samchain/econo-pairs-v1 huggingface dataset:
That is why, for example, we have clarified expectations about how firms should manage risks from cryptoassets and why, with the FCA, we set up and chaired the Artificial Intelligence Public-Private Forum to help us better understand the impact of artificial intelligence and machine learning on financial services. [3] It is also why we published this July, with the FCA and Bank as Financial Markets Infrastructure regulator, a discussion paper on critical third parties proposing proportionate measures to strengthen their resilience in a manner that supports the openness of the UK as a financial centre. [4] Good prudential regulation also changes to meet new sorts of risk, which is why we were amongst the first regulators globally to develop standards for operational resilience. [5] It turns out that white blood cells that target immune responses at threats, and direct them away from our own bodies, are called ‘regulatory T cells’, although I doubt they were named after prudential regulators! But they do what we need to do when we choose to take action. We need to boost the health of the markets we oversee, by letting our ‘regulatory T-cells’ target the threats we face in a tailored manner, leaving the healthy parts undisturbed. This is why, for example, we are  Page 4  building what we call a Strong and Simple framework for small domestic banks and building societies for whom Basel standards were not designed.

For example, that is why we have removed unnecessary EU restrictions, limiting when firms can make distributions which would take them into their capital buffers. It is why we removed an EU requirement that international groups with significant activities would be required to operate underneath a single intermediate parent. It is why we have already delivered a 15% reduction in the reporting burden on insurers across the sector and significantly more for smaller firms with further reductions to come. And it is why we will be consulting on the removal of the bonus cap in the autumn which we did not agree with when it was first introduced. Rather we believe that the Senior Managers Regime and remuneration rules requiring deferral of bonus payments are more effective tools for ensuring bankers take proper account of risks. And we will continue to delete unnecessary rules, including onshored EU material. We have already deleted thirteen EBA and EIOPA Guidelines, five superseded Supervisory Statements and twenty-six PRA Technical Standards (with relevant parts made in rules). We will do more. Indeed, when a menu of options is available for pursuing safety and soundness, we will choose the one that facilitates competitiveness and growth. Becoming more responsive, accountable, and accessible We must also take the opportunity to strengthen our accountability to Parliament and the public, and to make our rules more accessible. Being accountable means having clear justifications for our policies and being open and responsive to challenge. The Financial Services and Markets Bill will strengthen our accountability to Parliament.
It was for similar reasons that we already had to turn down a request from your industry association in 2015 to operate non-interest-bearing sight deposit accounts for the pension funds. 7 Quite fundamentally, the introduction of a ‘fourth contributor’ in the form of the SNB would seem to depart from the rationale on which the occupational pension system is founded. So how can the SNB make any contribution to the health of the pension system? By consistently and credibly pursuing a policy geared to price stability, the SNB is contributing significantly to a solid foundation. In the long term this will facilitate economic growth and prosperity in Switzerland and, in particular, also safeguard purchasing power. Ultimately, this  7  cf. Moser, Dewet (2015), Herausforderungen der aktuellen Geldpolitik [‘Monetary policy challenges currently facing the SNB’], speech at the general meeting of the Association of Swiss Pension Funds (ASIP), Zurich, 8 May. Page 6/8  is one of the decisive factors in ensuring that our country can afford a social security network that is resilient and remains fundable. Stable prices are thus very important for pension fund members. However, price stability is also of utmost importance for the socially disadvantaged and pensioners, as they are scarcely able to protect themselves against an inflation-related loss of purchasing power. Like the pension system, price stability plays a key role in the Swiss success story. It is an accomplishment that is greatly valued – and today almost taken for granted – by the general public.

