samchain/econo-pairs-v1 huggingface dataset:
Without sufficiently high capital and liquidity standards, and, as a backstop, a resolution mechanism that is credible, regulators are faced with a Hobson’s Choice when a large, systemically important financial firm encounters difficulties. On the one hand, if authorities step in to respond to prevent failure, contagion and collapse of the broader system, that action rewards the imprudent and can create moral hazard – that is, encouraging others to act irresponsibly or recklessly in the future in the belief that they will also be rescued or “bailed out.” On the other hand, if authorities do nothing and let market discipline run its course, they run the risk  BIS Review 6/2010  3  that the problem will spread and unleash a chain reaction of collapse, with severe and lasting damage to markets, to households and to businesses. So what can we do about the “too big to fail” problem? It is clear that we must develop a truly robust resolution mechanism that allows for the orderly wind-down of a failing institution and that limits the contagion to the broader financial system. This will require not only legislative action domestically but intensive work internationally to address a range of legal issues involved in winding down a major global firm. Second, we need to ensure that the payments and settlement systems are robust and resilient. By strengthening financial market infrastructures, we can reduce the risk that shocks in one part of the system will spread elsewhere.

In the same way, the crisis revealed the critical deficiencies in the toolkits available to the regulators to deal with nonbank institutions in duress. Emergency lending by the Fed might be enough to forestall the disorderly failure of a systemically important institution and all the wider damage such a failure might cause, but it was a blunt and messy solution, employed as a stopgap measure because better alternatives were not available. What is needed – what our country still lacks – is a large-firm resolution process that would allow for the orderly failure even of a systemically important institution. 2  BIS Review 6/2010  Thus, in the fall of 2008, regulators and policymakers found themselves facing the prospect of the total collapse of a complex and interconnected system. It was these circumstances, and the prospect they created for an even deeper and more protracted downturn in real economic activity and employment, that required truly extraordinary actions on the part of the Federal Reserve, as well as the Treasury and many other agencies. This is a situation in which the United States must never again find itself. For its part, the Federal Reserve is hard at work on developing and implementing new regulations and policy guidance that take on broad lessons of the recent crisis. We are working with other banking regulators in the United States and overseas to strengthen bank capital standards, both by raising the required level of capital where appropriate and improving the risk capture of our standards.
Finally, as we talked about earlier, the economic and operational environment we are in is somewhat unusual, and we will consider whether this has any implications for the implementation timelines of any final policy. Conclusion 4/5  BIS central bankers' speeches  A rather ingenious member of my team at the PRA came up with the title of “mutual interests” for this speech. At first I took an instinctive dislike to this title, clever though it is, because I worried it had a hint of collaboration, cosiness, or regulatory capture – all of which I consider to be pure poison for the regulator. But having thought about it further I have concluded that it is actually a pretty good summary of what I’ve been talking about today. With regards to mutuals, parliament has of course always given us specific instructions to consider the impact of our decisions on the sector.6 But more broadly, as we now move into our future phase of rulemaking outside the EU, there will be even more opportunities for us to engage with all of our stakeholders, including industry and Parliament. Across strong and simple, the leverage and MREL reviews, and mortgage risk-weights we all have a very strong mutual interest in getting it right. I would like to thank Thomas Papavranoussis and other colleagues for their help in preparing this speech.

