samchain/econo-pairs-v1 huggingface dataset:
One of the roles of the Parliamentary Special Investigative Commission is to compile information on these topics and present an analysis of them. The Central Bank neither has the capacity nor the will to front-run that analysis. The Bank will probably need to revise its operational practices in these areas in view of experience and the Commission’s findings, as will other supervisory institutions. In addition, the Bank will soon review its precautionary rules, such as those pertaining to financial institutions’ liquidity and foreign exchange balance, in light of recent events. Various elements of payment intermediation and settlement will also be reviewed in the near future, with the aim of promoting financial stability more effectively. Because of the uncertainty still surrounding assets, capitalisation, and ownership of Icelandic financial undertakings, it is difficult to assess the main risks in Iceland’s financial system at this time. However, those risks are clearly related to asset quality, on the one hand, and foreign exchange and indexation mismatches, on the other. For this reason, among others, it is important that financial institutions maintain capital adequacy ratios well above the statutory minimum in the near future. At present, deposits form the backbone of the banks’ funding, as foreign investment in Iceland and access to global credit markets are limited. Lifting the capital controls entails a certain risk, partly because it involves liberalising capital flows while the ownership structure of the banks is still being clarified.

This is particularly important as the Riksbank has such a high degree of independence. This independence means that it is important to be able to evaluate how we are carrying out our duties. To make it possible to evaluate us, we must be open and clear in everything we do. But it is perhaps not as self-evident that the responsibility of public authority makes a number of other demands on our actions. This applies, for instance, to the forms for how we make our interest rate decisions and how we communicate our monetary policy intentions. The latter is usually called “signalling” in central bank language. I shall return to this. Transparency – being open and clear It was long common for central banks to be secretive and a little mysterious. One example, which today may sound fairly strange, is that the Federal Reserve, the US central bank, did not begin publishing the interest rate changes it had decided until 1994 1 . However, over the past fifteen years, central banks have in general become increasingly open and clear with regard to their actions and intentions. This applies both in inflation-targeting countries like Sweden and in countries that have not quantified a target, like the United States. Democratic reasons for transparency… There are several reasons for the increased openness and clarity, or transparency, as it is usually called. The most important one is probably that the central banks have become more independent in relation to the political system.
The Bank did this by: setting up a senior level Steering  4  Summarised in http://www.bankofengland.co.uk/archive/Documents/historicpubs/qb/1995/qb950107.pdf. 5  Today, the standard settlement times in CREST are T+2 for equities and T+1 for gilts. 4  BIS central bankers’ speeches  Committee to oversee the development of the design; forming many working-level working groups and consulting on all major design decisions; and ensuring that the industry bore the cost of the overall project. The Steering Committee was for making decisions and knocking heads together. According to a “senior banker” quoted by the Independent newspaper, Pen Kent (as Chair) and Iain Saville (as Chief Executive) were a “Mr Nice and Mr Nasty’ duo … bludgeoning the vested interests which sank TAURUS into submission” 6. The consultations were voluminous, had short turn-rounds (some as little as two weeks), and respondents received personalised replies (much to their initial surprise): a strategy christened “choking the cat with cream”. And the financial commitment sought by the Bank was broad-based: when CRESTCo was first established, 69 institutions were asked to subscribe £ in share capital, giving them skin in the game from the start. Second, the project team committed to an approach to building CREST that was simple, focused and open: in the design of the system itself, and in the composition and work practices of the project team. From the start, the November 1993 “Green Book” set out a deliberately minimal blueprint, excluding non-critical functions required only by a few, or which could be performed by users in their own systems.