If monetary policy were to need to be more expansionary we can extend the purchases of government bonds, or cut the repo rate further and lower the repo-rate path. We also have the possibility of introducing a programme of loans aimed at companies similar to the ECB’s TLTRO or the Bank of England’s “Funding for Lending Scheme”. Moreover, we can intervene on the foreign exchange market. How do complementary monetary policy measures work? Regardless of which measure one chooses, the effects of complementary monetary policy can be divided into two main lines; one is that they contribute to reducing interest rates in general and the other that they increase the amount of money in the economy. The purchases of government bonds reduce the supply available in the market, which leads to an increase in the price and a decrease in the yield. When government bond yields fall, investors find it more attractive to seek higher-risk assets, which pushes down interest rates and raises prices there, too. This is usually called the portfolio balance channel. When the price of the assets rises, the wealth of those who own the assets also increases, which contributes to stimulating consumption and investment. More liquidity among the banks may also lead to increased lending. All in all, complementary monetary policy thus functions in roughly the same way as normal repo-rate cuts.
The two must be made to intertwine and clear legislation should be made for the procedures for the central bank at appropriate intervals to agree monetary targets with the government and then to be allowed to implement its work independently and unimpeded. But I guess there’s no point in talking much about it now. Let’s wait and see what mandate people give during the election. The only obvious thing is that the present Senate seems to be quite qualified to take up such an important role as safeguarding the central bank. Let me continue on what the new government has to look at, for instance the general guarantee on deposit. This general guarantee cuts across all good banking practices. Banks that misbehave are not being penalised and those that try to do well are dragged down by those who are capricious with the general guarantee that the government gives. The general guarantee will have to be got rid of sooner rather than later if Thailand is to get back on an even path. Probably, in order to do this, some kind of deposit insurance will have to be in place and seen to be working. It does look like a long road for the new government, where sequencing and implementation of many difficult concepts is still needed before full prosperity returns. Let’s start on this road to prosperity as soon as possible.

The economy remains tied to the extraordinary and unpredictable nature of the pandemic. But with continued progress on the economic recovery and a reversal of some of the pandemic’s unusual dynamics, I anticipate that we will soon reach a time when business will be more like usual. I look forward to the Q&A portion of today’s program, and very much look forward to seeing many 3/4  BIS central bankers' speeches  of you when we are able to be together again. 1 See Hobijn, Bart, and Ayşegül Şahin (2021), “Maximum Employment and the Participation Cycle,” paper  presented at the 2021 Jackson Hole Economic Policy Symposium, August 27. 2 Olivier Armantier, Fatima Boumahdi, Leo Goldman, Gizem Koşar, Jessica Lu, Giorgio Topa, and Wilbert van der  Klaauw, “Have Consumers’ Long-Run Inflation Expectations Become Un-Anchored?,” Federal Reserve Bank of New York Liberty Street Economics, September 24, 2021. 3  Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, December 16, 2020. 4/4  BIS central bankers' speeches
In the meantime, credit risk is the main risk to which the banking sector remains exposed. This risk becomes even more present as a result of its persistence and continuous problems that banks face in the process of collateral enforcement. Following the rise in non-performing loans in the first half of the year and their fall in the second half, the ratio of non-performing loans to total loans fell to 18.2% at the end of 2016, at the same level as in the previous year. Therefore, the reduction of non-performing loans and creation of stimuli to boost sound lending has been and remains a priority issue for us. The Bank of Albania has worked in several aspects to address this problem. First, the assessment of the credit risk and the recoverability of non-performing loans have been subject to intensive monitoring during our on-site examinations. In parallel, we have maintained a prudent approach in assessing lending policies and practices applied by banks. Second, the Bank of Albania has fulfilled its engagements under the National Plan for the Reduction of Non-performing loans. In this regard, the Bank of Albania has made regulatory amendments to clarify the concept of non-performing loans write off and the administration of properties taken into ownership as a result of collateral enforcement. Moreover, the Bank of Albania has cooperated with the IMF to review the regulatory framework about the licencing of companies that purchase bad debt.

In contrast, the composite yield rate on Government bonds stood at 23.0%, up from 20.9% registered in 2004. As at May 29, 2006, the composite weighted average Treasury bill yield rate came down sharply to 6.5% while the composite yield rate on Government bonds declined to 11.0%. The sharp reduction in yield rates on Government securities has been due to low inflation expectations, coupled with high demand for these securities by Banks, the non-bank Private and Public financial institutions, and foreign portfolio investors. You may wish to know, Your Excellency, that there are no restrictions with regard to foreign participation in the Government securities market. With continued improvements in the macroeconomic environment, investor confidence is heightened with foreign portfolio investment in Government securities recording appreciable growth. Foreign portfolio investments in Government securities increased to K400 billion at end-December 2005 from K5.6 billion at end-July 2005. Distinguished Ladies and Gentlemen, with respect to developments in the money market, commercial banks lending rates have also been coming down, though not as fast as the decline in inflation and Treasury bills rates. Commercial banks nominal weighted average lending base rate declined from 29.8% in 2004 to 27.6 % in 2005. As at May 30, 2006, the weighted average lending base rates stood at 22.5%. Clearly, there is a need for commercial banks to do more to reduce lending rates in order to influence a substantial expansion of private sector credit. Lower lending rates will contribute to the reduction in the cost of doing business in Zambia.
BIS central bankers’ speeches  15  the use of cash means that central bank revenue from the issuing of banknotes and coins – known as “seigniorage” – decreases, which further inflates the risks of central bank finances becoming more strained than previously in the period ahead. Less room for manoeuvre in the wake of financial globalisation Central banks’ room for manoeuvre is affected not only by how independent they are in accordance with national regulatory frameworks. I have today spoken about how central bank operations, in basically all areas, are influenced by financial globalisation. Over the past 30 years, international capital flows have increased dramatically. 34 This reflects the gradual liberalisation of capital flows that has occurred over a long period. In the right circumstances, especially when countries have achieved a certain level of institutional and financial development, and when there are regulations and oversight, free capital flows lead to considerable efficiency gains. But it does not mean that the completely free movement of capital is good for all countries at all times. The fact that many countries have been affected by the US credit cycle is nothing new, but the fact that this synchronisation now includes developing countries as well as a large number of other countries is a more modern phenomenon. This increased global financial covariation does not just apply to credit in relation to GDP but also within basically all financial asset types.

