samchain/econo-pairs-v1 huggingface dataset:
The current situation raises many questions, some of which we had already been discussing at the theoretical level. Meanwhile, it contributes the necessary evidence to dig into such questions more deeply. Although we must detect the flaws and fix them to prevent episodes like this to happen again, we must also identify what has operated properly and should continue to be part of our macroeconomic and financial policies. In particular, a proposition that permeates my presentation today is that the current turmoils have shown the advantages of inflation targeting regimes committed credibly with an inflation anchor. As the crisis we are going through keeps reminding us, price-level stability must occur hand in hand with proper regulation of the financial system. Our region has learned these lessons the hard way, after severe crises that were created when we lost sight of macroeconomic and financial stability. In this juncture, the region has withstood like never before the effects of the international crisis. In the past, when the world got a cold, the region got pneumonia; today it is the other way around, our countries suffering just a cold while the developed world is with pneumonia (Figure 2). This comparatively good performance is no reason for complacency, as in our countries it is more urgent to avoid large cycles that affect disproportionately the poorest members of society, especially those most detached from the social safety nets. Today, I intend to address two very important aspects of the discussion about monetary and financial policy making.

Even with an agreement in place that might reduce the probability of a default by Bear, we decided that independent of that outcome, it was important to get assured liquidity to primary dealers by Monday morning, to address the accelerating process of deleveraging and tightening liquidity seen in the financial system. On Sunday morning, executives at JPMorgan Chase informed us that they had become significantly more concerned about the scale of the risk that Bear and its many affiliates had assumed. They were also concerned about the ability of JPMorgan Chase to absorb some of Bear’s trading portfolio, particularly given the uncertainty ahead about the ultimate scale of losses facing the financial system. In this context, we began to explore ways in which we could help facilitate a more orderly solution to the Bear situation. We did not have the authority to acquire an equity interest in either Bear or JPMorgan Chase, nor were we prepared to guarantee Bear’s very substantial obligations. And the only feasible option for buying time would have required open ended financing by the Fed to Bear into an accelerating withdrawal by Bear’s customers and counterparties. We did, however, have the ability to lend against collateral, as in the back-to-back nonrecourse arrangement that carried Bear into the weekend. After extensive discussion with my colleagues at the New York Fed, Chairman Bernanke, and Secretary Paulson, and with their full support, the New York Fed and JPMorgan Chase reached an agreement in principle that the New York Fed would assist with non-recourse financing.
Indeed, it is evident to me, as a former commercial banker and now as a supervisor, that only if we work together, each meeting our responsibilities and reinforcing the other, will we be able to successfully manage and supervise a rapidly evolving, ever-more complex financial services industry. BIS Review 32/2000  8

Only then, will our financial system become less prone to risk and will the extent of future crises clearly decrease. In order to achieve this goal, several measures have been decided on in Switzerland. First, new capital adequacy requirements were enacted in 2008. Big banks will have to double their risk-weighted capital. In addition, they will have to hold a minimum amount of equity capital, irrespective of the risk models they use internally. This is because the crisis has shown that internal risk models massively underestimated the risks taken. Second, new liquidity regulations will be adopted. In the future, big banks will have to hold a sufficient amount of high-quality liquid funds to be able to cover unexpected liquidity losses for a period of at least 30 days. The reason for this is that, in the financial crisis, even solvent banks had liquidity problems. Finally, measures to solve the “too big to fail” issue must be put into practice. No bank should be so systemically important that governments feel forced to rescue it from impending failure, fearing the economic costs such a failure would cause. Possible solutions to the “too big to fail” issue are the creation of incentives to encourage banks to reduce their size or change their organisational structure. BIS Review 36/2010  1
This last quarter saw a significant depletion of inventories, reversing the opposite trend seen in the first quarter of the year, due to, among other factors, the effects of the port strike. As forecast, CPI inflation has returned to the tolerance range, as the temporary factors that affected it have eased (figure 3). In particular, the prices of electricity and gasoline rose, the former due to the end of price recalculations, the latter because of world prices and, to a lesser extent, the exchange rate depreciation. Yet the core measure – CPIEFE, which excludes foods and energy – has remained near 1% annually, affected by the persistent  BIS central bankers’ speeches  3  negative incidence of the goods component. Inflation expectations two years ahead remain close to 3% annually. Although the Board has held the MPR constant, there have been variations in domestic interest rates and the real exchange rate that smooth the economy’s adjustment to a scenario of lower external impulse and less pressures on internal resources. Market interest rates have dropped in the year so far. The real exchange rate (RER) has depreciated, approaching its average of the past 15 to 20 years, and is believed to be within the range consistent with its long-term fundamentals (figure 4). The baseline scenario assumes that Chile’s GDP will grow between 4.0 and 4.5% this year. This range is consistent with assumptions in last June’s Report. In 2014, growth should be in the 4.0 to 5.0% range.

