samchain/econo-pairs-v1 huggingface dataset:
•  Finally, as links between markets are tightened by financial innovation, a shock occurring on one specific market may be more easily transmitted and possibly amplified on other markets. This may particularly be the case if the shock is large and if market participants adopt herd behaviour in the face of incoming information that is disseminated very fast. I will not try to conclude these opening remarks, since it is precisely the purpose of the conference to go into deeper analysis of all the issues I tried to mention briefly, and perhaps of others I forgot. And it will be up to President Axel Weber at the end, to draw the conclusions. But let me make just one final remark. Financial innovation brings a lot of progress and should be welcome in principle. It is also a constant challenge for central bankers. Good knowledge of microeconomic behaviour is of prime importance in order to better cope with the increased uncertainties and the new types of risks they bring about. This in turn is a challenge I am sure this conference will endeavour to rise to. References •  Angeloni I., A. Kashyap and B. Mojon (eds) (2003), Monetary Policy Transmission in the Euro Area, Cambridge University Press. •  Banque de France (2007), Financial Stability Review, Special issue on hedge funds, 10, Banque de France, April. •  BIS (1994), Macroeconomic and monetary policy issues raised by the growth of derivatives markets, CGFS – Monetary Policy (Hannoun Report), 4, November.

However, innovations constantly introduce additional layers of sophistication and complexity 13 . In this regard, the system of incentives by which professional asset managers operate should be closely and permanently aligned with the interests of investors. •  One specific type of financial innovation is the emergence of new unregulated players whose default might have implications for systemic risk. One such type of investor are hedge funds. Hedge funds’ activities could clearly be the source of systemic risk since they are now major – often dominant – actors in several market segments accounting for 40% of the turnover of major stock exchanges and 25% of the turnover of credit derivatives markets. They are also the main providers of liquidity in some markets that would dry up very quickly should they withdraw. They often leverage themselves with very high multiples either directly through borrowing or indirectly by intensive use of derivatives. •  The importance of hedge funds and more generally of the already mentioned OFIs illustrates that there may be circumstances in which injecting liquidity into the banking system – a traditional tool of crisis management used by central banks – may not be sufficient to prevent major instability. Three main avenues for mitigating the risks of contagion from hedge fund defaults either through potential losses to their bank creditors or through adverse market dynamics have been proposed 14 .
The difference between 3-month interbank rate and expected policy rate (basis-spread)  Sources: Reuters EcoWin and the Riksbank  2.World trade stabilising World trade monitor index, 2000 = 100, seasonally-adjusted data 180  180  160  160  140  140  120  120  100  100  80  80  60  60  40  40  20  20 0  0 90  92  94  96  98  00  02  04  06  08  10  Source: Netherlands Bureau for Economic Policy Analysis  8  BIS Review 111/2009  3.Growth in Asia GDP, annual percentage change 15  15  10  10  5  5  0  0  -5  -5 China South Korea  -10  -10  Taiwan Japan  -15  -15 00  01  02  03  04  05  06  07  08  09  Sources: National sources  4.House prices in the USA Index, January 2000 = 100, seasonally-adjusted data 250  250  200  200  150  150  100  100  50  50  0  0 88  90  92  94  96  98  00  02  04  06  08  10  Source: Standard & Poor's  BIS Review 111/2009  9  5.Growth increasing in the world GDP, quarterly change in per cent calculated as an annual rate, seasonally-adjusted data 10  10  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4 Euro area  -6  -6  USA  -8  -8  TCW  -10  -10  00  01  02  03  04  05  06  07  08  09  10  11  12  Sources: National sources and the Riksbank  6.GDP Quarterly changes in per cent calculated in annualised terms, seasonallyadjusted data 10  10  5  5  0  0  -5  -5 July  -10  -10  September  -15  -15  -20  -20 00  01  02  03  04  05  06  Note.

