samchain/econo-pairs-v1 huggingface dataset:
Our assessment of international economic developments over the next few quarters has remained largely unchanged since September. The SNB expects the moderate pace of global growth to continue in 2017. It is thus likely that the economic situation will continue to improve, particularly in the euro area, and that inflation will also pick up somewhat. Page 2/5  Berne, 15 December 2016 Thomas Jordan  News conference  Our baseline scenario for the global economy is still subject to considerable risks, however. Structural problems in a number of advanced economies – such as a fragile financial system, high public debt and low growth potential – could negatively affect the outlook. Added to this are a multitude of political uncertainties. First, it is unclear what direction economic policy in the US will take following the presidential election. Second, several countries in the euro area have important elections coming up in 2017. And third, exit negotiations between the UK and the EU are likely to be complex and arduous. Swiss economic outlook  I shall now turn to the economic outlook for Switzerland. According to an initial quarterly estimate, GDP in Switzerland grew at an annualised rate of 0.2% in the third quarter. This small increase must also be seen in the context of high growth in the second quarter. Year-on-year, GDP rose by 1.3% in the third quarter. Initial quarterly estimates of the national accounts are uncertain by definition. The SNB therefore takes a wide range of additional information into account when assessing the economic situation.

News conference  Berne, 15 December 2016 Thomas Jordan  Introductory remarks by Thomas Jordan  Ladies and gentlemen It is a pleasure for me to welcome you to the Swiss National Bank’s news conference. I will begin by explaining our monetary policy decision and our assessment of the economic situation. I will then hand over to Fritz Zurbrügg, who will speak about current developments in the area of financial stability and announce the dates for the release of the new 20-franc banknote. After that, Andréa Maechler will review the situation on the financial markets and discuss the impact of negative interest on the money and capital markets. Finally, we will – as ever – be pleased to take your questions. Monetary policy decision  Let me begin with our monetary policy decision and the inflation forecast. Our monetary policy remains expansionary and continues to be based on two elements: the negative interest rate and our willingness to intervene in the foreign exchange market. We are leaving interest on sight deposits at the SNB at –0.75% and the target range for the threemonth Libor will remain unchanged at between –1.25% and –0.25%. At the same time, we will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. The SNB’s expansionary monetary policy is aimed at stabilising price developments and supporting economic activity.
For example, the BIS was one of the first to emphasise that low and stable inflation does not necessarily imply macroeconomic stability and a reduced risk for financial crises, see for example Borio and Lowe (2002) and White (2006). However, contributions were not only made by the BIS in this context. Rajan (2005) is another example. 19 I discussed this case in a speech last year, see Jansson (2016). 12 [20]  difficult to attain. Sooner or later, confidence in the inflation target would be lost, bringing us back to the problems I just outlined. More fundamental problems with a monetary policy that focuses on financial stability There are also other reasons why a monetary policy that focuses heavily on attempting to counteract the accumulation of financial imbalances may be problematic. I have just addressed one of these, namely that fairly large rate rises may be required to slow down, for example, a rapid increase of debt. Even if the effect of this on inflation is not considered so important, it is more difficult to disregard that the effect on output and employment could be significant. The issue can also be considered from a more general perspective. Thinking about it, it would be quite strange if the main way of preventing financial crises was to hold monetary policy tighter than could be justified by basic economic prospects.

