samchain/econo-pairs-v1 huggingface dataset:
In Sweden too, authorities such as the Riksbank, the National Debt Office and Finansinspektionen (the Swedish Financial Supervisory Authority) have acted to alleviate the crisis. As in many other countries, the government has increased the national deposit guarantee scheme and has extended it to cover all forms of deposits in accounts. The government has also introduced a guarantee programme, set up a guarantee fund and decided on capital injections for banks. At the same time, the government is conducting a more expansionary fiscal policy than previously to mitigate the effects on the real economy. The Riksbank has implemented a large number of measures to safeguard financial stability and mitigate the negative effects of the financial crisis. We have changed the collateral requirements so that the banks can use more types of security as collateral when they borrow from the Riksbank. We have, for example, begun offering loans with commercial paper as collateral to facilitate the companies' financing. We have also begun to lend at longer maturities, with variable interest rates and with smaller supplements. We have provided special liquidity assistance to Kaupthing and Carnegie. In addition, we have entered into loan agreements with Iceland, Latvia and Estonia to ease the situation in these countries. All this has meant that during the second half of 2008 the Riksbank increased its total lending to the banks by more than SEK 450 billion. I will discuss what this entails in just a moment.

Without stability in the financial system it becomes more difficult to conduct monetary policy, and price stability is part of an effective payment system. Practically and organisationally, however, these are two separate fields of work. You could say that we normally use two different toolboxes to perform these two tasks. First, we have a monetary policy toolbox, parts of which I have already described. The monetary policy measures, for example the setting of the repo rate, have a clear objective: to influence economic activity with the aim of maintaining price stability. This in turn is an important component of our efforts to achieve stable development in the real economy. Second, we have a box of tools for promoting stability in the financial system. Financial stability is a basic prerequisite for a safe and efficient payment system. The Riksbank normally uses tools other than the repo rate to promote financial stability. Our analyses of the risks in the financial system that we produce and publish every six months in our "Financial Stability Report" represent the primary tool in this toolbox. If nothing else, this and other feedback that we provide to the banks makes them more aware of potential vulnerabilities and, in the best case, gets them to take preventive measures. This is usually referred to as "moral suasion". But this toolbox also contains more concrete tools. These include the possibility to quickly add liquidity to the banking system.
Stefan Ingves: Strengthening bank capital – Basel III and beyond Keynote address by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at the Ninth High Level Meeting for the Middle East & North Africa Region, jointly organised by the Basel Committee on Banking Supervision, the Financial Stability Institute and the Arab Monetary Fund (AMF), Abu Dhabi, United Arab Emirates, 18 November 2013. *  *  *  As prepared for delivery Good morning everyone, and thank you for the opportunity to speak about what – among the myriad of recent regulatory initiatives – has probably been the most important: strengthening bank capital. Strengthening bank capital is not simply about asking banks to hold more capital. Rather, it is a broader objective that involves ensuring the functioning of the entire capital regime. The Basel Committee’s approach has therefore been to work extensively on the consistent implementation of the regulatory capital framework. The ultimate goal is to implement Basel III so that it strengthens the quantity, quality, consistency and reliability of bank capital ratios around the world. Quantity and quality of capital As you know, a set of requirements designed to raise the quantity and quality of bank capital lies at the heart of the Basel III reforms. Not only were minimum capital requirements raised, but the increases in capital requirements were focused on where they were needed most: in going-concern loss-absorbing capital, or Common Equity Tier 1.

