samchain/econo-pairs-v1 huggingface dataset:
As we have witnessed in some cases in the recent past, the holding of these securities by individuals entails problems in a context of crisis, turning them even into an obstacle for the institution’s “resolvability”. And that is exactly the opposite of what the rule originally sought. The Banco de España is determined to prevent this type of past situation from recurring. We should not make the same mistakes again. For these reasons, the challenge of covering these issues is greater for smaller-sized banks, which have a scant presence on the markets and are more geared to the retail segment. I think it is important that banks, in particular those with less access to the markets, should take advantage of those windows in which investors’ appetite for this type of asset increases, so as to bring forward as far as possible the issuance calendar. One final aspect I wish to mention is the cost of these issues and of liabilities in general. The latest Banco de España Financial Stability Report offers the findings of a study on European banks which conclude that the higher the level of the CET1 capital ratio, the lower debt issuance costs are. 9/15  This effect increases as debt instruments become more akin to capital instruments. As can be seen in the chart, if the CET1 ratio increases by 1 pp, a 0.3% reduction may be expected in the cost of issuing instruments eligible as Tier 1.

That might sound flippant; but the fact is that if anyone were to read certain statements for the first time, they might reach the conclusion that raising solvency levels entails all kinds of problems. As I said earlier, profitability and capital should go hand in hand. But the flattening in solvency ratios has come about against the background of a sustained decline in lending, not an increase therein. If we analyse the change in CET1 capital ratios since the start-up of the SSM, we see that in 2014 Spanish banks had average levels below the European average, very similar to those of French banks and indeed higher than those of Italian banks. Yet at the end of this period our banks show levels clearly below those of both these countries. It would be worth reflecting on why our banks – which initially showed lower solvency levels than the European average and which, moreover, have maintained higher average profitability than their peer group – should have seen not only a reduction in the starting difference in solvency levels, but also a widening in this difference. Unlike their counterparts, Spanish banks have not been able to offset the erosion in CET1 brought about by the gradual entry into force of Basel III with increases in capital or reserves. Clearly, our banks consider that, since the launch of the SSM, the demands placed on them in respect of capital needs have been very great.
In addition, the GFXC hopes to develop a framework that can assist market participants to review or develop their client disclosures, and to identify any challenges to appropriate transparency. 13 Third, to continue to embed and integrate the Code into the FX market. A survey was conducted by the GFXC last year, to assess the industry’s baseline in Code awareness and adoption. We plan to conduct another survey later this year, to see how market participants are embedding the Code and how practices and behaviours have evolved. This survey will be rolled out across the key FX jurisdictions likely through the FXC network. We look forward to your active participation when the survey is rolled out. From the survey findings, we hope to identify ways to deepen adoption and broaden awareness over time and across jurisdictions. 14 These efforts need the support of you as market participants, and we hope that you can do 3/5  BIS central bankers' speeches  your part in promoting the good practices set out in the Code, from your respective vantage points and positions within the FX market. Singapore’s approach 15 Last year, I shared that the Singapore Foreign Exchange Market Committee (or SFEMC) has taken on the responsibility to promote and encourage adherence to the Code in Singapore. 16 Given Singapore’s position as the preeminent FX centre within the Asian time zone, it is important for us to continue to take a leading role in adopting the Code.

