samchain/econo-pairs-v1 huggingface dataset:
In addition, the effect on credit momentum of the other measures announced by the Federal Council in June 2012, namely the revision of the risk-weighting and the self-regulation rules, remains to be seen.16 Taking these issues into consideration, the SNB decided in August 2012 not to issue an immediate proposal to the Federal Council for activation of the CCB. It will reassess the situation regularly. The second key question pertaining to the functioning of the CCB is whether it is an effective instrument to strengthen the resilience of the financial system and thus help to limit negative spillovers (slide 7). The impact of higher capital ratios and more provisions on the resilience of banks is self-evident. This is also the case from a system-wide perspective. To assess the effectiveness of the CCB in strengthening resilience, we can draw some lessons from historical experience, namely the Swiss real estate crisis in the early 1990s. Internal calculations suggest that, had the proposed CCB regime been in place in the run-up to that crisis, the resilience of the system as a whole would have increased significantly. From an aggregate perspective, this additional capital would have absorbed a large portion of the losses that were reported as a result of the crisis. The third key question is: To what extent the CCB is able to contain the build-up of excesses? 13  IMF (2011), Drehmann et al (2011). 14  Namely, domestic mortgage volume indicators and domestic residential real estate price indicators.

Given these developments, Switzerland is facing an increasing risk, both of defaults in the mortgage market and a sizable correction in property prices, either of which might impair financial stability in the medium term. Specifically, an adverse shock – such as rising interest rates, lower growth or increasing unemployment – would leave some borrowers unable to service their loans, increasing the possibility and number of defaults, and ultimately leading to a vicious feedback loop of falling property prices and impaired balance sheets throughout the banking sector. At the same time, Switzerland currently serves as perfect example for the afore-mentioned argument that the interest rate is unlikely to suffice as instrument to ensure financial stability (slide 5). Notably, it is clear that the current exchange rate situation invalidates the interest rate as an available instrument to dampen the persistently strong growth in credit volumes. At present, the interest rates required for monetary policy objectives differ considerably from those required for financial stability policy objectives. This perfectly demonstrates the need for specific instruments to be able to address both policy objectives – financial and price stability – simultaneously. Against this background, the Federal Council announced a package of measures in June 2012 addressing these risks in the mortgage and real estate markets. In addition to the CCB, this package consists of a structural revision of capital requirements for residential mortgage lending as well as a revision of the banking industry’s self-regulation guidelines.
Full separation may also be operationally simpler to implement than the existing structural proposals. Finally, enhanced banking competition would potentially help to reduce some of the problems of too-big-to-fail by reducing the degree of banking concentration. Greater exit from banking, through enhanced resolution regimes, can help. But a bigger problem still is bank entry: the UK went 100 years without a new retail bank being set up. One potential barrier to banking entry is the difficulty of switching deposit accounts and loan contracts. A shared banking platform, containing customer account details, would dramatically reduce the frictions in search and switch for deposit and loan products for customers (Leadsom (2012)). It could lower materially barriers for new banking entrants. A powerful counter-argument to all of these more radical proposals is that they could erode the economies of scale and scope associated with large banks. These economies clearly do exist in banking, as they do in other industries. For example, fixed costs are large in finance and spreading them widely ought to deliver productivity improvements. The interesting question is at what point these economies of scale are exhausted. Indeed, informational and managerial diseconomies of scale are likely at some scale, whatever the business line. In his classic theorem, Ronald Coase tells us that firms will seek a privatelyoptimal size which balances the benefits of economies of scale against these diseconomies (Coase 1937)). How does all of this apply in banking? The empirical evidence on economies of scale and scope in banking is surprisingly patchy.