Overview of assessment outcomes  Table 1  Assessed member  Publication date of  Number of regulatory changes,  Overall assessment  jurisdiction  assessment  amendments, and clarifications  grade  made by a member jurisdiction during the assessment Japan  October 2012  5  Compliant  Singapore  March 2013  15  Compliant  Switzerland  June 2013  22  Compliant  China  September 2013  90  Compliant  Comparability of bank capital ratios Over time, the consistent national implementation of Basel III standards will help ensure greater “truth in advertising” when comparing bank capital ratios. It is important that, when a bank publishes what purports to be a Basel III capital ratio, investors and counterparties can be reasonably sure that the ratio has been consistently calculated and that, if there are differences, those differences are transparent and some measure of their materiality is available. But there is more to bank capital calculation than just following national regulations. The current framework makes use of internal models – these were introduced in 1996 for market risk, and in 2006 for credit and operational risk. The rationale was clear: to provide incentives for improved risk measurement, and reduce arbitrage via greater risk sensitivity. The Basel I framework, established in 1988, had grown outdated and was increasingly subject to arbitrage. Given its limited risk sensitivity, it provided banks with incentives to accumulate risk, as the build-up of many risks would not be visible in banks’ capital ratios.
In order to fulfil its functions in the payment system and contribute to efficiency, it is important that cash is both available and easy to use, ie that the public has real opportunities to obtain and use cash. Norges Bank will continue to issue cash and work to facilitate its use as long as this is appropriate and cost-effective for society. Real-time payments A common infrastructure can be regarded as a collective good that benefits us all. Payment solutions should therefore build on a common underlying infrastructure that is secure and fast and operates at low cost. Providers can then compete freely for customers through various applications and interfaces. Norwegian banks have traditionally agreed on good common solutions for the payment system infrastructure, but owing to developments in technology and market structure in recent years, payment services have increasingly become a competitive arena. Customer contact through payment services has gained increased strategic importance for banks and other providers. At the same time, this may have weakened incentives to develop common solutions. Real-time payments are payments where funds are available in the payee’s account within seconds of payment initiation – 24/7. A well-functioning solution for real-time payments is an important part of an efficient payment system. We expect the share of real-time payments to increase in the years ahead. Chart 6 Real-time payments Norway’s banking sector established a common infrastructure for real-time payments (called “Straks”) in 2013. The solution had some shortcomings and it took many years before it was adopted by several of the larger banks.

Such bank runs can lead to instability in the financial system. We have not observed such movements in Norwegian banks’ funding for a long time. Both the bank guarantee scheme and banks’ strong financial position have likely played an important role here. With the introduction of CBDC, digital bank runs might occur more easily and with greater speed. Avoiding digital bank runs are therefore an important factor to consider when designing CBDC. In addition to assessing the consequences of the introduction of CBDC, we must also analyse the consequences of a payment system without central bank money. We must ask ourselves 3/6  BIS central bankers' speeches  whether we can maintain confidence in the monetary system and achieve the goal of an efficient and secure payment system using instruments other than introducing a CBDC. We do not have the answer yet. Norges Bank will decide how the Bank will proceed with its work on CBDC in the first half of next year. We want to be transparent about our work. Three reports have been published so far, and there are plans to publish another report early next year. We hope that this will provide inspiration for continued dialogue with and contributions from a broad set of stakeholders. And already next week – on 9 November – we will be hosting an open webinar about the project. Further to my remarks on CBDC, I would also like to comment briefly on the central bank money we already have, namely cash.
But the belief that we could avoid the adjustment by pushing up our pay would lead to a self-defeating process of higher wages offset by higher prices. It is the task of the MPC to ensure that the process of adjustment does not lead to a persistent rise in inflation. Bank Rate was raised in order that inflation will come back to its 2% target, and future action will depend upon how those risks to the inflation outlook materialise. The month by month path of interest rates required to bring inflation back to target is a matter of judgment. There is certainly room for reasonable people to disagree about the level or timing of changes in interest rates. There is no absolute truth here, and it is vital that the MPC keeps an open mind at all times. That in essence is my letter to you and all the members of the Birmingham Chamber of Commerce. Achieving the inflation target is, I believe, in the long-run interest of manufacturing no less than the rest of the economy. I recognise that the burden of changes in interest rates often falls disproportionately on manufacturers and other exporters as increases in interest rates push up the sterling exchange rate. And that comes on top of a secular decline – fifty years ago almost 40% of GDP was produced  2  BIS Review 9/2007  by the manufacturing sector. Today that share is around 14%.

Falls in some important prices, such as petrol and utility charges, mean that people will have more disposable incomes to spend on other goods and services. That may encourage producers of those goods and services to raise prices. Equally, companies will be under less pressure to reduce other costs, affecting their response to upward pressures on earnings growth. The Committee will be monitoring carefully the outcomes month by month. All I can say is that the Committee’s central view remains that inflation is likely to fall back in the second half of the year, possibly quite sharply. As ever, there are risks around that central view – in both directions. Some of the biggest risks surround energy prices, supply factors such as migration, the level of asset prices, and the extent to which inflation expectations will prove to be a fixed or dragging anchor. Pay growth is also important. As I said earlier, if investment and employment growth are to be maintained, the burden of higher costs on employers must either be passed back in the form of lower input costs or forward as higher prices. All of us – whether on the shop floor, in the board room, or in the public sector – are coming to terms with the fact that those higher costs imply a temporary, but only a temporary, slowing in the growth of our real take-home pay. That adjustment – difficult but inevitable – will be helped by the fall in energy prices since last autumn.
Measures of underlying inflation that exclude the effects on CPI of our own interest-rate changes have been closer to the target of 2 per cent, as have inflation expectations (see Figure 1). BIS Review 96/2007  1  Figure 1: Inflation Expectations in Sweden Money market agent expectations, annual percentage change 5  5 Inflation expectations CPI  4  4  3  3  2  2  1  1  0  0  -1  -1  -2 1994  -2 1996  1998  2000  2002  2004  2006  2008  2010  2012  Sources: Prospera Research AB and Statistics Sweden  Figure 2: Real estate prices Index 1996 4th quarter = 100 350  350  Australia UK United States Sweden  300  300  250  250  200  200  150  150  100  100  50  50  0  0 97  98  99  00  01  02  03  04  05  06  07  Sources: Australian Bureau of Statistics, Nationwide, OFHEO and Statistics S eden  Since my remarks are to be on the role that house prices have played in Swedish monetary policy in recent years the following should be noted too. Since 1996 nominal house prices in Sweden have more than doubled (the increase is around 140 per cent, see Figure 2) and the average price for a coop condominium has risen even more.

