samchain/econo-pairs-v1 huggingface dataset:
[7] Tobias Adrian and colleagues at the IMF find that augmenting conventional monetary policy with foreign exchange interventions and capital flow measures in emerging market economies may improve their monetary policy trade-offs. [8]  The fundamental premise of an integrated policy framework is the recognition that policies that are independent in execution are often interdependent in their effects. If fiscal policy is not sound, fiscal dominance concerns will undermine monetary policy credibility. If the financial system is not sound, financial dominance concerns may compromise monetary policy. Fiscal stability may also be put at risk. In an integrated policy framework, the objectives of monetary, macro-financial, and fiscal policies do not need to change. But the way these objectives are pursued cannot ignore their implications for financial stability and price stability. Specifically, an integrated policy framework must seek to avoid the unsustainable build-up of debt which is the root cause of much financial instability. For monetary policy, it means providing a credible anchor for price stability in a way that does not lead to an unsustainable increase in leverage in the economy. For macroprudential policies, it means leaning against an unsustainable expansion of credit, inflation in asset prices, and the excessive build-up of debt in the economy. For fiscal policy, it means ensuring that public debt is sustainable and does not become a source of financial vulnerability in the economy. MACRO-FINANCIAL POLICIES The second key proposition: financial sector vulnerabilities are best addressed using a variety of macro-financial policies in a coherent manner.

As of June last year, the combined market capitalisation of the top four US coal producers had fallen by 95% since the end of 2010, and three of the top five US firms had filed for bankruptcy. There has also been a similar, albeit less severe, valuation shift for German utilities which have been seen as slow in responding to changes in domestic energy policy designed to shift towards renewables. 1  PRA (2015), The Impact of Climate Change on the UK Insurance Sector, https://www.bankofengland.co.uk/prudentialregulation/publication/2015/the-impact-of-climate-change-on-the-uk-insurance-sector and Scott, M., Van Huizen, J. & Jung, C. The Bank of England’s response to climate change. 98–109 (Bank of England, 2017). 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  The financial risks from climate change are clearly therefore already with us. But more significantly, these risks, both from physical and transition channels, will increase if global temperatures continue to rise or the re-allocation of capital implied by the transition to a ‘well below 2C’ world becomes more significant. I will refrain from spending too much of my time outlining the scale of the challenge given the number of reports published that have highlighted the issue. But the main messages in all of these reports is that if we are to make our climate goals a reality, significant amounts of equity, bank loan, and bond financing will need to become ‘green’.
This strategic move speaks louder than words and confirms that there are enormous opportunities here, which the bank can benefit from, despite the stiff competition in the market. Ladies and Gentlemen, another issue that the Bank of Zambia continues to challenge commercial banks on, is the cost of borrowing which continues to be high in spite of the efforts by the Bank of Zambia and the Government in ensuring that these costs come down. As you are no doubt aware, the Bank of Zambia reduced the Statutory Reserve Ratios from 14% to 8% in October, 2007 with a primary aim of bringing the cost of borrowing down. Further, in the recent few years, the Bank had managed to contain inflation to low levels in order to further reduce the lending rates. Coupled with this, in the recent past, the Government adopted prudent fiscal policies that enabled the private sector to access more credit from the financial system. Despite these efforts, credit is still not affordable to the majority of our people. This high cost has in turn stifled the growth of the productive sector and in particular Agriculture and the SME sector, which are the engine for the economic growth of our country. Hon Minister, I am however, glad to note that credit to the private sector has increased significantly with the Personal loans category accounting for the largest beneficiary of credit followed by the Agriculture sector.

