samchain/econo-pairs-v1 huggingface dataset:
The first test that must be applied is to assess whether the public interest objectives could be met by implementing a rapid payout of insured deposits, or any other definition of deposits which the authorities wish to protect via a top-up extension of the deposit insurance scheme. The remainder of the bank would then be put through something known as the bank insolvency procedure. The test of whether this procedure could be used depends in large part on how long depositors would face without access to their funds. At the moment I think few banks could meet an acceptable timetable for payout. Moreover, for bigger banks this would always be too disruptive as an approach. Work is underway to facilitate rapid payout of depositors under the Financial Services Compensation Scheme and I hope that in the next year, banks will be able to meet the objective that they have been given by the FSA to be able to make payouts to depositors within seven days. This is not a trivial task as I readily recognise, and achieving it would not mean that this approach would always be chosen in a resolution. That depends on the situation at the time. If the failure of a bank is determined to have wider systemic consequences that could undermine financial stability, confidence in the banking system or depositor protection, then the SRR provides a range of other tools to be used.

Andrew Bailey: The UK bank resolution regime Speech by Mr Andrew Bailey, Executive Director for Banking Services and Chief Cashier of the Bank of England, at The Institute of Chartered Accountants in England and Wales (ICAEW) Financial Services Faculty breakfast, London, 26 November 2009. I am grateful to Peter Brierley, Victoria Cleland, Iain De Weymarn, Geoff Davies, Tony Foster, Andrew Hauser, Orla May and Paul Tucker for their comments and assistance. *  *  *  The UK bank resolution regime Thank you for inviting me to speak this morning. One of the characteristics of bank resolutions, to which I will return later, is that they have to be done quickly to a fixed deadline and involve working through the night. They also require extensive involvement by accountants and lawyers, so, I have had some experience with spending nights and early mornings with accountants. The only, but important difference, is that I don’t get to choose when to spend my early mornings on resolutions, whereas you did choose to listen to me early this morning, for which I am very grateful. Some history The 2009 Banking Act, passed in February, created the new bank resolution regime in the UK. In its first nine months it has been used once, at the end of March for the Dunfermline Building Society.
Untenable in the long run Although I cannot see any problems right now, I do not believe that nominal house prices can continue to increase by an average of well above 7 per cent a year as they have done since the start of the 2000s. This is not sustainable in the long term. And when we now consider when is the best time to begin raising the repo rate, my colleagues and I will be carefully examining variables such as house prices and lending. As I pointed out, for instance, in connection with the monetary policy meeting in February, I believe that during the interest rate increase phase ahead of us it might be appropriate to “lean against the wind” – to emphasise some concern by raising the repo rate slightly sooner than we might otherwise have done. But as I also said then, monetary policy is not the most effective means if one wishes to slow down, for instance, house price developments slightly. I then said I would like to see measures such as Finansinspektionen setting a limit for the loan-to-value ratio for new mortgages. Now they have presented a proposal for this and we will carefully monitor its effects. Leaning against the wind concerns, in my view, avoiding large fluctuations in inflation and the real economy – what provides the best-balanced monetary policy. It is thus about monetary policy, not financial stability.

It is no easy task to build this type of mechanism into our models, or even the part of the analysis based on assessments. Allow me to alter the time perspective somewhat and assume that a loan-driven bubble in the property market has burst and had serious consequences for the rest of the economy. There are some questions that I would like to be able to give the “right” answer to if I were standing in this situation looking back over the developments leading up to it, perhaps looking back a year. Would we then be able to claim with certainty that our interest rate policy did not contribute to developments becoming unbalanced and getting out of control? Would we be able to say with certainty that we did not suspect that these developments were untenable and that there would soon be a collapse? And would we be able to say with certainty that conducting a slightly stricter monetary policy than was justified by the forecasts had not helped? I consider it essential for the credibility of every central bank to be able to provide good answers to these questions. And for me it is natural to also take into account the type of factor I have now spoken about – that is so difficult to quantify – when I assess what is the best-balanced monetary policy. Other weapons than the interest rate are probably more effective with regard to preventing loan-financed house price bubbles from building up.
Chart 8 indicates, however, that much of that is attributable to the substantial fall in imports associated with the collapse in domestic demand, rather than a rise in exports (although to the extent that there was excess demand before the crisis – as Chart 4 suggests – part of that decline in imports will be warranted). Moreover, the necessary sectoral reallocation of resources is harder to achieve in a currency union than in a country with its own currency, as the exchange rate is not free to adjust to expedite the necessary adjustments in prices and quantities. Absent a supply-side miracle to  2  As productivity tends to rise faster in manufacturing than services, unit labour costs on average rise faster in non-tradables than tradables. But, as Chart 7 makes clear, the gap was much greater in Spain than Germany. 2  BIS central bankers’ speeches  raise productivity in the periphery, the necessary reversal in the movements in relative unit labour costs needs instead to come about through wage and price adjustment, which may require a sustained period of spare capacity in the periphery together with excess demand in the core. There is, however, an inherent asymmetry, noted long ago by Keynes, that when credit flows dry up, adjustment is compulsory for the debtor but only voluntary for the creditor. Moreover, not only does the creditor lack the urgent need to adjust, they may also feel that the debtor ought to bear more of the burden of adjustment on moral grounds.

