samchain/econo-pairs-v1 huggingface dataset:
That will help all of us to consider the work ahead and make us even better prepared for the implementation of the New Accord by the end of 2006. Indeed, those of you in the audience from institutions that anticipate adopting the most advanced approaches available when the New Accord is implemented have already begun to collect and process the necessary data. You know, as well as anyone, that the required commitment is substantial, and that supervisors’ expectations are high. Reading the results of the global Basel II survey conducted by GARP during the month of January, presented in your monthly newsletter, I was encouraged to see that “Most financial institutions (77%) across the globe are confident that they will achieve full compliance with the Basel II risk-capital accord in time for the 2006 implementation deadline.” Perhaps even more important is the conclusion that “these institutions are confident that their internal risk management will be at least somewhat improved (86% somewhat or greatly improved) following the rollout of Basel II”. This is why I think that what you will discuss at this conference mean much more than simply complying with new regulations and calculating capital requirements appropriately. We want banks to manage risks, not to manage Basel II.

Jaime Caruana: Latest progress on Basel II Inaugural address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 5th Annual Risk Management Convention of the Global Association of Risk Professionals, New York, 24 February 2004. *  *  *  Introduction I would like to thank the organisers for inviting the Basel Committee to participate in GARP’s Risk Management Convention. Last year, you were kind enough to welcome as a keynote speaker Bill McDonough, the former President of the Federal Reserve Bank of New York and then the chairman of the Basel Committee. Today I am honoured to represent the Committee as Bill’s successor. The agenda for this week’s program demonstrates just how important and tough the job of a risk manager has become. Risk is no stranger to any business, and good business people have long sought ways to control their exposures to risk. Yet advances in technology and marketplace practices have sharpened our sense of the risks we face and of their potential costs should we fail to manage them. In recent years, for example, bankers have adopted an ever-widening array of databases, analytical tools, and sophisticated software packages to lend quantitative insight into risks that were once assessed mainly subjectively. Impressive advances have been achieved in measuring and managing exposures to market risk, credit risk and, more recently, operational risk.
But we must be vigilant towards any significant increase in longer-term inflation expectations. If high inflation gains a foothold, it may prove more costly to bring it down again, as experienced in the 1970s and 1980s. When my predecessor stood here last year, Norges Bank embarked on a gradual normalisation of the policy rate (Chart 7). But when inflation accelerated over spring, it became clear that the policy rate was no longer appropriate for the economic situation in Norway. Over summer and autumn, we raised the policy rate faster and in larger steps than had been the norm. As mentioned, the main driver of the jump in inflation has been higher prices for energy and imported inputs. So why does it help to raise the policy rate in Norway, some might ask. We cannot influence energy and commodity prices. But by softening demand, we can help avoid price increases for those prices spilling over to other prices and wages, and ushering in a period of high inflation. Chart 7 The policy rate was raised rapidly Policy rate. Percent 9 8 7 6 5 4 3 2 1 0 2001  2004  2007  2010  2013  2016  2019  2022  Source: Norges Bank  Norges Bank  Economic perspectives 2023  9  Chart 8 Inflation does not come down on its own Consumer price index subcomponents. Four-quarter change.

