samchain/econo-pairs-v1 huggingface dataset:
There would be one, global resolution, led by the home authority. But pure universalism also faces major obstacles. First, it would imply a surrender of national sovereignty – replacing it with pre-defined and enforceable rules that determined the roles of different authorities in different jurisdictions. Second, unless steps were taken to rule out the need for sovereign Capital of Last Resort operations 4 , it might well need to be accompanied by an ex ante burden-sharing mechanism, to facilitate a sharing of the costs of resolution across the jurisdictions in which a bank had activities. In theory, that could be addressed by the main home and host authorities of each LCFI agreeing a set of binding principles to govern the distribution of the costs of a universal resolution across jurisdictions. An alternative would be to design a single resolution regime for all LCFIs, to be implemented along universal lines by a supranational resolution authority. But would countries be prepared to tolerate the loss of fiscal independence and the overturning of national insolvency laws that this model would entail, especially if it required governments to commit to recompense the agency for unlimited amounts in the future? That is most definitely not a question for central bankers. (iii)  Modified universalism  Pure territoriality and pure universalism are corner solutions. We live in a world where some countries are closer to one corner, others closer to the other. Some have suggested that an intermediate solution might be feasible.

In either case, however, it would expose the authorities to risk of loss, and so would not always deliver the Objectives I think we share. It would not be assured to preserve orderly markets in all cases. And it would be insufficient if a firm was actually insolvent. A quite different, and rather more profound approach would be to deploy a super special resolution framework that permitted the authorities, on a rapid timetable, to haircut uninsured creditors in a going concern. By haircutting creditors in a going concern, there would be no need to close the business immediately (or, if regulators wished, even at all). That is a very high-level description. Variants obviously exist. Instead of haircuts, uninsured creditors could have part of their claim converted into equity. And it would need to be clear how the regime applied to the normal ranking in the capital structure, with common equity and subordinated debt being wiped out before any senior unsecured debt was haircut (or converted) at all. Precisely because investment banking is highly levered, relatively small percentage haircuts (or conversions to equity) could materially recapitalise a distressed firm. Creditors would recapitalise distressed LCFIs, not the state. In that, it shares some features of contingentcapital bonds, but would be on a statutory basis and could apply to all unsecured creditors in the extreme circumstances of systemic distress. The crucial feature is that haircuts/conversion would be applied up front to creditors of a going concern.
Also noteworthy is the fact that moratoria are more common in banks with higher credit growth in the years immediately preceding the outbreak of the pandemic. Looking ahead, the trend in employment and its distribution among households will be crucial in the coming quarters, as regards the materialisation of the financial stability risks posed by this sector. The ultimate impact will also depend on the effectiveness and continuity of the measures in place to sustain household income. 4  See Banco de España (Spring 2020), Financial Stability Report, Box 1.2, “Build-up of household debt defaults”. See P. Alvargonzález, M. Pidkuyko and E. Villanueva (2020), “The financial position of the workers most affected by the pandemic: an analysis drawing on the Spanish Survey of Household Finances”, Analytical Article, Economic Bulletin, Banco de España, 3/2020. 5  7  The real estate market Allow me now to briefly describe the recent developments in the housing market against the backdrop of the crisis triggered by the pandemic. After the very significant downscaling of housing investment following the crisis that began in 2008, which reduced its weight relative to GDP from 12% before the global financial crisis to levels close to 5% in 2019, in line with other European countries, this sector’s starting point was unquestionably less vulnerable. Moreover, the reduction in housing investment activity came about in parallel with a decline in house prices which, despite the growth observed in recent years, at end-2019 remained (in real terms) some 29% below the average nationwide levels observed in 2007.