We have seen the value of this in our own region in the 1980s and early ’90s, and, when discussing the problems created by capital flows, we should never forget that they have specific and beneficial functions. 6. The second characteristic is the sheer Volume of capital movements around the world. In April 1995 the global value of foreign exchange transactions taking place on an average day was $ trillion. In April 1998 this figure increased to $ trillion, or, to put it in more meaningful terms, to around 48 times the daily value of world trade. It is also worth stressing that these are largely private capital flows. In 1997, for example, the amount of private capital flowing into developing economies was estimated by the World Bank to be five times the size of official flows. 7. Within these private flows there is considerable Variety and fluctuation in the nature and organisation of capital. With financial liberalisation and the globalisation of financial markets, portfolio capital flows are of increasing importance compared with the more traditional foreign direct investment and commercial bank lending as a source of international capital flows. An aspect of this Variety is the growing number of complex investment tools, and different orders of derivatives therefrom, involving different degrees of leverage, available for moving money around the world, or indeed enabling investments to be made in markets without having actually to move money around. 8.
Like other central banks, we too are committed to establishing a standard for worldwide rules on foreign exchange market practices. Within the framework of the Swiss FX Market Roundtable, a broad spectrum of market participants has been working with the SNB to develop a global standard ‘FX Code of Conduct’. I would like to take this opportunity to thank these market participants for their contributions. Longer-term correlation between monetary policy and financial markets Ladies and gentlemen, I now come to the last part of my speech, where I would like to talk about the longer-term interactions between monetary policy and financial markets. Through their monetary policy measures, central banks influence financial market prices. To what extent this influence is stronger today than it used to be is the subject of a number of studies. Indeed, we observe that some traditional relationships and correlation patterns on the financial markets have changed in recent years. This is illustrated in chart 5. It shows the correlations between the prices of seven asset classes, including equities, government bonds, corporate bonds and commodities. The blue bars show the distribution during the period 2000 to 2007, before the financial crisis and during a period of conventional monetary policy, while the red bars depict the observed distribution since 2010. It is clear that the correlation between asset prices has significantly increased since 2010. There are various explanations for why financial market prices globally are moving more in unison.

French banks do not have so called “toxic assets” in their balance sheets but sovereign exposures on countries which are part of a monetary union. Some of these exposures need to be provisioned. These provisions will be increased for Greece. And all these risks are fully disclosed according to the European Banking Authority (EBA) templates. Despite the deleveraging taking place, their profitability remain strong and will enable them to face, in due time, the increase of capital requested by the new regulatory environment. I would therefore emphasize that these so-called “vulnerabilities” are mainly the consequence of the internationalization of banking activities. And there is a certain paradox in a situation where these globalized banks, with diversified activities and balanced business models, are perceived riskier than more specialized institutions. **** To conclude: in these turbulent times, Europe has a special responsibility. Currently, at the epicenter of the crisis we are fully aware of the necessity to take and implement vigorous decisions. However the interaction between markets and governments has become more complex. We live in democracies and have to accept that political decisions follow their own process and obey their own constraints. In all our countries, rising public debt and the unstable state of public finances is creating enormous anxiety, which, in turn, makes it more difficult to reach the necessary decisions. There are, however, some reasons for optimism. On the supply side, our economies remain robust and dynamic. Corporate balance sheets are strong.
Refinancing their foreign currency liabilities had become a concern in the mini-crisis of 2006, as I will discuss later, but proved increasingly difficult as the global financial crisis tightened its grip in successive waves from the autumn of 2007 onwards. The banks were thus forced to halt any further expansion and begin deleveraging in order to create the foreign exchange liquidity they needed in order to survive until foreign funding markets opened again. In the conditions then reigning, it was not easy to dispose of assets; however, two of the banks, Landsbanki and Kaupthing, were able to improve their foreign liquidity position by collecting deposits abroad. Kaupthing did so mostly through subsidiaries, but Landsbanki collected deposits primarily through branches in the UK and the Netherlands. This was to prove devastating for Iceland when the bank failed, because of the resulting dispute about the settlement of deposit insurance. But what had been difficult before the Lehman collapse in mid-September 2008 became almost impossible afterwards. In the immediate aftermath of the Lehman bankruptcy, crosscurrency liquidity management of banks and other entities became very difficult as FX swap markets became severely impaired and there was a general scramble for dollar liquidity around the globe. The Lehman bankruptcy led to a major loss of confidence, where concerns over protecting one’s own solvency and liquidity led financial institutions worldwide to take action that, although rational from the standpoint of individual institutions, was disastrous for the system as a whole.

This problem was significantly mitigated with the FX swap lines that the US Fed negotiated with the ECB and other major central banks, especially after these became uncapped in some cases. But the problem was not confined to currency pairs involving the US dollar, and a similar kind of dynamic played out for smaller currencies in Europe vis-à-vis the euro, especially where banking systems had significant short-term foreign refinancing needs, or what can also be called rollover risk in terms of foreign currency. In some cases, FX swap lines were granted vis-à-vis the dollar, the euro and the yen, and in some cases not. Where swap lines were granted, it helped. And for some of the smaller players, it might not have mattered terribly much which of the major international currencies they hooked on to in this sense, especially after the uncapped swap lines had been established. What we observed during this peak of the crisis was thus a run on cross-border banking operations. We know how to solve such problems domestically by letting central banks lend to markets and/or institutions through their almost unlimited short-run capacity to expand their domestic balance sheet. However, when it comes to foreign currency, a central bank’s capacity to help banks to refinance the foreign liquidity denied them on the market is limited by the size of its reserves or the willingness of its big neighbours to help. This is what did the Icelandic banks in.
What concerns would you have? What concerns at a European level, at the ECB level, are there about Brexit? Let me make three points on this. One is, as I think it’s well understood here: we’re in a pause. Brexit has happened, but until we know what the new trade deal is going to be, the uncertainty remains. The more quickly a trade deal is concluded the better, because we do think uncertainty in general is holding back the European economy. A second point to make is trade frictions: the more severe the trade frictions, the worse we think the medium-term performance of the UK and European economies will be. But taking the overall European view: the United Kingdom is not big enough. It’s a big country, but compared with the EU27 it is not big enough to be the driving force for the future of the euro area. Of course, it’s more important for us (in Ireland), as it’s the closest neighbour. But for the euro area, while it’s an important concern, compared with global trade and the future of, say, China and the emerging economies, this is a medium-priority topic. The last point is that, in terms of the financial system, it’s very important that we have good 3/4  BIS central bankers' speeches  supervisory relationships with the Bank of England and the other supervisors in the United Kingdom.

