samchain/econo-pairs-v1 huggingface dataset:
The capital needs arising under the adverse scenario are moderate at the aggregate level, although there is considerable heterogeneity across banks. Specifically, the reduction in the CET1 capital ratio for large institutions with a significant international presence is 0.4 pp, standing at 2.7 pp for other SSM-supervised banks and at 0.6 pp for less significant institutions. The difference obtained between internationally active institutions and other institutions supervised by the SSM shows the significance of geographical diversification in absorbing shocks. The lower decline in the capital of the less significant institutions is largely due to their lower credit risk and the lesser weight of their exposure to the real estate sector, i.e. to their better asset quality. The results obtained are generally more favourable than last year. This is because banks have made use of the past year to lessen their exposure to changes in the prices of certain assets, such as foreclosed assets. Specifically, banks have offloaded considerable packages of foreclosed assets during 2018 and in 2019 to date. Turning once more to the main sources of risk to financial stability, the last such source I wish to mention relates to financial institutions’ operational risk. Operational risk accounts for 9.3% of Spanish deposit institutions’ volume of risk-weighted assets, slightly below the European average (10.5%). In any event, the deterioration of solvency associated with an operational risk event may be high based on past experience.

If, on the other hand, we understand political union as the establishment of an entity that resembles the traditional nation state, the European Union may still have some way to go, if indeed this is the direction that Europeans want to take. Today’s Union is not a European Federation, for example, or a United States of Europe, with a constitution and a single executive. The euro marks the achievement of full integration in the monetary field. In purely functional terms, it is therefore an end point, rather than an intermediate step. However, with the euro, we now form a “Schicksalsgemeinschaft”, a community with a shared future. Our economies are linked, and so our policy decisions have become a matter of concern for all. We have a legitimate interest in developments and political actions in other euro area countries, since we are affected by them - for better or for worse. If I may use a “domestic” metaphor, the marriage in which the euro has joined our countries is about more than just living under the same roof, it is about sharing a common vision and about managing life together. Concluding remarks In the context of the current attempts to help the European Union work smoothly and on a sustainable basis following its future enlargement, I would like to conclude by mentioning the draft Treaty establishing a Constitution for Europe. The process of European integration has delivered half a century of stability, peace and prosperity.
The Bank of Canada, on the other hand, has a short maturity on its holdings, which means that selling them has not been judged to be appropriate.22 The Federal Reserve has a very long maturity on its holdings of mortgage bonds, which has led the Monetary Policy Committee to begin discussing active sales of those assets in the future, to achieve the long-term goal of primarily owning government bonds.23 Figure 9 shows how our aggregate holdings of securities would develop if no further purchases are made after 2022. Please note that this should be seen as a simple projection and not a forecast. As early as the forecast period up to the second quarter of 2025, the holding may well have been halved through maturities. This means that we do not have to consider active sales in the same way as, for example, the Bank of England to reduce the holding at a relatively rapid rate. I mentioned earlier that there are no reasons for the Riksbank to have any major holdings of private assets as the financial markets are functioning normally. Figure 20 See Bank of England (2021, 2022). 21 See Office for Budget Responsibility (2021). In addition to government bonds, the Bank of England has pur-  chased corporate bonds for a small amount, with sales of these starting in the second quarter of this year. 22 See Bank of Canada (2022). 23 See Federal Reserve (2022b). 8 [19]  10 shows the distribution of the securities held by the Riksbank.

And at our meeting in June last year we decided to use the full framework, which meant that our asset purchases ended at SEK 700 billion. Our plan was then to merely maintain the holding, by compensating for principal payments. I will return to our most recent decision later on. Broadly speaking, the Riksbank's monetary policy response followed the same pattern as the major central banks, the ECB and the Federal Reserve, as is illustrated in Table 1. This is not so strange, given that the crisis affected many countries roughly at the same time and in the same way. Figure 2 shows our holdings of securities, while Figure 3 shows how much of the outstanding stock we have purchased in each respective market. On the whole, we now own roughly the same nominal amount of government bonds as covered bonds. Nevertheless, we have bought a considerably smaller share of the outstanding stock of covered bonds compared to government securities. This says something about the size of the market for covered bonds. 3 On 12 March 2020, the index on the Stockholm Stock Exchange fell by 11 per cent. 4 See, for example, Sveriges Riksbank (2021), Cunliffe (2022) and the Federal Reserve Bank of New York (2022). 5 There have also been purchases of smaller amounts of securities with shorter maturities, in the form of treas-  ury bills and commercial paper. 6 The Riksbank also implemented a number of other measures as a result of the crisis.
Our economies and our societies have suffered heavily – indeed, on all available forecasts, this year will see the biggest declines in GDP recorded in peacetime – and we will have to endure a period of painful reconstruction for which sound knowledge and also good judgment will be essential. 1/1  BIS central bankers' speeches

