samchain/econo-pairs-v1 huggingface dataset:
This is because it is inherently difficult for firms to predict which stress might tip them into failure. Firms will need to ensure that they are embedding robust assurance, governance and oversight arrangements within everyday processes so that they are always ready for the unpredictable. This is particularly important given that resolution is not something which we will have a second chance to deliver. Framing our approach around the three outcomes requires firms to think holistically and ask: “how will we be able to keep the business operating, while losses are borne by investors, and restructuring occurs?” This is more fundamental than just complying with individual policies or submitting data to authorities, and helps ensure that capabilities can be sustained for the long-term. We have also been flexible in our application of the RAF. In May 2020, in recognition of the operational burden on firms arising from the Covid pandemic, we extended the submission deadline for firms’ first reports by a year.19  19  See Statement by the Bank of England and Prudential Regulation Authority on resolution measures and Covid-19 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  The RAF is also designed to be proportionate. I am quite conscious that I have dedicated a large chunk of my remarks focussing on larger banks and building societies – however being able to fail in an orderly way is a concept which speaks more widely than this – and is something which all firms need to take into account.

But we would, in my view, have had a much better chance of a more orderly, less damaging correction of an overleveraged banking system.” 5 Available here. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  The FSB highlighted that greater transparency would support the credibility of reforms already made, and that it would continue to encourage appropriate levels of disclosures on resolvability from authorities. The Bank led the way on efforts to increase transparency in the publication of its Approach to Resolution in 2014.6 A credible and transparent resolution regime is in firms’ interests, further increasing the resilience of the UK banking system by reducing systemic risk and giving the public and investors confidence that any failure, should it occur, will be orderly. To somewhat quantify this benefit: in December 2019 the Financial Policy Committee (FPC), of which I am a member, reaffirmed its 2015 judgement that effective resolution arrangements reduce the appropriate level of Tier 1 capital requirements by about 5 percentage points for the UK banking system.7  The benefit is quantifiable in market pricing too. The hidden subsidies given to the largest banks have been reduced; estimates of the value of these implicit subsidies to UK bank shareholders fell from c. £ in 2010 to less than c. £ at end-2016. This was also corroborated in the FSB Consultation Report, which noted that the funding cost advantages enjoyed by SIBs are negatively correlated with the degree to which resolution reforms have been implemented.
In the second place, the development of asset prices can lead to financial imbalances accumulating so as to threaten the stability of the financial sector and the Riksbank has a special responsibility here. Asset prices stimulate household consumption and business investment and it is probably here that asset prices are most significant for inflation target policy. Rising share prices, for instance, increase household wealth inter alia and are an indication that the economy is expected to grow strongly. Household consumption decisions are to a great extent based on expected incomes and wealth. At the same time, investment decisions by businesses are based on expectations of increased production. If households and businesses base their consumption and investment decisions on the expectations reflected in asset prices, demand will probably increase more rapidly than the actual growth of the economy. This creates an inflationary pressure in the domestic market. If the international investors also expect that productivity and the return will increase more quickly in Sweden than in the surrounding world, the exchange rate can, however, strengthen and also dampen inflation. Asset prices are also important for the assessment of stability in the financial system. It is important for instance to assess the risk for debt among businesses and households, which can be the result of rising asset prices, creating risks for suspensions of payments and ultimately for bank crises. What characterises a financial imbalance? Rising asset prices can thus contribute to financial imbalances being created in the economy.

