samchain/econo-pairs-v1 huggingface dataset:
Conduits and SIVs have no capital of their own, and they depend heavily on the liquidity support and credit enhancement from their sponsor banks, whose terms, and conditions, as I said, may  1  2  Market Liquidity and Short Term credit : The Financial Crisis of August 2007 ; 3 September 2007. BIS Review 128/2007  be variable and uncertain. And yet, they undertook maturity transformation on a significant scale. So those risks which materialized directly translated into liquidity shortage. Conversely, the reason why most hedge funds weathered the shock – at least until now – may be that they managed to strengthen their capital base by imposing strict redemption rules to their investors. Strong capital will not guarantee liquidity in all circumstances. There can be panics and sudden increases in the demand for liquidity. That's the job of Central Banks to help in those circumstances. But a strong capital base in the system – and in all its components – is likely to limit future liquidity shocks. In the period to come, Central Banks, regulators and market participants will debate on the ways and means to restore the securitized model on a robust and sound basis. The implementation of Basel II will bring significant improvements in the measure and management of risks. Had it been into place some years ago, we may have avoided some of the problems we currently face. Other evolutions in the regulatory environment and business practices may prove necessary.

There is, of course, a circularity involved, since liquidity depends on valuation, fair value must be based on a market price, and the ability to price an asset itself depends on sufficient liquidity in the market. The difficulty to get out of this circularity in periods of stress is currently creating significant uncertainty. Another example is risk measurement. In a securitized world, investors heavily depend on rating agencies for information about the risks attached to various instruments. These agencies have been strongly criticized recently. It is not my purpose to enter into any blame game. Suffice it to say that there has been a deep misunderstanding between investors and rating agencies as to the scope and true meaning of ratings. Most investors were not fully aware that rating did not encompass liquidity risk; nor did they realize that ratings for structured products were intrinsically more volatile than for more simple "plain vanilla" securities. The use of identical metrics for rating what are fundamentally different categories of assets certainly did not help and may have contributed to the confusion. Some observers have argued that investors should be faulted for relying too much on ratings. Instead, the argument goes, they should do their homework and put themselves in a position to directly assess risks. But it is doubtful that we can dispense of the rating process. If each and individual investor had to carry their own due diligence, the costs of gathering information would be prohibitive and this would introduce important frictions in the functioning of the market.
5  All speeches are available online at www.bankofengland.co.uk/speeches  5  With returns on a range of assets so low by historical standards, any signs that risks have declined and traditionally higher yielding assets are safer are tempting. And anyone looking for confirmation of such a bias can find it in recent performance. With low corporate default rates and low market volatility, portfolios of corporate bonds have outperformed cash and sovereign bonds (slide 8). But of course we know from the small print that the past is not always a good guide the future. So, as the Bank of England’s Financial Policy Committee stated in March: “…there are material risks associated with interest rate volatility. The principle risks are in debt markets.” 6  But are these a risk to the wider economy? It’s reassuring that easy conditions in markets have not led the corporate sector to take on an unusually high level of leverage. As a multiple of earnings, corporate debt in this country is around its long term average level. Nevertheless, developments in corporate debt bear close scrutiny, because we cannot take for granted that it will stay this way. The United States, where corporate debt levels have been testing previous highs, shows this to be more than a hypothetical possibility. The UK’s largest companies – those with access to capital markets – report that credit has become easily available. 7  Corporate debt in the UK has been growing at a not insignificant annual rate of 6.2%.

