samchain/econo-pairs-v1 huggingface dataset:
Another approach involves discussing and developing proposals for regulatory floors of different kinds, for example risk-weight floors like the one we have for mortgages in Sweden today or floors that cover the total capital requirement that is also in place today. Finally, it is a  4  BIS central bankers’ speeches  question of tightening up supervision and improving transparency concerning risk weights. It is probable that the assessment of the banks risk weights will be broadened and eventually become a permanent part of the undertakings of the Basel Committee. As in the case of the leverage ratio, there are those that claim that these measures will reduce the banks’ incentives to effectively manage their own risks. However, in my opinion it is question of avoiding a regulatory framework that gives the banks incentives to use their own models with the aim of reducing their risk weights and their capital requirements more than can be justified by the risks in their operations. It is important to find solutions to this problem as it will otherwise be difficult to restore the credibility of the frameworks and thus of the banks. Basel III is also relevant to the Swedish banking system Once Basel III is in place around the globe, the safety margins in the global financial system will be greater than previously.

In the case of systemicallyimportant banks there is also an extra capital requirement over and above the minimum requirements. How large this supplement is depends on how systemically important the bank is. For global systemically-important banks the extra requirement will begin to apply from next year. For the last 12 months there has also been an agreement in the Basel Committee on the short-term liquidity measure, the LCR. In brief, the LCR means that the banks must have a large enough buffer of high liquid assets to be able to cover their cash outflows during a 30-day long stressed scenario. The aim is to strengthen the banks’ resilience to short-term liquidity stress. The LCR will come into force no later than 1 January 2015, but some countries are already applying it. In Sweden, a stricter version of the LCR has been applied since 2013. Leverage ratio complements the risk-based capital requirement As I mentioned earlier, the Basel Committee has made a lot of progress on the leverage ratio this year. In January the Committee agreed on a common method for calculating the ratio. The leverage ratio can be described as measure of how much of a bank’s assets the bank funds using its own capital. Like the risk-based capital measure, the leverage ratio aims to increase the ability of the banks to cover losses. However, unlike the risk-based capital measure, the leverage ratio does not take differences in risk between a bank’s different assets into account.
Simon Potter: Reducing the size of the Federal Reserve's balance sheet - the benefits of moving gradually and predictably Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, to the National Association of Securities Professionals, New York City, 16 November 2017. * * * Good afternoon and thank you for the kind introduction. I would also like to add my warm welcome to the New York Fed. We very much value the National Association of Securities Professionals' (NASP) efforts to promote professional excellence and encourage economic empowerment for people of color and women on Wall Street, and for our community, and are pleased to host this year’s kickoff to the NASP's 21st Annual Symposium.This year’s symposium is organized around the timely theme of “Keeping Pace when Market Dynamics Shift”. In that vein, I welcome the opportunity to discuss with you some important changes that are in train with respect to the Federal Reserve’s balance sheet, and how these may impact financial markets. As always, the views I will express today are mine alone and do not necessarily reflect those of the New York Fed or the Federal Reserve System.1 Before I discuss the Fed’s balance sheet I would like to briefly review some pilot programs we conducted over the last few years and their impact on our counterparty policy.

Through these changes, the New York Fed is seeking to expand and diversify the pool of firms eligible to apply for primary dealer status, while also recognizing that a certain scale of activity is needed in order to be able to meet the many business obligations to which primary dealers must commit, in supporting the operations of the Federal Reserve and the Treasury. These changes offer the opportunity to increase capacity and further support competitive pricing for the Fed’s open market operations. Going forward, the New York Fed will periodically review its counterparty policy. Turning to monetary policy, at the conclusion of its September policy meeting, the Federal Open Market Committee (FOMC) announced that it would begin to reduce the size of the Federal Reserve’s securities portfolio.2 Over the past month, the Fed took the first steps in a multiyear effort to bring the Federal Reserve’s balance sheet to its longer-run size, by not reinvesting a portion of the securities repayments it received. In the remainder of my prepared remarks today, I will offer my views on this policy from a financial markets perspective, drawing on a fuller set of remarks I delivered last month, which can be found on the New York Fed’s website.3 1/7  BIS central bankers' speeches  The message I’d like to leave you with today is one of confidence.
I will return to these questions a little later when I put forward what I believe to be the main fiscal challenges facing our economy in the medium term. The last question I wish to address in this section relates to the risks underlying the revenue projection. In particular, the Draft Budget assumes that revenue from taxes and social security contributions will rise by 9% in 2021 in budgetary terms. This figure reflects the entry into force of the measures described above and also the projected behaviour of tax bases, which will essentially depend on the macroeconomic environment. In this respect, there are three main factors that condition the feasibility of this forecast, and all three are subject to significant uncertainty. First, the revenue-raising capacity of the new taxes, for which there are very few historical or international benchmarks. Second, the sensitivity of tax revenue to tax bases, which is an elasticity that is very difficult to assess accurately in circumstances such as the present ones for which there are no comparable historical benchmarks. And third, the macroeconomic situation in Spain and worldwide  22  which, as I have said, is subject to major uncertainty and risks which, overall, could result in lower economic growth for 2021. In accordance with the Banco de España’s preliminary analyses, the most significant risks of deviation from the revenue projection in the Draft Budget are concentrated on the last of the three factors mentioned, that is, on the level of momentum of activity in 2021.