The process runs as follows: Domestic interest rates at the longer end of the maturity spectrum tend to become more closely correlated with the global rate, or the rate of the largest trading partner, and less correlated with the domestic policy rate. This means that monetary transmission tends to go increasingly through the exchange rate channel, which is only a problem, however, if the exchange rate behaves badly. Unfortunately, there is a lot of evidence to suggest that it does. Uncovered interest rate parity (UIP) does not hold except over long horizons. Interest rate differentials give rise to widespread carry trading, which is by nature a bet against UIP. Exchange rates  BIS central bankers’ speeches  1  thus diverge from fundamentals for protracted periods, followed by sharp corrections. So the exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation. Ultimately, these cycles can take the boom-bust form and, in extreme cases, can result in serious financial instability or crisis. The research on this phenomenon is still ongoing, but there is a lot of evidence to suggest that the problem would not disappear even if macroeconomic policies in the traditional sense were perfect. This process was important in the Icelandic episode. The capital inflows were driven by the traditional push and pull factors.
Stefan Ingves: Time to rethink – inside the head of a central bank governor Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, to the Swedish Economic Association, Stockholm School of Economics, Stockholm, 6 April 2016. *  *  *  I would like to thank several of my colleagues who have contributed to this speech: Mikael Apel, Maria Bergsten, Charlotta Edler, Pernilla Meyersson, Johan Molin, Christina Nordh-Berntsson, Cecilia Roos-Isaksson, Marianne Sterner, Gabriel Söderberg, Anders Vredin and Anna-Lena Wretman. New challenges – new choices The Riksbank is – like other central banks – in a position where strategies and regulatory frameworks are being scrutinised and questioned more intensively than at any time over the past twenty years. The experiences of the latest financial crisis suggest politicians and central bank economists must be prepared to try new approaches. Today, I intend to discuss the challenges and questions facing central banks the world over. How should monetary policy be conducted? What consideration should be given to real and financial variables, in addition to the inflation target? What role should central banks have as regards financial stability and supervision? How is this role changing as a result of new innovations in payments and in the financial system more generally? What factors affect how independent central banks should be and how political oversight and influence should be exercised? Many central banks the world over are facing a similar set of problems.

Indeed, financial globalisation and digitalisation are also challenging the perception that central banks have a monopoly on the issuing of means of payment. The Riksbank’s responsibility for cash management has changed By law, the Riksbank shall supply the country with banknotes and coins and has the exclusive right to issue them. The law also states that these banknotes and coins are legal tender. Giving central banks a monopoly on the issuing of banknotes and coins, along with a certain degree of autonomy, has been seen as an effective and credible way of managing the supply of means of payment. Payment trends have a long history. From bartering and the first silver coins in Sweden in 995, to the first standardised and collective means of payment in the form of transport bills, which were introduced during the 17th century. Besides cash being much more modern today than when the Riksbank was founded almost 350 years ago, we also have access to several different electronic payment options. The Riksbank’ responsibility for means of payment has been adapted over time as needs have changed. At one point, the Riksbank had over 20 offices around the country, basically one in every county, where banks often deposited and withdrew cash. For a period, the Riksbank also accepted daily takings directly from companies. The Riksbank counted, performed quality checks, invalidated and stored cash. Over time, the Riksbank has rationalised and adapted its cash provision. Today, it is banks and other private entities who are responsible for the distribution of cash.
And our future prosperity will depend on our maintaining an environment of low and stable inflation. One of the most worrying comments I have heard in recent months came at a lunch of senior businessmen I attended. One of the diners suggested that the UK was returning to its old ways “of depreciating the exchange rate and inflating its way out of trouble.” Soon after, a City circular asked “is the MPC turning a blind eye to inflation?” This is dangerous talk. The evils of inflation are well known. The high and volatile rates of inflation of the 1970s and 80s stunted our economic performance. Companies and households were unable to budget and plan efficiently. Resources were misallocated. Longterm contracts were avoided. The value of hard-earned savings was eroded. This dangerous talk has perhaps been partly fuelled by the behaviour of inflation in recent years. CPI inflation has averaged close to 3% over the past four years, significantly higher than the 2% target and for the most part higher than the MPC anticipated. CPI inflation has been above target for 41 out of the past 50 months. Lest we forget, this is a long, long way from the high and volatile inflation of the 1970s and 80s. Even so, it is perhaps understandable that some may have started to question the commitment or competence of the Monetary Policy Committee. Has the MPC gone soft on inflation? Is this a conspiracy with the Government to deflate away some of its debt?