It confirms that the expansionary monetary policy cannot be maintained for the next three years because price stability will be compromised in the long term. However, a swift correction in monetary policy would be precipitate since the inflation outlook is still associated with downside risks. If these risks materialised, we could again be faced with the threat of deflation. The uncertainties relate to the global economy and to the level of recovery within the financial industry. These factors have persuaded the SNB to opt for a cautious stance, and it is leaving its monetary policy course unchanged for the time being. Strengthening the SNB’s equity capital On 4 December, the SNB Bank Council decided to strengthen the SNB’s equity capital by doubling the allocation to provisions over the next five years. This decision was prompted by the growth in market and credit risks in the SNB’s balance sheet (creation of the SNB StabFund and the increase in currency reserves). Given the high level of the distribution  BIS Review 167/2009  3  reserve and results expected for 2009, this decision should not pose problems in terms of the distribution of profits, in the amount of CHF 2.5 billion annually, up to the end of the period agreed with the Confederation and the cantons (2017). My colleague Thomas Jordan will address these aspects in more detail in his own introductory remarks. 4  BIS Review 167/2009
But the liquidity of other assets is less assured, and banks can suffer problems if the liquidity of their assets dries up. That could cause financial instability. The Bank of England can provide liquidity insurance to individual, creditworthy institutions and to the banking system as a whole, by accepting those less liquid assets as collateral, for a fee, in exchange for more liquid assets, including reserves.9 But such liquidity insurance must be provided in a way that takes account of the potential for “moral hazard” – the incentive for individual banks to undertake riskier activities because of the presence of a central bank backstop. The Bank’s operations must not undermine the incentives of private sector firms to manage their liquidity needs safely in the market, rather than turn to the Bank routinely. Moreover, although the Bank’s operations are collateralised, the value of the securities delivered to the Bank is always uncertain. We would never be able to protect ourselves perfectly against credit risk. 8  “The Bank’s money market framework”, Bank of England Quarterly Bulletin, 2010 Q4. 9  The Bank also stands ready to provide gilts via its permanent Discount Window Facility, introduced in October 2008. This facility is available to provide bilateral liquidity support to solvent and viable institutions, against a wide pool of collateral. BIS central bankers’ speeches  5  As well as implementing the policy rate, the SMF is also used to provide that liquidity insurance.

We believe these policy actions, as well as those announced by the Minister of Finance in order to promote Chile as a Regional Financial Center, should greatly contribute to a more resilient financial sector, wider cross-border use of the Chilean Peso and a greater participation of non-residents in our FX market.   The Strategic Planning 2018-2022 of the CBC includes a thorough review of its FX regulation. Current FX regulations require most FX transactions to be executed through the “Formal Exchange Market” —which is comprised by banks and some stockbrokers— and to be reported to the CBC. These two elements have remained largely unchanged since the capital account was opened 20 years ago. Back then, re-imposing capital controls could not be ruled out, and that rationale underlies the somewhat cumbersome structure of the FX regulation. Currently, while capital controls are still part of the regulatory toolbox, re-imposing them could only be considered during an exceptional situation. Therefore, the CBC has decided to streamline its FX regulations and reduce the burden of compliance to the private sector, whenever possible, without affecting the quality of the statistical information or the capacity to act in an extreme scenario. The first part of this process, eliminating some of the existing reporting requirements, is about to be put out for public consultation. Page 13 of 20  Central Bank of Chile September 2019    Modernizing FX transactions goes beyond a review of existing reporting requirements and the structure of the regulation.
But monetary policy has its limits too, which we must respect if we do not want this essential pillar of price stability to weaken. This is why, after having higher and more persistent inflation levels than we had foreseen, we have decided to withdraw part of the monetary impulse, with the objective of bringing inflation to the target within a two-year horizon. Monetary policy will remain expansionary, with the real rate below its neutral level for a prolonged period of time. With that, we are certain that we will continue to contribute to the recovery of growth and hold unemployment within boundaries. But, at the same time, we will also ensure the achievement of price stability. I would like to conclude by emphasizing that, despite the pessimistic atmosphere associated with the developments in the world economy, plus the cases of collusion and other legal issues and, I will say it, the stress that has pervaded some important local discussions, from a macro standpoint the conditions to resume strong growth are present. However, we must be ready to confront a more complex scenario. This means that every aspect that I have mentioned has to improve. As for monetary policy and our role as financial regulator, we will continue to work to pursue the objectives that we have been entrusted, namely to safeguard price stability and ensure the normal functioning of internal and external payments. Thank you.

