samchain/econo-pairs-v1 huggingface dataset:
As supervisors on the Basel Committee have developed standards for the disclosure of components of capital, for loans, and for other topics of mutual concern, we have sought out the views of representatives of the accounting profession. This dialogue will continue. I should add that we are currently seeking new opportunities for discussion on issues of mutual concern with accounting standards-setting bodies and private sector accounting professionals. Conclusion By the end of this conference, I think that we will all have a better sense of our many worthy accomplishments to date in refining the measures and management of credit exposures. At the same time, we will no doubt develop a better understanding of the significant work ahead – in terms of developing more sensitive capital requirements, but also in terms of advancing our ability to control the risks we face. With regard to the New Accord itself, the issues and themes you will discuss at this conference suggest that we’ve moved beyond a discussion of the principles behind the rules to a focus on preparing for their implementation. This seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the New Accord, supervisors and the industry will be ready to implement the new rules by the end of 2006. Indeed, banks that wish to be among the first to adopt an advanced approach to credit risk should already have begun to gather and process the data that is key to the IRB approach.

The rich literature that followed affirms the benefits of central bank announcements in guiding market outcomes, with a number of papers showing that market interest rates have tracked policy rates more closely since the 1990’s.3 Separately, communication was also shown to reduce the size of central bank interventions required to achieve desired policy rates.4 Further, effective communication from central banks on the future path of monetary policy, or forward guidance, can potentially be a powerful tool in a global environment of low nominal rates and reduced policy space. The seminal paper by Eggertsson and Woodford (2003) demonstrated that changes in the expected future conduct of monetary policy can have a substantial effect on the macroeconomy, even when the economy is at the zero lower bound and conventional monetary policy has lost potency. Subsequent empirical research also show that forward guidance can help macroeconomic stabilisation efforts.5 Nevertheless, despite the clear trends and benefits of greater information dissemination, central bank transparency has evolved cautiously including in the region, reflecting in part the irreversibility of communication initiatives. From the perspective of preserving policy integrity and effectiveness in a second best world, more is not necessarily always better. At each step along the way, central banks therefore need to take account of the potential costs against the perceived benefits of greater transparency. Several considerations could be pertinent. First, too much information may crowd out the formation of private sector beliefs.
SPEECH DATE:  13/05/2019  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Swedish Society of Financial Analysts  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Underlying inflation – for better or for worse∗ Thank you very much for the invitation to come and speak at the Swedish Society of Financial Analysts! Concepts such as underlying inflation and core inflation are often used in discussions on inflation and monetary policy. But what do these concepts actually mean? And what do measures of underlying inflation actually measure? My aim today is to discuss why central banks are interested in underlying inflation and how it can be measured. I will first explain why we need to measure underlying inflation (or core inflation, which I regard as a synonym) and then briefly describe the history of the concept. There are two common methods of calculating underlying inflation, and on the basis of these I will discuss which properties are desirable for measures of underlying inflation. I will also present different examples of measures. There are measures that are better or worse with regard to how well they fulfil the criteria for desirable properties. But a first conclusion is that there is no measure that is unequivocally better than all the others. Although there are a couple of measures that are clearly better than others.

