samchain/econo-pairs-v1 huggingface dataset:
Slide 9  Financial crises in emerging countries 25 Worst Financial Crises in History Ranking 1 3 4 6 8 10 14 12 15 17 18 21 23 24 25  Year  Country 1926 Chile 1983 Peru 1931 Uruguay 1929 Mexico 1890 Brazil 1890 Uruguay 1929/1933 US 1980/1985 Argentina 1994 Venezuela 2008 Greece 1931/1934 Argentina 1981 Mexico 2001 Argentina 1980 Chile 2002 Uruguay  % change Peak to trough -46.6 -32.0 -36.1 -31.1 -21.7 -21.0 -28.6 -21.8 5.3 -24.0 -19.4 -14.1 -20.9 -18.9 -18.9  Number of years Peak to Peak to Severity trough recovery index 3 16 62.6 11 25 57.0 3 17 53.1 6 16 47.1 4 21 42.7 2 19 40.0 4 10 38.6 11 18 39.8 11 14 8.7 6 12 36.0 3 15 34.4 7 17 31.1 4 8 28.9 2 8 26.9 4 8 26.9  Sources: Reinhart, C. and K. Rogoff (2014), “Recovery from Financial Crises: Evidence from 100 Episodes,” Working Paper 19823, NBER.

Speculators may observe relevant information about the weaknesses of one particular financial institution or the system as a whole and exploit such information in speculative attacks that target certain assets when the central bank or another institution may have low reserves or liquidity problems. CBDC seems to lead inevitably to the replacement of the classical role of central banks at the top of a tiered liquidity system to that of a massive retailer, where deposit-taking may soon combine with loan-making. For this reason, the experiments with RSCoin at the Bank of England and CAD-Coin at the Bank of Canada take a very cautious approach, aiming at addressing technical issues before any definite step in such direction. This means that a real CBDC may still be many years away.
In all these examples host authorities have a legitimate interest in being able to influence supervision, share assessments and have a say in the event of a crisis situation. They have been given the task of protecting the soundness and stability of their financial sector and the general public in the host country will rightly expect their authorities to be able to do this. At the same time, the home authorities should have an interest in sharing resources in crisis prevention and risks and costs in crisis management and resolution with the host countries. In the current setting, however, this is only possible to a very limited extent. First, there is a need to share information between the home and the host. This should be the least difficult, but in practice everyone who has tried to share information between authorities knows it can  BIS Review 35/2005  5  be a complicated and cumbersome process, at least until there is an established routine. Even when there are no confidentiality concerns there are many practical obstacles to overcome. Information sharing is not only about sending data back and forth, but more importantly, it is about explaining information and sharing assessments. As long as hosts are under the impression that they know a lot less than the home, it will be very tricky to cooperate. Second, there is a need to cooperate on actions vis-à-vis the bank or the group and its components.

The CMU action plan should cater for initiatives promoting private sector solutions, such as a broader use of existing rating tools. Investors need also to access clear, comparable and comprehensive accounting reporting which are currently lacking for most SMEs in Europe. Because accounting rules are the basis of financial information, a Capital Markets Union cannot be effective with 28 different accounting systems. This is all the more relevant in the Banking Union, where banks supervised by the Single Supervisory Mechanism (SSM) are still subject to different accounting systems. In this area, progress is highly desirable and as a first step, I would support an initiative aiming to assess the quality and degree of comparability of national accounting standards and to promote further convergence. (iii) Third, it remains necessary to ensure financial stability in the long run. The shift towards more market-based financing would entail several implications from a financial stability perspective. The development of alternative sources of funding, outside the banking system, brings a necessary diversification. Yet the risks associated with disintermediation are clear, notably a limited assessment 3 of risks by investors or less ability to address difficult situations and gaps in supervision. In parallel, re-intermediation by non-banks raises level-playing field questions linked with uneven regulation and supervision across sectors and countries. The objectives of the Capital Markets Union should serve as a backbone to the regulatory efforts made at the European level. Before adopting new pieces of legislation, it is of utmost importance to thoroughly examine their impact.
This has direct consequences for everybody's welfare, particularly so for those groups most adversely affected in terms of both wages and unemployment, namely women and the young. These particularities of workers' situation in Spain compared with other developed countries – higher unemployment, even in the good times, a swifter increase in unemployment in adjustment phases, lower real wage growth, lower labour productivity growth, greater discrimination against certain groups – match the singularity of our labour institutions when compared with those countries. There is a long list of areas where we differ: the practical  BIS Review 18/2009  3  impossibility of opting out of collective bargaining, the scant share of compensation in corporate profits, wage indexation mechanisms with no connection to firms' situation, State intervention through mandatory authorisations that prevent firms from increasing their productivity, etc. But as time presses, I’ll focus on just one of these particularities: the way in which we provide for the unemployment contingency. Spain continues to adhere to unemployment contingency arrangements which, formerly, were similar to those in other European countries, but which have all been reformed in recent decades. Under our system, assistance to the unemployed combines a government benefit with the payment of a one-off amount related to the time the beneficiary was at a single company. This amount is payable by firms, not the State, and it is occasionally the biggest portion of the assistance to the unemployed.

