Riksbank has deemed it necessary to provide support to these institutions, which under normal circumstances would not receive it. In the current situation, suspension of payments by these financial institutions would pose a risk of serious disruption to the rest of the financial system and therefore lead to an undermining of confidence in the payments system. It is these assessments, not concerns about individual institutions, that motivated the Riksbank in granting the assistance for which the banks in question applied. With respect to Carnegie, a few days ago its operations were taken over by the Swedish National Debt Office, which granted a loan that replaces the liquidity assistance previously granted by the Riksbank. Financing assistance for companies Another problem begging for a solution is the financing situation of non-financial companies. As the financial crisis escalated, the credit supply to these companies has also become more troublesome, which could have strong repercussions on economic activity. To alleviate these problems, the Riksbank has temporarily offered banks the opportunity to borrow at three months against collateral comprising more commercial papers than usual.
While Greece, with its strategic position between Asia and Central Europe, has long been exposed to commerce, Switzerland, a country without natural resources, has in some sense been forced to embrace trade in order to survive. Switzerland has now become a global player. Today, the “cliche” of Switzerland as an isolated country with its citizens “entrenched in the Alps, living happily and looking after their cows” totally belies the facts. We tend to easily forget that exports of goods and services account for more than 40 percent of our gross domestic product and that the European market absorbs about two thirds of our exports. The presence of Swiss firms in European countries is also very pronounced, with more jobs created abroad than at home in recent years. In 2002, Swiss direct investments in Europe represented around 7 billion euros, i.e. 13.5 percent of total investments in Switzerland, and Swiss firms employed close to one million people in Europe, equivalent to about one quarter of Swiss employment. Around 9’000 of those employees are living in Greece. My purpose here is not to brag about the Swiss economy, but to emphasize the fact that Switzerland is very open to international trade, investment, and migration, and that our economy is very integrated in the global economy and intimately linked to the euro zone. Swiss monetary policy With those facts in mind, you might wonder whether Switzerland, a highly integrated country surrounded by trading partners sharing the euro, can still follow an autonomous monetary policy.

If markets were anticipating such an evolution, spreads between the Swiss franc and euro deposits would progressively shrink, in the same way spreads between German marks and French francs deposits fell in the 1990s during the build-up of the monetary union. Market pressures could then force the SNB to shadow the monetary policy of the European Central Bank. Many observers overlook the fact that, contrary to other countries which have gained an interest rate bonus by joining the European monetary union, as they previously had higher interest rates than Germany, Switzerland would loose its interest rate advantage in joining the monetary union. No tendency of a convergence in interest rates has been observed over the past few years. On the contrary, the interest differential has broadened slightly. For the time being, markets are not expecting any move from Switzerland towards monetary union, and rightly so, I might add. This does not mean that my country will never join the EU. As you probably know, important decisions shaping the relations between the EU and Switzerland have been taken in recent years. A first set of bilateral agreements has already come into effect. It gives us access to the single market and ensures labor mobility. New agreements have now been negotiated with the aim of harmonizing taxation on savings and integrating Switzerland in the Schengen and Dublin frameworks, a further step toward closer cooperation. As you see, without being formally an EU member, Switzerland is increasingly part of the European reality.
Baker, M and Wurgler, J (2013) “Do Strict Capital Requirements Raise the Cost of Capital? Banking Regulation and the Low Risk Anomaly”, NBER Working Paper, No.19018. Bank of England (2015) “The framework of capital requirements for UK banks”, Supplement to the December 2015 Financial Stability Report. Bank of England (2016a) Financial Policy Committee statement from its policy meeting, 23 March 2016, available at http://www.bankofengland.co.uk/financialstability/ Pages/fpc/default.aspx. Bank of England (2016b) “Understanding and measuring finance for productive investment – A Discussion Paper”. Benford, J and Burrows, O (2013) “Commercial property and financial stability”, Bank of England Quarterly Bulletin, Q2. 18  See Bank of England (2016b). BIS central bankers’ speeches  9  BIS (2016) “Revised market risk framework and work programme for Basel Committee is endorsed by its governing body”, Press release, available at: http://www.bis.org/press/p160111.htm. Cunliffe, J (2016) “Credit: Can trees grow to the sky?” speech given at British Property Federation Annual Residential Investment Conference, London. Goobey, A R (1992) Bricks & Mortals: the story of the 1980s property boom – and slump – and those who made it, Century Business. Jordà, O, Schularick, M and Taylor A M (2015) “Leveraged bubbles”, Journal of Monetary Economics, vol.76, pages S1–S20. Kindleberger, C P and Aliber, R Z (2005) Manias, Panics, and Crashes: A History of Financial Crises’, John Wiley & Sons. Knott, S, Richardson, P, Rismanchi, K and Sen K (2014) “Understanding the fair value of banks’ loans”, Bank of England Financial Stability Paper 31.