With inflation too high, we are focused on restoring price stability, while maintaining a strong labor market. Before I go any further, I should give the standard Fed disclaimer that the views I express here are my own and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or anyone else in the Federal Reserve System. Shared Impacts It's striking to think that just two years ago, the U.S. economy was reaching the trough of the COVID-19 recession. Back then, we were living through unprecedented lockdowns. And we had no way of knowing that this would be the shortest recession on record, or that the rebound would be so dramatic. If we think about the global pandemic as a common factor, shutdowns, contractions, and rapid rebounds were the shared impacts across countries around the world. But so were supply-chain bottlenecks, shortages in semiconductors, and backlogs at portsissues we grapple with today. And just like the United States, other countries have experienced imbalances in demand. Since the initial lockdowns, people have spent more of their money on electronics, cars, and furniture-and less on entertainment, travel, and restaurants. 1/5  BIS - Central bankers' speeches  Many nations also showed considerable resilience of economic activity through the Omicron wave. But global risks remain. The BA.2 variant is now fueling a rise in cases in some countries, including China, Hong Kong, and the United Kingdom. Their experiences bear close monitoring.
Today, we can easily say that payment and settlement system in Turkey is at par with its counterparts in developed countries promoting the efficiency and effectiveness of the financial system. Distinguished Guests, Removing market imperfections is essential for the smooth operation of financial system. In this context many central banks have been involved in addressing information problems experienced in credit markets. At this point I will draw your attention for a few minutes to the asymmetric information problem, which can lead to credit rationing. It is known that obtaining credit information to ensure sound-lending activities is a costly procedure requiring an efficient monitoring process. The lack of adequate information about a borrower’s credit solvency and the viability of a project may raise screening and monitoring costs for banks. This situation sometimes leads banks to cut credit supply or make them reluctant to supply loans. Of course, collateral based lending could ease banks’ reluctance as it partially reduces the risk involved in lending. However, collateral may play a limited role in the case of small and medium size enterprises since they are less likely to possess appropriate collateral. In order to improve exchange of information on credit history of a borrower, regulators of many countries have actively involved in setting up public credit bureaus. In Turkey, the Central Bank took the lead in setting up the Risk Center of Turkey in 1951. The Risk Center has been operating within the Central Bank since then.

This is still a somewhat high number, given the country’s population, and above all, the similarity of products banks are offering. Further mergers and acquisitions may have a positive impact on cost management, which will in turn make it easier for economies of scale to be achieved. On the other hand, domestic mergers and acquisitions are unlikely to involve a cutback in foreign ownership. Enhanced cooperation amongst regulators and supervisors from home and host supervisors is thus essential to the continuing stability of the system. BIS central bankers’ speeches  1  Yet there exists no precise definition what international regulatory cooperation is. Most of the time, it brings to mind the system of committees and working groups meeting in Basel, at the Bank for International Settlements. The international regulations which are the outcome of the Basel system, comprise among other documents, Basel III, the bold new guidelines at the core of which is the concept of risk-weight; some assets are riskier than others and this should be reflected in the percentage of capital that should be held against them. For credit risk, this riskiness is taken to depend on the obligor, i.e. it is taken that savers and investors are almost inherently more averse to obligations of some entities than to obligations of other entities. This approach is not new, but an enhancement of the existing Basel I and Basel II infrastructure.
[1] Giving legal tender status to the digital euro would make this possible, and it will be decided by you, the co-legislators. It would also help to achieve the network effects that are key to the success of payment solutions. [2] We will also strive for the highest standards of privacy[3] and aim to contribute to financial inclusion and foster digital innovation, including as regards the programmability of payments. [4] As for implementation, we are working to minimise the time to market, costs, risks and ecological footprint associated with the digital euro. In particular, we will make sure that the digital euro builds on the experience of financial intermediaries in consumer-facing services, does not crowd out private means of payment, and preserves financial stability. And this is the aspect that I will focus on today: the potential impact of a digital euro on the financial system. The digital euro and the evolution of the financial system As we explore the design of the digital euro, we are not only looking at the payments landscape of today – we are in fact also considering how it might evolve in the future. Imagine a world in which the central bank continues to offer only cash, but people increasingly prefer to pay digitally and the only digital forms of money available to them are private ones. [5] In such a world, central bank money would lose its key role in payments, and it would not be possible to ensure the complementarity and convertibility of public and private money.