For example, while it may capture some important aspects of how asset purchases work it’s not really an accurate representation of how the conventional policy rate is set. That’s fine for today, as I’m focusing more on QE. But one should at least be aware that the monetary authority needn’t vary the supply of reserves in order to change its policy rate[7]. Second, the downward slope of the MD line was often justified, in the textbook account, by the assumption that reserves don’t pay interest. This would mean that any rise in bond yields is bound to make central bank money comparatively less attractive to hold. These days, however, reserves do pay interest (at the official central-bank rate). As a result, central bank money and government debt – the two sides of the QE transaction – are closer substitutes than they otherwise would be. This has the effect of making the downward slope of the MD line less pronounced. Third, the model – the way it was often taught in the textbooks, at least – glosses over the distinction between “narrow” and “broad” money. For the wider economy it’s clearly the second that matters. Firms and households don’t have deposits at the central bank – for them, “money” is  Page 13  what they hold in their commercial bank accounts. But, as conveyed to students, IS-LM elides the two, assuming that the one is just a multiple of the other[8].
You could probably do the Volcker Rule in a more efficient way to achieve the same objectives without the burden of regulation that you have right now. You know, right now, if you’re an equity trading desk and the equity market falls very violently, you really aren’t supposed to go in and buy equities unless you actually have customer orders. So, you actually have this crazy situation where the equity desk can’t actually buy equities to support the market. So, I’d like to see the Volcker Rule looked at to see if there’s a way of doing it in a way that – if you’re a client-facing business, and you’re trading your own asset class, you have a little bit more freedom to buy and sell when markets are volatile and maybe provide actually a little liquidity support in the market. But also make it a lot easier, I think, to enforce the Volcker Rule. The other thing I would say is relief for smaller banking institutions. The financial crisis was not about small banking institutions. It was about large banking institutions and particularly it was about large broker-dealers. And so I think the Dodd-Frank Act imposed a lot of compliance and regulatory costs on smaller banking institutions. And I think – we have about 6,500 smaller banks in the United States plus a lot of credit unions and other financial intermediaries.

If there is a shortage of labour and other economic resources, a tight monetary policy stance will reduce inflation through its effect on prices for imported goods and on aggregate demand for goods and services and for labour. When monetary policy is aimed at stabilising inflation, it will also contribute to stabilising aggregate output and employment. If it appears that inflation, with unchanged interest rates, will be higher than 2½ per cent, the interest rate will be increased. If it appears that inflation, with unchanged interest rates, will be lower than 2½ per cent, the interest rate will be reduced. Monetary policy functions with considerable and variable lags. Therefore, the current level of inflation does not provide an adequate basis for determining the level at which interest rates should be set today. Our analyses indicate that a substantial share of the effects of an interest rate change will occur within two years. Two years is therefore a reasonable time horizon for attaining the inflation target. It is nevertheless conceivable that in a situation with a high rate of inflation and sluggish economic growth, Norges Bank may decide to apply a somewhat longer time horizon than two years to reach the inflation target of 2½ per cent. By influencing inflation over time, monetary policy will not in itself cause unnecessary disturbances in the economy. BIS Review 51/2002  1  Norges Bank has one instrument: the interest rate. Changes in the interest rate have a broad impact.
I believe that we must strengthen three  BIS Review 52/2004  3  areas of supervision in particular that form the foundation necessary for Basel II - and that are, in themselves, equally crucial to safety and soundness. First, a system of effective supervision must exist in a country. The Basel Committee has previously helped to identify 25 principles that contribute to a supervisor’s effectiveness. They are enumerated in the Core Principles for Effective Supervision and outline the authority and resources that a supervisor must have to promote financial stability. They include having adequate legal authority to set and apply licensing criteria, prudential regulations and capital requirements; having the ability to conduct ongoing evaluations of a bank’s operations and to respond when banks fail to meet regulatory requirements; and having the ability to apply this authority to the consolidated global operations of their banking organisations and to the domestic operations of foreign banks. When applying these principles to internationally active banks, supervisors must furthermore be able to share information with home and host supervisors as necessary. Second, we must ensure that the market in which Basel II is to be applied is moving toward greater transparency and is subject to a clear set of rules. Sound accounting and provisioning standards must be enforced so that capital ratios - however calculated - reflect meaningfully the bank’s ability to absorb losses.