Jaime Caruana: Making diligent preparations for Basel II Opening remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the Thirteenth International Conference of Banking Supervisors (ICBS), Madrid, 22-23 September 2004. * 1. *  *  Welcome and overview  Distinguished guests and friends: as the Governor of the Bank of Spain, it is my pleasure to serve as your host at the Thirteenth International Conference of Banking Supervisors here in Madrid. I am also privileged to serve in a second capacity at this event as chairman of the Basel Committee on Banking Supervision. In that regard, it is my honour to launch our dialogue on the two main themes selected for this conference. As you know, the Committee reached agreement on an historic revision of the international capital framework just this past June. So naturally an important focus for this conference will be on preparing for its implementation. In addition, because Basel II relies increasingly on the quantification of risk exposures to understand a bank’s risk profile, it is more important than ever before to look behind the numbers and into the rules that define how exposures are measured. The second day of our conference will be devoted to the emerging issues in accounting and their relevance to banking supervision.
Before recommending the establishment of the Federal Reserve System - a plan which it described as “essentially an American system, scientific in its methods, and democratic in its control” - the Commission produced 22 volumes on the monetary and banking systems elsewhere, especially in Europe. Copies of these volumes sit proudly in the Governor’s anteroom in the Bank of England. The authors noted that “the important place which the Bank of England holds in the financial world is due to the wisdom of the men who have controlled its operations and not to any legislative enactments”. But they did not see the Bank of England as a model, and they recommended the creation of an institution framed by legislation. It would be ninety years before Britain finally learnt the lessons of the National Monetary Commission and passed legislation to buttress whatever wisdom the Bank could command. Institutions embody accumulated wisdom and experience, and they should not be meddled with lightly. From time to time, however, it is necessary to rethink the role of our institutions. The changes made to the Bank of England in recent years, including an inflation target and a high degree of transparency, have, I believe, improved Britain’s monetary arrangements. Whether either the men and women or the current institutional arrangements of the Bank of England will have any more success in influencing monetary arrangements in the United States today than in 1908 is a matter I leave to you.

BIS Review 146/2008  3  To name just a few developments in the past 12 months: a new Dow Jones Islamic Market Index was launched to track China-related equities listed on the Hong Kong Stock Exchange; Islamic mutual funds were introduced by a local bank and an asset management company featuring China-related equity investments through the stock market platform in Hong Kong; and an exchangeable sukuk linked to the shares of a Mainland company listed in Hong Kong was issued in March, enabling investors to gain exposure to China’s growth story. The response so far has been highly encouraging: for example, the sukuk was 10 times oversubscribed. Likewise, positive progress is achieved in the development of Islamic banking in Hong Kong. Following the first Islamic banking window introduced three months ago, I’m glad to witness yet another market player who is set to launch its Islamic banking window in Hong Kong at this auspicious occasion today. The increasing number of banks taking part in Islamic banking activities will add further momentum to the development of an Islamic capital market in Hong Kong by providing an important tool for funding and liquidity management. The Hong Kong Monetary Authority will continue to give full support to the HKSAR government in its initiative to develop Islamic finance in Hong Kong by acting as a market enabler and infrastructure provider. The HKMA has taken important steps and devoted considerable resources to promote the industry in Hong Kong.
The main reason is that the single currency has made corporate debt financing more attractive by creating a much larger home-currency investor base than it was the case for any single country of the area before EMU and encouraged international underwriting business for euro-denominated corporate bonds, driving down issuing costs. In 2002, corporate issuance represented about half of the overall bond issuance in the euro area, that is four times more than its share in 1998. In 2002, the gross issuance of eurodenominated bonds accounted for more than a third (38%) of all bond issues (US dollar issues: 47%). Not only have the size of the bond market grown, but also did its liquidity, transparency and standardisation. An increasingly competitive environment, and the development of electronic trading systems, contemporary to the launch of the euro, are among the factors that contributed to these improvements, on the secondary market for government debt initially, and increasingly nowadays on the corporate segment. In that regard, it is worth reminding the success story of the MTS group, an original Italian concept which has translated over a few years into a true pan European electronic platform for fixed-income products with offshoots throughout the continent. Developments witnessed on the short term securities market may appear somewhat uneven and less dynamic. And indeed, efforts remain to be done as regards for instance products characteristics, issuers’ information memoranda settlement practices in order for cross border activity to effectively develop and market integration to gather momentum.