Secondly, in order to make it easier for investors to purchase the bonds, all commercial and Islamic banks, as well as Bank Kerjasama Rakyat, have been appointed as agent banks. The public may start applying for the bond beginning 5 January until 30 January 2004. Thirdly, profits will be paid to investors on a quarterly basis. Through the quarterly payment of profits, investors will receive a steady stream of income to support their expenditure needs. For the first issuance, the Merdeka Savings Bond offers a profit margin of 5% per annum. At 5% per annum, the return is higher than interest rates paid for 12-month fixed deposits by the commercial banks. The income earned from the bonds will also be exempted from tax. The Merdeka Savings Bond also provides investors with the benefit of early redemption without any penalty in terms of forgone profits. Investors can redeem the full amount of their initial investments at any time after the first profit payment. Profit payments will then be based on the number of days the bond is held. This feature gives investors the option and flexibility to withdraw their savings at any time to meet unanticipated expenses. There will be a dedicated hotline and website to attend to public queries regarding the bonds. The launch of the Merdeka Savings Bond marks a further step forward in creating new investment instruments for a specific target group of savers who have retired. Moving forward, further savings products should be developed by the financial services industry.
After focusing on the developments in inflation and our policies regarding interest rates and exchange rates, now I would like to talk about the growth of the Turkish economy. As you all know, the Turkish economy has been displaying a high growth performance for the last four years. Since 2001, cumulative real growth has been 35.1 percent, whereas the average annual growth has been 7.8 percent. The point that stands out in the growth figures is that growth is led by the private sector and that the investment-originated base is growing. In the 2001-2005 period, investment expenditures of the private sector increased by 105 percent, while those of the public sector increased by 15.5 percent. On the consumption side, expenditures of the private sector increased by 30.3 percent in the same period, whereas those of the public sector increased by 5.9 percent. These developments indicate that the ongoing strong investment trend enhanced the growth potential and that the dynamics and actors of growth changed parallel to Turkey’s structural change process. Growing with public resources is no longer the case. In this respect, it is clear today that the public sector assumes and should assume, a strong supervisory and regulatory role in the framework of good governance principles. This is emphasized evidently in the Ninth Development Plan Strategy, which comprises the period between 2007 and 2013.

The first of these is the launch of the code of conduct for FX dealers by the end of this quarter. On behalf of the Bank, I would like to thank everyone involved, especially the ACI, for your considerations and suggestions that have made this long-term project a feasible one. I hope that the code of conduct will help guide fair and ethical market practices and increase confidence among the market participants for many years to come. 10. Another development is in the area of market reference rate reform. The transaction-based valuations to the benchmark calculations for the Thai Baht implied interest rates (THBFIX) will be introduced in the second half of this year, in place of the current survey-based model. The change is in line with the approach adopted by many other countries to reduce the risk of rate manipulation that has become the subject of vast discussions over the past few years. With these reform efforts underway, I hope the Thai financial markets will continue to inspire confidence among the market participants and allow us to move through these uncertain times with minimum disruptions. 11. Ladies and gentlemen, without further delay, let me conclude by congratulating the winners of the FX awards once again. I would also like to reiterate my thanks to Thomson Reuters for the invitation as well as for your continuing support as an important facilitator and information provider in the Thai financial markets.
And thanks also to Martin Arrowsmith, Andrew Bailey, Dan Beale, Sarah Breeden, Caitriona Dorris, Simon Hall, Andrew Hauser, Phil Evans, Damien Lynch, Paula Gallego Marquez, Rebecca Maule, Paul Nahai-Williamson, George Speight, Sam Woods for comments. Errors and opinions are my own. Page 12  1. Speech by Vicky Saporta ‘Emerging prudential lessons from the Covid stress’, July 2021 2. Speech by Sam Woods ‘Bufferati’, April 2022 3. Hernández de Cos, P (2022), ‘Lessons from Covid-19 on Basel reforms and next steps’  , BCBS speech. 4. In addition to the studies already discussed in my previous speech, Berrospide, Gupta and Seay (2021)  use US  confidential loan level data and find that low-headroom banks reduced lending to SME by an average of 1.4 percent more and were 4 percent more likely to end pre-existing lending relationships than their peers. 5. The analysis underpinning Saporta (2021) finds that CCyB releases in the UK contributed to greater stability in capital ratios and sustained bank lending. Avezum and Oliveira Diogo Serra (2021)  by considering 14 European countries,  find that CCyB and Systemic Buffers (SRB) releases implemented during the pandemic contributed to mitigate the procyclicality of credit to households. Moreover, Couaillier et al. (2021)  focused on a broader definition of capital  releases, by including also Pillar 2A requirements, and confirmed that regulatory capital reliefs during the pandemic effectively supported the credit supply, in particular for banks closer to their regulatory constraints. 6.