The corresponding figures concerning the increase in housing prices are for the UK +220%, the US + 110 %, Australia + 140 %. In recent years, household borrowing has also increased, both in absolute terms and relative to household income. Rapidly growing house prices and household indebtedness were increasingly highlighted by members of the Executive Board from around 2004 and onwards. From 2006 statements  2  BIS Review 96/2007  regarding the development of house prices and household indebtedness have often been included in press releases following monetary policy decisions, and discussions in the minutes from the Executive Board meetings. The role of house prices in an inflation targeting regime With these institutional and other details in place, let me turn to a more general discussion of the role of house prices in an inflation targeting regime. As we are all well aware, the debate regarding the role of house prices in the formulation of monetary policy has yet to settle in a working consensus. There are many ways in which the different views in this ongoing debate can be summarized. Without claiming to have captured all views, and perhaps exaggerating a bit, let me mention three: “textbook flexible inflation targeting”, “leaning against the wind”, and “extending the forecast horizon”. Let me elaborate on each category in turn and then return to our view.
For additional discussion, see “Domestic Open Market Operations During 2017,” a report prepared by the Markets Group of the New York Fed for the FOMC. 13  4  the FOMC’s future policy stance are properly incorporated into the term structure of interest rates, and thereby appropriately affect financial conditions and the broader economy. To address the rise, the Federal Reserve made a technical adjustment to the IOR rate at the June FOMC meeting, raising it by 20 basis points while increasing the target range by 25 basis points. 14 The technical adjustment worked exactly as we expected. As you can see back in Figure 2, all rates paid on federal funds borrowings, as well as in other money markets, rose by about 20 basis points. This made it less likely that the effective federal funds rate would be above the top of the target range. Let’s spend a few minutes exploring what drivers might have been most significant in bringing about the rise in money market rates relative to IOR. 15 Leading into the technical adjustment, a shift in flows in the Treasury market had the effect of pushing both Treasury bill yields and repo rates higher in February and March. Figure 6 shows cumulative net Treasury bill issuance since the beginning of last year, as well as projections through the third quarter of this year as reported by a private-sector forecaster.

The substantial run-up in net bill issuance over the past few quarters, along with other factors, contributed to notable growth in securities dealers’ inventory of Treasury securities, shown in Figure 7—inventories that likely required financing in the repo market. Before these developments, Treasury bill yields and repo rates had been well below federal funds rates. The increases created an attractive alternative investment opportunity for federal funds lenders, including the Federal Home Loan Banks (FHLBs), which make up about 95 percent of current overnight lending in the federal funds market. Figure 8 shows that as repo rates rose relative to federal funds rates, volumes of FHLB lending in the repo market increased as some of the FHLB activity shifted into this market. As federal funds borrowers competed for this reduced pool of funds, rates rose. You may notice on Figure 1 that the federal funds rate had been rising within the range well before these recent shifts in Treasury market flows. This gradual and slow rise coincided with the ongoing decline in reserve balances that is a part of balance sheet normalization, which has raised the question of whether the decline in reserves might be putting upward pressure on overnight rates. In the academic literature on monetary policy implementation, models for the behavior of the overnight interbank rate generally boil down to its relationship with the stock of bank  14  This adjustment was discussed within the May 2018 FOMC minutes.
The Asia Pacific region continues to be the key investment destination for Singapore-based asset managers, accounting for just over 60 per cent of total assets under management. Private equity, venture capital, and other alternative investors have found Singapore a conducive centre to access regional and international investment opportunities. Such concentrations of investment talent and expertise in the major financial centres of Asia augur well for sound investment allocation. Conclusion 27. Let me sum up. The prognosis for Asia is good. An increasingly educated population, sound and prudent governance, and open markets set the stage for Asia to return to its historical role as the centre of gravity in the global economy. 28. But this is not an assured outcome. With high domestic savings and excess liquidity flooding the international system, the risk is that capital in Asia could potentially be mispriced and misallocated. This can in turn lead to asset bubbles and inflation. But if Asia is vigilant in ensuring that capital is priced correctly, that the infrastructure for allocating it is strong, and that the human expertise for investing it wisely is built up, Asia will be better placed to realise its potential. 29. Conferences like these, that bring together investors, intermediaries, and policymakers, can play a useful role in the effort to realise Asia’s promise. I applaud Deutsche Bank for lining up a strong programme of lectures and presentations, examining in greater depth the promises and pitfalls of the Asian century. 30.