The Bank has put in place a structured, holistic and collaborative Scholars’ Development Programme to support all of our scholars throughout their studies. The programme aims to develop high-quality and well-rounded scholars with leadership qualities that will be the next generation of young talent who will be the leaders of tomorrow for the Bank and our nation. With regard to the achievement of our scholars enrolled in top university, I am glad to share with you that this year 3 of our scholarship holders will be entering the University of Pennsylvania to pursue their undergraduate studies in Economics and Finance, 1 scholar to pursue Engineering at the University of Cambridge and another scholar to pursue Philosophy, Politics and Economics at the University of Oxford. We wish all our scholars the best and to make the Bank proud of your excellence. BIS central bankers’ speeches  1
We will need to consult on elements of change along the way and be responsive to the comments. All this takes time and thought, but the quicker these processes are completed, the quicker the vision will be realised. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  We will best realise our vision to be a responsive and accessible policymaker by continuing to proactively engage with the wider world – both at home and abroad. This will ensure that our prudential framework keeps pace with innovation, and so we identify and best respond to risks at an early stage. We will continue to engage with our counterparts in other jurisdictions, and we will continue to lead policymaking through our membership of international standard-setting bodies such as the Basel Committee. Our key aims remain to ensure that global standards are robust and that regulatory fragmentation for firms is minimised. Strong engagement with Parliament and industry will be essential. We will take seriously our task to understand Parliament’s priorities within the framework of the objectives and ‘have regards’ that Parliament will give to us. And industry input will be particularly important on areas of the regime we are targeting for reform, which brings me to the main subject of this speech. A strong and simple prudential framework for non-systemic banks and building societies I would like to turn my attention now to speak specifically about one particular policy initiative which the PRA is pursuing.

The simpler regime will, of course, only apply to firms which are not internationally active because internationally active firms will remain subject to Basel standards. We therefore also ask for views about how we should identify which firms are not internationally active. Decisions about scope will be important because, speaking generally, the more alike the firms in scope are, the simpler the regime can be. For example, 40% of the existing rules and technical standards for credit risk relate to the internal ratings based approach.3 If just those firms which only use the standardised approach were eligible for the simpler regime, these rules could be entirely removed. But, on the other hand, too restrictive a scope will mean fewer firms are able to benefit from the simpler regime. That is why we want to receive comments about where we should draw the line for a first step which delivers meaningful simplification for a worthwhile number of firms. These choices will determine which banks are affected by the simpler regime. As I say, these are likely to be smaller non-systemic banks as we focus on taking the first step towards building a strong and simple framework. But before moving on I would like to draw your attention to two other important reviews that the Bank aims to consult on this summer.
The CRB provides an essential service that aids lenders to be able to evaluate and price loans better. Good borrowers with a perceived low risk premium should have access relatively cheaper credit while bad borrowers can be denied credit thus reducing default rates and ultimately the price of credit. (v)  Sovereign Credit Rating: Fitch Rating and Standard and Poors both assigned the country with a B+ Sovereign Credit Rating. The rating is expected to provide an opportunity for both the Government and the private sector to access cheaper funds on the international financial markets. 6  BIS central bankers’ speeches  8.0  Conclusion  The Bank of Zambia acknowledges that there has been remarkable development in the financial sector over the past years, as evidenced by the various new products and innovations. However, despite the growth in products and services being offered, customers are still faced with high costs of borrowing. The challenge for the financial sector therefore is to improve on their operations by engaging in innovative activities that will reduce their cost of operations and pass on the efficiencies to borrowers. From the foregoing, it is clear that the challenges of reduction of interest rates to levels that would facilitate economic development through an efficient savings mobilisation and credit allocation system are numerous. However, they are not insurmountable. The solutions are in the hands of all stakeholders in the financial sector.

The actual form inflation targeting took in Romania thus matched the “managedfloating plus” concept introduced by Goldstein in 2002, considered the most suitable choice for an emerging-market economy involved in the global capital market, as it combines the managed float part, allowing for FX market interventions in order to smooth out excessive volatility, with an inflation targeting monetary policy strategy and an active pursuit of measures to limit the degree of currency mismatches in the economy. What are the challenges of adding explicit concern about financial stability to the standard objective of price stability? Should monetary policy lean against the wind sooner and possibly harder than it would normally? Even though now, with the benefit of hindsight, one could say that higher interest rates in the run-up to the crisis may have alleviated some of the issues that led to it, I believe that it is best to let monetary policy focus on price stability and deal with the objective of financial stability via dedicated macroprudential policy instruments – doing otherwise is likely to severely complicate communication with the public, complicating expectations management and ultimately undermining monetary policy credibility and effectiveness. It is indeed of critical importance to make sure that the tasks entrusted to the central bank are feasible. Not as clear-cut or simple as before the global crisis, but feasible! Otherwise, if the monetary authorities are overburdened with possibly conflicting goals, the major risk is to render them inefficient and unable to deliver a single one of their objectives.
2  BIS Review 86/2005  Graph 2: Interest rate risks by bank groups (reduction in net present value as a percentage of equity following an interest rate shock of +100 basis points) Source: SNB  Conclusion: Increased efficiency without higher risks The slight narrowing of interest rate margins supports the assumption of increasingly fierce competition in the mortgage market. From the viewpoint both of consumers and of economic efficiency, this would be a welcome development. However, in the banking business there is always a danger that fiercer competition might encourage excessive risk taking by the banks. A bank can outperform its competitors by offering more favourable conditions while at the same time accepting poorer risk cover. However, as already mentioned, our aggregated analysis suggests that caution has not waned. Banks’ gross margins are declining slightly because their cost savings and improvements in efficiency are being passed on to customers. The capacity to absorb risks is not compromised by granting customers better conditions. Currently, the positive aspects of healthy competition are taking hold without apparently having any negative side effects. The SNB will nevertheless keep a close watch on trends in the real estate market. In particular, we will monitor interest rate risks, which have already reached a high level. With an appropriate normalisation of money market rates, the SNB contributes to limiting the danger of an abrupt rise in interest rates. In the current environment of historically low rates, however, there is no guarantee that the future trend in interest rates will be moderate.

