samchain/econo-pairs-v1 huggingface dataset:
They should be empowered to assess the risks that a bank poses to its stakeholders and the financial system. This will enable them to deal with risks at an early stage. But if the rulebook becomes too extensive and too detailed, supervision turns into a simple boxticking exercise. A large, detailed and seemingly comprehensive set of rules would make supervisors less flexible and effective; it would leave no room for discretion. Supervisors would no longer be able to react quickly to newly emerging risks in an ever-changing banking sector. They would be walled in by rules that were devised to cover every possible situation but, in reality, were outdated right from the start. So, looking ahead, we must fight the urge to make the rulebook ever more detailed. But don’t get me wrong – we shouldn’t unwind any of the reforms. What has been done was necessary. But we should be cautious about going too far. A few clear principles can be more effective than 1,000 complex rules. The two pillars of regulation and supervision are equally important and we should not favour one at the other’s expense. And this brings us to the third pillar of a stable banking sector: market discipline. With all this talk about rules and supervision, we must not forget that banks operate in a market economy. So why not use market forces to keep risks in check? There is nothing like the prospect of failure and financial loss to keep a lid on risk-taking.

17 The model combines a macro part – capturing macro variables that shape household balance sheets over time – and a micro part – built around a household member level logistic model for its employment status – in a fully integrated manner. The framework allows us to compute probability of default (PDs) and loss given default (LGDs) for mortgage exposures directly at the household sector level and link them to macroeconomic stress scenarios. The model-framework offers, for example, insights into how borrower-based instruments – such as LTV and DSTI ratio caps – influence the economy Intuitively, the effect of LTV caps derives primarily from reducing loss given default (LGD) parameters, as the LTV ratio is directly related to the value of the underlying collateral in a mortgage loan. The effect of DSTI caps, on the other hand, stems mainly from the reduction in household capacity to serve the debt, thus their probability of default (PD). These results are confirmed by the model. This module is being integrated in the ECB top-down stress testing framework to account for a consistent stress scenario and for dynamic adjustments of individual households’ balance sheets in response to shocks and related second round effects. Finally, as just illustrated, enhancements to the ECB macroprudential toolkit go beyond stress testing as the complete set of models also provide a tool for impact assessment of macroprudential policy instruments.
Firms need this in order to raise equity and find European venture capital; keeping a European capacity in investment banking is a strategic imperative. Financial players need this in order to conduct cross-border mergers: European banking consolidation is overdue, and it is indispensable, not to reduce competition – quite the opposite – but to reach the critical mass necessary to make digital investments and allow savings to circulate. And, lastly, the euro area needs it in order to finally have an effective economic stabilisation tool to weather the shocks affecting some countries: “private risk sharing” is effective between states in the United States. If one doesn’t want a fiscal union – duly noted –, one must make even more resolute progress on the Capital Markets Union. We have talked enough about this, and it is now time to take concrete  Page 2 sur 5 measures: this must be the ambition of the new Commission. The ECB will support it, and France will be a committed player. My second prerequisite is the successful implementation of Basel III. It is vital that we do not forget the lessons from the financial crisis, nor break the promise we made in 2017. But this transposition must be fair – naturally involving the United States – and reasonable. The first estimates of capital requirements are premature and do not give the horizon: Basel III will be finalised only in 2027.