The baseline scenario reflects those events believed to be the most likely to occur with the information at hand at the closing of the Reports. There are risks, however, that, if materialized, could reshape the macroeconomic outlook and thus alter the course of monetary policy. About the external scenario, it is still early to know how the policy rate increase in the United States will affect the global economy. A first look shows that the markets have taken it calmly, stock prices rose and the dollar lost some value against the other currencies. Of course the way this process will unfold is an important source of risk, especially because of existing differences between what market expectations suggest and Fed’s statement about how fast and how far it will raise the rate. Plus there is divergence in the monetary policy among the developed countries and its potential effects on the global value of the dollar. To the extent that this continues, the pressures for a more appreciated dollar will persist, affecting commodity prices and our own currency. In China, an abrupt adjustment is now less likely, but doubts remain about how its economy will contribute to the recovery of global activity and commodity prices, especially now that they are rebalancing growth toward consumption and services. Finally, the complex situation in Brazil and the need for further tightening in some Latin American economies continue to pose a major risk. A worsening of the economic outlook in the region would affect external demand and possibly financing conditions facing Chile.
6  The latest macroeconomic projections point to robust growth in the coming quarters once the vaccination programme has gathered pace and restrictions on movement have been progressively lifted. However, significant uncertainties remain as to the course of the pandemic itself, private consumption, tourism flows, the economic impact of the NGEU funds and the damage to the productive system caused by the pandemic. Against this background, there is still the risk of credit quality impairment being more pronounced in the future than has been observed to date, especially in the sectors hardest hit by the pandemic, and particularly once the support measures are gradually withdrawn. In fact, some signs of credit quality impairment were already observed in 2020. Specifically, Stage 2 loans6 increased substantially in 2020 (24.3%), and their growth has quickened in 2021 to date (37.5% in March). Meanwhile, although forborne loans continued to fall year-on-year, these declines have been far more moderate since the onset of the pandemic (-2.3% in March 2021, compared with -19.6% in March 2020). Lastly, NPLs increased in the consumer portfolio in 2020, growing by 23% (but slowing to 15.9% in March 2021). Deeper analysis of the growth of NPLs and Stage 2 loans in the business lending segment reveals that the sharpest increases occurred in sectors severely affected by the pandemic.

Second, the banking sector’s resilience during the crisis has benefited crucially from the decisive economic policy response (monetary, fiscal and prudential), which has substantially alleviated the impact of the crisis on the financial position of households and non-financial corporations, thus lessening the effect on financial institutions’ balance sheet quality. The decisions taken by macro- and microprudential authorities have also allowed the banks’ capital positions to improve during the crisis, and have authorised the use of buffers to help smooth the provision of financing to other economic agents, as a complement to the fiscal and monetary measures. 1  Although banking was among the hardest-hit sectors – in terms of stock market valuations – during the initial stages of the crisis, its share price valuations have recovered significantly on international financial markets after the development of vaccines was announced in November 2020. This reflects the fact that, thus far, the crisis has largely been prevented from developing a relevant financial component. Some examples will suffice to illustrate the banking sector’s resilience during the crisis and the role played by economic policies in maintaining it. 2  The resilience and role of the banking sector during the crisis  First, let us look at the indicator reflecting credit developments. For the first time since the global financial crisis, the volume of bank lending to the resident private sector in Spain increased in 2020 (by 3.5%).
We managed to survive this strain by taking, on the one hand, unconventional and controversial measures to prevent market dislocation that could have been very destabilising, and, on the other hand, belt and brace measures to strengthen the defence mechanism of our financial system. I am pleased to say that these actions have been successful, as reflected in the marked change in sentiment in our markets and the sharp fall in the interest rate premium for our currency over the US dollar. Although we continue to endure what has become a very painful economic adjustment, we can now work through this adjustment without it being grossly exacerbated by the kind of extreme market overshooting brought about by the manipulative attacks we faced last summer. The adjustment taking place is rapid and pronounced: we saw a decline in asset values of some 50% at the peak of the crisis, a doubling of our unemployment rate to around 5.5% and a fall in our GDP last year of 5%. However, if this is the adjustment necessary to re-establish our competitiveness we have, and are prepared, to accept it. But we can do without the collateral damage and general trauma of overshooting experienced by so many other economies in the region. We believe that our fundamental strengths can help us through this adjustment, just as they have helped us through the many other transitions of the past few decades, whether economic or political.