Likewise, the preparations and hard work that we undertake today to prepare for Basel II will, at the same time, strengthen the financial and supervisory infrastructures in our countries more generally, even before we implement Basel II. These preparations are important in helping to ensure the effectiveness of our supervisory systems, to enhance the transparency of our markets, and to develop the sense of a risk management culture in the industry. Together, they will contribute to the promise of greater financial stability in our markets. That is surely a goal worthy of the preparations we will demand of our banks, of our markets, and of our own agencies. We must recognise that, just as banking is becoming an increasingly complex business, the job of bank supervisors will only become more challenging in the coming years. To promote sound banking and risk management practices on a national, regional, or global level, we will need to work together and cooperate even more in the future. Your participation in this conference speaks to your interest in finding ways to deepen our cooperation as we move into this next journey for supervisors. “El trabajo compartido es mas llevadero,” as we say in Spanish: “Many hands make light work” - and, looking around this hall, you will see many hands ready to cooperate. And so, in closing, I encourage you to make the most of this unique opportunity to build contacts and working relationships and to share views on how we can work together toward greater financial stability in the future.
The two recent crises have brought to fore the issue of food insecurity that had been brewing under the surface. Chronic hunger, child and mother malnutrition, and pervasive poverty, always features of poorest members, have been exacerbated by the surge in global food prices that has pushed many more millions into poverty, even in some middle-income countries. The international community has to rise to the challenge. In this connection, we welcome the IMF’s new food shock window as a part of its emergency support facilities that should be accessible to all eligible members in an evenhanded manner and with the same sense of urgency. The sad plight of the Afghan people should not be forgotten. Afghanistan is facing the highest incident of insufficient food consumption in the world, with 90 percent of households, and an even higher percent of households headed by women, are facing insufficient food consumption. Close to 4 million Afghan children are acutely malnourished. It is difficult to imagine how long and how far this situation could continue. Going forward, we all bear responsibility of putting the world economy back on a sustainable and steady track. The expectation is for the AEs to maintain the delicate balance in the inflation-growth trade off, recognizing the significant negative spillovers of policy mistakes, in either direction, as they try to lower inflation and keep inflation expectations anchored. While we will all benefit from lower inflation, we cannot afford an overtightening of monetary conditions when the world is at the cusp of a serious recession.

