samchain/econo-pairs-v1 huggingface dataset:
However, these clauses create a sort of vicious circle. Indeed, rating agencies are expected to help borrowers to make informed decisions for future financing ; still, through these trigger clauses, rating decisions have an impact on the outstanding debt of borrowers, thus aggravating the situation of the debtor. •  The generalisation of credit risk hedging through short selling of stocks. Hedging is a key technique for a smooth functioning of financial markets. However, the use of new financial techniques to hedge has had unexpected consequences. Indeed, financial institutions have  2  BIS Review 62/2002  tended to hedge part of their credit exposure on borrowers by short selling stocks of their debtors. Doing so, they have hedged their risks but at the cost of a further deterioration of the overall situation of their debtor associated with the fall of their shares resulting from such sales. •  The marketing of saving instruments with capital protection feature. These instruments are based upon a built-in asymmetry : they offer the full participation in stock market capital gains and the protection against possible capital losses. Either the issuers of such instruments are not hedged, and enormous risks are concentrated on them. Or, more likely, they are hedging their risks and thus they contribute to amplify current trends, be it downward or upward. I have to be clear: all these techniques and instruments contribute to a better functioning of financial markets. For each and every market participant, they facilitate the management of credit and market risks.

Measures of global economic slack are good predictors of national inflation in advanced countries, as shown empirically e.g. by C. Borio and A. Filardo (2007), “Globalisation and inflation: New cross-country evidence on the global determinants of domestic inflation” BIS WP no. 227; and in New Keynesian open economy models e.g. by R. Clarida, J. Gali, and M. Gertler, (2002) “A Simple Framework for International Monetary Policy Analysis,” Journal of Monetary Economics 49: 879–904. BIS central bankers’ speeches  1  driving disinflation, and a notable increase in global shocks. Those global shocks are, however, overwhelming associated with oil and commodity price falls (Figure 1). As is well-known, global factors linked to oil and commodities should not, in principle, have any effect on price stability over the medium-term. They may have a lasting impact on the price level, but not on the rate of change of prices. All things being equal, lower prices for oil should, over time, lead to higher prices elsewhere as disposable income increases and overall demand from consumption and investment rises. In light of this, central banks typically choose to “look through” such global forces until their effect on inflation fades out or until prices reverse. As oil and commodity prices swings have opposing effects on output and inflation, monetary policy usually does not want to overreact and reinforce the effect on growth, in either direction.
The performance of the non-bank financial institutions has todate been fair as the Bank of Zambia continues to implement measures aimed at maintaining and enhancing the soundness of the financial system. Chairperson; when we met last year at Fringilla in Chisamba, I informed the participants to the 12th Media Seminar that further expansion in the banking sector was eminent, as some commercial banks had plans to re-open or indeed open more branches across the country, this has come to reality as most of you have seen the establishment of new branches by  2  BIS Review 113/2007  several banks. These developments are undoubtably a manifestation of the improving investment environment arising from consistent macroeconomic reforms reflected in enhanced macroeconomic stability. We have also continued to received inquiries from foreign banks that want to establish operations in our country. Under the Financial Sector Development Plan, implementation of activities has continued key among them being: a)  Sovereign rating for Zambia  The process of obtaining a sovereign rating for Zambia, being spearheaded by Government has made appreciable progress, with the completion of the Terms of Reference for the provision of advisory services and subsequent submission of Cabinet Memorandum for approval. The Sovereign rating is expected to compliment other government initiatives to promote foreign investment in the Zambian private sector and stimulate the development of domestic capital markets and investment by Zambians.

Let us continue as partners and provide checks and balances to each other for the good of our people. Let me, once again, welcome you to this Media Seminar and declare the Seminar officially open. I thank you for your attention. 4  BIS Review 113/2007
But, for today’s purposes, I shall take as my starting point a speech given by the previous Governor to the RICS in Paris in October 1989. You will recall that everything in the garden then seemed rosy. Cranes were everywhere on the horizon; there was an expectation that rents and capital values could only move upwards. Banks were developing innovative financing techniques and competing fiercely with one another to finance all this activity. Income returns were not out of the ordinary but the market was underpinned by the prospect of capital gain. 4 Yet some participants and commentators were beginning to have concerns about the scale of development. The Governor questioned whether there would be sufficient demand for the supply coming on stream. He noted too the banks’ rapidly growing exposure to the sector. The sector was quite simply heading for overcapacity and overgearing. Why did the lenders not see it coming? Perhaps inability or unwillingness to see the big picture was one reason - but more of that later. We have been asked quite often why we as the supervisor of banks did not stop them overlending. The answer remains the same. The banks have to be responsible for their own commercial decisions. We are there to protect their depositors, not their shareholders. But we can usefully draw their attention to gathering clouds - and that is what we did. 5 As we all know, the required level of demand did not materialise.

