samchain/econo-pairs-v1 huggingface dataset:
We are still dealing with this legacy: for instance, Swiss franc loans, even though accounting for a much lower share of total credit than in neighbouring countries, proved troublesome in the wake of the recent CHF appreciation. Second, implementing the unorthodox measures has also proven very difficult from the communication perspective. These measures proved difficult to explain to the public at large, which saw them as preventing improvements in welfare, and also to the commercial banks themselves, which – as I said earlier – were protesting against what they saw as an uncalled for injunction into their activity. On top of that, we had a tough time explaining our policies even to the ECB. Fortunately, President Trichet understood why we had to take the unusual monetary policy approach, acknowledging that the standard policy consensus was not enough to deal with the challenges a small open economy had to face amid a flood of capital. Third, the exit from these measures has not been easy. While the post-crisis environment provided an opportunity to gradually normalize the reserve requirements levels (thus supplying an additional counter-cyclical tool), they remain high by European standards. However, despite all these obstacles, I think the resort to unconventional policy instruments had 3 major advantages. BIS central bankers’ speeches  3  I would name first the fact that they certainly managed to limit the size of the disequilibria.

However, for the saving glut to result in growing imbalances, net savings have to be more and more asymmetrically distributed across nations. In addition, for more than a decade now, capital has been continuously flowing “uphill”, i.e. from poor to rich countries with current accounts surpluses in emerging economies mirrored in growing deficits in the US. This is one of the most salient and puzzling features of modern economic history and has attracted a lot of attention. Some explanations focus on the domestic drivers of private saving behaviours in both emerging and advanced economies. Cyclical factors, such as productivity shocks, or fiscal policies, have likely played a role (Bussière et al. 2010, and Henriksen and Lambert, 2009) But this can only be part of the story. It may well be that saving / investment imbalances are endogenous to the system itself.. According to the “Bretton Woods II” approach (Dooley et al. 2003, 2008, 2009), the pattern of capital flows results from a mutually beneficial equilibrium between two groups of countries. On the one hand, emerging economies which follow an export-led development strategy and seek to prevent appreciation of their real exchange rates by constant foreign exchange intervention (together with capital controls). As a consequence, they accept to accumulate increasing stocks of liquid assets denominated in dollars. On the other hand, the US is happy to get both reserve inflows to finance their deficits and cheap imports to fuel their demand for consumption goods.
Then I will look at monetary and financial conditions and the SNB’s monetary policy. In the third quarter of 2012, global economic growth remained weak, while the volume of international foreign trade actually declined. A mild recession persisted in the euro area, and Japan recorded strongly negative growth figures. In the US, growth was supported by private consumption as well as the improvement in residential construction investment. The situation varied in the emerging economies. In some countries, there was scarcely any improvement in economic momentum, while in others – such as China – a supportive economic policy led to some consolidation. BIS central bankers’ speeches  1  We still expect that the global economy as a whole will gradually recover. However, we have adjusted our forecast for 2013 slightly down from the last monetary policy assessment. This revision mainly affects the short-term outlook for the euro area. We expect that the euro area will only emerge from the recession during the course of 2013. In the US, the moderate recovery is likely to continue, partly as a result of the favourable developments in residential construction. In the emerging economies, growth should continue to gain momentum. The downside risks for the global economy remain high. The crisis in the euro area continues to weigh on the economic outlook. In September, the ECB initiated a new securities purchasing programme, Outright Monetary Transactions.

Although this announcement substantially reduced the probability of extreme events and led to an easing in the financial and credit markets, the economic situation in the monetary union remains vulnerable and the level of uncertainty is still considerable. A further source of uncertainty are the upcoming fiscal decisions in the US. Swiss economic outlook In Switzerland, real GDP in the third quarter increased again following a downturn, due to a temporary recovery in exports. For the fourth quarter, however, we again expect significant weakening in growth. Consequently, economic growth for this year is likely to come to around 1.0%, as forecast to date. For 2013, we expect growth of 1.0–1.5%. While the gradual revival in the global economy is having a supportive effect, the strength of the Swiss franc will hold back export momentum and corporate investment expenditure. Domestic demand is also likely to be restrained over the next few quarters. In view of the modest pace of growth, production capacity in Switzerland will probably remain underutilised in 2013. The rate of unemployment is likely to rise further. Given the fragility of global conditions, the downside risks also remain high for Switzerland. Monetary and financial conditions I will now turn to monetary and financial conditions, which are almost unchanged as compared to the situation in summer 2012. Interest rates in the Swiss franc money market continue to fluctuate around zero. Since mid-June, the three-month Libor has fallen from some 9 basis points to only 1 basis point. Interest rates in the repo market are predominantly negative.
Jean-Pierre Danthine: Resilience of Swiss banks from a financial stability perspective Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the Media News Conference of the Swiss National Bank, Berne, 12 December 2013. *  *  *  In my remarks, I would like to look at the situation at Swiss banks from a financial stability perspective, taking the big banks first and then moving on to a discussion of domestically focused banks. To close, I will say a few words on the subject of banknotes. Big banks: strengthening resilience Since the last media news conference in June, the two Swiss big banks have improved their capital situation further. This applies particularly to their risk-weighted capital ratios, where, in an international comparison, they are above the average for large global banks. Credit Suisse, for example, has already met the requirement of 13% loss-absorbing capital to risk-weighted assets, which comes into force in 2019. According to its published plans, UBS should be able to meet this target by the end of 2014. As regards total capital – which, in addition to loss-absorbing capital, also comprises low-trigger contingent capital instruments – the big banks have also made great progress; however, they have not yet achieved the ratios that will apply from 2019. Unweighted capital ratios – leverage ratios – generate a different picture.