Yves Mersch: Medium to long-term priorities of Capital Markets Union (CMU) for the ECB/Eurosystem Panel remarks by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Eurofi conference, Luxembourg, 10 September 2015. *  *  *  While the Green Paper has set the right overall objectives of CMU and identified priorities for early action and the measures for the medium- to long-term, CMU needs to be pursued through a higher level of ambition to achieve greater capital markets development and deeper financial integration. 1. To bring about its expected benefits, the CMU should foster and result in a high level of financial integration in capital markets across the EU based on an adequate legal and regulatory framework. This would imply more steps towards greater harmonization of 1.  bankruptcy law,  2.  company law and  3.  taxation of financial products  that pose great political challenges. The aim is to ensure that investors have the same costs and equal access to finance irrespective of where they are located in the EU. Ultimately, the supervisory architecture will also warrant revision. The final destination in the path towards CMU will need to include the development of a single rulebook. These elements are key if we are to attain what has been ambitiously coined as CMU. 2. A schedule with clear milestones and deadlines in the upcoming action plan would facilitate implementation. 3. Market-led initiatives to promote capital markets are important but insufficient.
We can see from the graph (blue line) that inflation in the third quarter of this year was insignificantly higher than we had forecast in September. The dashed red curve represents the new forecast. It begins in the fourth quarter of 2004 and ends in the third quarter of 2007. The new forecast differs from the previous ones in three points. Firstly, the projected inflation is higher until the third quarter of 2005. Secondly, the inflationary uptrend sets in half a year later. And thirdly, inflationary pressure has decreased in the long term, which is evidenced by the lower-lying curve. There are significant economic facts behind these three deviations, which I would like to comment on. 1. Slightly higher inflation in 2005  The increase in the anticipated inflation until the third quarter of 2005 is predominantly attributable to the rise in oil prices. At the September assessment, the price of Brent in London stood at USD 41. By the end of October, the price had surged to over USD 50 before dropping back to around USD 40. Higher prices of oil products were the main cause for the rise in inflation in the last few months. Annual inflation between May and September hovered around 1%. A fresh spurt in oil product prices in October and November triggered a rise in annual inflation to 1.3% and 1.5% respectively. According to the new inflation forecast, the annual rate of inflation will increase to 1.5% on average in the first quarter of 2005.

With our decision to keep the three-month Libor rate on hold, we are adhering to our current monetary policy course: we are making use of our monetary policy leeway to support growth without jeopardising long-term price stability. Every forecast and every decision is fraught with uncertainty. Should unexpected events delay economic recovery or push up the Swiss franc sharply, we shall take appropriate action. For such cases, the Swiss National Bank keeps all its options open. 2/3  Observed inflation December 2004  Inflation forecast on September 2004 with Libor at 0.75% and of December 2004 with Libor at 0.75%  3/3
So, from a supervisory perspective, they were huge "black holes", including what has been called a "shadow banking system" where most of the excesses of securitisation took place. Not any more. During the last twelve months, a coordinated effort by industrialized and emerging countries alike has brought most important financial actors under the umbrella of supervision. Principles and rules have been enacted for rating agencies to deal with their conflicts of interest, enhance their rating process, increase transparency and their oversight through compulsory registration. Hedge funds will go through a process of licensing and oversight: they will have to meet transparency requirements towards both investors and regulators. Finally, off balance sheet activities will be consolidated and disciplined through changes in the accounting and prudential frameworks. The nature of financial regulation and supervision is changing. Here, I see two major trends. We must complement micro-supervision with macro-financial supervision, taking into account the systemic importance and interconnectedness of institutions, markets, instruments and the cumulative risks and dynamics which they create. System-wide phenomena that went unchecked, such as the aggregate rise in leverage and maturity transformation, must no longer escape our vigilance. All countries are moving in that direction. In Europe, following the de Larosière report, we are creating a European Systemic Risk Board. In the United States, it has been proposed that the Federal Reserve will become the future systemic supervisor.

Christian Noyer: Publication of Bank of France’s Financial Stability Review “The future of financial regulation” Remarks by Mr Christian Noyer, Governor of the Bank of France, at the publication of Bank of France’s Financial Stability Review “The future of financial regulation”, London, 4 September 2009. *  *  *  It's a pleasure to welcome you here, in London, on the eve of a very important G20 Ministerial meeting and to introduce the latest issue of our Financial Stability Review. It is also a privilege to have such a distinguished panel for this introduction and I want to express my gratitude to all. The Review is about the Future of Financial Regulation. Our hope was to help and contribute to the international discussions and the publication of this Review could not be timelier. The financial crisis has taught us some very hard lessons. While there are many causes to the crisis, including, maybe, macro economic policies, it is also clear that it forces us to reconsider the way we regulate and supervise the financial system. That is what we are doing, and this will take a significant part in tomorrow's discussions between G20 Ministers and Central Bank Governors. At stake is the scope of financial regulation, its nature, and its objectives. The scope of financial regulation We entered this crisis with many unregulated entities playing a major role in the financial system.
Information sharing with other agencies is simply not as good as the intimate knowledge and understanding of markets and institutions that is  BIS Review 6/2010  5  gathered from first-hand supervision. Indeed, many institutions at the center of the crisis and arguably the most troubled – Bear Stearns, Lehman Brothers, Merrill Lynch, AIG and the GSEs – were not supervised by the Federal Reserve. Consequently, when those institutions came under stress, the Federal Reserve had poorer quality and far less timely information about the condition of these institutions than would have been the case if we had had the benefit of direct supervisory oversight. In fact, some of the hardest choices the Federal Reserve had to make during the most chaotic weeks of the crisis concerned systemically important firms we did not regulate. It is not surprising that, in the wake of the crisis, some countries that had separated bank supervision from the central bank monetary policy role are now reconsidering that division of labor. That is mainly because coordination problems created difficulties in responding quickly and effectively in the crisis. Separation made it more difficult to communicate in a timely way and to understand the broader implications of what was transpiring. It is critical that we not introduce new inefficiencies and impediments.