Page 1  Capital and (for a change) Liquidity Buffers − speech by Victoria Saporta Given at the Bank of England  Page 2  Published on 14 July 2022  Our Prudential Regulation Authority (PRA) requires UK banks to hold ‘buffers’. These are extra funds that banks can use in times of stress. Vicky Saporta says there is evidence that banks are reluctant to use these buffers and she explains why. Then she starts a discussion on what the PRA could do to make it easier for banks to use them. Speech Good morning. Last year, I reflected on the emerging prudential lessons from the Covid-19 stress. [1] I noted that one major lesson was that the banking system remained resilient and continued to provide credit to the real economy, demonstrating why the post-Global Financial Crisis capital and liquidity reforms were necessary. I did, however, also identify some potential issues with the current capital framework, some of which were also reflected in Sam Woods’ more recent ‘Bufferati’ speech. [2] In short, I noted that the evidence suggested that capital buffers are likely not to work as intended. During a systemic stress, firms might not be willing to use their buffers and instead cut back on lending to the real economy to avoid dipping into them. But capital buffers are only one of available instruments to support the banking system during periods of stress – there are other important instruments, including the vital liquidity buffer framework.
This is why modern central banks pay so much attention to ensure that inflation expectations do not run away. In general, how well a central bank can anchor the public’s inflation expectations will depend on the extent in which the public perceived the central bank’s seriousness in fighting inflation. Such credibility hinges critically on the central banks’ actions and what the public expect it to do. Words like “behind the curve” are often used to describe central banks that move too slowly to curb public’s inflation expectations. Central bank, unlike the government which has a fixed term, has a greater incentive to care for economic stability. While the government tends to be more myopic in their policies, central bank is mandated to optimize the benefits across horizon. History has taught us that  BIS Review 98/2008  3  a popular central bank is not always the most credible central bank. A pro-growth central bank is prone to inflationary bias which undermines its credibility in fighting inflation. Disinflation would then become more costly. Inflation targeting is one framework to discipline the central bank by paying attention to price stability. It has been working very well for us and for many other countries in the world that have adopted the regime. But the challenge today is to find the right sacrifice ratio between economic growth and inflation. In addition, the central bank must ensure that inflation expectation is under control and the adherence of inflation targeting framework can go a long way to ensure this.

These operations have helped to stabilise bank lending to the private sector as well as the banks’ holdings of government securities. However, the effectiveness of these operations has been reduced, as banks have preferred to place a substantial part of the additional funds with the ECB’s deposit facility. BIS central bankers’ speeches  1  In fact, in Chart 2, the blue line shows the sharp increases in the volume of bank liquidity provided by the ECB through its longer term operations over the course of the crisis. The red line shows the increases in the volume of funds placed by the banks with the ECB deposit facility. The inflow of funds into the ECB’s deposit facility has neutralised a substantial part of the added liquidity. This reflects a persisting lack of activity in the interbank market and a hesitation on the part of the banks to provide more credit to households and businesses. This accumulation of excess liquidity comes at a cost to the banks, currently amounting to 0.75% – the difference between the 1% MRO rate charged by the ECB on the LTRO and the 0.25% paid by the ECB at its deposit facility. In a similar manner Chart 3 shows the path followed by various monetary aggregates during the crisis. The monetary base – shown as the blue line – includes mainly bank deposits with the central bank. The base consists of those central bank liabilities that form the foundation for expansion of the money supply – M3, represented by the red line.