Page 3 sur 5 However, beyond traditional financial regulation, international cooperation should be developed in three areas, three cornerstones of the regulation of digital finance. First, cybersecurity is a sine qua non for a reliable and sustainable digital future. It is a clear priority of the G7 French Presidency next week in Chantilly. Second, regarding data protection, financial supervisors and authorities in charge of privacy have to invent new ways of cooperation to address data issues that have become central to financial services. Third, regarding competition and anti-trust policies, situations where “the winner takes most” while staying outside the scope of financial regulation should be adequately anticipated and addressed. “Stable coin” projects, including Facebook’s Libra, are a case in point. “Stable coins” are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level, and believe me, we will do it. France, as Chair of the G7 this year, has created a dedicated task force. Our aim is to formulate a response that is common to all jurisdictions, and holistic on all the issues. And to quote only two of many requirements: it is imperative that the projects comply with anti-money laundering regulations; the anonymity of the users creates heightened risks. In addition, if issuers of stable coins also want to offer banking services such as deposits, financial investments and loans, then they will have to obtain a banking license in all countries where they operate. Otherwise it would be illegal.
The Governor of the Israeli central bank, Stanley Fischer, is one of the optimists and has recently likened central bank independence to marriage; like in a marriage, there are things you do together and things you do separately.8 However, regardless of which solutions gradually crystallize, I believe it is essential not to withdraw the central banks’ independence with regard to the task of price stability. The central bank should be able to decide independently over the means allocated for this purpose, such as the policy rate and other potential means. 7  This is one example of the so-called Lucas critique, which says that empirical relationships can change if the economic policy changes as the economic policy affect agents’ expectations. 8  See Da Costa (2013). 6  BIS central bankers’ speeches  Inflation targeting Let me go on to the other area I intend to discuss today – inflation targeting. As I mentioned earlier, the central banks’ independence and inflation targeting can be regarded as inseparable. They are both central parts of the monetary policy framework that was regarded as very successful, at least up until the crisis. Independence and inflation targeting can reinforce one another in both good and bad ways. Increased independence can contribute to greater credibility, which in turn can make it easier to attain the inflation target. A period of low and stable inflation creates confidence and legitimacy for inflation targeting and increases the political support for independence, and so on.

[11]  The upshot is that more firms have been protected and more jobs have been saved. Without the ECB’s policies, we estimate that over one million more people would have lost their jobs. [12]  But we are not out of the woods yet. With the tremendous progress made on vaccine technology, we can now see the light at the end of the tunnel. But we still cannot see exactly how long that tunnel is. We will continue to face a period of high uncertainty until more people have been vaccinated against the virus. In this setting, it is crucial that the bridge for SMEs remains in place for as long as needed. The ECB will help ensure that firms and families can access the finance they need to weather this storm – and that they can do so in the confidence that financing conditions will not tighten prematurely. That commitment is the best way to provide certainty to all sectors of the economy and to bring stability back to the euro area swiftly. And this, in turn, is the best contribution we can make to delivering on our mandate of price stability. 5/8  As Goethe said, “Im Idealen kommt alles auf die élans, im Realen auf die Beharrlichkeit an.”[13] Reality is currently hard for many firms and the future remains uncertain. And so we will persist and persevere until the pandemic emergency has passed.
BIS central bankers’ speeches  5  Chart 1 Credit and business cycles  Chart 2 US interest rates  Source: Bank calculations  Source: Thompson Reuters DataStream; Bank calculations  Chart 3 US Credit Gap  Chart 4 Actual and implied capital in the US  Sources: BIS, OECD and Bank calculations  Sources: BIS, OECD, FDIC and Bank calculations  Chart 5 Policy rates in Europe  Chart 6 Credit gaps in Europe  6  BIS central bankers’ speeches  Chart 7 Bank capital ratios in Spain  Chart 8 Bank capital ratios in Ireland  Sources: BIS, OECD and Bank calculations  Sources: BIS, OECD and Bank calculations  Chart 9 Policy rates in advanced economies  Chart 10 Real long-term interest rates  Source: Thomson Reuters DataStream  Chart 11 Covenant-lite and other highyield loan issuance in the US  Sources: Bloomberg and Bank calculations. Chart 12 Taylor-Minsky rule for the UK  Source: JPMorgan Chase & Co. (a) Volume as of 15 November 2013.