The extent to which the projects that Spain ultimately submits for European funding under the NGEU satisfy these conditions is a question that we will have to analyse in great detail in the coming quarters and that will directly affect their ultimate impact on aggregate activity. 5  For a review of the empirical evidence on the scale of the fiscal multipliers see, for example, V. Ramey (2019), “Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?”, Journal of Economic Perspectives, Vol. 33(2), pp. 89-114. 16  In short, the macroeconomic forecast underpinning the Draft Budget is subject to downside risks, arising from the possibility that the effects of the pandemic on economic activity may be more negative than projected (as has been the case in recent weeks worldwide), and from the difficulty of absorbing the funds available under the NGEU programme in quality projects in the necessary time frame. The last point I wish to make in this respect is that, to the extent that there are appreciable risks that the pick-up in activity in 2021 may be weaker than forecast, there is also a risk that the budget deficit, the unemployment rate and inflation may deviate from their forecasts in 2021. In the case of the deficit, in response to the ongoing health crisis the European Commission has allowed Member States to temporarily diverge from the paths determined by the European budget rules for the budget deficit, public expenditure and government debt in normal conditions.
Hong Kong is the first and so far the only place outside the Mainland that has developed a RMB bond market. So far, 19 RMB bonds have been launched in Hong Kong with a total issuance size of over 50 billion yuan. The issuer base was expanded from only Mainland Chinese banks at the start, to Mainland subsidiaries of Hong Kong banks and China’s Ministry of Finance in 2009, and further to Hong Kong corporations and international institutions like McDonald’s and the Asian Development Bank this year following an important elucidation regarding the operation of RMB business in Hong Kong in February. 20. The net effect is that any issuers, including foreign corporations and multilateral organisations, are now free to issue RMB bonds in Hong Kong, just as they can issue bonds in any other currencies. Of course, if the proceeds are to be used on the Mainland, the moving of funds into Mainland China will have to meet the requirements there. By the same token, banks can now also offer RMB trade finance, corporate loans, syndicated loans and project finance to their clients in accordance with Hong Kong’s existing banking practices. 21. The latest developments have provided more flexibility and larger scope for the further development of RMB financing activities in Hong Kong. As the pool of offshore RMB funds in Hong Kong continues to grow, there will be huge opportunities for financial institutions to take part in RMB financing as well as in the origination, distribution, investment and trading of RMB bonds. 22.