It aims to help people find out more about the notes and coins they use every day. On this occasion, though, there’s something new. The highlight today is the brand new ten euro note. It’s the first time it has been on public display since it was unveiled to the media just two days ago at the ECB in Frankfurt. That means you’ll be one of the first to see this new note before it starts circulating on 23 September this year. The new ten euro is part of what we call the Europa series of banknotes. It’s named after the figure from Greek mythology whose portrait is included in the hologram and the watermark on the notes. Take a closer look at those two security features in the exhibition, as well as the distinctive emerald number, which changes colour from green to deep blue when you tilt the note. They’re all examples of how we have used advanced technologies to make the notes even more secure. The security features will keep us well ahead of counterfeiters – and justify the confidence that the people of the euro area have in their money. There’s a lot more to be seen in this exhibition, which I hope you will all find as interesting and entertaining as I did. So without further ado, allow me to declare it open. BIS central bankers’ speeches  1
But that retreat from globalisation would also have a cost in inefficiency and restraints on the flows of capital between countries. We should not forget that the last decade of free financial markets has been a time of great progress across the developing world in Asia, Eastern Europe and South America. But the process of building up national controls is already underway in many countries including even the UK which has long been one of the most open economies for capital and ownership. It will continue unless we can convince each other that much better structures for cooperation and coordination are in place. That is an acute problem within the EU where the single market is based on a common passport. But dealing with the European problem is not the main priority since most of the biggest banks in the world are based elsewhere. I don’t think we should give up on this international agenda. The package of economic measures that were rolled out late last year – from coordinated cuts in interest rates, to provision of dollar liquidity and measures to support banks – showed the power and possibility of coordinated action. The programme of work on the regulatory implications of the crisis which has been coordinated by the FSF and will go in April to the G20 Summit demonstrates a wide accord on the main regulatory issues. But we need more progress on implementation as well as policy.

BIS Review 21/2009  15  Chart 6 : All hands to the pump  Bank of England  Stabilisation  Equity & Efficiency  Regulation  FSA  HM Treasury  Chart 7 : Stylised Value at Risk Chart 8: The Great calculations, pre and post crisis historical context 20  VaR Pre Crisis  18  VaR Post Crisis  Stability  Density 0.60  150 years of data 10 years of data  16  in  0.50  14  0.40  12 10  0.30  8 6  0.20  4  0.10  2 0 1  16  2  3  4  5 6 Banks  7  8  9  0.00 -15  -10 -5 0 5 Annual GDP Growth (%)  10  15  BIS Review 21/2009
of Hedge Funds  Assets under Management  Source: HFRI Graph 2 All Hedge Fund Assets Flows and Returns 50'000  50%  40'000  40%  30'000  30%  20'000  20%  10'000  10%  0  0%  -10'000  -10%  -20'000  -20%  -30'000  -30%  -40'000  -40%  -50'000  -50%  Mar-94  Mar-95  Mar-96  Asset Flows (LHS)  Mar-97  Mar-98  Mar-99  Mar-00  MSCI World $ Return (YoY, RHS)  Mar-01  Mar-02  Mar-03  Mar-04  All Hedge Funds Return (YoY,RHS)  Source: CSFB-Tremont  6  BIS Review 8/2005  Graph 3 Crude Oil Price and Futures Contract Volume (NYMEX)  60  300'000  50  250'000  40  200'000  30  150'000  20  100'000  10  50'000  0  0  1996  1997  1998  1999  2000  2001  Non-Commercial Long Contracts (rhs) WTI Crude Oil $ Barrel) (lhs)  2002  2003  2004  2005  Non-Commercial Short Contracts (rhs)  Graph 4 Gold Price and Futures Contract Volume (CMX)  300'000  550  250'000  500  200'000  450  150'000  400  100'000  350  50'000  300  0  250  1996  1997  1998  1999  2000  Non-Commercial Long Contracts (lhs) Gold Spot $ Ounce) (rhs)  BIS Review 8/2005  2001  2002  2003  2004  2005  Non-Commercial Short Contracts (lhs)  7