As you are aware, the decline in the copper prices on the world market has negatively affected the operations of the mining sector, leading to downsizing and job losses. Contributions by the mining sector to Government revenue is also expected to decline in the 2009 while foreign exchange in the market has declined. The unprecedented high prices of fertilisers and other agricultural inputs also contributed to the current high food prices. These and several other factors have resulted in the depreciation of the Kwacha against other international currencies as well as high inflation which closed the year at 16.6% from 8.9% in 2007. Hon Minister, the economic outlook may not be rosy now. The challenges may be huge but at the same time not insurmountable. You will agree with me that as a country with vast arable land and water resources as well as a huge market of eight neighbouring countries, we cannot afford to sit and wait for assistance from other countries. We need to work extra hard so that we can feed our children as well as export the surplus to neighbouring countries. We need to look within ourselves and determine how each one of us can help overcome the challenges that we face today. It is therefore my appeal to all of us present here today to show more commitment to the growth and development of our country.
Although the Riksbank was able to phase out its extraordinary measures relatively quickly, compared with other countries, the Riksbank’s balance sheet has for various reasons changed since before the crisis. So let us go through why the balance sheet looks the way it does. 1  The concept “monetary policy liabilities” is used as a generic term for the items ‘liabilities to credit institutions in Sweden related to monetary policy operations denominated in Swedish kronor” and “debt certificates issued”. 2  BIS central bankers’ speeches  How has the Riksbank’s balance sheet developed over the past decade? Let us examine (a simplified version of) the Riksbank’s balance sheet from the year-end 2004. Ten years ago, the balance sheet total was SEK 183 billion. The asset side was dominated by the gold and foreign currency reserves, which amounted to SEK 166 billion. In addition, we had a monetary policy claim on the Swedish banks of SEK 17 billion.2 At that time the Riksbank lent money to the banking system and this was done through the monetary policy repo transaction (therefore the name repo rate). The assets are largely funded through the Riksbank over the year issuing banknotes and coins to a value of SEK 109 billion. The bank’s equity amounted to SEK 65 billion. The small liability to the IMF is a result of Sweden’s membership of the International Monetary Fund. I do not intend so say so much about this item now. Let us now compare this with how the balance sheet looks today.

As you can all see, a lot has happened over the past ten years. For instance, we can observe that:   The foreign currency reserve is SEK 325 billion larger. This increase is mainly because we have borrowed the equivalent of SEK 200 billion in foreign currency through the Swedish National Debt Office to strengthen the foreign currency reserve. The Riksbank’s balance sheet 2004 and 2014 SEK billion  Source: The Riksbanken  2  The formal term in the balance sheet is “lending to credit institutions in Sweden related to monetary policy operations denominated in Swedish kronor”. BIS central bankers’ speeches  3    We have once again acquired a securities portfolio in Swedish krona. The Riksbank previously had a portfolio of Swedish securities but then this was phased out more than ten years ago.   The stock of notes and coins has declined, partly due to card payments and electronic payments becoming more common. As a consequence of this, we now have monetary policy liabilities instead of a monetary policy claim. This means that we are now borrowing excess liquidity from the banking system instead of lending money to cover a liquidity deficit. I will return to this issue later on.
It is factors such as “economic capital” and the level of competition that drive loan pricing, rather than regulatory capital. Research on the pricing of international syndicated loans has confirmed that “pricing clearly varies positively with credit risk.” That finding should be no surprise to any banker or supervisor – banks that do not price their loans based on a borrower’s credit risk probably will not be in business very long. When applied in the context of sovereign or bank borrowers, this finding suggests that loan pricing already takes into account the credit quality of the borrowers. Studies such as this one have concluded that, consequently, even those countries that have the lowest credit quality will not likely experience a marked contraction in capital flows. Why would that be true? It is because banks that are managing their risks appropriately are already considering all of the risks that they face when they lend to higher risk borrowers – and thus a country’s lower credit quality is already priced into a loan, even under the existing capital rules today. Furthermore, there are additional elements in Basel II that can contribute to alleviate concerns about the impact on capital flows. Let me mention the reduction in capital charges for retail lending, residential mortgages, small and medium enterprises (exposures below € 1 million) and well-provisioned past-due loans.1 Also, the recognition of credit risk mitigants such as collateral and guarantees is significantly better in the new framework of Basel II.