So our focus is on non-banks; on insurance companies, pension funds and investment funds of all sorts. The jury is out here too. I do not start from the presumption that there is an iceberg here. Our duty is to assess whether they could be one. 16  Carney, M. (2013), ‘The UK at the heart of a renewed globalisation’, available here. Even a user of derivatives to hedge another exposure – and thus having limited ‘VaR’ – could find themselves with significant ‘CaR’. It is the potential mismatch in liquidity, between the collateral called for and the assets held that is a source of firesale risk. In addition, as the IMF reports for a sample of funds, the majority of derivative exposures are entered into in order to boost returns rather than hedge existing risks. This would boost both VaR and CaR. 17  9  All speeches are available online at www.bankofengland.co.uk/speeches  9  But in order to assess properly the risks in this area we need much better diagnostic tools. So we are developing them. We are fortunate in being able to draw on data from Trade Repositories which now record all new derivative trades between counterparties and report each day on the outstanding positions between them. We are fortunate that these issues are the topic of international collaboration, with the International Organisation of Securities Commissions leading work to develop consistent measures of leverage – that incorporate derivatives usage – for investment funds.
The German government has announced a package of measures which aims to increase the share of renewable energy in Germany’s energy mix to 80% by 2030, up from an earlier target of 65%. Concerted action by policymakers, corporates, financial institutions, and individuals will be key in the drive to mitigate climate change. It is in the name of facilitating such concerted action, that we are gathered here today at the Green Swan Conference. The financial system can be a powerful lever to enable a credible and inclusive transition to net-zero. Central banks and financial regulators, whatever their mandates, have a role to play in greening the financial system to support the net-zero transition. It is this vision that led to the formation in 2017 of the Network of Central Banks and Regulators for Greening the Financial System, or NGFS. The NGFS has grown significantly, from 8 founding members to 114 today, representing a diverse group of advanced, emerging, and developing economies. The Network has accomplished much in the last four years, breaking new ground and providing valuable guidance on integrating climate and environmental risks into the work of supervisors and central banks. The integration of climate-related and environmental risks into financial stability monitoring and prudential supervision is becoming a reality. The next phase of the work of the NGFS is to move from awareness to action. The NGFS Glasgow Declaration, issued at COP26 in November last year, reiterated our commitment to expand and strengthen our collective efforts towards greening the financial system.

The model must be transparent and manageable  Norges Bank’s administration, management and Executive Board must be able to interpret and understand the model. It must not be perceived as a black box. It must have a theoretical structure so that we can easily examine the effects of alternative views of the economy’s functioning. 5. The model must reflect the Bank’s view  As a result of the modelling work, the Bank’s views on relationships in the economy will evolve. At the same time, we are developing a model with relationships that we have confidence in. Models will never provide us with a definitive answer. A model will always represent a simplification of reality. We must be pragmatic and exercise a good measure of judgement in addition. In my view, the most important role of models is to provide a framework and structure for the decision-making process, and to ensure that we do not change our views on the functioning of the economy without thorough reflection. BIS Review 36/2004  7  The use of models must also be seen in connection with the uncertainty associated with the actual state of the economy and the driving forces that dominate at a given point in time. It can be a demanding task in itself to find the balance between incorporating new information on the one hand and making abstraction of pure noise on the other. Allow me to illustrate.
Chart 8: LCFIs’ trading portfolios and financial leverage – 2007  Line of best fit  80 70 Total assets/Tier 1 Capital  UBS 60  Deutsche  SocGen Barclays BNP  50 40  RBS  30  Citi BofA  20  Credit Suisse HSBC JPM  10 0 0.0  0.1  0.2 0.3 0.4 0.5 0.6 T rading assets/total assets  0.7  0.8  Sources: Published accounts and Bank calculations  BIS Review 139/2009  17  Chart 9: Leverage and risk-taking in international banks – 2007 Total Adjuste d Asse ts/Tier 1 Capital 80  4% T 1 capital ratio  70 60  UBS  Deutsche  Credit Suisse  SocGen RBS BNP Citi Barclays  50 40 30  BoA  20 HSBC JPM  10 0  0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Risk We ighted Assets/Total Adjuste d Asse ts Sources: Published accounts and Bank calculations. Notes: These adjustments aim to ensure a common accounting treatment of exposures between US and European banks.