When we felt that this confidence was in the process of becoming undermined in 2014 and early 2015, we made the assessment that there was no other option than to increase the pace of repo rate cuts to clarify that the focus was entirely on inflation. Accordingly there was no longer any scope to use the repo rate to attempt to influence debts and housing prices. In this respect too, the Riksbank has been a forerunner in the world of central banking, albeit unintentionally. As far as I know, no other central bank applying a policy that uses its interest rate to counteract the build-up of financial imbalances, such as Norges Bank, has had to make such a clear and important choice. Having said this, I now also see more fundamental problems with a monetary policy that leans against the wind, even when there is confidence in the inflation target. I will return to this at the end of this speech. Consequently, my interpretation of Sweden’s experiences so far is that a policy that leans against the wind has its limitations. For example, it seems, at least under certain circumstances, that the policy rate would have to be set quite a lot higher to effectively dampen the increase of debt. But such a policy could slow down the economy as a whole quite seriously and risk leading to inflation falling significantly below target for a long period.
Structural macroprudential objectives motivate regulatory tools such as additional capital requirements for systemically important banks (“SIFI surcharges”), which aim to reduce the probability that a large institution fails, and resolution and recovery planning, which seeks to limit the damage in the event of failure. The second set of macroprudential objectives are cyclical objectives, focusing on the build-up of risks during credit and asset price booms and the consequent pull-back in financial intermediation during periods of stress. Cyclical macroprudential goals motivate regulatory and supervisory tools that “lean against the wind” in good times and “lean into the wind” during stress, such as the countercyclical capital buffer, the design of stress test scenarios, and time-varying loan-to-value restrictions, which are imposed in some countries. The macroprudential objectives of the SCAP reflected both structural and cyclical concerns. The primary goal was to ensure that large banks had sufficient capital to withstand an even-worsethan-expected economic downturn and still be able to lend—a structural perspective. Each of the 19 banks was required to raise additional capital if the stress tests indicated a shortfall relative to the supervisory target. However, the SCAP’s objectives also embodied cyclical concerns, namely, to provide confidence that banks could continue current lending (“leaning into the wind”) and thus reduce the likelihood of a worse-than-expected economic outcome. In the paper, we identified six elements that we argued made the SCAP a successful macroprudential exercise: comprehensiveness; consistency; multiple, independent estimates; diverse perspectives; transparency of process and results; and clear and predictable goals and actions.

In the extreme, these incentives could result in “model monoculture,” in which all actors use very closely related models.6 This risk becomes especially acute the more is known about the details of the supervisory models. A lack of modeling diversity would be especially concerning from a macroprudential perspective, since it would mean that the entire industry would be capturing the same risks in the same way —a form of collective blindness to new industry practices and products and emerging risk developments. As important, banks have incentives to optimize around the stress test and other risk models, engaging in strategies that maximize returns while minimizing measured risk exposures. Widespread use of very similar models could mean widespread loading on the same kind of risks and adopting the same hedging or mitigation techniques—increasing systemic risk. A final concern that I want to mention is based less in economic theory and more on the practical realities of implementing and updating regulations. The more stress test models are “hard coded” in regulation, the more difficult it is to change them as modeling practices improve or as new risks emerge. The models and parameters can quickly become stale and inferences from the models inaccurate.
In the early summer, we invited a representative sample of firms to confirm whether their preparations were on track. The response we received was broadly reassuring, though some of their preparations are dependent on decisions about the euro markets which have yet to be taken, as I shall explain in a moment. But the key point is that the urgency of the need to prepare is now widely recognised. The Bank of England is playing a substantive role in the preparations in two complementary ways. Through our very active participation in the work of the EMI, we aim to make sure that the design of EMU, at least so far as the operations of the ECB are concerned, is capable of being delivered in a technical sense. That is the test that we have applied, for example, to the work of the EMI on the implementation of monetary policy and on the so-called changeover scenario. John Townend talked about this yesterday. Our other role is to co-ordinate the preparations for the introduction of the euro in the City of London, to the extent that co-ordination is required. The Bank’s role in helping the financial sector to prepare for the euro was recognised and reconfirmed by the Chancellor this summer when he launched his complementary initiative to begin preparing the business community for the euro.

As an example, I would like to mention the work carried out by the ACPR with representatives of digital asset service providers (DASPs) on theapplication of  anti-money laundering and counter-terrorism financing (AML/CFT) rules to the cryptoasset sector. As you have understood from these examples, at the Banque de France and the ACPRwe cannot envisage taking action without interacting with the innovative financial ecosystem that you largely represent. 3. This brings me to my last point: what are the challenges that we must not miss collectively? I would particularly like to emphasize here the issues related to the regulatory framework for the transformation of the financial system. The digital finance strategy published by the European Commission is already a year old and the roadmap includes many useful and structuring projects for the future. Already, the discussions on the MICA (crypto-assets) and DORA (operational resilience) projects illustrate the need to reconcile professionals’ knowledge and operational realities  with the general risk control objectives in order to achieve the balance between innovation and financial stability that I mentioned earlier. From my point of view as a supervisor, progress still needs to be made on these texts to reconcile the necessary pragmatism and the necessary flexibility that the search for this balance implies with the requirement for risk control and the prevention of regulatory arbitrage. However, the projects that will be launched in the future are no less crucial.
If we are to move forward, we will certainly need leaders with your third quality: your statesmanship. I have witnessed this in action during many long nights in Brussels and at global meetings. There is much I have come to admire in you at such times. You are a formidable negotiator, yet I have always known you to be fair and straight, allowing points of difference to be identified and solutions to be found. One of the qualities I cherish is that you are a straight-talker. You speak “Klartext”, as you say in German. Your directness has always been married with loyalty and kindness, however. You know that successful diplomacy is built not through sheer force of personality, but through shared understanding with one’s partners, and especially within Europe. There were times during the crisis when you had to take tough decisions. You spoke recently of your sadness for those who have suffered, and said that you often think about how we could have done things differently. 5 That is the mark of a true statesman: the capacity to examine profoundly the best course of action, while avoiding false certainty. Wolfgang, for the past two years you have taken on a new role as President of the Bundestag. It is a step that befits a life dedicated to German and European democracy. Yet again, you are the 2/3  BIS central bankers' speeches  right person, in the right place, at the right time.