The Swiss franc money market is still in a position of structural liquidity surplus vis-à-vis the Swiss National Bank (SNB). Consequently, our focus is on liquidity-absorbing open market operations. Currently, a large proportion of the surplus Swiss franc liquidity is being absorbed through SNB Bills amounting to around CHF 110 billion and daily repo auctions (reverse repos) of around CHF 25 billion. The volume being absorbed has not been increased over recent months. Consequently, the total sight deposits of domestic banks have, at approximately CHF 25 billion, remained almost unchanged. This is a significantly higher level than before the financial crisis. It exceeds the minimum reserve requirements many times over. As a consequence, interest rates on the Swiss franc money market are still close to zero. Despite the fact that interest rates are still very low, the volume of activity on the secured Swiss franc money market remains at a relatively high level. By contrast, the volumes traded on the unsecured Swiss franc money market are still markedly lower than their pre-crisis level. The management of the three-month Libor is, however, not affected by this, and can still be guaranteed. The management of the foreign exchange reserves Allow me to conclude with a few words on the management of our foreign exchange reserves. First, let me stress that the increase in the foreign exchange reserves in 2009 and 2010 was a direct consequence of monetary policy measures. It had nothing to do with the pursuit of investment goals.
Budget balance percent of GDP 2 0 -0.9  -2 -2.2 -2.9  -4 -4.2 -6  -4.8  -2.5  -0.3  -0.2  2013 - 2015 at MTO  -2.1 -3.3  -5.4  -8 -8.1 -8.8  -10 2005  2006  2007  2008  2009  budget balance ESA  Source: Eurostat  2010  2011  2012  2013  structural budget balance  2014  2015  2016  2017  primary budget balance  Figure 15. Current account balance - regional comparison  percent of GDP 10 5 0 -5 -10 -15 -20 -25 2008  2009 Romania  Source: IMF  2010 Bulgaria  2011  2012 Croatia  2013  2014  Czech Republic  2015 Hungary  2016 Poland  2017  Figure 16. Current account and FDI 8  Current account deficit and non-debt-generating flows  % nominal GDP  4 0 -4 -8  * Mainly European structural and investment funds ** Current account balance + Capital account balance  -12 -16 2005  2006  2007  2008  2009  2010  2011  Capital account balance* Current account balance  2012  2013  2014  2015  2016  2017  Direct investment, equity (including reinvested profit) Net lending (+) / borrowing (-)**  2018Q1 (4Q moving average)  Source: NBR 12  Structure of FDI (%)  EUR bln.