We need a new regulatory structure that provides for comprehensive and consistent oversight of all elements of the financial system. This includes effective consolidated oversight of all our largest and interconnected financial institutions and oversight of payment and settlement systems. We must make sure that the people doing the regulation have the power and expertise to ferret out and bring to heel regulatory evasion as it occurs to prevent abuse and excess from building up in the financial system. In the end, the gaps, not the overlaps, have been the main shortcoming of our existing regulatory framework. A second fundamental point is that regulatory reform has to ensure that the financial system will be robust and resilient even when it comes under stress so that it will not fail in its critical role in supporting economic activity. No economy can prosper without a well-functioning financial system – one that efficiently channels savings to the businesses that can make the most productive use of those savings, and to consumers that need credit to buy a home and support a family. The fact that our financial system isn’t functioning well right now is part and parcel of our current economic difficulties. This critical link between the “real” and the “financial” is why we care so much about the systemic risks inherent in banking and finance. One critical element of systemic risk is what is known as the “too big to fail” problem.
5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  Chart 4: Underlying UK inflation relative to target-consistent levels  pp  2 1.5 1 0.5 0 -0.5 -1 -1.5 -2 -2.5  2012  2013  2014  2015  CPI ex VAT Trimmed mean core  2016  2017  2018  Core services CPI ex VAT SPPI  2019  2020  2021  Core CPI ex VAT  Source: ONS and Bank calculations  Chart 5: UK inflation expectations  Source: Bank of England, HMT Survey of Professional Forecasters and Citi/YouGov Household Expectations Survey  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  On the demand side, a disinflationary drag factor over the past decade has been the persisting effects of the global financial crisis. The recovery from this crisis was significantly slower than expected, with the level of activity in the UK consistently undershooting expectations (Chart 6). This resulted in a larger and more persistent output gap, and hence a larger and longer downdraught on inflation, from the demand side of the economy than was anticipated. The same was true internationally. Chart 6: UK GDP growth and historic forecasts  per cent  6 4 2 0 -2 -4 -6 -8  2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: ONS and Bank of England.

7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  For example, micro data studies from the UK, US, Denmark and Norway have all found statistically significant correlations between higher levels of household debt and the size of consumption cuts in a shock.13 And macro studies have also found correlation between rapid credit growth and the severity of downturns.14  But new studies have also sought to deepen the knowledge base. In particular, they have looked at why more highly indebted households cut consumption in response to shocks – the channels through which the observed association is working. For example, there could be debt financed ‘over-consumption’ prior to a downturn that is then cut back when expectations adjust to reality or credit becomes unavailable. This channel might work directly through unsecured consumer borrowing or through mortgage financed borrowing to consume. Alternatively, there are channels through which higher levels of debt constrain household budgets without appealing to ‘over-consumption’: some indebted households may be unable to consume as much as they would like in a downturn because they do not have a sufficient buffer of liquid savings and find themselves unable to access additional credit when they need it the most. This situation is more likely when falls in house prices reduce the value of the borrower’s collateral. The situation is also likely to be exacerbated if the downturn is accompanied by rising uncertainty. The combination of rising uncertainty and credit constraints would tend to lead to further reductions in spending as households build precautionary buffers.
The main financial indicators of banking sector soundness – capitalization, liquidity and profitability – show it has full capacity to withstand operational risks under normal conditions, as 4/8  BIS central bankers' speeches  well as good resilience against shocks. The share of banking sector assets in the Gross Domestic Product was 95.8% at the end of 2016, up by around 4.5 percentage points from a year earlier. Credit and deposits rose by 2.5% and 5.2%, respectively. In terms of capitalisation, the capital adequacy ratio stands significantly above the regulatory requirement. It stood at 15.7% for 2016, against the 12% regulatory requirement. Good capitalisation remains a characteristic feature of our banking system; it was maintained due to continued positive values in the net financial result. However, the financial result of the system fell slightly during 2016, mainly reflecting the increase in provisioning for the credit risk. The increase was a result of the conservative approach adopted by the Bank of Albania requesting banks to reclassify under non-performing loans those of certain large borrowers facing financial difficulties or a bankruptcy situation. The Return on Assets (ROA) of the system fell to 0.7% from 1.2% a year earlier, whereas the Return on Equity (RoE) fell to 7.2% from 13.2%. In terms of risks, the Bank of Albania deems that the banking system’s exposure to liquidity risk and market volatility is within acceptable parameters, but the management of such risk requires on-going attention by the banking industry.

