samchain/econo-pairs-v1 huggingface dataset:
At the present time, the insurance provided by many monetary authorities may look cheap because inflation is projected to stay low and markets seem to reward those countries which liquefy public debt. However this equilibrium could be unstable and market makers, aware of some inflation “tail risks”, are hedging themselves through gold or currencies like the Swiss franc whose exchange rates have reached historical highs. By contrast, purchases of sovereign debt by the Eurosystem remained very limited and will stay so. Our objective is simple: avoid disruptions in the monetary policy transmission mechanism. Any lasting liquidity backstop has to come from the governments. This is why we are asking for more flexibility in the European Financial Stability Facility (EFSF). Whether amounts are big enough is a matter of opinion but one could envisage to leverage existing commitments to provide greater intervention capacity. At this stage, the euro area is paying a double price. One for its mistakes and one for its virtues. The mistakes were to allow the piling up of debt through unsustainable fiscal policies over a decade, and then to create ex nihilo a doubt as to their ability to pay those debts. But we are also paying a price for our virtue as we refuse to liquefy our debt through massive monetization of our fiscal deficits. Will our virtue be rewarded at the end? I strongly believe so and I will explain why.

The financial sector represents a powerful conduit of the monetary policy impulses decided by the central bank – the so-called credit channel of monetary policy.2 It works mainly through changes in the balance sheet position of banks and (non-financial) borrowers, influencing credit demand and supply. When there are significant adverse shocks to the balance sheets of financial institutions, for example because of sharp decreases in the values of assets or because of impairment in funding markets, banks can respond by tightening credit standards applied to households and firms. The transmission of shocks hitting financial institutions’ balance sheets to the real economy – or originating within the financial system itself – is exceptionally strong if banks are not able to shield credit supply and if borrowers are highly dependent on bank credit to finance investment and consumption. Many euro area banks, for instance, have been highly dependent on market funding and have therefore been vulnerable to sudden stops in this source of funding. We also know that in the euro area banks are the main providers of funds  No. 1; and M. Brunnermeier and L. H. Pedersen, (2009) “Market Liquidity and Funding Liquidity”, Review of Financial Studies, Vol. 22, No 6. 2  See Bernanke, B. S., and Gertler, M., 1995, “Inside the Black Box: The Credit Channel of Monetary Policy Transmission.” Journal of Economic Perspectives 9(4):27–48 and a vast following literature.
At an appropriate moment during the QT process, we proposed to switch from using a simple floor system to a framework in which we allow reserves holders to determine how many reserves they need. Under this approach, the Bank would stand ready to lend reserves, at Bank Rate, in unlimited amounts against high quality collateral, through periodic Open Market Operations (OMOs) during the QT phase. Such an approach does not seek to ‘oversupply’ reserves in order to maintain a floor system, and so avoids the need to estimate the point of reserves scarcity. The Bank’s balance sheet should naturally be somewhat smaller under this system than it would be under an ‘ample reserves’ floor. That’s partly because we would not need to build in a buffer to account for uncertainty over the true level of the PMRR. But it’s also because the balance sheet cost for banks obtaining reserves via OMOs is likely to require there to be a degree of reserve scarcity before banks will participate.24 As a result, the quantity of reserves should settle within the PMRR, where some reserves scarcity is evident. See for instance ‘Observations on Implementing Monetary Policy in an Ample-Reserves Regime’ by Lorie K. Logan, at https://www.newyorkfed.org/newsevents/speeches/2019/log190417 24 Because they are secured funding transactions, OMOs will involve a leverage exposure, and will be subject to haircuts, which lower the value of reserves lent relative to the collateral supplied.