The concordat recognised the greater roles of host supervisors for supervising foreign banks that operate via locally-incorporated subsidiaries. Some home country supervisory in fact referred to the host supervisor as the banks' "intermediate home supervisor". The framework also recommended a high level of reliance by host supervisory on the works undertaken by the home supervisors in their oversight and monitoring of the soundness of the foreign banks' branches in their jurisdictions. These important principles have become the foundations for the current cross-border supervisory framework and have been the basis for the formulation of the HighLevel Principles for the Cross-Broader Implementation of the New Accord issued in 2003. The Principles have sought to further reinforce the responsibilities of home supervisors in conducting consolidated supervision of financial conglomerates and the greater expectation on host supervisors in the supervision of individual subsidiary banks in their country. The new capital accord is yet another significant development that would challenge the robustness of the cross-border banking framework and principles. The real test would be in translating the principles into detailed policies and action plans that are both sound and practicable. The main challenge in applying the new accord uniformly across the globe is, indeed the complexity of the framework itself. While the underlying intention of the framework to promote sound risk management and best practices is not in question, countries, particularly the emerging markets, are at different levels of readiness to cope with the extensive changes and potential implications of Basel II.
Our instrument independence – that we ourselves have been able to choose among our tools to attain our objectives and to use them quickly – has been essential in alleviating the effects of the crisis and contributing to good economic developments. I personally think that perhaps the most obvious monetary policy conclusion from the coronavirus crisis is that the repo rate is far from adequate in maintaining our price stability objective. Although I am discussing monetary policy today, I would also like to emphasise that the fiscal policy measures in Sweden and abroad have been a decisive factor in the special type of crisis in which we have found ourselves – some sectors have needed extensive support. 28 For a description of how the Riksbank’s measures have worked during the crisis, see for instance Sveriges Riksbank (2020b). 10 [20]  Proposal for new Sveriges Riksbank Act too limiting with regard to monetary policy toolbox We at the Riksbank consider the proposal for the new Sveriges Riksbank Act presented in December 2019 to be good in several aspects. But when it comes to the monetary policy toolbox, we think the proposal is far too restrictive. I do not believe that it sufficiently reflects the lessons I have just described. 29 There is thus a risk that it will become more difficult, not just for us, but also for future Executive Boards to make a good contribution to socio-economic developments.