As the BNB is not entitled to direct legislative initiative, we are going to immediately submit this draft to the Ministry of Finance so that they move it on to the National Assembly. Therefore,  2/5  BIS - Central bankers' speeches  when we speak of the legal framework, it is not so much about our readiness with drafted laws, but about whether we will have a working Parliament and political will. If these are present, the legislative programme can be fully completed in the next few months. The fourth group of tasks deals with the technical preparations and the entire logistics of the process of accession to the euro area. With regard to this group of tasks, not a small part of the burden falls on the Bulgarian National Bank and commercial banks. We are working intensely and systematically to fulfil this group of tasks. I will give a few examples to illustrate this. As a Central Bank, we have already received the full documentation on the minting of the Bulgarian euro coins. You probably know that at the end of last year, together with the Minister of Finance, we signed a Memorandum on this issue with the European Commission and with the Eurogroup that represents the euro area Member States. Under this memorandum, we have received the full set of documents from the European Commission and we are preparing for the first tests of minting the Bulgarian euro coins.
According to a study by Hoggarth et al, the average drop in GDP following a financial crisis is 15-20 percent. The social costs from a banking failure can thus be substantial and involve many countries in various degrees. This, in turn, will most certainly have the effect of giving rise to difficult negotiations on how burdens should be shared between the countries involved. The larger the banking group, the more countries that are involved in its cross-border activities, and the more important the bank is to the functioning of the financial system in a country, the higher the stakes will be for individual countries and the trickier and tougher the negotiations will be. But why is this relevant in a crisis management perspective? Couldn’t we just go about and deal with the most urgent phase of a crisis first, and take care of burden sharing later, when we all know the facts? In my opinion, we cannot afford to wait that long. Uncertainty about the distribution of social costs in the event of a cross-border banking bankruptcy can seriously hamper the ability to act in an emergency situation. In particular, there is a risk that crisis management will be held up by a negotiation game between nations unless there are some previously made arrangements for burden sharing.

If it is a subsidiary that is systemic in the host country, one solution might be for the central bank of the host country to grant emergency liquidity assistance to the subsidiary. However, it may not be possible to successfully ring-fence it, and the money is lost and the rescue mission fails. Similarly, the decisions in an emergency situation may also be distorted by conflicts of interests regarding deposit guarantee schemes and other crisis resolution measures. Through deposit guarantee schemes, bank deposits are partly insured in the event of a bank default, thereby protecting depositors from losses (up to some maximum amount), which in turn reduces the risk of bank runs that may jeopardise financial stability. Deposit guarantee schemes are thus a vital part of the safety-net for banks, apart from the central banks’ ability to grant emergency liquidity assistance. All EU-countries are required to have deposit guarantee schemes that are supposed to be financed by the financial industry, for example through fees to a fund. Typically such funds would be designed so that any deficits in the fund are financed by the banks from future fees. However, it seems doubtful that such financing would be sufficient in all cases. In the case of default of a very large bank, it seems more likely that the government would then have to intervene somehow. Either the deposit guarantee fund would have to borrow from the government, or the government would step in directly and provide some retribution to depositors on behalf of the deposit guarantee fund.
Please be assured that I am not criticising the construction of the CPI, which is, so far as I am able to judge, absolutely appropriate in terms of arriving at an overall cost-of-living index, but I do suggest that some qualifications may be needed if it is to be used in other analysis, such as that of business decisions which we are discussing here. Let me turn now to interest rates. Real rates have been high, at least as measured on the backward-looking basis in slide 4 (ie nominal rates less recorded inflation over the preceding twelve months). This is the arithmetic result of nominal rates which are very much dictated by US rates and recent deflation of prices in Hong Kong. US rates are being held up in part by the extremely buoyant US economy, and you will see from slide 6 that the Hong Kong economy is out of phase with the US, on the downside, to a greater extent than at any time since our exchange rate link was established. The only comparable divergence was in the 1980s, and that was on the upside, when we experienced - in complete contrast to today uncomfortably rapid inflation and negative real interest rates. But tight monetary policy is being balanced by a more relaxed fiscal stance (slide 7), as defined by the size of the budget balance relative to GDP. This is a reversal of the more common position in Hong Kong of relatively loose monetary and tight fiscal policy.