However, since four of the national central banks which form part of the ESCB continue to conduct their own autonomous monetary policies, one cannot accurately refer to the ESCB as the authority responsible for conducting monetary policy in the euro area. We must instead use the term “Eurosystem”, which comprises the ECB and the 11 national central banks of those countries which have adopted the euro, and which has been adopted as a “user friendly” expression to denote the form in which the ESCB performs its tasks and responsibilities. The Eurosystem is set up, like the Federal Reserve System, in a distinctively decentralised manner. At the same time, however, the Eurosystem disposes of marked centralised structures, since the definition and implementation of the single monetary policy are carried out under the exclusive responsibility of BIS Review 4/2000  2  the decision-making bodies of the ECB. These are, first of all, the Governing Council, which defines the single monetary policy for the euro area and takes all other decisions of fundamental importance to the Eurosystem. The Members of the Governing Council are the Governors of the 11 national central banks and the six members of the Executive Board of the ECB. Basically, all decisions are taken by simple majority, whereby each member has one vote. The other important decision-making body is the Executive Board of the ECB, which is basically responsible for the implementation of monetary policy in accordance with the decisions taken by the Governing Council.
Equity financing is a key driver of innovation: it is better suited to the uncertainty and offers long-term returns associated with innovative projects. The euro area is seriously lagging behind in this respect: equity only accounts for 80% of GDP, compared with 122% in the United States. Integrated capital markets also require effective supervision. Here again, milestones have been reached thanks to the outcome of the recent review of ESAs towards enhancing their role. Concerning the supervision of financial markets, ESMA will as a first step contribute to furthering convergence of supervisory practices. Yet in the longer run, the scope of its direct supervisory powers should be expanded starting with the supervision of wholesale markets. Regarding the insurance sector, a particular attention was paid to strengthening the supervision of cross-border activities through EIOPA. I welcome also the enhanced EBA role on AML-CFT issues, an area where progress in the European framework is absolutely needed. Finally, the Capital Markets Union needs robust market infrastructure. Thanks to EMIR II, Europe has given itself powers – via ESMA – to directly supervise third country CCPs which have a systemic footprint vis-à-vis the EU. This being said, EMIR II is not the end of our journey. Much more needs to be done regarding either the role of the ECB or ESMA’s prerogatives over EU CCPs.

It is clear to me that only if the industry and supervisors work together - each meeting our responsibilities and reinforcing the other - will we be able to successfully manage and supervise a modern financial system. While perspectives may differ from time to time, our objective is the same to maintain a strong and vibrant financial system over the long term. Thank you very much. 6  BIS Review 15/2003
See Capie and Wood (2001). BIS Review 36/2005  1  is the natural way to conduct policy when there is a great deal about its effects that we do not understand. The practice of monetary policy must recognise that monetary theory will continue to evolve. That is why my lecture is subtitled: practice ahead of theory. What can monetary policy do? In practice, monetary policy means setting the level of the official interest rate at which the central bank deals with the banking system.3 But ideas about how interest rates should be set, and with what objective, have been subject to radical changes since the 1970s. Let me give three examples. None is new; the subject has moved on. I give them to show that monetary policy operates against an everchanging backdrop of ideas about the way the economy works, a theme that lies at the heart of my lecture. First, it is now widely accepted that there is no long-run trade-off between output and inflation. Both theory – following Friedman and Phelps – and practice – particularly in the 1970s – showed that permanently higher inflation does not bring faster growth or higher employment, and may well reduce both. But in the post-war period views were different. In 1959 the Radcliffe Report on the Workings of the Monetary System seemed to support the idea of a permanent trade-off. The objectives of monetary policy included, it argued, “a high and stable level of employment” and “reasonably stability of the internal purchasing power of money”.

In a few moments, I will talk about how this growth abroad also presents an opportunity for Puerto Rico. The firming in economic activity, in short, is due both to natural healing and past and present policy support. In this regard, it is important to emphasize that we at the Federal Reserve have been expecting the economy to strengthen. We provided additional monetary policy stimulus via the asset purchase program to help ensure that the recovery regained momentum. A stronger recovery with more rapid progress toward our dual mandate objectives is what we have been seeking. This is welcome and not a reason to reverse course. Yet, we must not be overly optimistic about the growth outlook. The coast is not completely clear – the healing process in the aftermath of the crisis takes time and there are still several areas of vulnerability and weakness. In particular, housing activity remains unusually weak and home prices have begun to soften again in many parts of the country. State and local government finances remain under stress, and this is likely to lead to further spending cuts, tax increases, or job losses in this sector that will offset at least a part of the federal fiscal stimulus. Moreover, in recent weeks we have experienced several shocks from abroad that could have some impact on the economy’s forward momentum, at least in the short term.
The tight monetary policy stance of the Central Bank as well as the relatively tight fiscal policy stance of the government, which were adopted with the aim of regaining macroeconomic stability, partly affected public and private investment spending that also contributed to low economic growth. Consumer price inflation increased, mainly due to high food prices associated with weather related domestic supply disruptions, revisions to indirect taxes and increased prices of imported commodities, making our efforts to anchor inflation expectations challenging. Despite the tight monetary policy stance maintained by the Central Bank, growth of monetary aggregates was high during most of 2017, before decelerating to envisaged levels towards the end of the year. Although we have seen signs of a firm recovery in exports with better prospects in key export markets and the flexible exchange rate policy of the Central Bank, the trade account continued to be affected by a largely weather induced increase in  import expenditure. The decline in workers’ remittances resulted in a reduction in the cushion against the widening trade deficit in the external current account. Although the fiscal sector has recorded notable improvements in terms of revenue collection, some slippage in the budget deficit is likely in 2017 mainly as a result of weather related fiscal costs and higher interest payments. This could have an adverse impact on achieving the envisaged fiscal consolidation path, while complicating the conduct of monetary and exchange rate policies.

