samchain/econo-pairs-v1 huggingface dataset:
When the central bank offers to buy illiquid long-term bonds, it increases the average liquidity of the private sector’s portfolio, replacing less liquid with more liquid securities. The private sector will therefore be more willing to hold other illiquid instruments, such as private sector bonds and equities. As a result, liquidity premia fall across a broad category of securities, raising their market value. That will stimulate spending by firms and consumers.17 Such a policy is preferable to conventional open market purchases of short-term bills or bonds because when interest rates are zero such bills become perfect substitutes for cash. Hence purchases of short bonds have no effect on spending or other real variables. It is a short step to show that this argument implies an equivalence proposition between unconventional quantitative operations, on the one hand, and a combination of neutral conventional operations and government debt management, on the other. The purchase of a long-term bond by the central bank is equivalent to a combination of two other operations: a purchase of a short-term bill, followed by an operation that swaps the short-term bill for the long term bond. In either case, the central bank balance sheet ends up with an additional liability in cash, and an additional asset in longterm bonds. The first of these two operations, the purchase of a short-term bill, is neutral in its effect as it replaces one private sector asset, a short-term bill, with another, cash, that is a perfect substitute for it.

This is because uncertainty is reduced as market expectations are formed using a more superior set of information. And third, being more transparent also helps raise the quality of central banks’ own works which directly contributes to enhancing their credibility. However, despite the positive benefits, there are occasions when there would be arguments for central banks to go less than full transparency, especially with regards to their market operations. This is because transparency is not only about providing information as the academia normally assume. But transparency is also about how a central bank is being seen or being known in its operations in financial markets. Hence, for its operations to be effective, sometimes less-than-full transparency can be more efficient, for example, in the foreign exchange markets. Therefore, from practical considerations, the rationale for limiting central bank transparency includes: First, legal requirements and the risk of impinging on personal privacy, as well as for reasons of market or commercial sensitivity and public interest; Second, the risk of compromising the decision-making process; for example, saying too much or giving out too much information about what went on in the policy meetings; Third, too much information can also be tricky because of the risk of misinterpretation. This is because one cannot assume that all markets are efficient in processing the same information; Fourth, in central bank operations, elements of surprise can be useful on occasion; And fifth, central banks being what we are should reserve the right to act.
The most frequently acquired product in Spain is the credit card, followed by personal loans. Here, too, there are significant differences in the acquisition of savings products based on educational level and on the level of income, which are less marked in the case of debt products. Thus, in the case of interviewees with a university education, 32% acquire savings products, while in the case of those with primary schooling, only 8% acquire them. By level of income, 43% of those who live in a household with income of over € acquire savings vehicles while only 8% do so in households with income of up to € Finally, the Survey also enables information to be had on the use of financial products: in particular, on one hand, on whether interviewees have saved over the past 12 months and, if so, using which savings vehicle; and, on the other, whether the household’s spending has exceeded its income over this period and, if so, how they financed it the last time this happened. This information shows that, as regards saving, 61% of interviewees have been saving in the past 12 months. The percentage increases in terms of educational level and level of income. One noteworthy feature is that the second most common method of saving, behind the current account, is cash, even in the highest educational and income segments. In particular, 38% of interviewees who save do so in cash. Only 14% do so via a savings account and 11% via a pension scheme.