Of course, the Committee hopes that, over time, more and more countries will adopt the framework. We do not want them to do so before they are ready. And, when they are ready, we want them to adopt the options and approaches that are most appropriate for their circumstances. For a country that wishes to adopt Basel II but may not yet be ready, I would suggest a three-stage approach to the transition to Basel II. These stages could be categorised as (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. This three-stage process recognises that Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, Basel II is intended to enhance the quality of risk management. To achieve this goal, Basel II must be built on the foundation of a sound supervisory system. Such a foundation includes having successfully implemented the Basel Committee’s “Core Principles for Effective Banking Supervision,” including the provisions on operational autonomy of the supervisory authority, adequate supervisory resources, regulatory and remedial powers, and a sufficient legal framework. Likewise, sound accounting and provisioning standards are critical to ensuring that the capital ratios - however calculated - reflect meaningfully the bank’s ability to absorb losses. Establishing a solid foundation of sound supervisory, legal, and accounting systems constitute the essential first stage of the process of moving to the new supervisory framework.
A supervisory innovation: recovery planning The potential for rapid decay of asset and business line values unless assets and liabilities are transferred to a permanent owner quickly is a large part of what sets financial institutions apart from other companies entering insolvency. This difference motivates efforts to avert insolvency through supervisory action, as I described earlier. It also motivated U.S. banking supervisors in the early 1990s to ask some troubled banking companies not only to apply the three-part program but also to develop a meaningful contingency plan for reducing risk and raising capital if the first round of actions did not succeed. The supervisors incorporated the requirement to develop contingency plans in its supervisory agreements with those institutions. 2  BIS Review 140/2010  The CBRG has recommended that all systemically important financial institutions develop recovery plans. I believe the development of such plans by healthy institutions and their discussion by a college of the firm’s principal regulators constitute important innovations in the supervision of financial institutions. The Cross Border Crisis Management Group has provided momentum and a forum for discussion of progress and challenges as supervisors initiate discussion of recovery plans with firms. The discussions we have held in the United States involve the financial institution, its major U.S. regulators and the regulators of the foreign legal entities containing its principal business operations.

However, bail-in is not yet a well-defined concept in the international policy discussion; I’m not sure how my description of a mechanism resonates with the overall discussion. Right now, the common theme of a set of bail-in concepts is putting in place a statutory or contractual trigger that would convert a firm's debt into equity, thereby immediately strengthening the firm's capital base. Short-term debt and liabilities would likely be excluded. To move the bail-in mechanism from concept to a meaningful proposal, the official community needs to develop one or more specific proposals that can be vetted, debated and improved. In that spirit, let me list some areas in which a bail-in proposal needs to be more specific. A proposal needs to make clear:   The nature of the trigger. Is it contractual or supervisory? Is it rule-based and if supervisory, rule-based or discretionary? 6  BIS Review 140/2010    The desired capital structure before a bail-in. Consonant with the work in Basel on capital and liquidity requirements, how much bail-in eligible debt should the firm have? To answer that requires specifying goals for the capital structure of the restructured firm. It is probably crucial that the post-bail-in capital structure provide enough loss-bearing capacity to make regeneration of the company's prospects credible.   Estimates of the market capacity to purchase bail-in eligible instruments relative to the amounts of such instruments that would be needed and the price sensitivity of markets to volume and financial institution credit quality.
I was struck by a trivial example of where a bad equilibrium path can lead on a recent visit to the US. I opened the mini bar in my hotel room to find it empty save for a small slip of paper. Here is what it said: “A personal note to you.... We have made a renewing change to our heavenly guest rooms. Our refreshment centers will no longer be pre-stocked. Please be aware the refreshment center cooler is not intended as a refrigeration device” The empty-mini-bar equilibrium is not a good one. How do you get there? I think the story is this: mini-bar prices are high; they are high because some people conveniently tend to forget how much they may have used their mini-bar when they come to pay the bill and that forgetfulness gets worse the higher are prices; but then the mini bar prices need to be even higher as the forgetfulness seems to get worse. This vicious cycle ends up with mini bars that are empty save for a “personal note to you”. Good economic policies can help prevent bad equilibria and reduce the chances of vicious circles. For banks, I believe the most direct way to do this is to prevent an initial (limited) fall in the value of assets triggering sharply higher concerns about their solvency.

We will deploy these measures aggressively for as long as this remains appropriate, both within the context of our monetary policy strategy and with a view to our inflation forecast. We are aware that long-term risks are associated with the option we have chosen for fighting this crisis. Yet the SNB is profoundly convinced that the risks associated with the option of “doing too little”, let alone the option of “doing nothing”, would have been far greater. As soon as a return of the Swiss economy to its long-term growth path can be foreseen, the SNB will certainly not hesitate to redirect its monetary policy accordingly. BIS Review 41/2009  1
As for Thailand’s international financial position, even though exports will not be as buoyant as this year due to a less favourable external environment and imports will continue to increase in line with the economic recovery, the current account will continue to record a surplus in the year 2001, though of a smaller amount. Although the Thai economy will continue to expand, there are a number of important issues to be taken into consideration:  The first issue: The US economic slowdown External risks will be increased as the US economy is expected to slow in the coming year. How much should we be concerned about this, given that the USA is a major industrial country and the major export market for Asian countries? The degree of Thailand’s exposure to the US market can be considered moderate, as exports to the US market constitutes about 21% of Thailand’s total exports. Major export goods include textiles, electrical appliances, electrical parts and integrated circuits. Over the years, the structure of Thai exports has diversified considerably in terms of both markets and goods, thus reducing over dependence on any particular market or goods. It is expected that this diversified structure and the enhanced price competitiveness will help cushion any adverse effects on Thai exports caused by the US economic slowdown. The second issue: Restoring public confidence Given that exports will slow down, economic recovery will have to rely more on domestic demand which in turn depends on the recovery of purchasing power.