Therefore, financial literacy can be seen as a key element for a wellfunctioning economic system and thus as a prerequisite for sustainable economic growth and financial wellbeing of individuals. The establishment of the Ad-Hoc Committee to prepare the National Strategy for Financial Literacy in Cyprus Recognising the seriousness of the issue, state authorities around the globe have taken actions in order to enhance financial literacy among the wider population. A typical response to the challenge, is the establishment of a National Strategy for financial literacy in which a number of public and private stakeholders are involved. Up until recently, no such organised effort had been initiated in the case of Cyprus. Even though a number of initiatives have been undertaken by various stakeholders, these significant and valuable efforts have been limited in scope and without the necessary coordination for a truly effective impact on society as a whole. To this end, following an invitation by the Parliamentary Committee of Education and Culture, an Ad-Hoc Committee for the formulation of a National Strategy for the Promotion of Financial Literacy and Financial Education in Cyprus was established in December 2020. The Committee consists of members from the Central Bank of Cyprus (CBC), which also has the coordinating role, the Ministry of Finance, the Ministry of Education, the  1/4  BIS - Central bankers' speeches  Cyprus Securities and Exchange Commission, Dr Panayiotis Andreou (Cyprus University of Technology) and Dr Andreas Milidonis (University of Cyprus). The Committee receives administrative and analytical support from the CBC.
As a result, central banks which have been mandated by sovereigns to issue currency grow like an inverted pyramid: with a very low base as capital and reserves at the bottom and substantially high level of acquired assets through money creation at the top. This pushes a central bank to a very high risk level, when it is viewed from the point of solvency, since an overgrown central bank may not have sufficient assets to discharge its liabilities in a crisis situation. Exter, having known this fundamental risk faced by a central bank, made provisions in the Monetary Law Act to automatically hide the seigniorage. In terms of these provisions, the printed currency stock in the vaults of the central bank does not become a part of its assets. When currency is issued, it becomes a part of its liabilities with a corresponding asset created in its books. However, when that asset is liquidated, currency issued earlier comes back to the central bank and such currency is taken out of its books by deducting it from the currency issue. Thus, the accounting system prescribed in the Monetary Law Act does not take into account the profits made by the bank in its currency issue. The cost is simply charged to the income account of the bank and eliminated from the books. On the currency issued, the Central Bank makes a seigniorage.

He made this point clear in his Report as follows: “The danger that a government will make use of the power of a central bank to overexpand credit is a real one and might appear a strong argument against having a central bank at all. But, as already indicated, if a government wishes to engage in the irresponsible creation of money, it can do so without a central bank. Paper money has come to stay. The only real safeguard against its abuse is responsible government”. So the blame should not go to Exter. It is the absence of responsible governments that would erode the value of money through excessive creation of central bank credit. An example for such irresponsibility could be found in a reported statement by Robert Mugabe, President of Zimbabwe that, if money is not found for projects, he would print the same, at a time when inflation was rising at more than 4500 % in his country. (Time, 13 Aug 2007) Elimination of the seigniorage from the books of accounts The issue of paper based fiat money at a fractional cost of the face value has enabled sovereigns to earn a substantial profit known as the seigniorage. Since there is no requirement for the issuer to back such money with an equivalent reserve, there is no limit to the issue of money by a sovereign.
But if failure is orderly, and does not compromise our public policy objectives, the responsibility should rest with the board and management for failing to serve the private interest of their shareholders and creditors. Last on the theme of failure, having firms that are either too big or too important to fail is bad for competition in the industries that we regulate. An industry where exit is too difficult is one where entry is likewise inhibited. This is what we see in the banking industry. Embedding resolution into the public policy objectives of financial regulation matters for two reasons relevant to competition: first, because, to repeat, exit enables entry; and, second, because if, as we will, we require new entrants to satisfy us on their resolvability in order to be authorised, we will lower the barriers and costs of opening for business. Put simply, if we don’t know how to deal with a failed firm, we will inevitably set a higher barrier to entry. We have already started to put this new approach into operation. Resolution of failed firms consistent with the public policy objectives is one key plank of the new approach to financial regulation. Another key plank concerns the macro prudential approach to regulation. The legislation has formally established the Financial Policy Committee (FPC) charged with the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system.

Similarly, we hope that this MAS office can also cater to the needs of the larger Chinese financial community by enhancing understanding and contacts with Singapore and the regional markets, as thereby contribute in our own small way to the continued development of China’s financial sector. 2  BIS central bankers’ speeches  Concluding Remarks 18 On behalf of all my colleagues in MAS, I would like to express our strongest appreciation to the People’s Bank of China for their approval and support for MAS’ representative office in Beijing. 19 We look forward to taking full advantage of this milestone collaboration to deepen our financial and economic cooperation and take our bilateral relations to new heights. 20  Thank you. BIS central bankers’ speeches  3
First, balance sheet policies can serve as a signaling device that strengthens forward guidance and reduces expectations for the path of short-term interest rates. Putting actions behind its words—either through new asset purchases or by maintaining reinvestments—helps the central bank to establish a credible commitment to maintaining monetary easing.33 Second, balance sheet actions transmit through a portfolio balance channel, which—through the stock effect I described earlier—reduces term and risk premiums embedded in bond yields by reducing the supply of long-term bonds in the market. Many studies conclude that this channel is likely the dominant one.