As a consequence, interest rates in Sweden  19  For a theoretical discussion about the consequences of financial imbalances on flexible inflation targeting, see Woodford (2012). 20  See Giavazzi and Mishkin (2006), Goodhart and Rochet (2011) and Goodfriend and King (2016). See also Bryant, Henderson and Becker (2012). 21  See Mitelman (2013), Schück (2015), Sydsvenskan (2015) and Dagens Industri (2015). 10  BIS central bankers’ speeches  would remain at today’s extremely low levels for even longer to come. 22 For reasons I will shortly outline, it would, however, be more difficult to counteract economic recessions in the future, if inflation, inflation expectations and the average nominal interest rate were to remain permanently at very low levels. The international debate has not concerned itself too much with globalisation and digitalisation having lastingly held back inflation. Instead, it has been argued that central bank inflation targets should be increased. 23 One reason for this is that real, long-term interest rates have fallen by about 4.5 percentage points around the world over the past 30 years. 24 One consequence of interest rates being much lower than twenty years ago is that it has severely restricted the scope for central banks to cut their policy rates when the economy has been weak or inflation has undershot the target. One way of dealing with this is to raise the inflation target.
The only major missing piece of the puzzle is the absence of strong payroll employment growth. We will need to see sustained strong employment growth in order to be certain that this virtuous circle has become firmly established. With respect to the labor market, there are conflicting signals. On one hand, the unemployment rate has fallen sharply over the past two months, dropping to 9.0 percent from 9.8 percent two months earlier (Chart 4). This is the biggest two-month drop in the unemployment rate since November of 1958. On the other hand, payroll employment gains have remained very modest – rising by only 83,000 per month over the last three months  BIS central bankers’ speeches  1  (Chart 5). Such modest payroll growth is not consistent with a sustained drop in the unemployment rate. The true story doubtless lies somewhere in between – but probably more on the side of the household survey that tracks unemployment. That is because measured payroll employment growth in January was probably temporarily depressed by unusually bad winter weather. Although some of the recent decline in unemployment is due to a drop in the number of people actively seeking work, the household survey does show a pick-up in hiring. Other labor market indicators, such as initial claims and the employment components of the ISM surveys for manufacturing and nonmanufacturing, have also shown improvement recently (Chart 6 and Chart 7), which suggests that the weakness in payroll growth is the outlier.

