samchain/econo-pairs-v1 huggingface dataset:
“The Credit Rating Crisis”, NBER Working Paper, 15045. Freixas X., Parigi B. and J. Rochet (2000). “Systemic Risk, Inter-Bank Realtions and Liquidity Provision by the Central Bank”, Journal of Money and Credit Banking, 32(2). BIS Review 97/2009  3  Morgan D. (2002). “Rating Banks: Risk and Uncertainty in an opaque Industry”, American Economic Review, 92(4). Rochet J. (2008). “Liquidity Regulation and the Lender of Last Resort”, Financial Stability Review, Banque de France, February. 4  BIS Review 97/2009

Instead, monetary policy affects the economy as the current change in short-term interest rates and expectations about future monetary policy changes influence financial market conditions more broadly. Developments in financial market conditions are thus an important element in the transmission mechanism of monetary policy to the economy. Changes in financial market conditions influence economic growth through a number of channels. For example, a stronger equity market raises household wealth and lowers the desired personal saving rate – lifting consumer spending. A stronger equity market also reduces the cost of capital for business, which may help encourage greater investment spending. Lower long-term interest rates push down business financing costs, which also supports investment spending. At the same time, lower mortgage rates support housing demand and reduce household interest outlays. A weaker dollar supports growth by making imports more expensive and by increasing export competitiveness. The combined effect is to increase net exports. If the linkage from the federal funds rate to financial market conditions were stable over time, there would be no need to focus on financial market conditions. In a world in which the linkage was solid and unchanging, adjustments to the short-term interest rate and communication about future policy would have a predictable and reliable effect on financial market conditions. Central bankers, then, could keep their focus narrowly on their policy rate. However, as has been very clear, especially in recent years, this linkage is not stable.
A “ratcheting-up” of risk within the banking sector can occur over time, creating increasing vulnerability. 17 Low interest rates also encourage a higher level of leverage. Because financial intermediaries – whether banks, broker-dealers, shadow banks, or hedge funds – finance themselves with short-term liabilities, central bank decisions on the level of short-term rate affect their marginal price of leverage. As a result, the behaviour of financial intermediaries – which, by their nature, have high levels of leverage – can be strongly influenced by even small changes in short-term rates. 18 Low levels of interest rates encourage higher levels of leverage and, as a result, an accumulation of additional risk on bank balance sheets. Through all these channels, a prolonged period of low short-term interest rates can support the accumulation of risks and financial imbalances on the balance sheets of both financial intermediaries and the private sector. These imbalances render the economy vulnerable to financial crises: if confidence evaporates, lenders call in loans, balance sheets contract and a painful readjustment is required, with adverse implications for financial stability and the real economy. In particular, the build-up of leverage within the financial sector may unwind abruptly, leading to a tightening of overall financing conditions. 19 Such thinking sheds light on recent developments in the run-up to the financial crisis. Viewing the impact of globalisation on goods prices as the manifestation of a positive supply shock, we can map this abstract scenario into our experience of the past decade.

In this account, failures of financial regulation and supervision – rather than of monetary policy – lay at the heart of the crisis. 1 Yet an influential body of opinion takes an opposing line, claiming that an overly accommodative monetary policy – at the global level, and perhaps especially in the United States – was among the key causes of the crisis. 2 Its advocates argue that short-term interest rates were kept “too low for too long” following the bursting of the dot-com bubble at the turn of the century, and led to the economic imbalances that ultimately threatened the financial and macroeconomic stability of the world economy. The truth probably lies somewhere between these two extremes. No doubt financial regulation and supervision were weak. No doubt price stability is necessary but insufficient per se to achieve financial stability. Yet there is also no doubt that a monetary policy which turns out to be too lax to achieve price stability is likely to be responsible for fuelling excessive credit growth and thereby creating the potential for financial instability. There is substantial literature explaining this relationship, on which I will not elaborate further. 3  1  See: B. Bernanke (2010), “Monetary policy and the housing bubble”, speech at the 2010 AEA meetings http://www.federalreserve.gov/newsevents/speech/bernanke20100103a.htm. 2  For a response to Bernanke (2010), see: J. Taylor (2010), “The Fed and the crisis: A reply to Ben Bernanke”, Wall Street Journal (11 January).
The conduct of CCPs depends on clarity and certainty. A regime that does not provide the same certainty as that set out in CCP rules runs the risk of undermining the very reasons why international leaders have placed CCPs at the heart of the response to the financial crisis. Conclusion To conclude. Anniversaries are not always milestones to celebrate – and the anniversary of the failure of Northern Rock is a case in point. But even where the lessons of the past were painful, their anniversary provide a chance to step back and consider whether they have been learned. The lessons of the crisis, of course, go much wider than resolution. The first defence against bank failure is to ensure that banks are properly capitalised to withstand losses and continue to serve the real economy. A vast amount of work has been done over the past 10 years to put in place capital and liquidity standards and stress testing regimes to ensure a much safer and stronger banking system. Resolution should be seen as an integral part of making the financial system safer and stronger. Credible resolution regimes that impose losses on shareholders and investors, rather than taxpayers, when things go wrong will incentivise banks to manage their risks properly.