My assessment is based on a longer time perspective and it may differ from a year on year approach. Romania is one of the few success stories of converging within the European Union, even during and after the crisis. GDP per capita at PPS increased from 50.6% of EU average in 2008 to 62.5% in 2017. The real GDP was higher by 17.5% in 2017 as against 2008; and the real potential GDP was 23% higher in 2017 as against 2008 (Figure 1). By the end of 2018, these figures will further grow by approximately 4 percentage points, according to IMF and EC forecasts. 2  IMF/EU programs from 2009 to 2015 were successful in many ways, contributing to a sharp adjustment in the budget deficit, exit from the Excessive Deficit Procedure in 2013 and reaching the MTO in the period 2013-2015. Structural reforms also advanced during the programs, one indicator of these being the large reduction in public government and state enterprises’ arrears. Exports of goods and services doubled in the last ten years, from 38.3 billion euro in 2008 to 77.9 billion euro in 2017, while imports increased by only 42.7% over the same period. CPI-based Real effective exchange rate (REER) is also lower than in 2008 (Figure 2). Consequently, the negative contribution of net exports to GDP has diminished, and the current account deficit witnessed a major adjustment of about 10% of GDP.
A prominent exception is the ECB, which uses a reference value for the growth of the money stock M3 as a second pillar besides a broad-based assessment of the inflation outlook to achieve its objective of price stability. The SNB abandoned money supply targeting two years ago. Its new concept is based on an inflation forecast and an operational target range for the three-month Swiss franc Libor rate. The main goal has been, and will remain, price stability. Price stability is considered to have been achieved if inflation, measured by the national consumer price index, is below 2% in the medium term. In achieving this goal, the SNB always takes account of the economic development. This is also stipulated in the draft of the revised National Bank Law. Due to the strategy change from money supply targeting to inflation forecast-oriented interest rate steering, shifts in the demand for money have become less problematic, as they are being offset automatically. But although the money supply no longer serves as an intermediate target, its development is an important element duly considered – along with other indicators – in producing the inflation forecast. The centuries-old observation that sustained changes in the price level are linked to changes in the supply of money remains valid. 4.2. The significance of the exchange rate  Another important variable in producing a medium-term inflation forecast is the exchange rate. The significance of the Swiss franc exchange rate against the major currencies is due to the Swiss economy being so small and open.

Nina Stoyanova: Bank of Bulgaria’s latest projects in the area of financial services and payments Speech by Ms Nina Stoyanova, Deputy Governor (Banking Department) of the Bulgarian National Bank, at the opening of the “Innovations” Financial Forum, Sofia, 14 June 2016. *  *  *  Dear colleagues and guests, I would like to welcome you at the Financial Forum ‘Innovations’ organised for the third year in a row by the ‘Bank of the Year’ Association in partnership with the University of Finance, Business and Entrepreneurship (VUZF). The topic of this forum gives us the opportunity to present and discuss the innovations in the financial sector in the area of technologies, banking products and regulations. In this regard, I would like to briefly present the latest projects in the area of financial services and payments, on which the BNB is working. Later today our colleagues are going to give you more details on these projects, which will have an impact on the financial sector over the next couple of years. As you are well aware, the legal and regulatory framework of financial services and payments in Bulgaria is consistent with all European trends and requirements aiming to achieve an integrated European market, to harmonise the rules and conditions for providing payment services, to promote innovative payment methods, to ensure a high level of security for payments and better consumer protection.
Under passporting, currently we cannot apply our preference for retail subsidiaries to banks from elsewhere in the EEA. It would be odd to continue with this if the UK and EU27 become third countries following Brexit. Subject to the negotiations, our current planning assumption is therefore that all international banks will need to put material retail business in a subsidiary. This should be no surprise given our existing policy – we are 7  engaged on this with the handful of relevant branches and will continue to promote a smooth transition . How far does this logic go? Overseas there are moves afoot to apply elements of this logic to other parts of financial services, in particular to wholesale banking. Why does this matter to us? The UK provides unrivalled access to global capital markets. Over three-quarters of foreign exchange and OTC interest rate derivatives trading in the EU takes place here. International banks from Asia to the Americas use their UK presence to raise finance on behalf of their home group. Since the first Eurobond in 1963, which financed the Italian motorways, international banking in London has driven growth in real economies around the world. And custody banks operating here safeguard and administer assets on behalf of institutional investors from east to west. Wholesale capital markets and the banks which serve them are deeply interconnected and contribute to the efficient allocation of capital. International banks match savers and borrowers across the globe, reducing 8  funding costs, facilitating cross-border investment and financing trade .

First up, how the new accounting standard interacts with the bank capital framework here in the UK – a most enjoyable discussion, because you can never have too much of accounting standards. Next on the menu: consumer credit, of which you definitely can have too much. Some of the most difficult issues greeting our return, however, were not so domestic in nature. Would cross-border reinsurance contracts function properly in the wake of Hurricane Irma? How might a bad outcome on the Korean peninsula affect British banks and financial markets? Supervisors of the world's leading international financial centre have always had to juggle domestic and global risks. In between them, however, is a dynamic which is fundamental to retail and wholesale finance in the modern economy. It is a dynamic at play in the cliff-edge risks from Brexit and the differences of view between countries over Basel 3 finalisation. I am thinking of the impact of borders, location and distance on the shape of banks, insurers and financial regulation. Put simply: the impact of geography on the geometry of finance, a dynamic we might call 1  geofinance . With the revolution in regulation following the financial crisis coming to its end, and with changes to the geopolitical landscape looming large, I think that geofinance is likely to be the defining challenge of the next few years. The domestication of retail banking  Soon after the crisis I worked with the Independent Commission on Banking (ICB).