It appears that the expansion of mortgage claims has not been driven so much by real estate prices, but by the number of loan requests. Consequently, the growing demand for loans is more likely attributable to factors other than the expectation of a speculative boom in real estate prices. The crucial question is the following: Is the higher demand for loans due to excessively harsh competition among banks that has led to cheaper credit not reflecting the actual risks incurred? How has the relatively strong growth in mortgage loans impacted on bank risks? To answer this question, we took a closer look at the banks’ risk behaviour. Several indicators led us to believe that banks have hardly engaged in excessive risk taking. While it is true that interest rate margins, i.e. the spreads between mortgage rates and the banks’ financing costs, had fallen slightly by mid-2005, other bank expenses declined at the same time. In the final analysis, therefore, the profit margin was virtually constant or even slightly higher. The profit margin corresponds to the difference between the interest rate margin and the total operating expenses expressed in percent of the loan volume and – to reflect expected risks – of total value adjustments and provisions. The banks’ profit margin thus also serves to cover unexpected risks. Given that the profit margin has remained constant or moved slightly higher, the banks’ risk-taking capacity has not diminished in spite of pressure on interest rate margins.
BIS Review 76/2009  11  Figure 9 Durable goods sales (index, average January 1996 - April 2009=100) 230  230  190  190  150  150  110  110  70  70  30  30  96  97  98  99  00  01  02  03  New automobiles' sales (units)  04  05  06  07  08  09  Capital goods imports (nominal)  Sources: Asociación Nacional Automotriz de Chile (ANAC) and Central Bank of Chile. Figure 10 Economic perception  (diffusion indexes, percent) Business confidence (1)  Consumers' confidence (2)  70  140  120  60  60  120  100  50  50  100  80  40  40  80  60  30  30  60  40  20  20  40  20  10  07 Brazil U.S. Japan  Jul. 08  China Mexico Eurozone  Jul. 09 S. Korea  07 Brazil China U.S. Mexico  Jul. 08  Jul. 09  S. Korea Japan Eurozone  (1) S. Korea is anchored in 100. (2) Series of Japan, Eurozone and S. Korea anchored in 50. The rest of the series are indexes with base January 2007=100. Source: Bloomberg. 12  BIS Review 76/2009  Figure 11 Stock market indicators (*) (Index 01/03/2005 =100) 400  Subprime crisis erupts  350  Bear Stearns  400  Lehman, AIG, etc.