Summary Today, future prospects for the Swedish economy are bright in many respects. The consolidation of the government budget, accompanied by growing confidence in and support for the low inflation policy, has paved the way for a marked reduction of interest rates. This favours domestic demand. Together with a continuation of strong exports and favourable productivity, this points to good conditions for growth in the coming years, with persistently low inflation. At the same time it is a major problem that growth does not seem to be generating new jobs to a sufficient extent. This suggests that to a high degree the unemployment is structural. Measures must therefore be taken to improve the functioning of the labour market. For further favourable economic development it is also essential that the efforts to reduce government debt are continued. The conditions for monetary policy in the years ahead will then be improved and greater freedom of action will be created for economic policy in the longer term. BIS Review 68/1997
One example is the recently implemented review of the monetary policy framework in the United Kingdom. There, for instance, the fact that some members sit on both the Bank of England’s monetary policy committee and its committee for financial stability, is regarded as a means of fostering coordination between monetary policy and macroprudential policy. 15 In Sweden, it will not be possible to coordinate macroprudential policy and monetary policy as closely as in the United Kingdom, for instance, as we have chosen a different framework for responsibility. It is at present difficult to foresee what the consequences of this will be – and even if there will be any significant consequences. After all, neither research nor the so far limited practical experiences give any particularly clear answer regarding exactly how important coordination is. It is once again quite possible that the solution we have chosen in Sweden will turn out to work very well in practice – only time will tell. ...or at least concordance But even if macroprudential policy and monetary policy may not necessarily need to be coordinated in a more formal sense, there may be reason to consider whether there should be a certain amount of concordance between them. My personal opinion is that there must  14  For an intuitive description of the problems concerning the coordination of macroprudential policy and monetary policy, see Bryant, Henderson and Becker (2012).

Globally interconnected markets have resulted in a situation in which financial institutions everywhere have been hit, even if not exposed to the institutions or assets at the core of the crisis. My home country Sweden is a good example of this. What we have witnessed in recent months, since the default of Lehman Brothers, is the acute phase of a global financial crisis. To respond, authorities have taken action to prevent a systemic break down of the financial system. Both the US and the EU have delivered financial support plans committing governments and central banks to providing the necessary support to the financial industry. BIS Review 134/2008  1  These plans are now being implemented and we cannot yet be certain of their success. However, in my view, the support plans contain the necessary measures to solve the most critical issue right now, namely to restore market confidence by providing guarantees to creditors that their money will be repaid. Therefore, the prospects for restoring financial stability and enhancing the availability of credit for firms and households should be good. That the support plans also provide measures for government capital injections and takeovers is obviously good, but for the purpose of getting markets to function properly ownership issues really are of secondary importance. After all, what creditors are looking for is to get their money back. To them it should not really matter from where or from whom that money comes.
Infact, not so long ago on December 10, 2008, I was invited to officially open the Standard Chartered Solwezi Branch. I have no doubt that with the current expansion strategy; the bank will reach greater heights. However, you will all agree with me that those who have more should do more. I therefore look forward to seeing more from Standard Chartered Bank Zambia, it being such a leading bank in Zambia. 2  BIS Review 4/2009  Hon. Minister, it is my sincere hope that the Falls Park Agency will live up to the expectations of the Livingstone community. Once again, I would like to thank Standard Chartered Bank Zambia Plc, through the acting Managing Director, Mr Bairstow for inviting me to witness the official opening of this agency. I thank you. BIS Review 4/2009  3

The takaful and insurance industry also facilitated affected certificate holders by offering temporary deferment of contribution and premium to promote continuity of takaful protection coverage. More than 1.1 million9 certificate and policyholders have benefited from this relief measure. While the pandemic has yet to peak in some countries, others including Malaysia are heading towards periods of recovery while continuously managing the risk of virus resurgence. As this phase commences, Islamic finance has significant potential and role to play. Three attributes, at least, come to mind on how Islamic finance can respond and contribute meaningfully towards sustainable and inclusive growth:  First, Islamic finance must be value-driven and impact-focused to deliver Maqasid Shariah (the objectives of Shariah). The intrinsic values of Islamic principles are aligned with a vision of economic growth that is balanced, sustainable and inclusive. Shariah advocates for balance between wealth creation and wealth circulation. This in turn promotes fairness and ihsan in promoting the attainment of benefits as well as preventing harm. This crisis has indeed created a wealth of opportunities for Islamic finance. Shariah contracts can deploy a diverse range of capital that is risk-absorbent, patient and philanthropic in nature using instruments such as risk sharing, waqf and sadaqah to support inclusive finance. The flexible nature of such capital encourages allocation of resources towards entrepreneurial ventures and social impact projects that can improve and rebuild well-being of society. It can also to some extent help smoothen structural adjustments in the economy.
The second is strengthening of institutions that support the implementation of financial inclusion strategies such as development financial institutions and credit guarantee corporations. Third is the importance of having a national focus on SME financing and development as a key enabler for inclusive growth. The fourth area focuses on the role of digital financial services, including fintech and big data, in elevating financial inclusion. And lastly, the Forum will turn to the importance of financial education and consumer protection in increasing the responsible take up of financial services and building trust. Beyond these practical areas, there is also much to be gained from engaging in more strategic discussions on how financial integration itself can impact the inclusion agenda. More specifically, if we can better understand where potential risks of exclusion may arise from the process of integration, then we will have a better chance of mitigating such risks – including through measures that may be taken as part of the integration process, rather than a consequence of it. Equally, if we can identify opportunities for improving financial inclusion through the process of integration, then we can do more to ensure that financial integration actually creates these opportunities. We can think about these issues in several ways. Could increased cross-border access further entrench the segmentation of markets given stronger incentives for financial institutions to focus on strategies that only target an expanded market of more sophisticated, higher income customers?