Andrew G Haldane: Banking on the state Paper by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, and Mr Piergiorgio Alessandri, based on a presentation delivered at the Federal Reserve Bank of Chicago twelfth annual International Banking Conference on “The International Financial Crisis: Have the Rules of Finance Changed?”, Chicago, 25 September 2009. Contributions and comments were provided by Paul Doran, Marius Jurgilas, Samuel Knott, Salina Ladha, Ouarda Merrouche, Filipa Sa, William Speller, Matthew Willison and Nick Vause. * 1. *  *  Introduction  Historically, the link between the state and the banking system has been umbilical. Starting with the first Italian banking houses in the 13th century, banks were financiers of the sovereign. Sovereign need was often greatest following war. The Bank of England was established at the end of the 17th century for just this purpose, financing the war debts of William III. From the earliest times, the relationship between banks and the state was often rocky. Sovereign default on loans was an everyday hazard for the banks, especially among states vanquished in war. Indeed, through the ages sovereign default has been the single biggest cause of banking collapse. 1 It led to the downfall of many of the founding Italian banks, including the Medici of Florence. As awareness of sovereign risk grew, banks began to charge higher loan rates to the sovereign than to commercial entities.
As Arrow and his team reviewed these  3  See “Little Hiring Seen by Small Business,” by Siobhan Hughes, Wall Street Journal, July 11, 2011  4  See Small Business Economic Trends survey, National Federation www.nfib.com/research-foundation/surveys/small-business-economic-trends. 5  See the Federal Open Market Committee meeting calendar, www.federalreserve.gov/monetarypolicy/fomccalendars.htm. BIS central bankers’ speeches  of  Independent  Business,  3  predictions, they confirmed statistically what you and I might just as easily have guessed: The Corps’ weather forecasts were no more useful than random rolls of a die. Understandably, the forecasters asked to be relieved of this seemingly futile duty. Arrow’s recollection of his superiors’ response was priceless: “The commanding general is well aware that the forecasts are no good. However, he needs them for planning purposes.”6 Keep Ken Arrow in mind when you hear economists tout precise forecasts carried out several places to the right of the decimal point. You may need economists’ forecasts for planning purposes, but you should always take them with a grain of salt, even when the time horizon is a short one. I will direct you to an article in the Feb. 14 Wall Street Journal as evidence. The Journal had polled 51 leading economists, and they forecast that gross domestic product (GDP) would expand 3.6 percent in that very same first quarter.7 Growth came in at 1.9 percent. When economists forecast we will have growth of, say 3.6 percent, remember they are saying .036.

Even surveys of small businesses – most recently, the U.S. Chamber of Commerce’s survey of companies with less than $ million in sales and fewer than 500 employees – indicate that fewer than 10 percent of small enterprises (which employ half of the private sector’s workers) are having problems accessing credit.3 The National Federation of Independent Business specifically noted just yesterday that “91 percent [of those surveyed in June] reported that all their credit needs were met or that they were not interested in borrowing.”4 U.S. banks and businesses are awash in liquidity. Adding more is not the answer to our problems. With monetary policy having reached the limits of accommodation, and the federal government at sixes and sevens, what then is the foreseeable economic outlook? Are we going to grow through the rest of the year and on into the next, or are we going to dip back into recession? Forecasting economic growth is not a precise business. Economics is an art form, not a science; it is very judgmental and subjective. The FOMC is composed of 17 thoughtful, introspective and deliberate men and women. Five of the members serve full time in Washington as Governors of the Federal Reserve Board, appointed by presidents of the United States with the approval of Congress.
Page 1 sur 7  8th International Insurance Conference: “Towards the insurance of tomorrow” – Paris, 14 October 2016 Speech by François Villeroy de Galhau, Chairman of the Autorité de Contrôle Prudentiel et de Résolution and Governor of the Banque de France  Ladies and gentlemen,  I am very happy to be here today for this 8th International Insurance Conference - the first to be organised under the aegis of the French Insurance Federation - and I would particularly like to extend my regards to the federation’s Chairman, Bernard Spitz, as well as to its vice-chairmen. Although I have met you all several times in the past year, this is the first time I have participated in an event in my capacity as Chairman of the ACPR, the Autorité de Contrôle Prudentiel et de Résolution. Rest assured that at the ACPR, I indeed we - regard the insurance sector as every bit as important as the banking sector. With a total of 826 licensed firms in France in 2015, oversight of the insurance sector is a vital part of our mission to safeguard financial stability – which, alongside monetary strategy and the provision of services to the economy, forms part of my threefold mandate as Governor of the Banque de France. Page 2 sur 7  As supervisors, we are concerned on a daily basis with the theme of this conference: the insurance industry of tomorrow. Indeed, given the speed at which things are evolving, tomorrow’s insurance landscape is already very much present today.