In 2015 only 4% of CSRs were fully implemented, down from 7% in 2014. In some countries excessive economic imbalances 4  BIS central bankers’ speeches  persist and could harm other Member States. More can be done to improve national implementation and I see a lot of merit in the IMF's proposal that CSRs should be linked to outcome-based benchmarks that are concrete, measurable, and clearly linked to the ultimate reform objective[28]. The dismal implementation record of the CSRs nevertheless suggests that a governance framework that envisages European economic policy priorities being legitimised and implemented at national level has its limits. Looking forward, we will need to engage in a process at European level, based on shared institutions, that provides both economic resilience and the appropriate legitimacy. In such a process, consensus would be needed on (i) the policy areas that are crucial to preserve the resilience of the euro area, and on (ii) designating those policy areas as shared competences with democratic legitimisation at European level. And as I have said before, getting there will require both economic and political convergence. The success of the Single Market is one of the few uncontroversial achievements of the EU. It has shown that shared competences can be used to implement economic policies that lead to greater prosperity in each country and, at the same time, ensure greater resilience of the euro area and the EU as a whole. We should build on it if we want to make further progress.
In this way, expectations can have an impact on actual inflation, which risks reducing expectations further, and so on, in a self-reinforcing negative process. It can be very difficult to get out of this situation. This is how the rapid cuts in the repo rate since the middle of 2014, and the purchases of government bonds that have recently been a complementary part of monetary policy, should be regarded. The Riksbank is the authority that has the explicit responsibility for attaining the inflation target. Although we must also act to ensure the financial system is stable and functions efficiently, through the wording in the Sveriges Riksbank Act on “promoting a safe and efficient payments system”, the latter is a task that we share with the Government, Finansinspektionen and the Swedish National Debt Office. And the first line of defence with regard to counteracting the emergence of financial imbalances is macroprudential policy, including the tools for which Finansinspektionen has been given chief responsibility. Finansinspektionen’s mandate and tools for macroprudential policy need clarification in law It is therefore very unfortunate that there appear to be doubts with regard to the legal possibility for Finansinspektionen to use some of the tools – as in the case of the amortisation requirement. 2 The decision to give Finansinspektionen the responsibility for macroprudential policy was preceded by a fairly intensive debate, where other possible solutions were also discussed. One can therefore assume that the decision finally reached actually reflects the solution desired from a political point of view.

Low interest rates entail risks Increasing debt levels and rising housing prices The low interest rates contribute to household debt as a percentage of disposable income continuing to increase and to housing prices continuing to rise. This creates risks that can threaten future economic developments. If there were to be an economic slowdown for any reason, this could be significantly strengthened when indebted households are forced to cut back on consumption and other expenditure, particularly if housing prices were also to fall in connection with this. It is therefore important that household debts do not continue to increase. Their debts have increased more than their disposable incomes since the middle of the 1990s and the debt ratio is now at just over 170 per cent, which is a record-high level, see Figure 13. As can be seen in Figure 14, housing prices, and especially prices of tenant-owned apartments, have risen sharply in the past ten years. Prices of tenant-owned apartments have more than doubled since 2005. We can also see that prices of tenant-owned apartments have increased substantially in relation to the consumer price index in the past ten years, but even in relation to disposable income the increase is significant. This development indicates that there are structural problems in the Swedish housing market. The fact that the rental market functions poorly is a problem. Another problem is that too little housing is being built.
The global roadshows of the Government sukuk will also provide an ideal opportunity for us to reach out to global investors and showcase our credit strengths and Islamic finance capability. 16. As the Government’s representative under the Government Bond Programme, the HKMA is now working closely with the Government to prepare for the inaugural issuance of Government sukuk. A detailed issuance plan is being devised with reference to international practices and market conditions. According to our current plan, the inaugural Government sukuk would be based on the Ijarah structure and target institutional investors globally. What’s in it for fund raisers to issue sukuk? 17. As I have mentioned earlier, the key objective of the Government sukuk is to play a catalytic role, paving the way for local and international fund-raisers, no matter from the public or private sector, to follow suit. 18. For the potential sukuk issuers sitting here today, you may wonder what benefits you will get by issuing sukuk. Well, let me highlight two key benefits here. 19. First, you would be able to broaden your investor base. By issuing conventional bonds, you will only be able to tap conventional investors. But by issuing sukuk, you will be able to get both conventional and Islamic investors to participate. In particular, issuing sukuk will help you to gain access to the large pool of liquidity in the Middle East and other Islamic countries, where investors are progressively looking for Shariah-compliant assets in this part of the world.