In terms of the ability to expand credit rapidly, it makes no difference whether the banks have lots of excess reserves on their own balance sheets or can source whatever reserves they need from the fed funds market at the fed funds rate. 3  2  The IOER rate and the federal funds rate are likely to track each other closely in most circumstances. Banks do not have any incentive to lend reserves in the fed funds market at rates below the IOER rate, and can arbitrage away any significant price gap that emerges from the activity of non-depository institutions that can buy and sell federal funds, but cannot hold reserves at the Fed. Thus, through the IOER rate, the Federal Reserve can effectively control the fed funds rate. 3  Indeed, even the opportunity cost of making the loan is similar in both instances. A bank that has excess reserves and decides to extend credit forgoes the chance to earn the IOER on the money lent out. A bank that borrows reserves in the fed funds market in order to extend credit pays the fed funds rate in order to do so. The IOER and fed funds rate are likely to be similar. BIS central bankers’ speeches  7  So we have the means to tighten monetary policy when the time comes, but do we have the will? I think there should be no doubt about this.
For instance, we could set the necessary incentives through the remuneration of digital euro holdings, to make sure the digital euro is an attractive means of payment, not a form of investment.14  What next? Exploring design options, consulting the public and working together Our report also describes the design options we are considering. We will explore all aspects of different options: whether they are technically feasible, whether they comply with the principles and policy objectives of the Eurosystem, and whether they satisfy the needs of prospective users. But introducing a digital euro is more than a technical question. The value of money – in both physical and digital forms – is rooted in citizens’ trust. Acceptance by the public is crucial. For this reason, today we are launching our public consultation. We are seeking feedback on the design and on the financial and social issues surrounding the possible introduction of a digital euro. We welcome everyone’s views: citizens, merchants, the non-financial sector, professionals from the financial industry, technology companies, and academics. We encourage everyone to take part. After the public consultation and a period of preparatory work, the ECB’s Governing Council will decide – towards the middle of 2021 – whether to initiate a fully-fledged project that should lead us to define the specific characteristics of a digital euro and get ready for a possible launch. This journey will require prudence and perseverance. Conclusion Let me conclude. Since the introduction of the euro, the ECB has been responsible for preserving citizens’ trust in our currency.

This is a strengthening compared to the earlier agreement among the euro area countries, changing the requirement from targeting the cyclically adjusted deficit to targeting an improvement in the structural deficit. When deciding the adjustment path, public investment and structural reforms can be taken into account. If structural reforms are to be taken into account, they should have a large and proven positive effect on the economy and there should be a safety margin to the 3% deficit floor. My view is that there is a possibility to use the newly defined MTOs in a wise manner, more closely adapted to the situation of the individual country. However, the scope for interpretation is so large that there is a high risk of lax and uneven implementation. The experiences of the first year indicate that some member states have more ambitious MTOs than required by the Pact. This is often countries with their own national budgetary rules, such as Sweden, which comprise MTOs. At the same time,  2  BIS Review 88/2006  there are other member states who need to do more to achieve their MTOs. The measures are often postponed too far ahead and are not sufficiently explicit and concrete. Changes in the corrective arm The third part of the changes refers to what happens when a country has an excessive deficit. As before, exemptions can be granted if the country is suffering from a severe economic downturn that it could not foresee, so called exceptional circumstances.
Ladies and gentlemen, allow me to illustrate the elements I have just described and the logic behind our profit appropriation using this table (Slide 4). In 2020, the SNB recorded a profit of nearly CHF 21 billion. We first made an allocation of around CHF 8 billion to the provisions for currency reserves. We did so because strengthening the balance sheet takes precedence over the distribution of profits, as I mentioned before. The remaining amount of the annual result together with the available distribution reserve (i.e. the profit carried forward from the 2019 financial year) gives a net profit for 2020 of just under CHF 97 billion. This amount is then used for the payment of a dividend and the distribution to the Confederation and the cantons. The level of the distribution is determined by the new agreement – which I will come to in due course – and amounts to CHF 6 billion for the 2020 financial year. The not quite CHF 91 billion remaining forms the profit carried forward to the next year, in other words the new distribution reserve. This is how we implement both statutory requirements, namely the precedence of building provisions over making distributions, and the smoothing of distribution payments. New agreement on the SNB’s distribution of profits This brings me to the new profit distribution agreement concluded between the Federal Department of Finance (FDF) and the SNB at the beginning of this year.

With a view to ensuring that the ratio between the desired level of equity capital and the currency reserves can be increased again somewhat, the SNB recently decided to adjust its rule on allocations to the provisions for the coming years. For the financial years through to 2025, the annual allocation to the provisions will be at least 10% of the preceding year’s provisions, compared with 8% per annum previously. A persistent erosion of the SNB’s equity base would undermine the credibility of our institution over the long term and would fuel doubts regarding our ability to act. 1 Ongoing allocations to the provisions are therefore essential for the SNB. The amount remaining after the allocation to provisions is referred to as the distributable profit. However, since a profit in any given year can be followed by a loss the next, the SNB does not pay out all of the distributable profit at once. Instead we seek to smooth the distributions to ensure that they are less dependent on variable annual results. This smoothing was introduced to facilitate better planning for the Confederation and the cantons. However, maintaining distributions at a steady level is also of pivotal importance for the SNB. The reason for this is an underlying asymmetry: the SNB can distribute profits, but it cannot reclaim any money if it makes a loss. If the SNB were to always distribute its profits in their 1  For more information on the importance of a central bank’s equity, cf. inter alia Jordan, Thomas J.