They can also resort to undrawn amounts on their credit lines with financial institutions, to new borrowing, such as new bank loans and debt issuances, to divestments, or to new capital contributions from their members. This list of sources of liquidity for firms highlights the important role of economic policy measures in alleviating the effects of the crisis on the business sector. At the European level, the powerful monetary policy response from the European Central Bank (ECB) has proved essential for facilitating the financing of all European firms against this backdrop of high uncertainty, heading off financial fragmentation problems like those experienced as a result of the last crisis. Besides the approval of a new, very large asset purchase programme, this response has included the provision of liquidity to financial institutions under very favourable conditions providing they meet certain business lending targets. In Spain, the public guarantee programmes for loans to firms, which are managed by the Official Credit Institute (ICO)2 and have reduced the risk taken on by banks when lending in such uncertain circumstances, have been crucial, as have the measures to allow for more flexibility in temporary layoffs and short-time work arrangements (ERTE by their Spanish abbreviation) and the payment deferrals on certain tax obligations, among other measures. 2  ICO COVID-19 Guarantee Facility, approved through Royal Decree-Law 8/2020 of 17 March 2020.
Based on the discussions among panelists and attendees, it was evident that industry participants have taken onboard the directive that cultural and behavioral change is needed in the industry. A number of firms have begun to implement programs that are at various stages of depth, breadth and maturity. There were a few key themes that emerged that I want to share with you today: •  The role of regulation: There was a lot of discussion on the potential role of regulators and the public sector in developing and maintaining appropriate cultures at financial firms. While some voiced the opinion that regulators must play a role, others clearly indicated that trying to regulate something as dynamic and amorphous as culture would be counterproductive and would overstep the purview of regulators. I tend to agree. Of course, regulation is one thing; supervision is another. Culture may not be amenable to official rulemaking, but it falls squarely within a banking supervisor’s responsibility for financial stability. Financial institutions should expect greater supervisory attention to culture. •  Industry-led effort vs. first mover: Using the United Kingdom’s Banking Standards Review Council as an example, we believe that meaningful change will require an industry-wide effort. At the same time, the “first mover” issue fostered a general sense of skepticism around whether any firm would be willing to take on the risk of implementing a compensation structure, for example, that was dramatically different from others in the industry.

Before turning to the road ahead, I wanted to pause and recognize two things. First, it’s clear that progress has been made across the industry in a number of areas – particularly in making firms and the system more resilient through improvements in capital and liquidity, as well as enhancements in risk management, including capital planning and stress testing across the range of risks firms face. But, in the remaining two areas of the Framework– less complex and better managed – I think it’s safe to say that despite the fact that firms are addressing a number of outstanding issues, these areas continue to present challenges in reaching the desired end state. As I’m sure you would agree, we collectively still have quite a bit of work to do to fully implement the changes required under new rules and regulations. While it is important to take stock of the changes made over the past few years – first, to assess the impact of those changes, both intended an unintended; and, second, to understand the contours of the “new” financial system operating under a plethora of new rules and regulations, both national and global in nature – we must acknowledge that some of the changes necessary have yet to be fully implemented. We must continue to devote sufficient attention and resources to complete the efforts. And, firms and supervisors will continue to face challenges and competing demands as we press ahead on reform efforts in the coming months and years.
Figure 1 Monetary Policy Interest Rate, Deposit Rate, and Forward Curve (percent) 12  12  10  10  8  8  6  6  4  4  2  2  0  0  Jan.08  May.08  180-day prime deposit rate  Sep.08 MPR  Jan.09 6 month forward rate  Source: Central Bank of Chile  BIS Review 35/2009  5  Figure 2 Lending Rate Spread over MPR and Other Financial Indicators (index, average Jan. 2002-Jul. 2007=1) 4.0  40  3.5  35  3.0  30  2.5  25  2.0  20  1.5  15  1.0  10  0.5  5  0.0  0  02  03  04  05  06  Lending spread over MPR  07  08  VIX (1)  09  Libor - OIS (2)  (1) The VIX index measures implied volatility in the U.S. stock market (2) Libor-OIS spread measures the difference between dollar financing cost for banks around the world and a measure of the expectation of the monetary policy rate in the U.S. Sources: Central Bank of Chile; Bloomberg.