Three quarters of the Bank’s assets is in the form of a loan to the Asset Purchase Facility backing £ of gilt holdings and £ of corporate bonds, while another £ has been lent to banks under the Term Funding Scheme (Chart 3).9 A further £ of liquidity has been extended under the so-called ‘Index Linked Term Repo’ facility, part of the Sterling Monetary Framework (SMF). Nearly all of that activity has been financed by an increase in central bank reserves (Chart 4). 8 9  Alongside meeting regulatory liquidity requirements, and deposit insurance. https://www.bankofengland.co.uk/markets/funding-for-lending-and-other-market-operations 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  Chart 3: Bank of England assets  Chart 4: Bank of England liabilities  Source: Bank of England Note to Charts 3-4: The Special Liquidity and Funding for Lending Schemes (SLS and FLS respectively) were funded through asset swaps rather than reserves, so were not on balance sheet. They are nevertheless shown for context. Although created to finance asset purchases and loans, this increase in reserves supply has also allowed us to (more than) meet a sharp pickup in the demand for reserves as a safe asset, underpinning financial stability.
26 See the article “Rapidly rising housing prices despite the coronavirus crisis” in the Monetary Policy Report in April 2021(Sveriges Riksbank (2021b) 27 See Figures 5 and 34 in the Riksbank (2020b). 28 Based on arguments such as these, I entered a reservation against the decision in November 2020 to extend and extend the asset purchase programme, see Appendix and my comments at the monetary policy meeting (Riksbank 2020c, p. 21-24). 15 [30]  I want to use my (long!) review of the experience of asset purchases since 2015 to try to evaluate whether financial losses are offset by other gains for the national economy. I shall also discuss whether the losses will weaken the Riksbank's financial independence and, in that case, make monetary policy less effective. But let me first focus a little more on the financial losses. How has the Riksbank's balance sheet been affected by the purchase of assets, and how has the value of the assets we have purchased developed? The Riksbank's financial results are now deteriorating Prior to the global financial crisis, the Riksbank's balance sheet was relatively small and uncomplicated. The size of the balance sheet, corresponding to approximately 6 per cent of GDP, was determined mainly by the liabilities side, which was dominated by banknotes and coins in circulation and the Riksbank's equity. On the assets side, these liabilities were matched by the foreign exchange reserve, which consisted mainly of US and European government bonds.

Jean-Paul Redouin: Liquidity and transformation Speech by Mr Jean-Paul Redouin, Deputy Governor of the Bank of France, at the General Meeting of the French Association of Bank Treasurers (AFTB), Paris, 30 May 2011. *  *  *  Ladies and gentlemen, It is a great pleasure for me to speak at this General Meeting of the AFTB. I would like to take this opportunity to welcome the successful cooperation that has been established between your association and the Banque de France. It is extremely beneficial for us and I believe that you and your institutions also find it valuable. In many respects, bank and market liquidity is a fascinating area because few phenomena have been perceived in such different ways over such a short period of time. Indeed, market liquidity became abundant and cheap in the 1980s: financial markets deepened and transaction costs fell. In the 1990s, the growth of derivatives products facilitated the management and transfer of risk. In the following decade and up to 2006, many studies had already focused on excess liquidity. Then, during the financial crisis of 2007–2008, sources of bank funding suddenly dried up.
Nevertheless, we are aware that within this reality, there is room for a more positive approach to consumption and investments, and more lending. Uncertainties and reluctance are the main problems standing in the way of the Albanian economy. The purpose of this forum is to identify, together, ways to overcome this situation. In this context, I would like to quote President Roosevelt: the only thing we have to fear is fear itself. 2. Decision-making on banking supervision and financial stability  Recently, non-performing loans have been mentioned frequently. I will take this opportunity to make the following necessary clarification: First, I would like to underline that we have identified this problem at an early stage and have been very scrupulous with the banking system to evidence every penny of a loan that is not being repaid duly. This is why non-performing loans increased rapidly in the first period, and have stayed at the current levels for a long time. In contrast to other countries in our region, we have persisted not to conceal the non-performing loans, but evidence them accurately and comply with our rules to make provisions for every loss penny. Second, we have adopted a rather conservative approach to non-performing loans classification. In our case, when we calculate the value of non-performing loans, we do not take into account the value of collateral, as is the practice in many countries. If we deducted this value from that of the non-performing loans, the NPLs’ value would be significantly down.