This has largely contributed to the emergence of an environment favorable to price stability and low unit production costs, strengthening the competitiveness of our European economy. Finally, all countries have experienced significant fiscal consolidation in the 1990s Enhanced European performances are also evidenced by the significant fiscal consolidation pursued in Europe in the 1990s. The general government deficit for the euro area fell by 3.5 percentage points between 1993 and 1997 and was brought back below the 3% threshold. Since then, deficits have continued to fall. The most recent data point to a public deficit of 1.2% of GDP for the euro area in 1999, down from 2.0% in 1998. Four countries of the euro area have managed to achieve a fiscal surplus since 1999. The fact that European member states have made significant efforts in order to improve their public finances does not mean that the process of fiscal consolidation is over. In fact, some member states, including France, still have some way to go to meet the Stability and Growth Pact goal of budget positions which are close to balance or in surplus. In addition, there is a need to further reduce government debt levels, which remained above 70% of GDP for the euro area.
(X) Essentially, the year 2010 is supposed to be some kind of “the day after”, or the year of “coming to our senses”, which will show that we became smarter after the crisis, that we learned enough from it, and that we are prepared to act differently. The question is, however, whether this comes true, not only due to defending particular interests, but also because not even others know exactly what to do. There is not much use in repeating generally known facts. The general pattern has lately been to inject liquidity and strengthen regulations. We, too, injected liquidity (over EUR 5 billion, in a very short term), but we had to relax regulations in order to activate it. So, the stereotype that in the period of expansion we implemented restrictive monetary policy and in recession we should adhere to expansive policy – does not apply. Our monetary policy has never been really restrictive, but was even hyper-expansive in 2009, although this was not reflected in the monetary statistics. The problem is evidently not in the quantity of money but in its allocation, i.e. the purpose for which it is spent, and the effects produced by such spending. This was not so obvious in the period of expansion (when there was enough money for everyone). At the time of recession  2  BIS Review 2/2010  and stagnation, the change in allocation has a key role. However, no significant changes are possible without the government playing its part.

Not only in terms of the substance but also in terms of building and maintaining support for the regime, the UK has been much better served by an objective expressed in terms of a target for inflation. It is easier to explain. But that leaves open the question of what role money should play in our analysis. Some commentators want money to be important in the transmission mechanism because, after all, inflation is a monetary phenomenon; others feel that it can be placed to one side on the grounds that it is essentially endogenous and, after all, the dual of the quantity of money – interest rates – is in our models (more or less). This is an area where, given our individualistic governance structure, views on the Committee cannot be expected to be monolithic. My own view is that it is useful to recover the concept of shifts in the supply of broad money. 32 But such shifts do not have much in common with the proverbial helicopter drop; households and firms are not forced to hold the extra money, but respond to the terms and conditions on deposits offered by banks. The consequences for the macroeconomic outlook therefore depend on the nature of the underlying shock. For example, if a shock – say to the monetary regime – caused perceptions of macroeconomic risk to decline, there could plausibly be shifts in both the supply of and demand for credit.
We are expecting that the measures taken by us and other authorities, both in Sweden and abroad, will contribute to the Swedish economy  BIS Review 23/2009  3  beginning a recovery next year. We are therefore expecting to begin raising the interest rate again towards the end of 2010, and fairly quickly, to just over 3 per cent at the end of our forecast period. Sharp deterioration in world economic activity… The main reason why we cut the repo rate and adjusted the interest rate forecast in this way is that economic activity has weakened both in Sweden and abroad – much more than we had expected in the assessment we made in December. To return to my ice skating metaphor – we were once again in a situation where conditions had changed so quickly that it was also necessary to change course significantly and at once. Households’ and companies’ expectations of future economic prospects are now as low as they were during the crisis in the 1990s. And since last autumn in principle all types of confidence indicators around the world have fallen substantially. Almost all statistics on economic activity published since our December assessment have been worse than expected. The situation looks particularly gloomy in the United States and the euro area, but prospects have deteriorated more or less around the world.

I want to talk a little about how we have been able to grow relatively strongly over the past couple of years despite very weak productivity growth; but why that is unlikely to be possible over the coming years. And why we expect productivity to improve – albeit moderately – in the future. And in doing so I will also talk about why the UK’s productivity performance has been so puzzlingly weak, not just in the depths of the crisis and recession but in the recovery and expansion that has been underway since the middle of 2013; and whether the boom and bust of the financial sector can help us to understand the UK’s recent productivity performance. The importance of productivity Productivity growth matters hugely. In the end it is the key determinant of rising living standards. For 18 centuries – from the year 1AD to 1800 when the industrial revolution started – living standards in the West were fairly stagnant. It is because of the step change in BIS central bankers’ speeches  1  productivity growth launched by the industrial revolution that living standards are now 20 times higher than they were then. 1 Increases in population and the labour force can make the national economy bigger. But in the end only productivity growth – producing more output relative to input – can consistently raise GDP per person. Central banks like the Bank of England foster monetary and financial stability, which support investment and productivity growth.