Poor investment or loan decisions will not be forgiven by inflation. This environment will alter attitudes to property, especially among users who will increasingly regard it purely as a factor of production subject to the full disciplines of cost controls. But lower nominal rents need not mean lower real income. 19 The second fundamental difference lies in the role, and potential, of the Private Finance Initiative. In many ways, the PFI simply reflects processes already underway in the private sector whereby occupiers are seeking more flexible arrangements and are prepared to pay a price for changing the traditional relationship between landlord and tenant. It opens up the possibilities for more imaginative use of property, and the principles are applicable both to public and private sector users of property. The providers of services, whether public sector or private, no longer want automatically to own the productive assets needed to provide them. They prefer to rent them instead with a higher level of service as part of the deal. Landlords with property expertise are well placed to provide this wider type of service and have a competitive advantage in doing so compared with less experienced operators. And maybe the word “property” will itself imply something too narrow. Owners will provide a working environment. They may move from “core and shell” to “finish and facilitate”. Indeed in some PFI cases the owners will go even further and operate as well, “provide and process” you might say. This would give outsourcing a new meaning.
Some say that macroprudential policy is a “blend of old and new” policy area, and even mention the Swedish credit regulations from the 1950s-1980s as an early example of macroprudential policy measures. 13 The “blend of old and new” also applies to the challenges 11  See, for instance, Borio, C. and White, W.R., “Whither monetary and financial stability? The implications of evolving policy regimes”, BIS Working Paper 147, 2004. 12  See, for instance, the speeches by Lars Nyberg “The mortgage market from a Riksbank perspective”, published on 11 November 2004, and “House price developments and monetary policy “, published on 19 December 2005, and my own speech “Introduction on monetary policy”, published on 26 October 2006. 13  See, for instance, Galati, G. and Moessner, R., “What do we know about the effects of macroprudential policy?”, DNB Working Paper no. 440, 2014. 6  BIS central bankers’ speeches  connected with the regulations. As I mentioned earlier, one reason for the deregulation of the Swedish credit market in the 1980s was that the effectiveness of the regulations was questioned. This was in turn because they were easy to circumvent. For example, the combination of a loan cap and negative real interest rates created large incentives for regulatory arbitrage, which led to the emergence of a “grey” credit market. A major challenge for today’s macroprudential policy is how one prevents “leakage” from regulations in a particular sector to other sectors not covered by the regulations.

25 The supply of credit increases, at the same time as interest rates are  24  For an overview of how complementary monetary policy functions, see De Graeve, F. and Lindé, J., “Effects of unconventional monetary policy: theory and evidence”, Economic Review 2015:1, Sveriges Riksbank or the article “The Riksbank’s complementary monetary policy measures”, Monetary Policy Report, February 2015, Sveriges Riksbank. 25  Some studies of the effects of complementary monetary policy in other countries include, for instance, Weale, M. and Wieladek, T. “What are the macroeconomic effects of asset Purchases”, External MPC Unit Discussion Paper No. 42, 2014, Bank of England, Gertler, M. and Karadi, P. “QE 1 vs. 2 vs. 3. . . : A Framework for Analyzing Large-Scale Asset Purchases as a Monetary Policy Tool”, International Journal of Central Banking,  10  BIS central bankers’ speeches  pushed down and the exchange rate weakens – aggregate demand in the economy increases. When the economy is stimulated, inflation gradually rises, as companies can charge higher prices and the lower unemployment pushes up wages. A weaker exchange rate also leads directly to higher inflation, as prices of imported consumer goods rise faster. Let me give an example of how the increase in the Riksbank’s balance sheet in the form of government bond purchases can spread throughout the economy. When we buy government bonds, those who sell them receive liquid funds in the form of their bank account balance instead of the bonds they previously held.
So as members of the Monetary Policy Committee we see it as more important than ever to make visits such as this so that we can talk to businesses face to face about the conditions they are experiencing on the ground. And every month our Agents in the regions, including the North West, give us a comprehensive report based on a large number of meetings with contacts in all sectors of the economy. 2009 is certain to be a difficult year for the UK and the global economy more generally. In the United Kingdom, we expect the sharpest fall in output for decades while on some measures, retail prices are likely to fall for the first time in almost half a century. We are not alone in our difficulties. Most of our major trading partners are also entering recession. A decade or more of remarkable macroeconomic stability; the Great Stability as economists called it, has come to a shuddering halt. These exceptional developments have led already to exceptional policy measures. Here in the United Kingdom, the government has set in train a fiscal expansion and has stepped in to support the banking system and lending. And earlier this month, we reduced official interest rates to an historic low of 1.5%. Similar measures have been taken overseas.