Nevertheless, the underlying risks of this transformation should not be ignored. The competition from Fintech such as EMIs and PIs leaves no room for complacency to banks. They need to adapt to the demands of the new era regardless of which school of thought, which I mentioned earlier, they belong to. Climate related and other emerging risks, like cybersecurity, must be taken into consideration during the transformation of business models in order to safeguard sustainable growth. It might be pertinent to recall what Charles Darwin said: ''It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change''. 5/5  BIS - Central bankers' speeches
The precise formulation of an amendment would need to be worked out, but the application should be sufficiently broad so that it also covers asset managers, hedge funds and private equity funds. Like the registry, a broad and permanent industry prohibition changes the time horizon for the perceived costs of misconduct – from a one-time fine, or perhaps a few years in prison, to a lifetime prohibition from earning a living in finance, regardless of the type of employer involved. I would welcome the industry’s participation in developing this concept. Conclusion To ensure the behavior that is required for a safe, sound and trusted financial system, we must also be effective in our role as regulators and supervisors. As part of this, we as supervisors must continually work to improve our own cultures to ensure that we can successively carry out our responsibilities. But it also requires good culture at the institutions that we supervise. Supervisors simply do not have sufficient “boots on the ground” to ferret out all forms of bad behavior within a giant, global, financial institution. Moreover, regardless what supervisors want to do, a good culture cannot simply be mandated by regulation or imposed by supervision. In conclusion, if those of you here today as stewards of these large financial institutions do not do your part in pushing forcefully for change across the industry, then bad behavior will undoubtedly persist. If that were to occur, the inevitable conclusion will be reached that your firms are too big and complex to manage effectively.

At recent auctions, both yields were still negative. It is interesting to note that these liquidity operations may have affected more than just current and expected short-term rates. After the SNB’s 17 August announcement, the rates of two-year Swiss government bonds briefly moved below zero, and the yields of longer-term Swiss government bonds also decreased significantly. While the yields on other long-term government bonds which are generally considered safe also followed similar patterns, it is nevertheless striking to observe in chart 5 that in the wake of the SNB’s liquidity measures in August, ten-year Swiss government bond yields experienced their largest declines since 1995. The interest rate and liquidity measures taken by the SNB in August naturally preceded and prepared for the introduction of the minimum exchange rate, in case it proved necessary. The SNB will continue to keep liquidity at exceptionally high levels, but has decided not to set a specific target level for sight deposits at present. Management of the foreign exchange reserves In the context of the minimum exchange rate, there has been renewed interest in the management of our FX reserves. Let me repeat here that our investments are subject to the primacy of monetary policy and implemented according to three criteria, namely, in order of priority: security, liquidity and returns. The SNB has to bear the risk associated with exchange rate fluctuations, as any hedge would be equivalent to buying Swiss francs against foreign currencies.
But while net financial income has fallen for the wealthiest households, the same is not true for wealth. Wealthier households tend to have a greater amount of housing wealth and house prices have risen since the introduction of negative interest rates. Extrapolating the HFCS forward using changes in equity, bond and house price data shows increases in the net wealth for every wealth quintile. 3/5  BIS central bankers' speeches  The ECB’s policy measures have been unambiguously positive for euro-area governments. Germany alone saved approximately 28 billion euro in 2015 in lower than expected interest payments. Such payments would ultimately have been financed from lower spending or higher taxes. Broadly speaking, the lower income the household sector has received from income payments from government bonds, either directly or intermediated through the banking sector needs to be offset against lower tax liabilities now or in the future. Indeed, research by Deutsche Bank4 shows that the impact of low and negative interest rates on the returns of German household financial assets has been limited so far. This was in part due to revaluation gains on the back of the ECB’s asset purchase programme as well as interest income from investment funds and insurance and pension products. It is still possible for savers to gain positive real returns by holding a diversified portfolio of assets.