Hedging markets developed rapidly. All in all, financial engineering emerged as a new area of knowledge. Dear Guests, The aggressive capital movements among countries and developments in financial markets generated a number of economic benefits at the global level. When borders between countries have disappeared in favor of capital flows, funds flew to regions where capital had the highest return. So, it has been observed that competitiveness and productivity of capital in global scale increased considerably in the 90s. There has been also a substantial rise in the volume of global merchandise trade. However, all developments that I mentioned now represent only the front side of the medallion. The back of the medallion has not been as bright as the front. In the 90’s, not only the scope, timing and speed of the financial liberalization varied across countries, but also the consequences of economic policies had various effects on national economies, depending on the initial conditions and country specific factors. Hence, the rapid increase in capital movements among countries shook the financial markets from time to time, led to financial and banking crises in many countries and, even more importantly, caused the crisis in one country to spread to others. In 2003, Caprio and Klingebiel reported 117 episodes of systemic and highly costly financial crises in developed and emerging market countries since the late 1970’s1.
Jacqueline Loh: Shanghai and Singapore - synergies amidst a dynamic Asian financial landscape Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the Second Shanghai-Singapore Financial Forum, Shanghai, 30 November 2016. * * * Ladies and Gentlemen Introduction 1 Good afternoon, it is my pleasure to join you at the 2nd Shanghai-Singapore Financial Forum (SSFF). 2 In November last year, the Monetary Authority of Singapore (MAS) and the Shanghai Municipal Financial Services Office (Shanghai FSO) launched the inaugural SSFF. That was a significant and important milestone. As the Chinese saying goes, 二人同心，其利断金. The SSFF is more than just a forum. It is a reflection and commemoration of the longstanding relationship and cooperation between Shanghai and Singapore. Following last year’s success, both sides are keen to build on the good momentum achieved and bring our relationship to a higher plane. 3 The aspirations of both the MAS and Shanghai FSO are reflected in the theme for this year: “Shanghai and Singapore – A Partnership for a New Asian Financial Landscape” . Our hope is that both cities can work together to forge a stronger, more future-ready partnership ahead. This is important for both Shanghai and Singapore, which are international financial centres in the midst of a rapidly evolving Asian financial landscape. 4 Let me outline briefly what we have achieved together so far and highlight the synergies that we see ahead for both Shanghai and Singapore. I.

Figures differ across countries – with the lowest numbers in the Czech Republic (around 20 percent) and the highest in Romania (above 50 percent) – but the tendency is the same. Referring to the benefits of euro adoption, one of the prominent ones, namely the lower financing costs, is no longer obvious. The incomplete institutional setup of the European project in general and the European Monetary Union in particular – weak fiscal rules and the lack of any transnational instruments that would have enabled monitoring cross-border private capital flows – gave rise to a number of vulnerabilities which the recent crisis has exposed. To be more specific, what sets the European Union apart from the other industrialized economies is precisely the fact that the initial banking crisis which hit everybody here gave birth to fears of sovereign default, which reinforced banking system vulnerability and sapped investor confidence further, thus deepening the recession. The consequence of all that was the financial fragmentation issue, which is precisely the reason why the lower financing cost benefit of euro adoption, seems to have vanished. Another unfortunate consequence was that the benefits brought about by commercial integration were significantly diminished by lack of growth in the euro area. The fixes proposed to the institutional architecture of the European Monetary Union, such as the setup of the European Stability Mechanism and even that of the Banking Union, brought 2  BIS central bankers’ speeches  about direct costs of adopting the euro.
In this context, the SNB regularly reassesses the need for a reactivation of the CCyB. Closing remarks Ladies and gentlemen, I now come to my concluding remarks. Are we heading for a big real estate crash? Is there a bubble that will burst soon? If you were expecting me to answer these questions today, I’m afraid I have to disappoint you. To predict the future would require a crystal ball. By their very nature, crises cannot be predicted. 12  Behncke (2020), for example, shows that LTV risks did in fact decrease due to the banks’ self-regulation rules in 2012 and the activation of the CCyB in 2013. Cf. Behncke S., Effects of macroprudential policies on bank lending and credit risks, SNB Working Papers, 6/2020. 13 Cf. Schelling. T and P. Towbin, Negative interest rates, deposit funding and bank lending, SNB Working Paper, 5/2020. Page 11/12  The key question, from our point of view, is: Are there substantial vulnerabilities on the mortgage and real estate markets? We can answer this question with a ‘yes’. According to our assessment, markets today are more vulnerable to corrections in the form of declining prices and increasing numbers of mortgage loan defaults. Thanks to substantial capital buffers, however, most banks should currently be capable of absorbing the associated losses. The capital buffers are therefore essential to financial stability – and will remain so in future.