The sustainability of fiscal policy is very important for restoring confidence in Estonia and adopting the euro. When looking at the changes made in the budget this year and at the new fiscal strategy, it has to be pointed out that the support of fiscal policy to the economy was remarkable in 2008. The state budget swung from a 2.7% surplus to a deficit in the course of one year. This year, the share of state expenditures in GDP may rise to 43%. Thus, it is important to ensure fiscal sustainability this year and also in the next years. Thereafter reserves must be restored. In Eesti Pank's estimate this means an extra 7 billion kroon cut in addition to the curtailments already made. Actions related to fiscal policy must be decisive, but thoroughly considered. I am not so pessimistic as to absolutely agree with the opinion that the government has reached the stage where it faces just "bad and very bad solutions". But it is also clear that there is no simple or simplified way to rekindle growth. Measures need to be taken on both the revenue and the expenditure side. But I think it should be kept in mind that it is state expenditure that has soared over the past years. On the other hand, the tax burden that has been relatively stable so far is one of the main strengths of the Estonian economy, leaving sufficient room for private initiative. To conclude, I will repeat the main message of Eesti Pank's spring forecast.
When some investors sought to sell their shares in exchange for gold early in 1720s to secure their gains, the party came to an end. The bank attempted to persuade investors to accept banknotes instead, but this led to a sharp increase in the money supply. Inflation surged and in January 1720 it had exceeded 20 percent per month. In late spring 1720, the bubble burst. People lost all confidence in banknotes. Coins resumed their status as means of payment, and to the extent that bank-like institutions were established in France in the next 150 years banks were designated using other names such as “caisse”, “credit”, “sociétè” or “comptoir”. John Law was sacked and allegedly fled the country disguised as a woman. At about the same time a similar project in England led to the South Sea Bubble. Under an agreement between England and Spain in 1713, the South Sea Company was awarded a contract for delivering slaves to the Spanish territories in America. The South Sea Bubble also burst in 1720. In contrast to the Mississippi bubble, however, the South Sea Bubble involved extensive insider trading and fraud, and a reaction new and stricter financial regulation was introduced in England through the Bubble Act and Sir John Barnard's Act. There is a large body of literature dealing with these speculative bubbles in France and England in the early years of paper money, see for example Larry Neal (1990, 2011), “The rise of Financial Capitalism.

Although history never repeats itself exactly, some key features recur: one recurring feature is that boom periods are confused with an increase in the economy’s growth capacity. Good times are mistakenly interpreted as perfectly normal.15 When times are good, it is difficult to gain acceptance for setting aside funds. There are always unsolved tasks in a society, and these tasks attract attention. In the 1930s, Ragnar Frisch understood that it is difficult for politicians to recognise good times at the time. He believed that it was the task of economists to ascertain the cyclical situation.16 When the crisis arrived in 2007, government finances were in disorder. Deficits and debt rose to such high levels that it was difficult for many countries to borrow money. When credibility is lost and lenders draw the line, Keynesian policy has reached its limit. These countries now have no other choice than to cut welfare schemes and public spending. The political fury we are now witnessing in Athens, Madrid and Rome is being directed at today’s political leaders. Perhaps their rage should be directed at those who were in positions of responsibility in the good times, instead of at those who are now left with the washing-up. We have furthered our understanding of economics over the many decades since Keynes, Frisch and others laid the basis of modern economics after the 1930s crisis. Theories have become more advanced, and methods and calculations far more complex. We have reams of regulations.
Taken together, these actions helped to stabilize the core of our financial system, support the flow of credit to our economy, and counteract the damaging psychology that was taking hold. At the FOMC's direction, the Open Market Trading Desk (the Desk) at the New York Fed executed many of these policies at an historic scale through repos, asset purchases, and swaps with foreign central banks. To give you a sense of size, since mid-March, the Desk has made gross purchases of around $ trillion of Treasury securities and $ trillion of agency MBS, including agency CMBS for the first time. Outstanding repos and swaps peaked at nearly $ billion and $ billion, respectively. In addition, using emergency lending authorities under Section 13(3) of the Federal Reserve Act, the Fed has stood up 13 temporary credit and liquidity facilities. Each facility was launched with the approval of Treasury, and in most cases, with an explicit Treasury backstop against potential credit losses. The mechanics and targets of each facility differ, but the underlying purpose is fundamentally the same: to support the flow of credit to households, businesses of all sizes and structures, nonprofits, and state and local governments during a time of extraordinary stress. Why was it necessary to have so many facilities? Our financial system is highly complex, and these facilities backstop the various channels in which credit flows to borrowers in the economy, including through loans from banks and nonbanks, through securities issued in capital markets, and through securitizations.