There is much concern today about the rise of extreme views and the coarsening of political discourse. But displaying your characteristic sangfroid, you have reminded us to be confident in ourselves and in the resilience of our democratic institutions. As you have said, “our free, democratic system based on the rule of law is so strong that nobody can wreck it, neither from within nor from without. Anybody who tries will fail.”6 I believe this is a message all of Europe needs to hear today. A message of strength, resolve and courage. A call to remember our better selves and not to allow self-doubt to drag us down. This is the message that rings loud from your career, Wolfgang. For you, in the spirit of Max Weber, politics has always been more than a “Beruf”, it has been a “Berufung”. Not just a profession, but a calling. Germany and Europe have been blessed by this calling. Thank you. 1 Interview with the Tageszeitung. 21 January 2012. 2 According to the latest Eurobarometer survey, June 2019. 3 Schäuble-Lamers Paper, 1 September 1994. 4 Interview with the Financial Times, 6 October 2017. 5 Interview with the Financial Times, 22 March 2019. 6 Interview with Bild am Sonntag, 3 October 2017. 3/3  BIS central bankers' speeches
In order to give appropriate consideration to financial stability aspects, we feel that the SNB should be involved in regulatory procedures at an early stage. In other words, in the conceptual phase. The authorities responsible for issuing financial market regulations should, therefore, be obliged to consult with the SNB early on in the process. Thirdly, the National Bank must have clearly defined decision-making powers with regard to regulations that either bear direct relation to monetary policy or to emergency liquidity assistance. I would like to take two current regulatory proposals to explain more clearly what I mean: the countercyclical capital buffer and the implementation of the TBTF regulations. The countercyclical capital buffer represents a capital requirement that can be adjusted over time. This buffer will be introduced within the framework of Basel III and has the important tasks of protecting the banking sector from the risks posed by excessive lending and of curbing the banking sector’s procyclical behaviour. In the event of excessive growth in lending, the capital requirement can be increased; then when growth in lending is weak, it can be lowered again or even reduced to zero. The countercyclical capital buffer thus has a direct impact on banks’ lending activities and can, as a result, strengthen or weaken the effect of the SNB’s monetary policy significantly. Therefore, whoever determines the level of this buffer also influences the effect of monetary policy.

I would therefore encourage as many market participants as possible to begin to use the Association’s new documentation. This should help to boost the liquidity of the primary market in syndicated loans, but it should also serve to increase turnover in the secondary market which is still relatively underdeveloped in Hong Kong. It is easier to trade a product whose terms and conditions are homogeneous. The Association’s intention to move on in the second phase of its project to develop standardised documentation for secondary loan trading will give further impetus to this market. This is something that the HKMA would particularly welcome since it would give banks greater flexibility to manage their loan portfolios and adjust their liquidity. Apart from its impact on the market as a whole, standardised documentation has clear benefits at the level of the individual firm. Lending banks are better protected against the risk that contracts will turn out to be unenforceable, and that they will be left with a credit exposure that they did not anticipate. Moreover, the whole process of negotiating loans becomes more streamlined. There should not be a need to haggle over the standard “boilerplate” of the loan agreement, so that resources can be freed up to concentrate on the issues that are unique to the particular transaction. The reduction in the number of idiosyncratic terms and conditions also means that the loan should be easier and safer to administer after the loan agreement is signed. Operational risk is therefore reduced. Nor are the benefits one-sided.
8/16  BIS - Central bankers' speeches  Given the loss in FY22/23, no contribution will be accrued but the Government will still receive $ billion this FY, based on the contribution accrued for FY20/21 when MAS recorded net profits. However, MAS is unlikely to be able to contribute to the Consolidated Fund over the next few years. We will need to generate future profits exceeding the cumulative losses in the latest two FYs of $ billion, before we can resume contributions to the Consolidated Fund. Second, the loss recorded by MAS will not affect the Government's ability to spend up to 50% of the expected long-term real returns on the net assets invested by MAS. As with GIC and Temasek, up to 50% of the expected long-term real returns on the net assets invested by MAS are available for spending by the Government under the Net Investment Returns framework. Under this framework, the expected long-term real rate of return on MAS' net assets is not affected by any single year's investment performance. This rate of return is reviewed annually and is subject to the President's concurrence. To ensure that MAS remains well-capitalised relative to its assets, MAS increased its issued and paid-up capital by $ billion to $ billion in FY22/23. The last time that MAS' capital was increased was in FY11/12, from $ billion to $ billion. As a fully owned subsidiary of the Government, MAS returns a portion of its net profits from time to time, taking into account its capital and reserves.