I would once again like to thank the EU Delegation for enabling the implementation of this project with the hope for further support in providing subsequent project for the implementation of the recommendations, and thank the other guests for their presence. 2  BIS central bankers’ speeches
In my opinion, it seems that is the case, although a number of opinions highlighting potential problems should not be ignored. In favour of the ECB are its strong expertise in the financial sector, as well as the synergy that exists between banking supervision, on the one hand, and the lender-of-last-resort function and payment system oversight, on the other hand. As the third pillar of the banking union, the single bank resolution mechanism is deemed to ensure a centralised management of banking crises that provides options for dealing with bank failures in an orderly way, with minimal disruptions to the economy. The principles of the resolution should be set out in a single rulebook and they should address the issues of the cost of bank recovery, the fiscal backstop, and the moral hazard problem that may occur. The cost of banks’ recovery or resolution should be borne by shareholders and creditors. Nevertheless, in the case of systemic crises, an explicit fiscal backstop may be required, on the design of which a political consensus will be difficult to achieve. Another challenge to establishing this mechanism relates to the heterogeneous resolution framework at the national level, which calls for significant changes in national insolvency, labour and tax laws. Additionally, if the European Stability Mechanism were enabled to recapitalise banks directly, negative consequences could occur in terms of moral hazard within the single market, as well as unfair competition between participating and non-participating banks in the banking union.

The financial system in the aftermath of the crisis  The financial industry is supposed to be the lubricant of the economic engine and ensure its smooth and efficient functioning. To grasp the sheer scale of its task, just imagine the billions of savers and investors whose interests have to be matched by the financial system, each of them having a particular behaviour, often driven by emotions. In doing so, financial institutions use specialized resources to assess and manage risks, including complicated mathematical models. Just think of the many Nobel prizes that were awarded for achievements in this field. The complexity of financial intermediation explains some of the seemingly peculiar features of the financial system as, for instance, the fact that the volume of transactions on the forex market is many times larger than what would be required by the actual exchange of merchandise. BIS central bankers’ speeches  3  The major positive contribution of the financial system is its ability to deal with asymmetric information problems. Adverse selection and moral hazard are issues emerging from asymmetric information. They are a cost to society, as they hamper lending. Financial system expansion has been the natural solution of the society in order to overcome asymmetric information problems. Financial institutions put their capital at risk and derive income from the spread between lending and deposit rates. In doing so, they use specialized resources to assess credit risk and discipline the borrower.
As noted above, many of the emergency liquidity facilities rolled out in the crisis were developed in a very short period of time by experts with years of experience in these various markets. All of the new facilities were designed to price the emergency liquidity such that as market stresses eased, their use would decline. This is exactly what happened. Furthermore, the most convincing evidence that the facilities correctly addressed market failures related to liquidity is the fact that none of them lost any money.19 Conclusion The past few years have seen important changes in the role of central bank interactions with financial markets. Some of the main lessons I take away are: published statistics and market prices only tell part of the story of developments in financial markets, at best; beliefs of market participants and the distribution across markets matter, and information on them needs to be collected and analyzed on a frequent basis; active operations in financial markets allow central banks to flexibly respond to unexpected events and understand market functioning issues and changes in market infrastructure. Most importantly, the global financial  18  The Federal Reserve established swap arrangements with the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Canada, the Danmarks Nationalbank, the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Korea, the Banco de Mexico, the Reserve Bank of New Zealand, the Norges Bank, the Monetary Authority of Singapore, the Sveriges Riksbank, and the Swiss National Bank.