The Fed also used coupon swaps to settle some agency MBS purchases under its first purchase program. (A coupon swap is the simultaneous sale of one agency MBS and purchase of another agency MBS, which may have a different coupon, issuer, or both.) 29 See Minutes of the Federal Open Market Committee, August 10, 2010 and Minutes of the Federal Open Market  Committee, September 20–21, 2011. 30 The FOMC suspended Treasury rollovers from July 2012 through December 2012, when it continued the MEP. At that time, redeeming Treasury securities expanded the Fed’s scope to lengthen the maturity profile of its Treasury securities portfolio. 31 See the paper cited earlier by Ben S. Bernanke, “Monetary Policy in a New Era.” 32 See Eric M. Engen, Thomas Laubach, and David Reifschneider, “The Macroeconomic Effects of the Federal  Reserve’s Unconventional Monetary Policies,” Board of Governors of the Federal Reserve System Finance and Economics Discussion Series, no. 2015–005, January 2015. The authors found that the gradual nature of accompanying revisions to the FOMC’s policy expectations may have limited the effectiveness of forward guidance and asset purchases. However, in a future crisis, market participants will have the benefit of the current episode in assessing the FOMC’s likely response, leading to a faster adjustment of expectations. 33 The importance of a credible commitment for maintaining accommodative policy when the zero lower bound is  reached is explored in Gauti Eggertsson and Michael Woodford, “The Zero Bound on Interest Rates and Optimal Monetary Policy,” Brookings Papers on Economic Activity, no.
Banks serve as custodians for the public’s wealth and as intermediaries of credit to consumers and businesses alike. No bank can discharge those duties for long if it lacks sufficient capital. When capital is exhausted, the bank fails, leaving public authorities – and taxpayers – responsible for making depositors whole again. The 1988 Basel Accord established the the first internationally accepted definition and measure of bank capital. In many ways, the 1988 Basel Accord was a tremendous success story. Perhaps because it was simple to apply, it was adopted in over 100 countries, including most of the countries represented here today. As a result, it became acknowledged as one of the benchmark measures of a bank’s financial health. While the simplicity of the 1988 Accord was an asset in promoting its acceptance, today its simplicity is quickly becoming a liability for some bankers and supervisors alike. Over the past 16 years, the methodologies for measuring and managing risk have evolved in ways that the architects of the 1988 Accord could not have anticipated. For one, advances in technology, telecommunications, and markets have changed the way that banks collect, measure, and manage their risks. Having gained experience in quantifying exposures to market risk, leading banks today are quantifying and using increasingly reliable estimates of the credit risk associated with particular borrowers.

Of course, we recognise that the objectives we are seeking cannot be achieved overnight and that they are dependent on building good relations and trust between supervisors. As part of this effort, the AIG will be meeting again with the Core Principles Liaison Group’s working group on capital in the  BIS Review 33/2004  7  middle of this month. Among other things, the two groups will discuss cross-border issues and case studies and will exchange current thinking on implementation strategies. I believe that each and every effort and initiative to improve communications between supervisors around the world should be strongly encouraged. 4. Moving to the New Framework  These are just a few examples of how Basel II has been improved to make it more suitable for national circumstances and domestic banking systems in many countries. The members of the Committee and I recognise, and we have consistently stressed, that only national authorities can decide when to adopt Basel II. Adopting Basel II on the same timetable as the member countries of the Basel Committee is not feasible for all countries. In fact, Basel II may be a lesser priority compared to other ongoing efforts to promote the fundamentals of safety and soundness in each country’s banking system. All of us must think long and hard about the state of our markets, our banking systems, and our supervisory structures to determine when we are ready to adopt the new approach to banking supervision that Basel II implies.
On the one hand, economists at the Bank for International Settlements and others (e.g. Borio and White, 2003; Cecchetti, Genberg and Wadhwani, 2002) advocated “leaning against the wind” by raising interest rates above that apparently warranted by inflation and activity. On the other hand, the Federal Reserve espoused a policy of “benign neglect” coupled with aggressive relaxation in the event that asset prices fell sharply (see e.g. Greenspan, 2002; Bernanke and Gertler, 2001) on the grounds that identifying an asset price bubble in its early stages was difficult and trying to deflate an established one was dangerous. The events of the past couple of years have clearly tipped the balance in favour of taking pre-emptive action. And in a second-best world, where monetary policy is the only instrument available to cool a credit/asset-price boom, then that may well make sense. Indeed, an inflation-targeting central bank ought to be willing to undershoot its target in the medium term, if it thereby improves its chance of meeting the target further out through the avoidance of a disruptive bust (Bean, 2003). But monetary policy is a blunt weapon for this purpose, and raising interest rates enough to cool a credit/asset-price boom that is in full swing is likely to involve substantial collateral damage to real activity. Instead, with an additional objective in the shape of credit growth/asset prices one really needs another instrument that has a stronger and more direct impact on credit growth and asset price inflation than monetary policy.