This approach was consciously at odds with that adopted for TAURUS, which had tried to be all things to all people 7. But it also focused minds in the industry, forcing them to make difficult tradeoffs, and creating a clear incentive to market providers to produce “add ons” for extra user functions. The project team itself projected a similarly minimalist, open approach in its work – building on their own past experience of having developed the Bank’s system for dematerialised settlement of gilts (the “Central Gilts Office”), involving a full range of disciplines (including policy, IT and legal) in all outreach and design meetings, and embracing a robust attitude to analysis and self-criticism, perhaps best summed up in their T-shirt logo “Purist and Bloody-Minded”. Not everything went to plan. Some early project management structures were found wanting. PWC’s audit of the project in Spring 1994 identified what might be euphemistically termed “a range of unfinished business”, but allowed the project to go forward. And the early months of operation after that launch day in July 1996 faced technological challenges and setbacks. But it is remarkable to think that this basic approach delivered a system that, at its core, remains with us twenty years later. How has the Bank applied the lessons from the building of CREST to the strategic renewal of RTGS?
3  For example, estimates from term structure models such as those discussed in Meldrum, A and Roberts-Sklar, M (2014), ‘Long-run  priors for term structure models’, Bank of England Working Paper 575. 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  The lower demand for investment accounts for nearly two-fifths of the reduction. An ongoing decline in the price of investment goods, less public investment and systematically higher credit spreads account for the reduction in desired investment. And, alongside these changes in the levels of the supply of saving and the demand for investment, there has also been a change in the underlying return on investment. Expectations of a lower rate of real global growth accounted for another fifth of the reduction in the trend real rate of interest. 4  Three caveats are important at this point. The first is that the Bank work estimated the reduction in the global average trend real rate and the impact of changes in the level of global savings and investment. To the extent that global capital markets are not perfectly integrated and that there is an element of home bias in the financial allocation of savings, changes in the national supply of savings and demand for investment matter too. For example, developments in UK demographics would suggest less of a reduction in the trend real rate here than seen globally. But overall, the evidence suggests a very significant proportion of the movement in UK trend rates reflects developments elsewhere.

The impact of the depreciation of sterling on future inflation has increased the salience of such a trade-off for the MPC. As the Committee has made clear, there are limits to the extent to which above-target inflation can be tolerated. These limits depend inter alia on what is driving the inflation overshoot, on the impact on inflation expectations and on the scale of the output gap. The exchange rate shock has made it more difficult for policy to follow the natural rate. And finally, I have discussed the implications of a low natural rate and low real trend rate for central banks. But the implications of course go much wider than that. A secular period of very low underlying interest rates would pose many challenges. If, as I have suggested, the forces pushing down on interest rates might be less cyclical than we had thought and more secular, authorities with a longer policy horizon and with instruments more enduring in impact than monetary policy are best placed to address such challenges. A key and well recognised challenge in this respect is to raise the growth rate of productivity in advanced economies which will in turn raise the return on investment and hence the trend real rate of interest. Another might be to address the imbalance in the supply of savings and the demand for investment that appears to have pushed the trend real rate down.
On top of maintaining their central role in the payments system, this means that, even if operating an ‘originate and distribute’ model in their investment banking business, commercial banks still have substantial funds to employ in asset portfolios. This can be achieved in a number of ways: for example, holding onto originated assets, buying assets after they have been securitised by other banks, or entering the principal investment business. All three are underway to a greater or lesser degree. In the UK, until quite recently large banks probably held on to more loans than their peer group22. In the US and parts of Continental Europe, the commercial banking sector acquired massive portfolios of securitised assets in the first half of the decade, possibly diversifying sectoral or geographical exposures. And a range of banks have been entering or reentering the principal investment business. What to make of all this? Well it certainly underlines the difficulty of using the growth or composition of bank balance sheets as the sole basis for judging credit conditions. With so much credit distributed and traded via capital markets, quantity data have to be put alongside prices (yield spreads) and, ideally, qualitative information. It is in that context that the Bank is planning to introduce a formal survey of credit conditions next year. This important initiative is designed to help us get behind the money and credit data.