For that, structural reforms are necessary – at national and European level. At the same time, structural problems are making monetary policy less effective in the euro area. In this context, it seems very odd to me that politicians are now criticising the European Central Bank. This endangers our independence and undermines trust. I would like to see a political class that has the courage to lead public opinion. Politicians who have the confidence to explain to voters that a fully fledged European monetary union is not without an alternative, but that it is worthwhile – even if it’s proving difficult to get there. But once the idea and the reality of the euro are back in harmony, then Eurosceptic voices will not find many listeners. I am convinced of this. BIS central bankers’ speeches  5
Data on the unsecured market segment are published every six to eight weeks. With this project the ECB took an important step towards the future, becoming a collector of “big data”. But, of course, we didn’t do this on our own. A tale of cooperation Cooperation is often mentioned at conferences like this one. But in the field of statistics, it is simply a reality that you won’t get very far if you don’t cooperate with others. Projects such as the MMSR would never have come into being without good cooperation. In fact, the genesis of the MMSR involved the central banks of four countries – Germany, France, Italy and Spain – and the ECB. And of course, these institutions needed to cooperate with reporting banks. And cooperation happens not only between institutions, but also within institutions: the constant feedback loop between departments using the data and those preparing them leads to highquality results. But smooth cooperation has helped us from the start. It allowed the Eurosystem to achieve its objectives from day one, 20 years ago. Thanks to a joint effort by the entire Eurosystem, we had a set of harmonised euro area statistics from the very beginning of the ECB’s existence. And some 16 years later, when European banking supervision came into being, the Directorate General Statistics was able to provide the supervisory data we needed right from the start – thanks to another joint effort. Indeed, as the ECB’s functions have expanded, statistics have had to follow.

This, therefore, does not mean less regulation. As the strength of individual institutions is often the first line of defence against any crisis, the responsibility is therefore increasingly on the board and management of individual institutions to strengthen the resilience of the institutions. The Central Bank’s focus is increasingly on the need for banking institutions to adopt and promote good governance, integrity, strong internal controls and risk management practices. Greater regulatory scrutiny is undertaken to ensure that the shareholders, board of directors and management of banking institutions are “fit and proper” and have the capacity to discharge their responsibilities and accountabilities. This is reinforced by greater transparency and disclosure requirements. Integrity and transparency is critical for financial institutions to gain public trust and investor confidence. Strategic ICT investment as driver for performance Ladies and Gentlemen: In an era where advancements in technology have significant impact on our daily activities, we are constantly presented with the challenge to make decisions on the best ICT products that will meet our preferences and requirements. Similarly, in the financial industry, advancements in ICT have certainly had a significant impact on how businesses operate and on the landscape that they operate in. The financial services industry is one of the single largest users of technology. The rapid advancement of technology will indeed continue to drive improvements in the banking system, particularly new technology with respect to information management systems, product development, risk management and delivery of products and services.
Svein Gjedrem: Monetary policy and the economic outlook Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at SR-banken, Stavanger, 19 March 2004. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 11 March, Inflation Report 1/04 and on previous speeches. The Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The target is symmetrical - it is just as important to avoid an inflation rate that is too low as an inflation rate that is too high. The inflation target provides economic agents with an anchor for inflation expectations. It therefore influences their decisions concerning saving, investment, budgets and wages. History shows that there is no long-term trade-off between lower unemployment or stronger economic growth and higher inflation. We witnessed this in the 1980s when growth was low and inflation high. The task of monetary policy is to provide a nominal anchor. Low and stable inflation is such an anchor. There are several reasons why it is an advantage for inflation to be higher than zero: •  The structure of the economy is in flux. Demand for labour with different qualifications is changing. This requires changes in relative wages. There are rigidities in nominal wage growth.

This also applies to Rogaland. In recent year, non-residential investment has accounted for more than a third of total investment in services and distributive trades. The large investments in this sector in the latter half of the 1990s has led to a high non-residential vacancy rate. Statistics Norway’s new price index for non-residential commercial property shows that in Norway as a whole, prices peaked in the first half of 2001 and have since fallen by over 9 per cent up to the first half of 2003. This situation is likely to curb overall investment growth in the years ahead. In 2004, many companies will probably realise the gains provided by the efficiency measures that have been implemented. Continued brisk growth in household demand is expected to boost investment activity in 2005 and 2006. Petroleum investment will also increase as a result of the Orme Lange project. This is also the case for Rogaland. Our regional network reports that demand is on the increase, the market outlook for the next six months is favourable and corporate profitability has improved considerably. The economic upturn is primarily being reinforced and driven by stronger household demand, although without any substantial increase in investment or employment. The upturn has both broadened out and gained momentum in the past months. All sectors report stable or increasing demand and sales. The market outlook for the next six months in this county is very positive. Optimism does not translate into a stronger willingness to invest, however.
In the wording of the Treaty, the ECB is requested to contribute to the smooth conduct of policies pursued by the competent authorities with respect to the prudential supervision of credit institutions and the stability of the financial system. Furthermore, the ECB’s financial stability function is also related to its responsibility for overseeing financial market infrastructures. The legal framework under which the ECB collects statistical data has in fact recently been extended to expressly recognise its powers to collect data for this purpose. BIS central bankers’ speeches  1  In 2011 the EU institutional framework was revised to explicitly address both macro and micro-prudential supervision. This led to the establishment of the European System of Financial Supervision, the three new European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB). The ECB is in charge of providing analytical and statistical support to the ESRB, notably by collecting and processing information that feeds into discussions within the ESRB. 1 3. What has been achieved so far? In recognition of an increasingly interconnected financial system, considerable progress is being made in the enhancement and development of new statistics at the euro area, EU and global level. At the euro area level, improvements in ECB statistics are notable with regard to, in particular, the development of enhanced statistics relating to monetary financial institutions (MFIs) and to shadow banking (e.g. securitisation vehicles).