As much of these efforts will involve interface with other parts of the public sector, it has been my experience that the participation of the Central Bank in many of these agendas will require careful boundary management and a signing off when it is completed so that it does not remain permanently with the Central Bank. New institutional arrangements will need to be developed to render effective coordination across the public sector. Of great importance in this process is also to carefully safeguard the independence of the Central Bank. Conclusion As policy makers in emerging economies, we have the added responsibility of building institutions for the country. Our quest is filled with challenges but we can learn much from each other. Going forward, the transitions that are taking place in the global economy necessitate continuous institutional building at the national, regional and international level. A regional institution such as SEACEN has an important role in enhancing future talents, facilitating the sharing of knowledge, ideas and insights on policy management in the region and from its research on subjects important to the region. In conclusion, allow me to express my deep gratitude and appreciation to my fellow governors and to all my colleagues at the SEACEN member Central Banks and to SEACEN for all the cooperation and support that has been extended to me and to Bank Negara Malaysia throughout my career. For the friendship and for the collaboration, it has truly been enriching and special for me.
Looking forward, roles of Asian banks as intermediary could be diminished on the back of the growing capital markets and shadow banking, which includes not only traditional ones like asset management companies and savings cooperatives, but also more modern ones like crowd-funding and peer-to-peer lending. Capital account liberalization will also lead to asset diversification abroad. Banks’ funding sources are likely prone to be more vulnerable and volatile, with the increasing interconnectedness between banks, non-banks and capital markets. After many years of consolidating our financial systems after the Asian financial crisis, technology could fragment our financial systems in an unprecedented way. Regulatory arbitrage could lead to pockets of vulnerability, particularly in the less-regulated or unregulated areas of shadow banking. Ladies and gentlemen, the need for rapid transformation in Asia is not limited to only banks and financial institutions. Changing technology, changing demographic structure, and changing global operating environment also necessitate that Asian businesses transform themselves to be able to compete in the new environment, where productivity is key. In addition, they need to improve their risk management and immunity to be able to cope with increasing volatility and uncertainties of the modern world. It is also crucial that Asian banks and businesses understand developments in the society at large that could affect their operating environment, chief among these is income inequality.

With regard to developments in the euro area, the situation is slightly different. There, the growth forecast for 2003 has been revised down further during the second half of the year and it is only very recently that some positive economic signals could be distinguished. However, it is quite clear that growth in the euro countries was much poorer during 2003 than we believed it would be at the beginning of the year. All in all, we have made an upward revision to our international growth forecast for not only 2003, but also 2004 and 2005. The assessment in the December Inflation Report was that growth in the OECD area would be around 2 per cent in 2003 and then rise to 2.9 per cent in 2004 and 2.7 per cent in 2005. The new information that has become available since December confirms the original picture of the global economy, as our next monetary policy meeting approaches. The monetary policy decision in December was based on the assessment that the growth rate of the Swedish economy would gradually improve from 1.5 per cent in 2003 to 2.5 per cent in 2004 and 2005. So far, the new information received is consistent with this view. The significance of the labour market for inflation forecasts Developments in the labour market are very important for our inflation forecasts and we have had to revise our forecasts on several occasions over the past year. Employment measured as the number of people in work was on average as expected in 2003.