Let me now turn to the challenges arising from greater financial globalisation and the growing importance of international cooperation in ensuring sustainable economic and financial integration across national borders. In this environment regulators are confronted with the challenge of adapting regulatory and legal norms from a nation-centric system to norms that are more reflective of international business and finance. The issue is how to complement the domestic agenda and the international agenda. Regulatory problems arise not only because of the need for domestic regulators – operating within diverse national regulatory norms and cultures – to cooperate and coordinate in the domestic environment but also across jurisdictions. Operational and legal issues in cross-border resolution arise where the regulatory frameworks of different countries do not provide for a common solution in areas such as the unwinding of financial transactions and the enforceability of secured parties' rights to collateral in the foreign jurisdiction. Failure to address such resolution issues promptly, generally within a matter of days, can lead to increased uncertainty and potential crossborder conflicts. Authorities must also have access to information that is not regularly  BIS Review 113/2009  3  exchanged in the normal course of supervisory cooperation. This needs to be supported by consistent requirements for the coordinated execution of regulatory actions. Equally important is an effective legal infrastructure for the mediation of claims against insolvent institutions with international operations Concurrence among regulatory authorities on key elements of effective resolutions would be an important step forward.
36 Dealing with the magnitude of financial cycles or bubble dynamics that economies typically face from time to time requires some absolute prudential limits. In Singapore, we have employed the following limits on property loans: •  Loan tenure cap of 35 years. BIS central bankers’ speeches  5  •  Loan-to-value ratios of 80%, 50%, and 40% for the first, second, and third property loans respectively, for tenures less than 30 years; for loan tenures more than 30 years, the loan-to-value ratios are 60%, 30%, and 20%. •  Total debt-service ratio of 60%, taking into account all debt obligations and using a medium-term interest rate of 3.5% for residential properties. (Current mortgage rates are generally below 2%.) •  Cap on banks’ property-related exposures at 35% of their total exposures. 37 In fact, macroprudential policies need not even be limited to prudential tools at the disposal of central banks or financial regulators. In the face of abundant global liquidity, credit-based prudential measures may not constrain loan growth or asset price increases sufficiently. Singapore has therefore also adopted fiscal measures such as stamp duties on buyers and sellers of properties as part of the macroprudential toolkit. •  The seller’s stamp duty ranges from 4% to 16%, while the buyer’s stamp duty ranges from 3% to 18%. •  These are essentially transactions taxes that aim to curb the speculative flipping of properties. 38 Third, it is important to draw a distinction between macroprudential policies and capital flow management measures.

4  BIS central bankers’ speeches  •  During a property boom, compared to interest rates, expectations of price appreciation may have a greater influence on current prices. •  Kenneth Kuttner and Illhyock Shim estimate that a 100 basis point increase in the short-term interest rate would lower real annualised credit growth by less than 1 percentage point in the following quarter. Such a rate hike will also reduce real housing price growth by only 1 percentage point. •  Using monetary policy to prick a property bubble may therefore require very sharp increases in interest rates to be effective. But this may have unintended spillovers on other parts of the economy. Macroprudential policy: targeting the cracks 30 This brings us to the third approach to securing financial stability: using macroprudential policy, while monetary policy continues to focus on price and output stability. Macro-prudential policies can be more effective for “targeting the cracks” where specific vulnerabilities are concentrated. 31 But what exactly are macroprudential policies? Given its recent rise to prominence, it is still a nebulous concept with differing definitions. Let me offer my thoughts on what macroprudential policy is and what it is not, from the perspective of Singapore, which has been an early experimenter and practitioner in this area. 32 First, it is closely related to yet distinct from microprudential policy. Some have called macroprudential policy “old wine in new bottles”. Yes and no.
One is with a major bank, which has agreed to stock a proportion of its ATMs with £ and examine what affect this change would have on its cash business. The results to date suggest that the business case for stocking some ATMs with £ is stronger than previously thought. At the same time, we have carried out a second pilot study. This has been focused on the business case for major retailers ordering more £ to use as change. A major supermarket chain has conducted a trial which involves supplying more £ to many of its stores. Again, the results appear to have been a success. Using more £ as change has appeared to slightly speed up the overall processing of payments at the checkout and appears to be well received by customers. I am very grateful to HSBC and Sainsbury’s for their help with these two pilots. In the New Year I hope and expect that we will take these examples to other financial institutions and major retailers to make the case for a change of policy towards issuing £ This is important because my assessment is that there is a good deal of aversion among the commercial sector to change in this area. Yet our evidence suggests that the public wants more of them and of a better quality. To achieve that objective we need to see more £ dispensed from ATMs and by retailers in change.