There is no consistent framework at the EU level for collecting data on the use of these instruments, but attempts to limit information gaps on this topic in the EU are under way, possibly by means of ad hoc surveys under the aegis of the ESRB. 6. Concluding remarks  As mentioned earlier in my remarks today, data challenges would be far more modest, and the need for supervisory information reduced, if the level of public disclosure, the quality and the accessibility of, and consistency in, financial public reporting were more satisfactory. This would also benefit market participants at large – notably by reducing uncertainty with respect to counterparties. Further encouragement and guidance by national authorities (in addition to another FSB initiative on disclosure) could be provided to improve the financial reporting of institutions and to enhance the quality of disclosures. 6  BIS central bankers’ speeches  On another front, the establishment of a common legal entity identifier (LEI) that is applied universally should contribute greatly to the quality of macro-prudential analysis. It would, for example, facilitate the aggregation of the single-name counterparty risk at the level of the system and can, for example, help in the identification of the building-up of concentrations towards single counterparties. Unique identification codes at the EU level will be valuable for meaningful data aggregations, and would allow the use of this information for macroprudential purposes.
This has required the adoption of a strategy to permit banks to use their own internal measurement approaches – subject to quantitative and qualitative criteria and, on a transitional basis, to a minimum or floor capital charge. Assessing and validating different internal risk mitigation measures would be a regulatory challenge. 13. The Basel Committee has put forward a framework consisting of three options for calculating operational risk capital charges in a ‘continuum’ of increasing sophistication and risk sensitivity. There are three approaches under Pillar I: (i) the Basic Indicator Approach for Operational Risk I, which requires a flat rate of 15% or a fixed percentage of gross annual income; (ii) the Standardized Approach for Operational Risk II which requires a risk charge based on annual income per each business line, multiplied by a risk factor per business line; and (iii) Advanced Measurement Approach for Operational Risk III which requires full reliance on bank’s internal risk management system subject to supervisory review. Many Central Banks including the Central Bank of Sri Lanka propose to initially allow banks to adopt the Basic Indicator Approach for computing regulatory capital for operational risk. They are expected to move along the range towards more sophisticated approaches as they develop acceptable operational risk management systems and practices, which meet the prescribed qualifying criteria.

Undoubtedly, it would require commitment of substantial capital and human resources on the part of banks and the supervisors. For banks, the main challenges appear to be the skills shortages and data inadequacies coupled with uncertainties regarding costs associated with implementation. Banks all over the world have started to voice concerns over the mounting regulatory costs. It is a regulatory responsibility to encourage banks to have a phased implementation programme starting from a traditional baseline scenario of identification of operational risks, assessment, and awareness monitoring and integrating these elements over a period. Basle II implementation and operational risk mitigation process puts heavy burden on supervisors to detect problems in banks, to stay on top of the latest advances in risk management and to avoid abuses of many powers that are given to supervisors. All these are too much for supervisors to bear as many of us are still on the learning curve. Exchange of information both within and outside the region would be very important particularly in capacity building for evaluation and validation of risk assessment models of banks. This seminar is one such joint effort by the Central Bank of Sri Lanka  BIS Review 88/2005  3  and the SEACEN Centre, which would provide a good opportunity to exchange information and learn from each other. 16. Basel II is expected to foster financial stability through its risk sensitive framework through encouragement of banks to adopt improved risk management practices.