The Bank of Zambia is in the process of engaging the banks with a view to finding a solution to the high cost of banking which is often cited as the main hindrance to access to finance. I therefore appeal to all the banks operating in Zambia to critically assess the level of their charges and to continue playing the supportive role to development that they have in the past. In this regard, I am particularly pleased to make mention of the spirited efforts that Standard Chartered Bank continues to make in financing SME’s and Micro-finance. The experiences of many economies show that these sub sectors have the capacity to create a middle class and  BIS Review 163/2008  1  to emancipate both rural and urban dwellers from their poverty trap. Zambia has many promising entrepreneurs whose only constraint is affordable funding. As you explore the opportunities that this new venture will bring you, I urge you to focus on the customers who may appear small today, but could grow with the bank if they are given the right support. I wish you every success as you embark on this journey into North Western Province. 2  BIS Review 163/2008
The Bank of England thinks that this deserves serious consideration, and it is now the subject of debate in the UK. Beyond deposit insurance: how can the industry bear the cost of rescues? During the current crisis, around the world governments have gone much further than protecting only insured depositors – uninsured wholesale creditors have been bailed out too. The need for such support operations was evident if complete systemic collapse was to be averted. But it does raise big questions looking ahead – of fairness and of incentives. Once more, we need some principles for what are in effect official Capital of Last Resort (CofLR) operations. One possible starting point is how central banks have learned to think about bespoke liquidity-support operations, so called Emergency Liquidity Assistance. After explicitly recognising that occasionally liquidity support operations can end up providing de facto risk capital if the recipient deteriorates, the late Eddie George offered some thoughts on this in 1993; 9 “central banks are not in the business of providing public subsidy to private  9  “The pursuit of financial stability”, LSE lecture by the late Eddie George, Bank of England Quarterly Bulletin, 1997; and Mervyn King’s September 2007 letter to the Treasury Select Committee, “Turmoil in financial markets: what can central banks do?”  8  BIS Review 144/2009  shareholders. If we do provide support, we will try to structure it so that any losses fall first on the shareholders and any benefits come first to us.

The Bank of England has adopted a schedule for our Discount Window Facility under which the rate charged increases with the size of a drawing relative to the bank’s size, and also with the illiquidity and riskiness of the collateral provided. We want to underline that banks will end up paying more to draw on the insurance line if they are overly reliant on illiquid, risky collateral – implying that their balance sheet was overly exposed to liquidity risk. These considerations have to be taken into account if central banks are to lend against very broad asset classes; for example, as we flagged earlier in the year, the Bank of England will be deciding over the coming months whether to extend the collateral eligible in our Discount Window to portfolios of loans to companies and households and of equities. The Bank of England also charges a premium rate if a bank borrows from us against assets comprising securitisations of loans they originated themselves. This is because there needs to be an incentive to make such securities marketable; and, more important, it can help to protect us against one of the most basic risks in banking – the correlation between the quality of a bank’s underwriting standards and its solvency. Although central banks need to be ready to lend against a wide range of collateral, we do still need to be careful about precisely what we take.
The uncertainty instead concerns how much and how quickly it will fall and whether this will be sufficient. The Swedish economy must not end up in a situation where inflation becomes entrenched above the target of 2 per cent. The danger of inflation becoming entrenched at a high level Let me elaborate on why this is so important, starting with an illustrative example from when I visited companies last month. One person I spoke to noted that there had been a clear shift in negotiations with other companies about future prices and deliveries. A few years ago, inflation was not discussed in these negotiations. But now it is, and this makes it difficult to enter into long-term business relationships, which in turn has a negative impact on economic developments. This highlights the problem that high inflation becomes a factor that makes financial decisions more difficult for companies and households. And this contributes to the entrenchment of high inflation. We must return to low and stable inflation because this is a long-term base for good economic development. In addition, we will then be able to have real wage increases again. Firms set their prices according to, for instance, the costs they incur, the behaviour of their competitors and expectations of future price and cost increases. When inflation is  4/10  BIS - Central bankers' speeches  high and cost increases are large, firms are more eager to raise their prices often and to pass on the increased costs to customers.