The “comply or explain” principle is a powerful tool In my view, the ESRB has had a better start than might have been expected, given its size and composition. It has focused not only on identifying risks, but also on suggesting how to handle them. And the risks discussed have been the relevant ones, in spite of their political sensitivity. Certainly, a lot remains to be done before the ESRB will have established its working procedures. And it remains to be seen what it will be able to produce under normal conditions, out of the present crisis mode. But, properly managed, it should develop into a useful institution, forcing countries and authorities to act in time to avoid difficult and dangerous situations. Comply or explain is a powerful tool, if respected. BIS central bankers’ speeches  7
However, in crisis situations the banks sometimes do not want to borrow, as this could signal that they have financial problems, as was the case in the United States during the financial crisis 20082009. Former Fed Governor Ben Bernanke says that the unwillingness to borrow from the Fed could have been reduced if they had a larger balance sheet. If the banks had had substantial deposits and larger loans with the Fed and thus been in the habit of having transactions with the Fed during normal circumstances, the stigma of borrowing in a crisis situation could have been alleviated. Among European banks, unwillingness to borrow from the ECB during the financial crisis was a much smaller problem than for the Fed. Bernanke points out that one possible reason for this could have been that the ECB had a larger balance sheet even prior to the crisis and that the banks in Europe therefore were used to making large transactions with the ECB. Increased supply of safe assets for the banks in the economy 50 The demand for safe and liquid assets with a short maturity has been huge around the world for a long period of time. This is often seen as one of the main reasons for the low global interest rates. If the Riksbank has a large balance sheet and  47 See Duffie and Krishnamurthy (2016) and Bertsch and Molin (2016). 48 The interbank market is one where the banks can borrow money from one another at short notice.

Long enough for the international authorities to think they would get time to fix problems in the regulatory capital regime before they gave rise to serious problems (such as the zeroweighting of 364-day lines of credit, which underlay the profusion of bank-like conduits etc). Long enough for many to proceed on the basis that “it couldn’t happen” or, indeed even after it began, “wasn’t happening”. Long enough, crucially, for investors to get too used to elevated returns. Those returns came largely from two sources. The fall in risk-free rates, brought about by an ex ante imbalance of global savings and investment; and the fall in risk premia, which may in part have flowed from improved monetary policy regimes around the world. The ensuing Search for Yield can be thought of as asset managers and bankers wanting to sustain into the future the fabulous ex post returns “achieved” as asset prices rose. Its main engines were leverage, and maturity transformation. A cocktail that not only raised private risks for asset managers and lenders, but also systemic risks. The upshot has been a protracted, and not yet concluded, period of deleveraging. That, in the great scheme of things, relatively small US subprime mortgage delinquencies could set this off shows just how fragile the system had become. Structural changes in the financial system really matter As commentators struggle to make sense of this, a lot has been said about the “originate and distribute” model of financial intermediation. Three comments on that.
We did not see some of the critical vulnerabilities these changes had created, including the large number of self-amplifying mechanisms that were embedded in the system. Nor were all the ramifications of the growth in the intermediation of credit by the nonbank or “shadow banking” system appreciated and their linkages back to regulated financial institutions understood until after the crisis began. With hindsight, the regulatory community undoubtedly should have raised the alarm sooner and done more to address the vulnerabilities facing our banks and our entire financial system. But this was difficult because our country didn’t have truly systemic oversight – oversight that would be better suited to the new world in which markets and nonbank financial institutions had become much more important in how credit was intermediated. Without a truly systemic perspective, it was unlikely that any regulator would have been able to understand how the risks were building up in our contemporary, market-based system. The problem was that both banking and nonbank organizations played an important role in credit intermediation but were subject to differing degrees of regulation and supervision by different regulatory authorities. Although these gaps had existed for years, their consequences were not apparent until the crisis. Difficulties in one part of the system quickly exposed hidden vulnerabilities in other parts of the system, in a way that our patchwork regulatory system had not been designed to detect or readily address.

Moreover, our new forecast, which as always takes account of today’s decision, shows that a further tightening of monetary policy cannot be ruled out in the coming quarters. However, the environment continues to be subject to a high degree of uncertainty. Let me now say a few words about the exchange rate. The Swiss franc has appreciated in trade-weighted terms by around 7% since the monetary policy assessment in June. This appreciation helps to tighten monetary conditions and dampen inflationary pressure. In order to set appropriate monetary conditions, we remain willing to be active in the foreign exchange market as necessary. If there were to be an excessive appreciation of the Swiss franc, we would purchase foreign currency. If the Swiss franc were to weaken, however, we would consider selling foreign currency. Period of negative interest rates comes to an end  With today’s decision, an extended period of a negative SNB policy rate comes to an end. Negative interest was introduced at the beginning of 2015 to counter upward pressure on the Swiss franc associated with the discontinuation of the minimum exchange rate. Over the past years, negative interest has helped to dampen the appreciation of the Swiss franc and to ensure price stability. At the same time, we were always aware that negative interest can have undesirable sideeffects and presents challenges for many economic agents. On the whole, however, negative interest has proved its worth.