Affordability risks of new mortgages financing residential investment property are high and have risen further. These developments have taken place against a background of persistent imbalances in the mortgage and real estate markets. Both mortgage-lending volume and prices for single-family houses and apartments continued to rise at a moderate rate in 2019. Although prices of residential investment property have stagnated of late, there is still a risk of a price correction in this segment in particular. On the one hand, this is due to the sharp price increases in previous years. On the other, larger numbers of vacant dwellings suggest that brisk construction activity in rental apartments may have led to an oversupply. Despite banks’ high risk appetite and the persistent imbalances in the markets, SNB stress tests suggest that the resilience of the domestically focused banks remains adequate overall. Thanks to robust capitalisation, most of these banks would be able to absorb the losses incurred in adverse scenarios. Given the risks I just mentioned, this is positive. It is crucial for the stability of the financial system that banks continue to hold sufficient capital to be able to cover the risks on their books. Ongoing pressure on margins means that the incentive for domestically focused banks to take on risks remains high. This applies to mortgage lending in particular. The revised selfregulation rules for banks in the residential investment property segment, which come into force at the beginning of 2020, should help to prevent a further build-up of risks in this segment.
Research indicates that by 2007 the percentage of nonprime mortgages that went into default within their first year rose to 10 percent compared with 3 percent of such loans originated in 2003. While falling home prices appear to be the primary factor explaining this sharp increase in early defaults, most of the increase cannot be explained by traditional risk factors. 4 A potential explanation is that individual home buyers often falsely indicated on their mortgage applications that the property they were buying would be their primary residence. Using an extensive set of data on loan performance that we have developed with Equifax, we find that multiple first mortgage lien holders – that is, people owning more than one home – account for about 40 percent of the dollar volume of seriously delinquent mortgage balances, up from about 5 percent in 2004 (Chart 10). 3  There are a few caveats to note about this trend. First, there are several categories of spending by households that are lumped into the personal consumption expenditures category in our official GDP statistics that can fairly be counted as investment. These include spending on consumer durable goods, education, and, possibly, medical care, and their combined share of total personal consumption expenditures (PCE) rose over the period in which the saving rate declined. Second, other forces were at work to push down the personal saving rate. Prominent among these is a secular decline in the share of health care expenditures paid out-ofpocket by consumers, lessening the motivation for precautionary savings.

BIS Review 41/2010  7  Chart 1  Chart 2  8  BIS Review 41/2010  Chart 3  Chart 4  BIS Review 41/2010  9  Chart 5  Chart 6  10  BIS Review 41/2010  Chart 7  Chart 8  BIS Review 41/2010  11  Chart 9  Chart 10  12  BIS Review 41/2010  Chart 11  Chart 12  BIS Review 41/2010  13  Chart 13  Chart 14  14  BIS Review 41/2010  Chart 15  Chart 16  BIS Review 41/2010  15  Chart 17  Chart 18  16  BIS Review 41/2010  Chart 19  Chart 20  BIS Review 41/2010  17  Chart 21  Chart 22  18  BIS Review 41/2010  Chart 23  Chart 24  BIS Review 41/2010  19  Chart 25  Chart 26  20  BIS Review 41/2010  Chart 27  Chart 28  BIS Review 41/2010  21  Chart 29  22  BIS Review 41/2010
And while they may remove the reliance on expert judgement, they veneer over the fundamental challenges of thin and incomplete markets through the extrapolation of data. The ability of such rates to maintain representativeness through periods of stress remains a challenge to which we have not seen adequate answers. Developments in sterling markets So what is the position in sterling markets? Back in 2017, a reformed SONIA rate was recommended by the Working Group on Sterling Risk-Free Reference Rates (RFRWG) as the alternative risk-free reference rate to sterling  Descending safely: Life after Libor ‐ speech by Andrew Bailey | Bank of England  Page 2  Libor. This was in my view a good choice reflecting the liquid and active markets upon which it is based. This makes it inherently more robust. Since then, the RFRWG and UK authorities have co-operated on recommending a series of industry milestones to build liquidity in SONIA. These milestones have been positioned ahead of the cessation of sterling Libor at the end of this year. We don’t apologise for this – it is focussing attention, and providing a clear roadmap to support the development of deep and liquid markets in robust alternatives to Libor and facilitating a smooth transition. In line with the RFRWG milestones, alternatives to GBP Libor should have been offered to borrowers since the start of October last year.

Given the trade and financial linkages of this region with the European economy, it is of interest to also shed some light on the Europe’s growth prospects. It is encouraging that the economic recovery is expected to proceed in the monetary union, at a growth rate of slightly below 2%. It is to be supported by the ECB’s monetary policy measures, by the earlier progress made with fiscal consolidation and structural reforms, and low oil prices as well. However, similar to the global outlook, the economic recovery in the euro area is moderate and downside risks prevail. They pertain to the global uncertainties that were mentioned previously, as well as to broader geopolitical risks. It seems that the possibility of prolonged slow growth is high, and this could affect the potential to grow, as well. This asks for policies of supporting long-term economic growth, which typically calls for structural measures – more innovation; technology sharing; support to the global regulatory reforms in order to improve the resilience of the financial system; investments in human capital, education, health and infrastructure. At the end, let me once more wish you a pleasant stay in Macedonia and a successful meeting. I hope that you will have a chance to see Skopje and that you will enjoy it. 2  BIS central bankers’ speeches