A credible 2 per cent inflation target acts as an anchor Thus, when inflation is high, there are self-reinforcing mechanisms that allow our expectations to adjust and this contributes to keeping inflation high. But an environment with low inflation can also become self-reinforcing in a similar way. Firms are then more likely to let temporary price and cost increases reduce their margins rather than pass them on to customers. The effects on other firms' prices and costs will then be smaller. Businesses and households recognise that inflation remains low and adjust their expectations accordingly. This means people do not need to worry or even think about inflation in their everyday financial decisions. An inflation target of 2 per cent creates good conditions for such an environment, as it acts as an anchor for the expectations of households and companies and also avoids inflation becoming too low. Households and companies assume that inflation will remain around the 2 per cent target going forward, even if it happens to be higher or lower at the moment. But this presupposes that there is confidence that inflation will eventually return to the target. The longer inflation remains above the target, the greater the risk that households and companies will be more inclined to focus on what inflation has been and set their expectations on it continuing to be above the target. Inflation needs to come down significantly this year This is one of the main reasons why the Riksbank has a low tolerance for continued high inflation at present.
The industry needs to develop and implement an action plan to increase access of the OKUs to the financial products and services. Role of individual institutions – to ensure enabling environment for OKUs For a start, individual financial institution is encouraged to address immediate needs mentioned earlier that was highlighted by the OKUs such as providing lower counter, Talking ATMs, sign language for the deaf, website which is W3C compliance and offer appropriate insurance products for the OKUs. In providing the accessibility to the OKU community, the industry players need to ensure that the services and products are relevant, sustainable and affordable in meeting the needs of the OKUs, associated risks are mitigated and the OKU consumers are protected. 4  BIS central bankers’ speeches  Role of Bank Negara Malaysia – to consolidate effort and move forward together As mentioned earlier, it has always been high on Bank Negara Malaysia’s financial inclusion agenda that all facets of the Malaysian society are served by the financial industry. As such, I would like to call upon all of us here, let us embrace this journey together towards a more caring and responsible industry by ensuring the needs of the OKUs are provided for. Launching of “Cash Test” for the visually impaired As part of Bank Negara Malaysia’s continuous initiative to support the needs of OKU community, the Bank has introduced a device known as Ringgit Cash Test Cards, a credit card-sized plastic card with gauges designed to assist the visually impaired in identifying banknotes and coins.

Policymakers face a trade-off between placing losses on a narrow set of taxpayers today (bail-in) or spreading that risk across a wider set of tax-payers today and in the future (bail-out). If governments are risk-averse and wish to smooth the pain across taxpayers and across time, then bail-out may look attractive on the day. Financial history certainly suggests so. The history of big bank failure is a history of the state blinking before private creditors (Haldane (2011)). Recent crisis experience has written another chapter in this history. Next time may be different. For example, the public backlash against future bail-outs could reinforce government’s resolve to impose losses on creditors. And recent US legislation in principle locks the tax-payer cashbox and throws away the key. Looking forward, the issue is whether this ex-ante rule is ex-post credible. BIS central bankers’ speeches  5  As Chart 6 illustrates, implied levels of support for the US’s biggest banks are much higher than before the crisis. More telling still, the passage of Dodd-Frank appears to have had little impact on levels of implied state support. It is early days for this new resolution regime and credibility may take time to be earned. Nonetheless, at present the market believes the timeconsistency problem for big banks is as acute as ever. Even if it might appear the expedient option on the day of crisis, it is questionable whether bail-out is the optimal response over the medium-term.
It is a hard truth, but I fear a truth nonetheless, that it will be some time yet before trust between banking and society is established. That societal anger has motivated much of the reform effort that has been the story of the past 5 years. The message to politicians, policy makers, regulators and supervisors has been loud and clear: a repeat of the events of the crisis and recession will not be tolerated. Against that background, I want to look at the key new approaches that define the new landscape from the regulatory perspective. I do not want to list in detail the reforms that have been implemented and that are in prospect. It is an impressive list, especially when one looks at the amount of international agreement that has been reached on new international standards. •  Globally there is already more than $ loss absorbing equity capital in the system and,  •  for the first time, an international standard for the liquidity banks should hold. •  UK banks have £ more capital than before the crisis and their holdings of liquid assets have trebled. •  International standards are in prospect on leverage and on the amount of debt banks must hold that can be “bailed in” if a bank fails. Rather, I want to look at three fundamental changes in approach that have driven and will continue to drive these reforms. – macro-prudential policy, international governance and intensive supervision.

This was Sweden’s experience with the combination of a currency peg and deteriorating public finances in 1991-1992. But now there is another danger. Given that the target of imminent euro adoption is gone, and the large euro area nations do not provide real leadership on fiscal soundness, there is less incentive for some of the new member states to stick to the consolidation of their public finances. This is especially obvious for Hungary, where the deficit was 7.5 per cent in 2005 and is, according to present plans, expected to increase to around 10% this year. For Poland and the Czech Republic the deficits will stay at the present level of around 3% in the coming two years. Whether in the old or new member states, there is an additional problem, as we are entering a period of intensifying structural changes. Old industrial patterns in Europe are being changed when confronted with both the boost to productivity from IT and globalisation and enlargement, all of which supports this process. These trends will eventually help productivity and growth in Europe to start catching up with the US again. But in the short term the structural changes will lead to higher frictional unemployment as old industries are more rapidly replaced by new ones. In addition, the recent downturn never led to a dramatic increase in unemployment or a dramatic decrease in employment in the euro area; hence, the upturn is probably also less likely to lead to rapid job creation.