1  Such liquidity may be secured against a wide range of collateral, building on the collateral eligible in Sterling 2  Monetary Framework operations. The Bank’s objective would be to provide liquidity in sterling or foreign currency as required, in the necessary scale and for a sufficient period of time to allow the firm to make the transition to market-based funding. The terms would be set in a way designed to support the effectiveness of the resolution regime, incentivise the transition of the firm back to market-based funding, and protect public money. Confidence in the regime for the resolution of international banks is of crucial importance to the UK. We are home to a number of major international banking groups. But equally, if not more important, we are host to a very large number of foreign banks, many of which have sizeable wholesale market operations in the UK. As the leading international financial centre, we import considerable risks from other jurisdictions. It is therefore crucial to financial stability in the UK that we can rely on foreign banks operating in our jurisdiction having viable resolution strategies in line with international standards. Absent such assurance, we would need to ensure the entities operating here have greater resilience locally. Non bank resolution  It was the failure of systemic banks in the crisis that exposed the lack of an effective resolution regime.
They are increasingly a source of finance for UK businesses. However, the ‘dash for cash’ in March 202011 led to a rapid deterioration in the functioning even of advanced-economies’ government bond markets and created market dynamics significant enough to raise the cost of lending. The episode clearly demonstrated the need to build resilience in market-based finance. 12  Given the global nature of market-based finance, the effectiveness of any policies in the UK will depend in part on policies implemented in other major jurisdictions. We are therefore working with international counterparts in the Financial Stability Board to take coordinated action to address these issues – including on open-ended funds, margins, the liquidity structure and resilience of core markets, to name a few. In the meantime, the FPC (and other UK authorities) need to continue monitoring them, starting by ensuring there is reliable data to do so. 2.The growth of cryptoassets and decentralised finance: regulatory frameworks need to evolve Another important challenge is seen in cryptoassets and decentralised finance (DeFi) which in recent years have grown to represent around 1% of global financial assets.13 Cryptoasset technology is creating new financial assets, and new means of intermediation. Many services now facilitated by this technology mirror those available in the traditional financial sector, including lending, trading and exchange, investment management and insurance. While that activity is currently small, if the pace of growth seen in recent years continues, interlinkages with the traditional financial sector are likely to increase.

So, even without any improvement in the trade deficit, the growth of final domestic demand will have to moderate to prevent GDP growth rising above trend and putting pressure on the supply capacity of the UK economy. Indeed, if the trade deficit is to be reduced, then domestic demand growth will have to fall below the growth of total output for a while. So by the time of the September MPC meeting much had changed from earlier in the year. New data showed that final domestic demand was growing faster than expected. The data on the housing market – for the UK as a whole not just the South East – as well as credit indicated that the strong consumption growth over the past year might persist. And house prices, I should add, enter our decisions, because of their implications for future consumption, not because we are trying to target house or indeed any other asset prices. Unemployment was still falling: the Labour Force Survey measure of unemployment had reached its lowest rate since the series started, while the claimant count had fallen to its lowest level since 1980. The Bank’s regional Agents had also noted tightness for both the skilled and unskilled. Oil prices had risen sharply during the year. These factors led a majority of the Committee to vote for a modest rise in interest rates of twenty-five basis points in order to keep inflation on track to meet the 2½% target. The task now is to continue looking ahead.
Should the impact of the pandemic on household and corporate income be much greater than currently assumed, it could trigger a price correction in the real estate market. Equally, such declines in income could lead to a materialisation of the historically high affordability risks. Both of these developments would negatively affect the quality of the banks’ mortgage portfolios. Given these challenges, the available capital buffers of the domestically focused banks are a crucial element for their lending capacity and loss-absorbing capacity. The SNB’s scenario analysis indicates that, in aggregate, domestically focused banks would also be in a position to absorb the losses incurred under significantly more adverse conditions than assumed in the baseline scenario. Use of cash  This brings me to the last section of my speech in which I will talk about the impact the coronavirus pandemic is having on the use of cash. There are currently two main developments. For one, banknote circulation in Switzerland rose sharply during the first wave of the pandemic in spring. This increase was mainly driven by the demand for large denomination banknotes and indicates an increased desire to hold reserves in the form of cash. Second, available data on card payments and cash withdrawals from ATMs suggest that for payment purposes, cashless methods are currently being used more than prior to the pandemic, while cash is being used less. Following the easing of containment measures, the amounts paid with cards have risen above their pre-crisis level.