This is a role the Bank has endeavoured to play consistently, and for good reason. The more people understand how our economy works, the challenges it is facing and the limited options available to overcome them, the greater the likelihood that policymakers will feel comfortable to take the required decisions promptly, leading to a faster pace of wealth creation, which is one thing we all want. 11. The adoption of the euro will greatly reduce the role of the Central Bank of Malta. What will you be doing in January 2008? Your question reflects a perception that is commonly held but which is not borne out by the experience of the current members of the euro area. It would be more correct to say that the Bank’s role will be greatly changed rather than reduced. Some existing functions will become less important, others more so, and yet others created. On the institutional level, the transfer of responsibility for monetary policy to the ECB would be replaced by the Governor’s participation in the Governing Council where interest rates are set for the euro area. For this purpose, we will need to strengthen our capacity in the areas of economic research, forecasting and statistics and redirect its focus. This also applies to our activities in support of monetary policy, such as open market operations, which would be conducted within the parameters set by the ECB.
However, where the service provider is not the regulator, it is hard to coordinate and preserve the character of accessibility. The UK regulators have taken bold steps to outsource the service provider’s role and concentrate on the regulatory role, while USA, Sri Lanka and India are still trying to strike a balance between the dual roles, which we have inherited for decades. 2. Retail payments outlook and prospects  2.1 Retail banking is still the main force in banking, and is likely to stay that way for the foreseeable future, despite the relentless growth of investment banking, corporate banking and other forms of services. In 2006, retail banking business accounted for euro 1,220 bn in revenue, or about 57% of the global banking revenue pool of euro 2,150 bn. The world over, banks continue to open branches and attempt to make their branches more attractive for retail payments. Sri Lanka, India, Bangladesh and many of the SAARC countries are members of the South Asia Free Trade Agreement (SAFTA), Asia-Pacific Trade Agreements (APTA), The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), Comprehensive Economic Partnership Agreement (CEPA) and several other trade agreements. During 2002-2006, exports in the SAARC region as a ratio of world exports rose from 1.09 to 1.29 percent, of which India accounted for more than 75 percent. Although firm numbers are not available for 2007, exports are estimated to have increased at a significant rate followed by higher cross-border payments.

To speed the process and avoid unnecessary delays that might exacerbate liquidity problems, and to halt any possible contagion to other parts of the system, the Banco de España took the swiftest of decisions while fully observing the provisions of the Law on the Discipline and Intervention of Credit Institutions. The conduct of the Banco de España has been informed by the lessons that all supervisors have drawn from the unfolding of the financial crisis in other developed countries. In particular, it is our resolve to prevent the problems of an individual credit institution degenerating to such an extent as to spread to other domestic banks and savings banks. BIS Review 42/2009  1  The speed behind the Banco de España's decision also justifies the urgency of and need for the Royal Decree-Law adopted by the government. Without going into details on the legislation, I would like to stress that the granting of guarantees by the Treasury has a dual purpose. First, it allows the Banco de España to act with full force, providing a very high volume of guarantees backing potentially significant funding. Such provision is necessary if the ailing credit institution is to meet all its commitments and honour all its payments. Since autumn 2008, when the suspension of payments by Lehman Brothers led to a risk of widespread collapse on the international financial markets, no country has allowed any credit institution active on international markets to suspend payments.
As I noted earlier, we are open to hosting cross-border business in the UK – but only if it 5  https://www.bankofengland.co.uk/prudential-regulation/publication/2020/statement-regarding-supervisory-cooperation-on-operationalresilience 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  is appropriately controlled and governed, and if we have sufficient visibility of and influence over the necessary supervisory outcomes. Firms must meet our Threshold Conditions, which make specific mention of us being able to effectively supervise the risks which arise from being part of a group (including any impact of a parent being subject to regulation overseas)— which is particularly relevant to international groups. Those firms who have been supervised by us for a long time should recognise the substance of what is set out in the consultation. And EEA branches, who have until recently passported into the UK, will recognise our supervisory expectations from their extensive engagement with us as part of the branch authorisation process. The substance of our expectations is stable and consistent; by making them transparent it will make it easier for firms to identify any gaps and plot their course to meeting those standards. In particular, I’d like to highlight three areas: o  Information sharing;  o  Governance; and  o  Booking models. Information sharing  The statement sets out the types of information we expect to receive from firms on their group operations.

On the regulatory side, thc adoption of a risk-focused supervisory framework entails a shift away from a rigid, rules based approach to regulation and towards more “incentive compatible” prudential standards. By “incentive compatible”, I am referring to broad, principles based standards that encourage banks to develop and continuously update their internal risk management systems to ensure that it is commcnsurate with the scope and complexity of its operations. While the benefits are obvious, there are also some consequences for the supervisory side of our business that may not be readily transparent. First, an emphasis an broad prudential standards - while useful rot fostering sound risk management practices - will inevitably create significant challenges for front-line supervisors. This is because they will need to rely much more on sound professional judgment and critical analysis, and less on rules-based compliance criteria, in order to make proper risk assessments. This in turn, will require supervisory staff members to have a fundamental grasp of risk-based supervisory concepts and how it is applied in the field. The challenge for every emerging market supervisory authority is to equip our front line supervisors with the requisite knowledge, skills, and abilities, in order to help make their transition to a risk-based framework as smooth as possible. At the Bank of Thailand, we have placed greater reliance an this risk-based philosophy during the past several years.