That compensation is paid for by those seeking to spend more today than their current income, such as people buying houses, or firms investing in new capital, who in return will not consume all their income in the future to repay the debt. There are two parts to interest payments – the real component which is the extra amount of goods and services you can buy in the future relative to today and the inflation component which compensates for the changes in the prices of goods and services in the future. Long-run nominal interest rates have been falling across major advanced economies for more than three decades. In major part, this is due to the success of central banks in taming inflation. The expected inflation rate and the inflation risk premium incorporated into long-run interest rates have fallen. Yet changes in expected future inflation that are in turn realised are benign for savers – it is changes to the amount of goods and services that can be purchased in the future that matter, not changes in nominal prices. But it is not just long-term nominal interest rates which have been declining; longterm real interest rates have also fallen. Factors beyond monetary policy have played a role in driving real rates lower, which are less benign. There has been a secular decline in productivity growth rates in advanced countries, and increased pessimism about future growth. With lower expected return on capital, firms are more reluctant to invest.
Conférence - Débat, Association Dauphine Discussion Débat / House of Finance Paris, 18 January 2022 “Making the post-Covid era a success for the French and European economy”  Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr). Page 1 sur 15 “Making the post-Covid era a success for the French and European economy”: summary For two years, our economic debate has been dominated by the pressure of the Covid emergency, in a permanent present that masks our post-crisis structural challenges. Today, the global picture is one in which inflation is a source of concern, but growth is solid despite Omicron. In two years time however, our concerns should reverse, with inflation expected to normalise in line with a "new regime" close to our 2% target and growth expected to fall to below 1.5%. This is what we need to change. Gaining 0.5% of potential growth each year would enable us to overcome two permanent French problems: household purchasing power, which is increasing (somewhat artificially) at the expense of a deterioration in public debt; and an unemployment rate which, despite recent progress, is still well above the 5% level of nearfull employment attained in many of our European neighbours. What should we do? One third of this additional growth could come from changes at the European level, through the two major 'Schumpeterian' transformations: the digital revolution and the ecological transition.

vii This largely falls within national remits, but should be pursued within an upward-levelling European convergence: namely the Northern European solutions, including a much greater development of apprenticeships and professional training. Lastly, by pooling our funding. I mean, partly, public investment programmes, such as those enabled by the famous "Next Generation EU", that decisive breakthrough from the Covid crisis. But a private driver is at least equally important: Europe must be able to harness and  Page 7 sur 15 redirect its domestic savings, which are the largest in the world; in recent years, we have had a surplus of domestic savings over investment of almost EUR 300 billion per year. These savings should be channelled towards the equity financing of companies, which is a method of financing that is particularly well suited to innovative projects – which are inherently riskier and require long-term support, but which are also more profitable if successful. Our lag visà-vis the United States in this area is striking: the largest European venture capital firm appears to be three times smaller than the 10th largest US one. The technical agenda has been identified, but politically is not very clear and is far too slow in its implementation: it is the Capital Markets Union (CMU). On the one hand, we have resources – savings – and on the other, the investment needs of companies: we must decisively accelerate a European financial ecosystem that better allocates the former to the latter, if we want to finance the forthcoming digital and environmental revolutions. III.
I should note here that other consumer-protection regulations issued by the Board of Governors address consumer credit transactions. 13 FDIC General Counsel Opinion No. 8 stated, in essence, that the FDIC would consider granting Federal deposit insurance coverage for electronic value residing on stored value cards issued by a bank, only if the value on the stored value card represented an obligation definitively linked to an existing bank customer’s deposit account. 12  BIS Review 17/1997  -6-  certification authorities be entirely private sector derived? Or would they be established and operated by the government, by the individual states, some of whom already have enacted digital signature statutes? What is the role of banks in this process? In particular, what are the risks to the bank, in allowing a nonaffiliated third party to act as a certifying authority for electronic checks drawn from the accounts of bank customers? I could ask some even more basic commercial law questions about banking in cyberspace. When is an Internet payment final? More specifically, when a payment over the Internet is made, has the maker of the payment made a provisional payment, as with writing a check, or a final payment, as with giving a certified check or making a wire transfer? Articles 3, 4 and 4A of the Uniform Commercial Code (“UCC”) govern the above circumstances, but have nothing to say on Internet payments. Currently, private contract law governs; agreements between each of the parties in an on-line transaction should be very carefully drafted and reviewed.