The large banks in particular are concerned that they will end up paying for the bulk of the cost of a DIS from which they and their customers will receive little benefit. They have argued that the cost of insurance will inevitably be passed onto customers in the form of lower interest rates on deposits and higher fees. Competition might well oblige the banks to absorb the cost. Even so, this is a sensitive issue about which those in favour of the DIS have also expressed concern. Of course, it can be argued that the reason why the large banks would bear most of the cost is because they have most of the deposits, from which they derive a significant competitive advantage. Moreover, large banks in general tend to benefit from the perception that they are “too big to fail” or at least “too big to liquidate”. A DIS to which the large banks contribute can therefore be seen as helping to level the playing field for the small banks. These are however rather sterile arguments. The reality is that we have a responsibility to keep the costs of a DIS as low as possible. If the decision is taken to proceed, we will therefore be looking at the size of the premium to see whether it can be brought down from the 10 basis points indicated in our consultation paper.
I mean that the central bank must be aware of general changes in the functioning of the economy that may justify adapting its behaviour to be able to carry out the task it has been given in the best possible way – even if this is a very delicate task. It is as yet still fairly uncertain what will be decided regarding the question of the central banks’ independence. Perhaps the main complicating factor is the broadening of the central banks’ tasks and toolboxes, which many people are saying is on the cards. While a large degree of independence is relatively easy to justify with regard to maintaining price stability, the independence is somewhat less self-evident with regard to the central bank’s role in the fields of macroprudential policy and crisis management. Some analysts say that one solution may be that the central bank is allocated different degrees of independence in different roles. The independence should be considerable when it comes to the task of maintaining price stability, but perhaps less when it comes to tasks connected with macroprudential supervision and crisis management. Opinions are divided as to how easy it is to attain this kind of division. There is scarcely any doubt that the problems in drawing up boundaries can be difficult at times.

The reduction in the Eurosystem's monetary asset holdings is expected to be pursued in a predictable and gradual manner, with the first principles being announced in December. This will undoubtedly change the financing environment which borrowers have grown accustomed to. The most immediate impact will be on money markets and government bond yields, which later propagate to the cost of bank and corporate debt. Indeed, euro area sovereign yields have already risen markedly since last year and could increase further when balance sheet normalisation starts. Turning now to Malta, while the transmission of the latest monetary impulses to bank lending and deposit rates appears rather slow, government bond yieldsin Malta have already begun to increase. Such increases and tighter financing conditions abroad will eventually be reflected in a higher cost of funding for domestic banks, and eventually, households and corporates. It is essential to be reminded that on monetary, financial and economic terms Malta is very much integrated with the rest of Europe and that the decisions taken in Frankfurt ripple across the whole euro area, Malta included. 2/5  BIS - Central bankers' speeches  The transmission of tighter monetary conditions to the interest rates that banks offer to their customers is necessary for inflation to return to the policy target of 2% in a timely manner. But it is not sufficient. Other policy actors also need to do their part. In particular, fiscal support has to be temporary and targeted, so that it avoids supporting demand for longer than is necessary.
Economists and central bankers were remarking on the low level of real interest rates as early as 2005.1 The MPC discussed the factors behind the more recent decline, since the financial crisis, in the February 2014 Inflation Report, in the context of its forward guidance. My colleague David Miles went through some of these arguments in more detail in a speech in February this year. The debate about “secular stagnation” has also focussed a lot of attention on the issue. The only wrinkle here is to distinguish those factors that are good for risky assets from those that are bad – and, in doing so, to say something about distributional effects. I also want to caution against mistaking cause for effect and in particular, when it comes to asset prices, putting central banks at centre stage. Autonomous changes in monetary policy certainly can have an impact on asset prices. But that does not mean they’re the only thing that actually  1  Bernanke (2005). BIS central bankers’ speeches  1  does so. Over time, trends in real asset prices are determined by real (non-monetary) forces: we may occasionally be prominent actors but it’s someone else who’s written the script.

And there will be more to come. We look forward to the launch of the Shenzhen-Hong Kong Stock Connect, and looking further ahead, the Mainland authorities have announced plans to consider implementing the Qualified Domestic Individual Investors scheme (QDII2) on a trial basis. It’s certainly true that individuals on the Mainland have shown a great deal of interest in diversifying their investment holdings. This is an area where we see Hong Kong having a strong competitive advantage, with our strategic location, our expertise in private banking and wealth management business, coupled with our strong client networks on the Mainland. To  BIS central bankers’ speeches  1  capitalise on these emerging opportunities, we have been liaising closely with the Mainland authorities on QDII2.The second trend is that not only is Chinese capital “going out”, Chinese companies are also increasingly "going out". Outward direct investments (ODI) by China to the rest of the world amounted to RMB758.5 billion in 2014, a 63% rise over the past five years. And, it’s interesting to note that 16% of these flows are settled in RMB, up from a mere 3.7% in 2011. This “going out” trend has been continuing for some time, but has been given fresh impetus by the greater desire of Chinese enterprises to diversify into other non-RMB asset classes. New policy measures by the Mainland authorities, notably the ‘Belt and Road’ initiative, has also played a key role.