Philipp M Hildebrand: Economic outlook and monetary policy Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, Apéritif Marché monétaire, Geneva, 17 November 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy has benefited from a favourable international environment. Activity has remained strong in the US, whereas it has improved in Japan and, more recently, in Europe. In Switzerland also, the latest indicators point towards stronger growth. Exports remain the engine of the recovery but private consumption has also picked up. However, consumer confidence remains fragile in the context of only modestly improving labour market conditions. The SNB expects the economic recovery to continue. A sudden adjustment of the US current account imbalance or a further increase of energy prices are predominant risks. From a monetary point of view, the current situation is characterised by different counteracting forces. On the one hand, the economic outlook is positive. On the other hand, some risks put this favourable picture into perspective. Furthermore, the increase of energy prices might endanger medium term price stability at a time when monetary conditions remain expansive. Last but not least, globalisation continues to hold down the prices of many goods. In this complex environment, it is important that central banks succeed in preserving their most important monetary asset, namely well anchored inflation expectations.
Lucas, Jr., Robert E., 1990, Why Doesn't Capital Flow from Rich to Poor Countries? The American Economic Review, Vol. 80, No. 2, Papers and Proceedings of the Hundred and Second Annual Meeting of the American Economic Association. (May, 1990), pp. 92-96. Obstfeld, Maurice and Alan M. Taylor, 2003, "Globalization and Capital Markets". In Michael Bordo, Alan M. Taylor and Jeffrey G. Williamson, Globalization in Historical Perspective, Chicago, The University of Chicago Press. Summers, Lawrence, 2006, Reflections on Global Account Imbalances and Emerging Market Reserve Accumulation, Speech delivered at the Reserve Bank of India, March 24, 2007. Summers, Lawrence, 2007, Opportunities in a era of large and growing official wealth, in Johnston-Calari, Jennifer and Malan Riedveld (eds. ), Sovereign Wealth Management, Blackrock and Central Banking Publications, London. Truman, Edwin M. 2007a, Sovereign Wealth Funds: The Need for Greater Transparency and Accountability, Peterson Institute for International Economics, Policy Brief 07-6. Truman, Edwin M., 2007b, The Management of China's International Reserves: China and a SWF Scoreboard, Paper prepared for the Conference on China's Exchange Rate Policy, Peterson Institute for International Economics, October 19tt, 2007. BIS Review 150/2007  9  Appendix Table 1.

However, the 1  See, for instance, the box on earlier economic downturns in the Riksbank’s March Inflation Report or the box in the IMF’s most recent economic outlook. BIS Review 32/2002  3  strong household consumption, primarily in the USA, does raise some questions with regard to the sustainability and strength of the recovery, given the initial low level of savings among US households and the relatively high indebtedness. The fact that large mistakes in forecasting can be made at turning points for economic activity is nothing unusual and the pattern we have been able to distinguish during the 1990s, with short-lived downturns and longer upturns, appears to be holding true. Economic policy has contributed to stability A number of different factors may have contributed to upturns in economic activity becoming longer, and the downturns shorter, while variations in production have declined. Various studies bring up different explanations, so I would like to point out that this is more a question of speculation than fact. One explanation could be that economic policy has contributed to increased stability. Fiscal policy in a large number of countries has been changed towards a balanced budget and avoiding an unsustainable build-up of debt, while monetary policy has been given a clearer focus on maintaining price stability. A greater emphasis on combating inflation and on institutional changes to make central banks more independent, has gone hand in hand with stabilisation policy appearing to have been more successful in counteracting fluctuations in economic activity in many countries.
Let me now touch on several important aspects of the Malaysian Islamic financial markets that are important to issuers and investors. These relate to the freedom to move capital into and out of Malaysia, the availability of credible and timely market information and the capacity of the Malaysian Islamic financial market to allow for greater product diversification and risk management. On capital mobility, Malaysia maintains a highly liberal foreign exchange administration regime. The primary focus of foreign exchange administration is to support the monitoring of flows of funds to promote financial and economic stability. As part of the continuous effort to enhance efficiency and reduce the cost of doing business, the foreign exchange administration rules have been progressively liberalised and simplified. There is free mobility of inward and outward movement of funds relating to both foreign direct investment and portfolio capital investments. Foreigners investing in Malaysia are also free to hedge with onshore banks their committed flow of funds such as the repatriation of investment proceeds, dividend and profits from Malaysia as well as the purchase of ringgit assets in Malaysia. In addition, investors are freely able to obtain ringgit and foreign currency to fund their investments in Malaysia. Strategic measures have also been taken to allow non-residents, in particular, Multinational corporations and Multilateral agencies to issue ringgit denominated bonds in Malaysia. The ringgit funds raised may be used either in Malaysia or outside Malaysia. Both the foreign issuers and investors are free to hedge their foreign exchange exposure from the issuance and interest respectively.