I should make clear that, as put, I would not go along with this completely. It would all depend on whether medium-term inflation expectations were well anchored. So long as they were, the central bank would have a wider choice than a one-item menu of having, putting it crudely, to generate a material downturn in the short term to contain inflation; or, symmetrically, a boomlet to raise inflation. Another possible choice might be to tighten (loosen) modestly but for longer, allowing inflation to return to target over a longer  2  BIS Review 2/2007  horizon; and if the policy maker explained the considerations behind the likely path of policy, price and wage setters might act in a way that helped to bring inflation back to target5. Acting aggressively without need could endanger the political economy foundations of any central bank’s authority. It has to be a judgment based on the particular circumstances. In terms of my central theme this evening, this is a world in which monetary regimes truly are better, but in which policy makers are having to face some fresh challenges. Asset pricing uncertainties If central bankers see possible interruptions to the Great Stability, there is arguably conflicting evidence as to whether financial markets are giving it insufficient weight or – at the opposite pole – taking stability for granted.
At a time when our monetary policy was working hard to prevent the propagation of the inflationary shock to other prices, we suffered the onset of an international financial crash of a magnitude not seen since the Great Depression of the 1930s. The sharp fall in demand, caused largely by a crisis of confidence and an unprecedented rise in volatility and uncertainty, caused a severe downturn in the world economy and in Chile. The downturn was especially strong in the last quarter of 2008 and the first four months of 2009. The drop in output during that period was determinant in the recession we saw last year. Macroeconomic policies reacted strongly. However, they could do little to counteract the immediate effects of this phenomenon, not only because of the lags with which they operate, but especially because of the sudden nature of the collapse in demand. Still, and as we have previously claimed, a monetary policy based on a flexible inflation targeting regime – that allows for the accommodation of shocks over a reasonable period of time –, a floating exchange rate, a solid financial system and a fiscal policy that saved during the good times, were key to ensuring a rapid and sustainable economic recovery. Our macroeconomic policy scheme allowed us implementing an unprecedented stimulus, which has had important positive effects on output, within a context of well contained inflationary pressures. The national economy began recovering by the middle of the second quarter of 2009.

Domestically, financial conditions showed early signs of normalizations, with lending increasing from month to month, low interest rates and credit standards that were more expansionary during the fourth quarter of 2009 than during the preceding quarter (figure 3). The value of the peso has fluctuated significantly since December, partly owing to global phenomena, but largely due to domestic factors. After continuing with the process of  2  BIS Review 61/2010  appreciation that began in early October, the peso peaked at the beginning of January. It then depreciated sharply, driven by increased tensions in world financial markets and by changes in the hedging strategies used by pension funds. The depreciation trend reversed during the course of February due to a decline in external tensions and a change in pension funds’ purchase flows. After the earthquake and tsunami, the peso experienced further fluctuations due to changes in private expectations about how the reconstruction would be financed and how insurance claims would be paid. The importance of idiosyncratic factors is apparent in multilateral indicators that measure the peso’s movements with respect to the dollar and other currencies, which are showing smaller variations than those of the peso/dollar exchange rate (figure 1). Annual CPI inflation returned to positive territory earlier than what had been foreseen in December (figure 2). Core measures, in particular the CPIX1, continued to display low month-on-month variations.
In this process, we will make use of the experience gained during the last months and the directions in which the international standards are changing in this area. We are aware that this process requires constant communication with the banking industry. Also, the identified measures will be taken by allowing the proper time necessary for the banking industry to recover and prepare. As a matter of fact, the Bank of Albania has initiated this negotiating process first of all within itself. Some regulatory acts of supervisory framework, which are being discussed lately, mentioning the draft-regulation “On liquidity risk management”, are prepared by taking into account the above goals. Also, procedures for systemic risk identification and assessment, as well as response to them, are being completed. 4  BIS Review 129/2009  In this framework and beyond it, the Bank of Albania believes that all the public authorities that play a role in financial market regulation, supervision and development, should be committed to a similar process, having the strengthening of the regulatory and operational framework as the final goal, in order to firm up the long-term financial system stability. To this end, we think that it is necessary to pursue such policies that enable re-establishment and maintenance of balances in fiscal, banking and monetary activity, supportive to a stable economic growth over the medium and long run.