Thank you, and I wish all of you a successful conference and a productive time at the SIRC and in Singapore. 6  BIS central bankers’ speeches
Through the NGFS we have been able to share practices and increase our understanding of the implications that climate change has for central banks and supervisors, contributing to the inclusion of these risks in our micro and macro-prudential supervisory 8  Official Monetary and Financial Institutions Forum. 4/5  frameworks. Notably, the NGFS has produced three key reports, which include recommendations not only for central banks and supervisors, but also the industry. We also have today with us the chairman of the NGFS, Mr. Frank Elderson, who is likewise a member of the SSM9 Supervisory Board, where we sit together. I am aware that Frank receives innumerable requests to speak on behalf of the NGFS, so I am also very grateful for his presence here today. Let me conclude. Climate change is a global phenomenon and all of these initiatives evidence the fact that cooperation is key. Of course, official institutions and governments must cooperate, but so too must the public and private sectors. We are all together in the same boat, this planet, so we must also learn and work together to achieve the same shared objective. The Banco de España is aware of the importance of this challenge, and is also developing its own strategy: it is analysing the possible implications of climate change for the stability of the Spanish financial system, assessing data gaps and developing the methodologies and responses it may adopt in its micro and macro-supervisory role.

Unfortunately, it would seem that it hasn´t been till recently that this call for action has been taken seriously. In his keynote presentation Lord Stern will shed some light on whether we are still in time to avoid the worst impact. Thank you very much for accompanying us today. Still, we shouldn´t forget that the fight against climate change also has a human and social dimension. The transition to a low-carbon economy must also be “fair” or “just” for the economic sectors most affected. This is one of the objectives of the 2030 Agenda for Sustainable Development, which commits to eradicate poverty and achieve sustainable development worldwide by 2030, ensuring that no one is left behind. The Agenda integrates in a balanced manner the three dimensions (economic, social and environmental) of sustainable development through seventeen Sustainable Development Goals. Ms. Cristina Gallach, High Commissioner for the 2030 Agenda, will moderate the panel that will follow Lord Stern´s presentation, and will share with us the progress that is being made in this respect. Thank you very much, Cristina, for being here today. I am sure we are all looking forward to hearing Lord Stern’s speech. But first, let me say a few more words about the implications that the transition to a low-carbon economy has for the financial sector, and the kind of actions that Supervisors and Central banks are taking to address this global challenge.
The underlying economic exposures involved are harder to assess in part because of the complexity of the instruments, the embedded leverage in many products and the difficulty of estimating correlations across different exposures. BIS Review 55/2006  1  For these reasons, the risk individual dealers attribute to exposures involving some types of credit derivatives exhibit a very large variance, substantially larger than one would typically find in measurements of traditional credit exposures. That variance illustrates the magnitude of the uncertainty involved in capturing the direct exposure in these markets. But perhaps the more difficult challenge is to capture the broader risks the institution might confront in conditions of a general deterioration in confidence in credit and an erosion in liquidity in these markets. This task, which is the province of stress testing and analysis of very low probability but extreme scenarios, is, of course, fundamentally difficult. The analytical challenge is magnified by the inherent difficulty in predicting how behavior changes in crisis, that is, how investors and counterparties would react to actual losses and the fear of future losses. This challenge is substantially more difficult in markets where there have been dramatic changes in the instruments involved, in the nature of the participants and in the structure of the markets. We tend to look more closely at things we can measure than those we cannot. We are drawn to approaches that offer the comfort of precision and tend to look past the wide band of uncertainty that surrounds those estimates.

Therefore, at times of such excessive domestic demand through fiscal dominance, the Central Bank of Sri Lanka intervened in the foreign exchange market to defend the exchange rate from depreciation. Although this was done with the good intention of maintaining macroeconomic stability in difficult times, experience 11  repeatedly showed that managing the exchange rate extensively was always associated with a substantial loss of limited international reserves followed by a large depreciation. The most recent of such events were in 2011/2012 and 2015. During the 2011/2012 episode, the Central Bank supplied US dollars 4.2 billion to the market on a net basis, while the Central Bank supplied US dollars 3.2 billion to the market on a net basis during the year 2015. In spite of these considerable losses of reserves, the rupee depreciated against the US dollar by 13.5 per cent by the end of the 2011/2012 episode and by 9.0 per cent during 2015. Since then, the Central Bank has explicitly announced that international reserves will not be used to defend an overvalued exchange rate. Instead, the Central Bank intervention in the foreign exchange market will aim to buildup international reserves. So far during 2017, the Central Bank has been able to purchase over US dollars 1.3 billion from the market on a net basis for this purpose, and improved market confidence is shown by the limited depreciation of the currency this year.