We have also constructed a consumer credit panel to track local household credit conditions, including the amount and type of personal debt and whether payments are being made in a timely way. In addition, we have a periodic poll about the credit needs of small businesses, which are an important source of new jobs. We are just launching our latest survey that also includes questions about the skill needs of small businesses and if the right kinds of skilled labor are available. Almost 900 regional businesses responded to our last poll, of which roughly 5 percent were from Long Island. If you, as part of a small business, would like to participate in our current poll, please pass your card to my colleagues, who are in the audience, or see me after the speech and we will be glad to add you as a respondent. In December, we hosted a workshop for small businesses in the New York City metro area to provide information about how they can export their products and services. The ExportImport Bank, the Small Business Administration and the U.S. Department of Commerce were on hand to tell participants how to tap demand in the global marketplace and what government programs are available to enhance credit and to increase lines of working capital. In 2012, we’re further developing our small business program. We hope to partner with many of you to support the small business sector. As you know, even states as wealthy as New York have large pockets of poverty.
In the context of a flexible exchange rate, access to forex hedging with the proper regulation and supervision is certainly important for the various players. Chile has made great advances in this area with a derivatives market that has increased as a fraction of GDP, being above the average of Latin America and other emerging economies. In this context, it is important to expand the information system of derivatives, which allows to further approve the internationally accepted standards to "Transaction Repositories", which are currently considered as important as other types of financial infrastructures, such as Central securities depositories, counterparty entities and payment systems. Summing up, we believe that there is a series of legal changes that will enable the Chilean financial system to improve its efficiency and stability, providing the necessary tools for agents to make better decisions and foster growth. This, together with monetary policy oriented at keeping inflation stable over the medium term, is the best contribution the Central Bank can make to our country’s development. Dear senators, In the second quarter of last year there was a change in Chile’s economic scenario, with sluggish demand and lower inflationary pressures, that were particularly visible in low numbers for activity and prices at the end of 2016 and early 2017. As incoming data allowed to gauge the nature and magnitude of this change, the Bank adjusted its monetary policy by cutting the policy rate by 100 bp in five months.

On the other hand, its implementation may be a bit too ambitious and a difficult task for our countries. Therefore it is in our interest to find ways to make it more suitable to our needs by following a gradual approach rather than jeopardising its success through an uninformed adoption. 1  According to Basel II, the assessment of the borrower’s credit risk will depend on the performance of the economy, whether it is in a upward or downward trend. In the worst case, when the economy will be wholly swept in recession, banks will have automatically either to increase the level of capital, or shift towards less risky assets, that most intuitively calls for a slow down to provide loans thus engendering credit crunch and further recession.
In addition, if issuers of stable coins also want to offer banking services such as deposits, financial investments and loans, then they will have to obtain a banking license in all countries where they operate. Otherwise these activities would be illegal. Stable coin projects reveal gaps in existing cross-border payment systems. Hence, at the European level, we should aim at promoting a genuine European strategy for retail payments. Payments are no longer a mere boring back-office technicality. They are innovative, and they provide two strategic assets: data, and daily customer relations. The raw truth however is that the European payments market is already dominated by non-European stakeholders. Furthermore, the growing role of non-European digital firms – be they American or Chinese – offering payments solutions should be taken seriously. Despite the creativity of the European ecosystem of payments, our market remains too fragmented. We don’t have much time left. We – the Eurosystem and the Banque de France – call for the creation of pan-European payment solutions, building on a common brand and on a state-of-the-art instant payment such as the Target Instant Payment Settlement infrastructure (TIPS) managed by the Eurosystem, and contributing to much more efficient international payments including for remittances. Some also suggest that the right answer to Libra is accelerating the creation of a Central Bank digital currency (CDBC). This is a scintillating subject, but a separate one.

In the normal case, a well-balanced monetary policy means that the inflation forecast is close to the inflation target a couple of years ahead at the same time as the forecast for inflation and the real economy (production, employment and unemployment) does not fluctuate excessively. It thus a question of finding an appropriate balance between stabilising inflation and stabilising the real economy and resource utilisation. The Riksbank therefore conducts what is generally referred to as flexible inflation targeting. One might think that it should be enough to simply compare the outcome for inflation with the inflation target when assessing monetary policy. But it is not that simple, for two reasons. The first is that it takes time for changes in the repo rate to have an effect on inflation and the real economy. During this period of time, shocks may occur that can push the economy in a different direction than was forecast. The monetary policy adopted may have been right, but the Riksbank is unlucky and unforeseen shocks lead to inflation deviating from the target. BIS Review 32/2010  1  The monetary policy adopted may have been wrong, but the Riksbank is lucky and unforeseen shocks nevertheless lead to inflation hitting the target. The second is that flexible inflation targeting means that the Riksbank strives not only to stabilise inflation around the inflation target but also to stabilise resource utilisation around a normal level. This can sometimes entail a difficult balancing act.