Let’s take a look at the UK’s experience in developing the Eurodollar market. Despite the sheer size of the Eurodollar market in the UK, it has not undermined the role of the British Pound in serving the domestic economy. Likewise, in the eyes of local investors in Hong Kong, RMB mainly represents an attractive investment choice in addition to other foreign currencies, and does not create any problems at all to the Hong Kong dollar’s role as a locally-used currency. 34. What about the idea of pegging the Hong Kong dollar to the RMB instead of the US dollar? In thinking about this question, it is important to recognise that the RMB can only be an anchor currency when it meets a number of important fundamental conditions. 35. First, there should be a high degree of synchronisation between the economic cycles in Hong Kong and the Mainland. At present, Hong Kong’s economic cycle is more affected by the flows of trade between the Mainland and the advanced economies, rather than domestic demand of the Mainland. And the business cycle synchronisation between Hong Kong and the US continues to be higher than that between Hong Kong and the Mainland. Secondly, to make it technically feasible for the RMB to be a reserve currency, the RMB must be freely convertible, the capital account control on the Mainland removed and all currencies allowed to flow freely.
Lars E O Svensson: Differing views on monetary policy Speech by Prof Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at SNS/SIFR Finanspanel, Stockholm, 8 June 2012. *  *  *  I would like to thank Hans Dellmo, Karolina Ekholm, Gabriela Guibourg, Per Jansson, Stefan Laséen, Ulf Söderström, Staffan Viotti and Anders Vredin for valuable discussions and views. Pernilla Johansson, as well as Joanna Gerwin and Marianne Sterner at Sveriges Riksbank, has contributed to this speech. The views expressed are my own, and are not necessarily shared by the other members of the Riksbank’s Executive Board and other employees of the Riksbank. My view is that monetary policy should stabilise inflation around the inflation target and unemployment around a long-run sustainable rate. In my opinion, this mandate for monetary policy follows from the Sveriges Riksbank Act and the government bill that contained the proposal for this legislation. 1 According to the Sveriges Riksbank Act, the objective of monetary policy is to maintain price stability. The Government Bill states that the Riksbank should, without prejudice to the objective of price stability, support the objectives of general economic policy with the aim to achieve high employment. Accordingly, the mandate is to maintain price stability and to attain the highest possible sustainable employment. In practice, it is the same thing as stabilising inflation around the inflation target and unemployment around a long-run sustainable rate.

BIS central bankers’ speeches  13  A higher average unemployment rate by 0.8 percentage points over 15 years is of course a very large cost to the real economy of undershooting the inflation target. At present, a higher unemployment rate of 0.8 percentage points corresponds to around 40,000 jobs. In comparison, it can be mentioned that the government’s own calculations show that the four stages in the earned income tax credit and the changes in unemployment insurance reduce unemployment in the long run by 0.6 and 0.7 percentage points respectively. 17 The respective reforms are thus expected to have a slightly smaller effect on unemployment than the calculated real-economic cost of inflation on average undershooting the target over the past 15 years. Implications for future monetary policy Why average inflation in Sweden has undershot the target over the past 15 years is a separate and important question that requires thorough examination. I do not intend to discuss this here. But a clear conclusion for future monetary policy is that it is important that the Riksbank ensures that average inflation is actually close to 2 per cent over a longer period of time and that it does not fall as low as during the past 15 years. This means that the inflation target must be regarded as symmetrical and that it should constitute a central point for the fluctuations in inflation. One should thus not be more afraid of overshooting the target during a limited period than undershooting it.
Andrew Bailey: Bank capital – debating again Speech by Mr Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at Barclays’ 2016 Financial Conference, London, 9 March 2016. *  *  *  Bank capital has been in the news again recently, or at least parts of the news – there are some other things going on. There are probably two reasons for this “news”: first, because we have entered another phase of highly uncertain conditions in financial markets, which has had a strong impact on the market value of banks; and second, as authorities we are pushing on with implementing the post-crisis reforms to capital standards, and in doing so we have reached a point where some of the important building blocks are now being put into place. Today, I am going to reflect on and draw some conclusions for what I would call the bigger picture, namely what sort of banking system are we seeking to create, what are we not doing, and why not. I will draw on the detail, and there is no shortage of that, but this is not a talk about the detail of bank capital, you can find that in plenty of other places. Another objective is to tackle some urban myths of today.