The transition from Libor to SARON  Let me now turn to the SNB policy rate and the transition away from Libor. As Thomas Jordan has explained in his remarks, we are introducing the SNB policy rate as the future of Libor is uncertain. This adjustment does not entail any change in the SNB’s current monetary policy stance. However, the move away from Libor presents the financial markets, and those operating in them, with a very challenging task. I would like to discuss three aspects of this transition in greater detail: first, the choice of the Swiss Average Rate Overnight (SARON) as the alternative reference rate; second, the importance of using SARON in financial products and developing a liquid, SARON-based yield curve; and third, the issue of how interest payments should be calculated over longer periods. As regards the first aspect – the choice of a new reference rate: In Switzerland, the National Working Group on Swiss Franc Reference Rates (NWG) recommended SARON as the alternative as early as 2017. Switzerland, like other currency areas, has thus chosen an overnight rate as its preferred alternative to Libor. SARON has been in existence for ten years and, unlike Libor, is based on trades and binding quotes for overnight transactions on the secured Swiss franc money market. This market segment is broader and more liquid than the unsecured money market on which Libor is based.
News conference  22 September 2022, 10.00 am  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the news conference of the Swiss National Bank. Our news conferences will now be held after every monetary policy assessment. The introductory remarks will be shorter overall. This will give us more time to take your questions afterwards. Monetary policy decision  I will begin with our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.75 percentage points to 0.5%. In doing so, we are countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected. It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term. To provide appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. The SNB policy rate change applies from tomorrow, 23 September 2022. Moreover, we are adjusting the implementation of our monetary policy to the positive interest rate environment. This ensures that the secured short-term Swiss franc money market rates remain close to the SNB policy rate. Banks’ sight deposits held at the SNB are remunerated at the SNB policy rate up to a certain threshold. Sight deposits above this threshold are remunerated at an interest rate of zero percent. We will also use liquidity-absorbing measures.

Moreover, our new forecast, which as always takes account of today’s decision, shows that a further tightening of monetary policy cannot be ruled out in the coming quarters. However, the environment continues to be subject to a high degree of uncertainty. Let me now say a few words about the exchange rate. The Swiss franc has appreciated in trade-weighted terms by around 7% since the monetary policy assessment in June. This appreciation helps to tighten monetary conditions and dampen inflationary pressure. In order to set appropriate monetary conditions, we remain willing to be active in the foreign exchange market as necessary. If there were to be an excessive appreciation of the Swiss franc, we would purchase foreign currency. If the Swiss franc were to weaken, however, we would consider selling foreign currency. Period of negative interest rates comes to an end  With today’s decision, an extended period of a negative SNB policy rate comes to an end. Negative interest was introduced at the beginning of 2015 to counter upward pressure on the Swiss franc associated with the discontinuation of the minimum exchange rate. Over the past years, negative interest has helped to dampen the appreciation of the Swiss franc and to ensure price stability. At the same time, we were always aware that negative interest can have undesirable sideeffects and presents challenges for many economic agents. On the whole, however, negative interest has proved its worth.
A projection of GDP from 2005 according to the earlier trend of three per cent per year would have given a GDP level about six per cent higher than actual GDP in 2011. Even if this is only a mathematical example and the potential growth, if there had been no financial crisis, is assumed to be significantly lower than three per cent per year, it still shows that the financial crisis put a dent in the long-term upwards development of potential GDP.13 The lowered rate of growth of potential GDP after the financial crisis corresponds with international experiences. In conjunction with financial crises, it is normal for GDP growth to be lower in the ten years following the crisis than in the ten years before the crisis.14 But the financial crisis primarily affected Sweden through reduced exports, not through problems in the banking sector. It is thus not self-evident that the rate of growth of potential GDP should necessarily be lower in Sweden. One explanation may be that the rate of growth of potential GDP does not only decrease in conjunction with financial crises, but also in conjunction with deep recessions. We have seen in earlier crises, in the late 1970s and early 1980s, as well as in the early 1990s, that a deep recession can have this effect. On these occasions, GDP did not reach the pre-crisis trend level for the next ten years.15 Another explanation may be that Sweden, with its high international dependence, cannot isolate itself too much from developments abroad.

We need more knowledge of productivity growth Today, I have given you an account of how the Riksbank tries, in various ways, to assess how large resource utilisation is. One of the measures of resource utilisation that we use compares actual GDP with an estimate of potential GDP. The financial crisis has probably lowered the growth rate of potential GDP. Actual GDP is thus roughly equal to potential GDP at present, even though GDP is only slightly higher than it was before the crisis. My assessment is also that resource utilisation is largely normal. This assessment is also supported by other measures of resource utilisation that are not associated with such large problems in calculation. Resource utilisation has a positive relationship with future inflation. Resource utilisation is thus also an indicator of future inflation. It is therefore important to be able to reliably estimate the level of resource utilisation. But the financial crisis and the associated deep recession have greatly increased uncertainty in estimates of resource utilisation. Different  16  See “An indicator of resource utilisation”, Economic Commentary no. 4, 2010, Sveriges Riksbank. 17  See the article “The driving forces behind trends in the economy can be analysed using a production function” in the Monetary Policy Report of October 2010. 18  See also the article “Low unemployment – a challenge” in the Monetary Policy Report of July 2011.