Even if residents choose to move into foreign assets, the liquidity in the domestic currency will not disappear and will ultimately be deposited with the domestic banking system. In the end, and as a whole, the banking system is trapped. The question then is how banks will react and with what consequences for the economy. They could impose negative rates on depositors, but that is not always easy, and in the case of households, it could have a negative impact on the wealth sentiment. They could increase their credit margins, with the effect of tightening credit conditions, although that may also be difficult if the demand for credit is weak. Or the banking system could simply become weaker, with the paradox that the more a bank is conservative and well-managed, extending high-quality loans and covering them by deposits with no short-term market funding, the more it will be penalized! A second, different challenge, relates to the rigidities in the economy. Price rigidity is higher in Europe than in the United States as the goods and labour markets are less “contestable” and outsiders find it harder to compete. And in the labour market, there is a strong downward rigidity on wages. Structural rigidities have complex effects on inflation and monetary dynamics. In the very short run, price rigidity may somehow protect the economy against deflationary shocks and, more generally, increase the output response to a monetary stimulus.
We have seen that the links to the central banks work best when the staff at the Swedish embassies in the respective countries are actively involved and regularly follow up what is happening in the respective banks. At the beginning of this year, Sida commissioned an evaluation of the Riksbank’s cooperation so far with Sri Lanka and Vietnam. The evaluation showed that the Riksbank’s efforts in these central banks had been both successful and appreciated by the recipients. The very fact that we are colleagues, that we do the same things, have the same responsibility, was one of the key factors. There are many  BIS Review 123/2006  1  consultants; colleagues are harder to find. The long-term thinking behind the cooperation is also an important factor. We do not merely make an analysis, write a report and disappear. We are still here and can continue the discussion whenever necessary. The problems that were indicated in the evaluation were more of an administrative nature. For instance, it is difficult to find a place in a foreign aid context for low-cost projects like this, as they do not really follow the set patterns for other aid efforts. Finally, I can mention that the Riksbank has allocated resources in our internal business plan for next year to extend our cooperation with some of the central banks in Sida’s cooperating countries.

As all of the central banks in the world do more or less the same things, albeit in rather different ways, it is always rewarding to see how others work. We therefore send experts in various fields out to the countries with which we have this cooperation, for instance, experts who design payment systems or make models for inflation forecasting. The other central banks send their staff to us for further discussion of these issues or to talk about other things, such as how we deregulated the financial system in Sweden in the 1980s, or how important information and transparency are if one is to run a central bank with independent responsibility for monetary policy. Recently we have received some young employees who have stayed with us for periods of a month to six weeks on “internships”, where they can, for instance, learn how to write a financial stability report from scratch. Long-term thinking is a central concept of our programme. It takes time to understand one another’s reality and to create relationships that lead to cooperation based on mutual trust. We usually say it takes at least five years. Central bank governors are always involved in various ways (both here at the Riksbank and at the other central banks), which is important for giving the programmes adequate status. In our view, it is important that we are colleagues, not consultants. We are rarely able to stay longer than a week, as we have our own central bank to manage.