Christian Noyer: France’s banking industry in 2007 – key trends Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the French Banking Commission, at the presentation of the 2007 Annual Report of the French Banking Commission, Paris, 26 June 2008. *  *  *  Welcome to the working breakfast organised for the press on the occasion of the publication of the Commission Bancaire’s 2007 Annual Report today. I would like to take this opportunity to speak to you about the major trends seen in the banking industry in 2007. Naturally, the main development last year was the subprime crisis. I will also speak about the lessons learned from the crisis for the future. Even though the French banking system’s overall exposure to the risks revealed by the subprime crisis turned out to be less severe than in other G10 countries, our banking system was still affected, as can be seen in the decline in profitability. On a more encouraging note, however, French banks managed to maintain satisfactory solvency ratios, testifying to the system’s resilience and its ability to cope with a very large-scale and complex crisis. However, in addition to the impact on business conditions, the financial crisis calls for an examination of the robustness of some of the banking activities that developed so rapidly over the last ten years. These activities have complicated the task of risk management in major banking groups.
Jaime Caruana: Contemporary issues in credit risk Keynote address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, to the Credit Risk Summit USA 2003, sponsored by Risk Magazine, New York, 27 October 2003. *  *  *  Introduction I would like to thank Risk Magazine for inviting me to participate in this summit on contemporary issues in credit risk. Looking at the agenda, it is clear that, while credit may constitute the oldest risk in banking, it remains the most important and is still one where we have much to learn. There is a Latin proverb that says ‘Danger can never be overcome without taking risks’. As a supervisor, I would tend to rephrase that by saying that managing risks properly is the best way to overcome danger. I think this idea is at the core of any modern, innovative and dynamic economy. The next two days will no doubt offer a sense of the rich abundance of research under way to identify risks, to improve our measures for them, and to find better ways to address them. On this front, a risk manager and a bank supervisor share similar interests. A risk manager seeks the best risk measures and management techniques to protect a bank against losses, to hone its competitiveness, and to enhance its profitability and long-term growth. Supervisors advocate sound risk management practices to ensure the adequate capitalisation and prudent management of all banks.

Creditor safeguards and CCP resolution Intervention by a resolution authority, especially at a point where default management procedures have yet to be exhausted is action that cannot be taken lightly. Nor can the discretion of a resolution authority to deviate from the existing rules of the CCP be unbounded. Appropriate creditor safeguards are central to ensuring that an effective resolution regime does not unduly interfere with property rights or undermine its own value by introducing unnecessary uncertainty into a financial institution’s contractual relationships both in resolution and outside of it. Perhaps the most fundamental safeguard to creditors in resolution is that the actions of the resolution authority will not leave them worse off than if the authority had not intervened and the firm had instead entered a liquidation proceeding. For the purposes of determining this No Creditor Worse Off protection 6, bank resolution takes an insolvency counterfactual; recognition that a failing bank that meets the conditions for resolution would in most likelihood lose its licence at that point if not resolved, thereby tipping it into insolvency (whether cash-flow, balance-sheet or both) if it was not there already. That insolvency counterfactual requires an ex post assessment of the value of assets and liabilities of the firm. That is no easy task but one that can, and has been, credibly undertaken.
Our calculations also indicate that households with debts on average have a relatively good safety margin for interest rate rises and reductions in income. We therefore do not at present envisage any major problems for the household sector as a whole, even if interest rates rise significantly. However, this does not mean that problems will not arise for individual households in the case of higher interest rates. It is important that borrowers include rising interest rate expenditure in their calculations and carefully consider what level of indebtedness they can manage when interest rates sooner or later begin to rise. For this reason, we have emphasised in connection with our monetary policy decisions over the past six months that interest rates are at present low in a historical perspective and will need to be raised in the long run. With regard to house prices, the calculations we have made so far do not indicate that prices for housing in the country as a whole are substantially unbalanced. The developments can be explained fairly well by factors such as disposable income, living costs, construction costs and the fact that there is relatively little new building, despite strong demand. Supply is expected to increase at a slightly slower rate than demand over the coming years. My assessment is that at present no imbalances have been built up that could risk leading to a sharp fall in prices further ahead. However, the rapid increase in house prices and indebtedness occurring now is something we shall monitor closely.

Household wealth plays an important role in the Riksbank’s assessment of how private consumption will develop. Wealth affects households’ consumption in several ways. To simplify, one can say there are two reasons why an increase in wealth, for instance in the form of an increase in the value of one’s own home, can be expected to lead to increased consumption. Firstly, the larger the wealth an individual has, the more he or she can consume during his or her lifetime. This is a traditional wealth effect. Secondly, the size of the wealth can affect the possibilities to obtain loans. This is usually called the balance sheet effect. The larger the collateral a household can offer for its loans, the greater the possibilities to borrow and thereby to consume. When the value of the property owned by the household increases, this also provides a possibility to take out further loans on the property, for instance, to extend or renovate and further increase the value of the property, or to consume other goods. Another effect is that a higher valuation provides the possibility to renew last mortgage loans as first mortgage loans and thereby reduce the interest costs for the loans. There is also empirical support for a positive correlation between wealth and consumption. Wealth also has significance for how strongly households are affected by interest changes.