These numbers, in themselves, are not cause for concern. Indeed, some would argue that emerging Asia’s investment on a per capita basis is not very high. The real question is whether these investments are going into the right places. Asia’s periodic bouts of asset market bubbles – especially in real estate – are a case in point. Michael Pettis of Beijing University, for instance, warns that Asia’s extraordinarily successful development model will eventually run into the constraints of “massive over-investment and misallocated capital”. BIS central bankers’ speeches  1  8. The key challenge that faces Asia therefore boils down to this: “how can Asia harness its sizeable domestic savings and large inflows of foreign capital to realise its economic potential?’ There are three things emerging Asia needs to do right. First, Asia needs to price capital correctly. Second, Asia needs to strengthen its infrastructure for allocating capital. Third, Asia needs to build up expertise in investing capital. Price capital correctly 9. Let me begin with the pricing of capital. History is replete with examples of how mispricing capital leads to serious misallocation of resources, which in turn leads to excessive risk-taking and a build-up of debt that eventually ends in a financial crisis. 10. Take Latin America in the 1970s. Global interest rates were low and capital sought higher returns in a booming region. International creditors lent huge sums for industrial development. External debt quadrupuled between 1975 and 1983, rising to 50% of the region’s GDP.
That’s why about two-thirds of the Mainland’s two-way capital flows consistently go through Hong Kong. 25. Some argue that this advantage is temporary. As China’s domestic capital markets open up, the argument goes, surely international capital can bypass Hong Kong and go directly to Shanghai and Shenzhen? 26. It is true that the Mainland authorities are pursuing further liberalisation of the onshore capital markets. This was evident in a series of reforms to the Qualified Foreign Institutional Investor regimes last year. Access to the China Interbank Bond Market has also been enhanced, making it easier for investors anywhere to directly access this 16 trillion US dollar market. 27. And yet Hong Kong’s own portal to Mainland bonds is more popular than ever. Orders going through our Bond Connect link to China’s Interbank Bond Market account for more than half of its turnover by foreign investors. More than 2,400 institutional investors are registered on the platform. And Bond Connect has continued to grow right through the social unrest and pandemic: volumes rose by 82 per cent in 2020. 28. Hong Kong’s two Stock Connect links – with Shanghai and Shenzhen – are also very popular with international investors. Average daily turnover on Stock Connect more than doubled last year. ‘Northbound’ traffic from here to the Mainland rose by 119 per cent. This reflects continued global demand for Chinese securities as their weighting in benchmark indices increases. 29. And investors choose Stock Connect for the same reason they choose Bond Connect.

As the manager of the Exchange Fund, the HKMA has ensured that ESG principles are now an integral part of our investment criteria, investment process and asset allocation decisions. 42. And, once again, Hong Kong’s status as China’s offshore financial centre gives us an edge in sustainable finance. No financial centre is better positioned than Hong Kong to channel global investment into China’s ambitious plans to achieve carbon neutrality by 2060. Opportunity – Technology 43. When it comes to technology, Hong Kong is already at the forefront of the global fintech scene. The HKMA’s Smart Banking initiatives have helped drive the digital transformation of banking services, bringing competition and promoting financial inclusion that directly benefit 4/5  BIS central bankers' speeches  customers. This is just the start of a long journey. The adoption of AI and data analytics in banking operations, the use of Regulatory Technology – or Regtech – in compliance and the need for enhanced cybersecurity are high on our agenda. 44. Looking ahead, apart from the technology itself, it’s clear that data will be central to the future of banking innovation. That’s why we’re building next-generation financial infrastructure. Last November, we announced plans for a pilot to build a Commercial Data Interchange. The project will enable corporates to share with banks their digital footprint kept by their business partners on a common platform.