Over time, this has become a reality almost everywhere. In Europe, countries and their inhabitants have converged on one currency – with the euro area as a special case, of course. In the United States, developments have been similar. The ‘free banking era’ showcased the impossibility of keeping track of the values of notes by different issuers. In the end, they were replaced by Federal Reserve banknotes, and a common currency was established. During our lifetime and in our part of the world, it has been like that – one country, one monetary unit. However, a few years ago, technology started to challenge this, at least conceptually. We are now seeing the emergence of cryptoassets in various forms, without a public issuer, claiming to be money. Yet, most of them vary significantly in value, which means that their purchasing power also fluctuate. Consequently, cryptoassets mainly function as investment assets and not as a means of payment in the way we use, for example, kronor, euros and dollars. One innovation in the crypto world is so-called stablecoins, which are cryptocurrencies where the issuer promises that the value follows the value of another asset, such as dollars. In this way, the stablecoin issuer uses the trust in already established currencies. So far, stablecoins have mainly been used by those active in the cryptoasset market, but there is the ambition to broaden their acceptance as a means of payment.
In sum, I continue to expect moderate growth in the year ahead and see the risks to that outlook as skewed to the downside, mainly due to uncertainty as to how events in Europe will unfold. Earlier this week we had a meeting of the FOMC. The committee reiterated its intention to maintain a highly accommodative stance for monetary policy to support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate. The committee said it now anticipates that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. The committee also released a statement of longer-run goals and monetary policy strategy within the context of the dual mandate, and published information on individual participants’ expectations of the appropriate future interest rate path. As Chairman Bernanke explained in his press conference on Wednesday, the strategy statement “should not be interpreted as indicating any change in how the Federal Reserve conducts monetary policy. Rather, its purpose is to increase the transparency and predictability of policy.” Further details on the discussion at the meeting will be available when the minutes are published in three weeks. I will not comment on monetary policy any further today beyond stating that monetary policy has done and will continue to do its part in supporting the recovery – but it is not all-powerful.

For example, the 10-year real rate beginning in 10-years’ time implied by current government bond yields is -¾%. The comparable number over 2000-2006 was +1⅔%. And even during the height of the financial and euro area crises over 2008-2012 it was +¾%. (Chart 7) In the long term, the most important determinant of potential output growth is productivity growth, which is in turn determined by the rate at which new ideas are generated and implemented. And given the very disappointing productivity performance of the UK over the past 7 years, it would perhaps be understandable were financial markets to have lost hope that productivity growth would ever return. Perhaps they agree with those who argue that recent innovations cannot contribute as much to productivity growth as historical ones such as the electric light bulb, the internal combustion engine and indoor plumbing once did. 14 Human history has had many periods in which pessimism about innovation and technological progress has been proven wrong, dating at least back to Malthus. There is much by way of exciting innovation that has yet to be fully exploited. 15 3D printing is transforming the R&D process by vastly increasing the capability to produce prototypes. Advanced robots are being developed that will allow increased precision and safety in their use, thus increasing our ability to automate many routine activities. Firms are learning how to harness the power of Big Data, which will allow them to personalise their products better and reduce waste.