However, the point is not to intervene to remedy problems of solvency resulting from wrong decisions regarding investment or resulting from insufficient capital. In this regard, a central bank is not in a position to deal with these problems, nor is it its job to. This is the responsibility of the political authorities. Following the collapse of Lehman Brothers, this has become clear in Europe. Only the heads of state and government, in their meeting in Paris prompted by President Sarkozy, were able to commit public funds to avoid several banks going under. The programme aimed at supporting banks’ capital and at guaranteeing bonds was a government initiative, even if the ECB made a technical contribution. And this is exactly how it should be. If something can be said to have gone wrong, it was with the implementation of the measures, not with the decision itself. The ECB has repeated its invitation to financial institutions many times to make full use of the state measures for increasing capitalisation in the banking system. If this doesn’t happen, there is a risk that the retroactive effect of the current recession on banks’ accounts will cause the banks ultimately to reduce their financing of the real sector, thereby further exacerbating the economic crisis. Evidently, there is not enough incentive for bank shareholders and bank managers to make use of such instruments, the shareholders out of fear that their shares will drop in value, and the managers for fear of operational and pay structure constraints.
- Significant institutions: NCAs play a pivotal role in the JSTs (they contribute the staff, experience and knowledge of the country’s institutions and banking system), and the on-site inspection teams are mostly from that country. Moreover, NCAs have an important role in a number of administrative procedures. For example, NCAs are responsible for submitting to the ECB the proposals relating to the “common procedures”. (iii) New tasks arising from membership of the SSM. The governors of NCBs and representatives from NCAs take part in the decision-making process in the Governing Council and the Supervisory Board of the ECB, respectively (not only decisions concerning institutions in their countries but also SSM decisions overall). In addition, the NCAs participate actively in a broad range of networks of experts and working groups set up by the SSM to conduct discussions at a technical level, particularly on issues of a horizontal nature. 13  For institutions operating in several countries, a “core JST” is set up, comprising an ECB coordinator (who is also the chair) and national sub-coordinators.

The primary question today is not so much how much further we need to go with interest rate hikes, but how large is the pass-through of what is already in the pipe. Overall, evidence shows a quick and smooth pass-through of ECB decisions to broad financing conditions, which is the first step of monetary policy transmission. The growth rate of bank loans to households and firms has slowed due to a combination of higher borrowing rates, lower demand, and - for firms - tighter credit standards. Volumes of loans are decelerating, even though growth in outstanding amounts remains positive [+3.3% in the euro area for mortgages to households and +5.2% for loans to businesses]. By the way, the growth of loans in France remains significantly higher than in the euro area average. The second step of monetary policy transmission goes from the overall financing conditions to the economy and to inflation. In the textbook theory, tighter financial conditions moderate aggregate demand, and then decrease inflation with some lags. The estimated transmission lags of monetary policy in the literature vary from one year1 to more than two years2. At the current juncture several factors may bring us closer to the upper range: The current tightening cycle started from exceptionally low levels of real interest rates. It is only from the end of 2022 that we achieved positive real rates at all maturities – but we are now clearly in restrictive territory. the proportion of fixed-rate long-term loans is particularly high by historical standards.