The yield curve of federal government bonds, which is used by banks as a benchmark for the interest rates they set for their clients, has significantly increased for maturities of up to three years, while staying almost unchanged in the long end. The rise in short-term yields reflects both our recent decisions and market expectations regarding the future key rate path. Shifts in long-term yields are minor. Among other things, this is an evidence of market participants’ confidence that monetary policy will finally bring inflation back to the target. I would like to reiterate that these are long-term interest rates, rather than our key rate as such (as is often stated), that determine the affordability of credit for companies’ investment purposes and of mortgage loans. As compared to yields on federal government bonds, interest rates on loans and deposits have responded more slowly and rose less significantly. Our today’s decision is aimed at accelerating this process. An increase in interest rates will help restore households’ propensity to save. Growth in retail and corporate lending is close to its highest rates recorded in recent years. Many borrowers seek to take out loans as soon as possible at lower interest rates. We have raised our lending growth forecast for this year. Mortgage lending will continue to expand fast, while slightly decelerating after the amendments to the subsidised mortgage lending programme become effective. Speaking of unsecured consumer lending, we can already observe the first signs of overheating. This lending segment has been growing faster than we forecast in April.
Project Meridian9 – our joint initiative with the BIS Innovation Hub London centre – will prototype and test end-to-end flow of synchronised settlement, which could be used for different trades such as securities and foreign exchange. This project will provide meaningful insights to make our RTGS systems more interoperable. The third topic of the consultation is how we can maintain and enhance the resilience of RTGSin light of the rapidly changing environment leveraging technology to enhance resilience. We will consider evolving or replacing our back-up settlement site and enabling CHAPS to act as 4/6  BIS central bankers' speeches  a contingency for critical retail payments. The consultation is an important opportunity for the whole industry to help us shape our long-term roadmap, and to evolve the platform to continue to meet the needs for current and future users. The Bank will decide how to take forward and to prioritise the options in the paper taking into account its public policy objectives and the costs and benefits for industry. How we can work together as an international community The ongoing upgrades to national payments infrastructure can help enable the private sector to deliver improved payment services. But the financial system is global. With cross-border payments set to total £ trillion by 202710, many of the most important issues require collaboration between jurisdictions. We are working closely with our international colleagues to enhance cross-border payments.

With the support provided through expertise and funds, the agreed programme with the IMF has aimed at drawing up an appropriate monetary and fiscal policy mix, correcting fiscal imbalances, improving the balance sheets of economic agents, and implementing an ambitious structural reforms programme, to support the long-term development of Albania. The Bank of Albania assesses that the Arrangement has achieved its major objectives: correcting structural imbalances and setting the country on a steadier path to longterm development. Economic growth has been improving in the recent years, driven – among others – by the combination of the monetary stimulus and fiscal consolidation, reduction of risk premiums in the economy and improvement of the balance sheets in the real sector of the economy. From a longer-term perspective, the structural reforms and the improved business climate should open the way for faster, more balanced and stable growth. In addition, excluding the effects of supply-side shocks, inflation has trended upward recently. The improvement of economic activity, implementation of a prudent monetary policy and a better anchoring of inflation expectations render us confident for the stable return of inflation to our 3% target. Lastly, Albania has made notable progress with regard to strengthening other economic and financial equilibriums. Safety nets in the financial system have been strengthened. The institutional framework that shapes the coordination, design and implementation of measures for safeguarding financial stability has been improved. The legal framework that disciplines contract enforcement has been improved.