And it helps to lay bare more clearly the underlying growth potential of the economy. BIS central bankers’ speeches  5  The third aspect of the policy response is better financial regulation and supervision. In both the US and UK, the repair of the financial sector was a prerequisite for recovery. Indeed, one of the reasons behind a persistently negative equilibrium real interest rate has been the restricted supply of credit from a damaged banking system. Going forward, financial reforms will help guard against excessive pro-cyclicalities that could emerge in a “low for long” environment. But financial reform is about much more than fixing the failings in advanced economies; it is one of the keys to rebalancing the global economy. The global savings glut will not disappear in the absence of further financial liberalisation in China. That will only proceed if there is a transparent, resilient global financial system worth joining, and will only be completed by further internationalisation of the renminbi. Those realities are key reasons why the Bank of England is so engaged in the work of the Financial Stability Board and has moved to support London as a hub for renminbi clearing. Conclusion For the first time in a long time it seems reasonable to expect the hopes and dreams of the holiday season to be fulfilled. The Ghost of Christmas Present is a cheerful spirit. As uncertainty diminishes, credit conditions improve and balance sheet repair progresses, monetary policy is gaining traction.
Among the many factors that have influenced the work of the Committee over the years, I thought I would identify five that have shaped what the Committee is today and will continue to guide its activities in the future. The first and most obvious is the evolution from a coordinating and information-sharing group to one that has become a standard setter. Although the 1975 Concordat was the Committee’s first substantive agreement, and its first public document, it was not a standard per se: rather, it was a sensible agreement on how supervisory responsibilities could be divided for banks operating across national boundaries. Its goal was modest: to make sure no bank could escape supervision. It did not try to harmonise supervisory standards. And, of course, it was primarily directed at supervisors, not banks themselves. In subsequent years, the Committee pronounced on international lending and foreign exchange positions. These documents began to set expectations for the way in which banks should manage these risks, but they were not standards in the way we use the word today. It was the first Basel Accord that really marked this new role for the Committee. As in 1974, a severe crisis triggered this step – in that case, the Latin American debt crisis of the early 1980s, which raised the political pressure for banks to increase their capital base and for the regulators to create an international level playing field in this respect.

Expectations concerning future inflation and economic stability have considerable impact, not least in the foreign exchange market. In the long term, output and employment are determined by the supply of labour, capital and technology and restructuring capacity. Monetary policy can contribute to smoothing fluctuations in output and employment. Norges Bank weighs stable inflation against stable output and employment. The economy grows over time. Output will in some periods lie below long-term trend growth and in others above trend. Stabilising output growth means seeking to maintain actual output near trend. The output gap is a measure of the difference between the actual level of output and potential output. Developments in the output gap provide a basis for assessing cyclical developments and can thus also shed light on domestic price and cost pressures in the economy. It is difficult to know how high capacity utilisation is at any given time. Output and employment figures are often revised and do not therefore always present an accurate picture of the current economic situation. Norges Bank therefore also uses a number of other indicators to gauge the temperature of the Norwegian economy. The period of high capacity utilisation that began in 1997 came to an end in winter 2003. The Norwegian economy was hit by a pronounced downturn in the global economy. An economic turnaround has now occurred in Norway, with a soft landing after the long period of high domestic cost inflation and sluggish external activity. Output is showing a marked increase, but inflation is low.
In economic literature, capital outflows following the developments of this kind are called “sudden stops”. Turkey and many other developing countries have occasionally experienced such sudden stops. Keeping excessive volatility and international capital flows under control is crucial for financial stability. In this respect, macroprudential measures stand out as an important tool. The monetary, fiscal and financial sector policies adopted by advanced economies in the wake of the global economic crisis exposed even open developing countries with sound economic fundamentals to financial instability risk. The Central Bank of the Republic of Turkey, in view of this risk, safeguarded both price stability and financial stability simultaneously by adopting a flexible monetary policy, and thus contributed to the sustainable development path. In addition to the flexible monetary policy strategy implemented by the Central Bank as of the end of 2010, the prudent measures adopted by the BRSA accompanied by the safeguarded fiscal discipline strengthened the Central Bank’s hand. We firmly believe that we will attain very positive results with respect to price stability and financial stability by the end of 2012. Along with national macroprudential measures introduced by countries, some international criteria have also been developed for the sake of safeguarding financial stability. For example, the Basel III accords bring about new arrangements reinforcing the capital structures of financial institutions. These arrangements will ensure a more resilient financial sector against unforeseen risks and will contribute to financial stability. The recent efforts clearly point to a consensus among countries on the critical importance of safeguarding financial stability.

In this respect, I would like to thank the organization committee for their efforts in bringing these very interesting and enlightening studies under this conference. I wish the conference a complete success and I would like to thank all our guests for their participation. 2  BIS central bankers’ speeches