5 Thomas M. Mertens and John C. Williams, What to Expect from the Lower Bound on Interest Rates: Evidence  from Derivatives Prices, Federal Reserve Bank of New York Staff Report No. 865 (August 2018). 6 John C. Williams, Preparing for the Next Storm: Reassessing Frameworks and Strategies in a Low R-star  World, FRBSF Economic Letter 2017–13 (May 8, 2017). 3/3  BIS central bankers' speeches
Building on the experience of currency crises, the IMF Guidelines for Foreign Exchange Reserve Management recognise that “official foreign exchange reserves are held in support of a range of objectives”, including to: •  “support and maintain confidence” in monetary and exchange rate policy, including the capacity to conduct foreign exchange interventions;  •  “limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed, and in doing so,  •  provide a level of confidence to markets that a country can meet its external obligations.”  Not so long ago, the required level of forex reserves was inferred from empirical rules of thumb such as the “three months of imports” rule. After the experience of the 1990s, when financial crises were triggered by a drying-up of capital inflows, the ability of economies relying on international borrowing to service their external debt became a central criterion. The “Greenspan-Guidotti” rule thus recommends that reserves should enable full coverage of total short-term external debt in order to be able to pay back that debt in event of sudden stops, i.e. if and when foreign lenders do not roll-over their loans. The empirical literature provides evidence that, today, the level of forex reserves in some emerging economies appears excessive with respect to the level inferred from both rules.

Solvency II will introduce an enhanced system of governance standards – promoting the embedding of a strong risk culture, demonstrable within the day-to-day operations of insurers. The new regulatory regime will not look to fix firms’ business models to be identical, nor to restrict the level of innovation across the market. Rather, Solvency II seeks to promote a better understanding of the risks being taken, allowing insurers to take informed decisions. 2  BIS central bankers’ speeches  It is for firms’ management to decide upon their chosen risk appetite and the precise details of their risk models. What matters to the PRA is that firms hold capital commensurate to such risk exposures, in line with the Directive. The introduction of the Prudent Person Principle is an example of how risk management and strategic decision making will be owned by the insurer and its management. The Prudent Person Principle will require investment decisions to be made as if being decided upon by the objective “prudent man” and represents a shift from quantitative to qualitative rules. Gone are the old investment limits for asset classes. So insurers will have much more freedom in their investment choices. The PRA does not and will not promote one asset class over another.
Both the county administrative court and Finansinspektionen (the Swedish financial supervisory authority) have made their assessments on the basis of what they should take into account, that is to say the company and owners' interests and the customers' interests respectively. However, I feel that this episode indicates that it is very unsatisfactory that we in Sweden do not have a clear legal framework that can manage this type of situation and I assume that these difficulties will quickly be repaired. Let me emphasise at the same time that we do not envisage any problems regarding financial stability right now. The fact that we have highlighted developments in house prices and household indebtedness has nothing to do with financial stability. It is because we are concerned about future inflation and growth. Developments in asset prices can in certain situations be a sign of risks to inflation and the real economy that need to be taken into account. One problem is that it may be difficult in the forecasting and analysis work to know how to interpret major fluctuations in house prices and prices of other assets. One reason for this is that the models used to make forecasts do not have sufficiently sophisticated descriptions of the financial sector and its interplay with the real economy. The problems are particularly great when house prices and credit growth have over a long period developed in a manner that is not sustainable in the long term.

Further benefits should accrue to business from the eventual linkage of the domestic payment system to the EU’s TARGET system. By linking together the national systems of Member States with the payment mechanism of the ECB, TARGET allows payments in euro to be effected much faster, potentially improving liquidity conditions in the financial sectors of participating countries while lowering the processing costs of cross-border payments in euro. The challenges posed by the single currency Thus far we have reviewed the opportunities inherent in membership of the euro area. As might be expected, however, membership will also present new challenges. For example, while it places the  2  BIS Review 61/2004  economy in a better position to compete internationally, it exposes businesses to additional competitive pressures. For a start, customers will be better able to compare local prices with comparable prices abroad and will increasingly question price differentials. Some operators will, of course, benefit from lower procurement costs, but others might find it difficult to survive. It is, therefore, advisable for pricing strategies to be reassessed well in advance of the date of the actual euro changeover, especially where price is an important variable in marketing strategies. In the same manner that the euro will facilitate price comparisons, other monetary variables such as cost per unit, average wage, annual sales volumes, administrative expenses and profits will also become easier to compare across countries.