The Guidelines are in turn based on the London Approach that was formulated by the Bank of England when the UK market was going through similar strains at the beginning of the 1990s. The underlying principles of the Guidelines are as follows: *  When it becomes public knowledge that a debtor company may be experiencing financial problems and the borrower has approached its banks, banks’ initial attitude should be one of support. They should not withdraw facilities or hastily put the company into receivership, or issue writs demanding repayment. *  Further decisions should only be based on information that is reliable and shared fully with all the creditor banks (after obtaining the debtor’s permission). *  The decision to offer the company financial assistance - or not - should be a collective one by creditor banks. It will be seen that the process begins when the debtor takes the initiative to approach the banks and to call what is known as an “all banks” meeting. This is the first psychological barrier to be crossed, since companies are often reluctant to own up to their difficulties. The meeting with the banks offers the company the opportunity to explain the nature of its problems and to ask the banks to agree to a standstill on repayments of principal and possibly also of interest.
Andrés, J., López-Salido, J. D. and Nelson, E. (2004), “Tobin’s imperfect asset substitution in optimising general equilibrium”, Federal Reserve Bank of St. Louis working paper 2004003A. Borio, C. and White, W. (2003), “Whither monetary and financial stability? The implications of evolving policy regimes”, in Monetary Policy and Uncertainty: Adapting to a Changing Economy, pp. 131-212. Federal Reserve Bank of Kansas City: Kansas City. discussed in Bernanke, Gertler and Gilchrist (1999). There is also the strand of work stemming from Kiyotaki and Moore (1997). 13  Other recent contributions on the bank capital channel include Aikman and Paustian (2006); Chen (2001); Meh and Moran (2004); Van der Heuvel (2008). 14  Recent contributions with richer models of the banking sector, but less developed specifications of the macroeconomy include Goodhart, Sunirand and Tsomocos (2005, 2006) and Uhlig (2009). BIS Review 101/2009  17  Bean, C.R. (2003), “Asset prices, financial imbalances and monetary policy: are inflation targets enough?” in Asset Prices and Monetary Policy (eds. A. Richards and T. Robinson), pp. 48-76. Reserve Bank of Australia: Sydney. Bernanke, B. S., (2004), “The Great Moderation”, remarks at the Eastern Economic Association, Washington, DC, 20 February. Bernanke, B. S., (2005), “The global saving glut and the US current account deficit”, Sandridge Lecture, Virginia Association of Economics, Richmond, Virginia, 10 March. Bernanke, B. S., and Blinder, A.S. (1988), “Credit, money and aggregate demand”, American Economic Review, vol. 78(2), pp. 435-439. Bernanke, B., and Gertler, M. (2001), “Should central banks respond to movements in asset prices?”, American Economic Review, May, 91(2), pp.

These new instruments should directly target the incentives to extend excessive credit. But there are a number of practical questions to answer before they can be implemented. Charles Bean concludes that it is a mistake to look for a single culprit. Just as in Agatha Christie’s Murder on the Orient Express, those with different motives but similar objectives can all contribute to the same outcome. The economics profession was one of those culprits and there are lessons for the discipline. It could incorporate psychology or behavioural economics into the study of financial markets but this may be unnecessary since much of the story can be explained using standard microeconomics. Economists should take more notice  BIS Review 101/2009  1  of history and not treat crises as pathologies that happen in other times or in other places but as a central feature of free-market economies that models should aspire to explain. Finally, macroeconomists have to learn how to put credit markets into their models in a meaningful way and which enable us to model shocks originating in the financial sector rather than just as an amplification mechanism. The Great Moderation, the Great Panic and the Great Contraction The past twenty-four months have been tumultuous for the global economy, for economic policy makers and, indeed, for the discipline of economics.