I would briefly like to develop these two points. The past two decades have been characterised, on the one hand, by an increasing integration at the global level of goods, services and capital markets and, on the other, by a reduction in inflation that has stabilised at low levels. Given the coexistence of these two phenomena, a number of observers have concluded that there appears to be a causal link. Where exactly do we stand today? BIS Review 28/2008  1  For over ten years, with the growing integration of our economies in the past few decades, powerful forces, throughout the world, have been acting to enhance price stability. Each year, the arrival of tens of millions of people on the world market increases global production capacity, in particular for tradable goods. For monetary policy in developed countries, this process is equivalent to a sequence of positive supply shocks that take the form of a spontaneous decline in the import prices of manufactured goods. All other things being equal, this terms-of-trade gain allows for a lower inflation rate for a given capacity utilisation rate. More fundamentally, and although things seem to be less straightforward in this area, it is possible that the increasing openness of our economies may have structurally changed the wage and cost formation process in a manner that favours price stability. Heightened competition triggered by imports reduces the market power of firms at the national level. However, other more indirect effects are also detectable.
Ladies and gentlemen, to some, it would not be a surprise to note that the seminar comes shortly after the first anniversary of the collapse of Lehman Brothers, one of the first banks to fail in a series of cascading defaults of major international banks, which precipitated the onset of the current global financial crisis and the resultant worldwide economic recession. The case of Lehman Brothers is just one of the many that highlights apparent weaknesses in the global regulatory and supervisory environment. To this end, market practitioners and academics are still analysing and discussing the causes, prudential supervision frameworks, problem bank resolutions and strategies to avoid future systemic challenges. As the current global financial crisis has demonstrated, critical deficiencies still remain in risk management systems. Areas in need of critical enhancements include identifying key risks both within and across borders; assessing these risks, including stress testing and macroprudential analysis to determine the impact on the financial system; monitoring, developing coordination protocols, reviewing the regulatory frameworks, adopting appropriate risk management frameworks and adopting international accounting standards. While these structural deficiencies are not new, the current crisis has brought them to the fore. The speed at which the crisis has spread across the globe indicates that the development of coherent and rigorous frameworks for maintaining financial stability came too late for several countries, leading to adhoc and inconsistent policy responses.

The International Financial Corporation (IFC) – an institution member of the World Bank Group that Romania joined in 1991 – has supported the Romanian banking sector by investing in various Romanian banks, especially during the privatization process. I welcome the current involvement of the World Bank in projects that aim to improve the health and education sectors, to reduce poverty, as well as projects focused on climate issues. Lastly, I thank you for the invitation to take part in this event. I am honored to be here, celebrating 30 years of renewed partnership and cooperation between Romania and the World Bank. To the team in Bucharest Office of the World Bank – which I considered, during these 30 years, as being competent and dedicated, aligned with our endeavors – I extend my warmest congratulations. Happy anniversary! At the same time, I would like to take the opportunity to express my appreciation for the management and staff of the World Bank in Washington for their work in pursuing the Bank's mission to foster sustainable development and promote social prosperity around the world. Thank you for your attention! 2/2  BIS - Central bankers' speeches
I’m aware of the risk of showing optimism amid the crisis, in the same way that during the bubble whoever dared denounce the imbalances being built up was called a pessimist. But I hope my optimism is qualified by my reminder that complacency, that is to say believing that we have already done everything that has to be done and that nobody can teach us any lessons, is the arch-enemy in the battle to exit the crisis. To earn the confidence provided by the knowledge that Spain has been capable of adjusting and reforming during these years of crisis, I have chosen two examples. First, the rapid improvement in our current-account balance; and second, the headway during these years in restructuring our banking system. BIS central bankers’ speeches  1  As is well known, under normal conditions the current-account balance is very easy to finance in a monetary union, but its size is a good indicator of two of the deepest imbalances that came about in Spain during the expansionary phase: the explosion in debt and the loss of competitiveness. Indeed, from 1996 credit began to outpace gross domestic product, doing so systematically until 2006, when its annual growth peaked: at a rate of over 25% for total credit, and more than 40% for credit extended to real estate development activities. Over the same period, Spanish CPI growth was systematically higher than that of the euro area.

John C Williams: The economic recovery - are we there yet? Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Women in Housing and Finance 2021 Annual Symposium, 4 May 2021. * * * As prepared for delivery Hello, everyone. I’m pleased to join you today. While virtual meetings like these do have some benefits—I haven’t gotten stuck in Midtown Manhattan traffic or experienced a flight delay in over a year—I know we are all looking forward to meeting again in person when it’s safe to do so. During this pandemic, we have now made an entire trip around the sun, and then some. The events since March of last year have been devastating on many levels. The ongoing human toll is a tragedy we will never forget. The shutdown of a wide range of everyday economic and social interactions posed tremendous challenges to families, businesses, and communities. And this extraordinary public health crisis has also had profound economic consequences across the globe. Of course, we continue to be affected by the pandemic in so many ways. But if you look out your window today, the view is very different than it was a year ago. Now, more than half of American adults have received at least one vaccine dose, and millions more are receiving vaccines every week.