Thus, for example, compared with the figures budgeted in 2019, real investment by the State is expected to rise by 47% in 2021 (equivalent to 0.2 pp of GDP), expenditure on civil research, development and innovation by 70% (0.4 pp of GDP) and expenditure on infrastructures by 52% (0.3 pp of GDP), while expenditure on education would increase by 80% (0.2 pp of GDP) and health expenditure by 71% (0.3 pp of GDP). As I have indicated, given the magnitude of these increases and the possible delays in the process, there is a risk that they may not materialise in full. In any event, independently of the volume of the European funds mobilised in 2021, I wish to insist on the importance of the quality of management of these funds. As I have said, it is essential they be assigned to new public investment projects with a high multiplier effect on economic growth potential. In addition, considering the temporary nature of these European funds, they should not be used to defray permanent increases in expenditure, as this would simply drive up our already high structural deficit. 19  These will clearly be the key aspects to be assessed in the coming quarters, as more details of the specific projects to benefit from the NGEU programme become known. My second comments refer to the forecasts contained in the Draft Budget for certain expenditure items that have been severely hit by the management of the pandemic in 2020.
We’ve seen it popularized by the Bank of Canada and Bank of England, and it figured prominently in the statement recently released by the Federal Open Market Committee (FOMC) of the Federal Reserve after our meeting of March 18–19 and again during the post-meeting press conference of the Fed Chair, Janet Yellen. It is front and center on the agenda of the FOMC. To understand forward guidance and its prominence in current discussions within monetary policy circles, it helps to retrace recent history. Adieu quantitative easing To encourage economic recovery from the debacle of the financial crisis of 2007–09, the FOMC cut interest rates to near zero. The Fed introduced an array of special lending facilities during the most panicked stage of the crisis. These credit and liquidity programs were largely self-liquidating as market functioning improved. But still being “zero bound,” we embarked upon a program of massively expanding the Fed’s balance sheet, referred to internally as “large-scale asset purchases” and popularly known as quantitative easing (QE). By buying copious quantities of longer-term U.S. Treasury bonds and mortgage-backed securities (MBS), our balance sheet has grown from slightly under $ billion prior to the crisis to $ trillion at present. When the Fed buys a Treasury note or bond or an MBS, we pay for it, putting money out into the economy with the expectation that the money will be used by banks and other creditors and investors to finance job-creating investment, the purchase of homes and other expansive economic activity.

Yet the press and the markets focus on them as though they were the writ of all-knowing, all-seeing monetary sages. On Monday night, for example, there was much ado made about Janet Yellen noting in Chicago that the central tendency of our best guesses was that full employment would be somewhere between a 5.2 and 5.6 percent unemployment rate. It is nonetheless helpful to contemplate what may be useful guideposts for deciding when to raise the base rate and how we may convey this to the markets. And so the FOMC is grappling with just what, in fact, we can provide the marketplace in the form of forward guidance about our future modus operandi. 4  Monty Python is the British comedy troupe known for its satirical skits. A parody about the FOMC’s “dots” could rank up there with the spoof about the argument clinic “intended to create grievous mental confusion among the general public.” A link is provided here for your enjoyment: www.youtube.com/watch?v=kQFKtI6gn9Y. BIS central bankers’ speeches  3  Odysseus or Apollo? Research papers have addressed this subject. For example, some academic economists draw on Greek mythology to distinguish different techniques for crafting forward guidance, making a distinction between Odyssean and Delphic forms of guidance. The Odyssean model involves committing to a policy rule or to a criterion for choosing between different policy alternatives.