Against this background, the capital situation at Credit Suisse and UBS has improved slightly since the first quarter. Looking ahead, the two globally active Swiss banks remain well placed to face the challenges posed by the difficult environment. An increase in provisions is likely in the coming quarters as a result of the expected deterioration in credit quality. Under the baseline scenario, however, the SNB estimates that the financial impact of the coronavirus pandemic on Credit Suisse and UBS will remain limited. Furthermore, the SNB’s scenario analysis shows that, thanks to their capital buffers, both banks could also cope with significantly worse developments in the economic environment than are assumed in the baseline scenario. At the same time, this analysis shows, however, that the estimated loss potential under stress scenarios at Credit Suisse and UBS continues to be substantial. Moreover, uncertainty about the future course of the pandemic and thus about the financial impact on the two globally active banks remains high. Both factors underline that the capital requirements under the current TBTF regulations are necessary to ensure adequate resilience at these two banks. Domestically focused banks  I shall now turn to the domestically focused banks. Here too, there has been little change in the situation since the Financial Stability Report was published in June. These banks’ financial figures and risk indicators are still showing scarcely any effects of the coronavirus pandemic.
These steps include the necessity to accelerate the potential GDP growth in the European Union and Japan through reforms of the labour market and the product market, increasing savings in the US by curbing the budget deficit, and reforms of the financial sector in China and subsequent gradual floating of the renminbi exchange rate. The central bank must consider possible scenarios of developments in the global economy and possible adjustments of global imbalances, as they significantly impact the perspectives of a national economy, and so the monetary policy pursued. Moreover, the central bank, as an institution that manages foreign exchange reserves, must monitor changes on the global financial market, as these changes and investment decisions made by the central bank influence the return on foreign exchange reserves. 5  This thesis was advanced, among others, in the frequently quoted work: M.Dooley, D.Folkerts-Landau, P.Garber “An Essay on the Revived Bretton Woods System“, NBER Working Paper 9971, September 2003. 2  BIS Review 57/2006  Re 2) Globalisation changes the wage and price setting mechanisms in a domestic economy. This ensues from the increased international competition and the growing role of outsourcing and offshoring. Offshoring consists in transferring of manufacturing, services or orders abroad, where such transfer may be made within a single company or to another company. Outsourcing consists in renouncing manufacturing or services in a given company and obtaining such goods or services from another company that may be located in the same or another country.

Mr Lee examines some of the major themes for strengthening the global financial system against the background of the financial crisis in Asia  Opening address by Mr Lee Hsien Loong, Chairman of the Board of Directors of The Monetary Authority of Singapore and Deputy Prime Minister at the fifth meeting of Finance and Central Bank deputies on the Manila Framework at Shangri-La Hotel on 29 August 1999. *  *  *  Introduction I am happy to address the Manila Framework Group. Prospects for the region have brightened considerably since your inaugural gathering in November 1997, in the depths of the regional economic turmoil. The worst of the crisis is now well past. Most of the crisis-countries are seeing growth again. Investor sentiment, while edgy, is generally upbeat. Equity markets have surged, some beyond pre-crisis levels. Currencies have stabilised; indeed some governments have had to temper the appreciation of their currencies. But financial markets are notorious for their short-term memories. An upturn does not necessarily mean that basic problems have been solved. It remains important for financial regulators and policymakers to remain mindful of the lessons thrown up by the crisis and to tackle them before another storm blows up. No two Asian economies are the same. During the crisis, hardly any were spared the panic and contagion. But how each was struck, how external problems interacted with internal weaknesses and how each government responded, varied from country to country. These diverse experiences offer rich materials for study and contrast.
It has attracted much attention here and abroad and I thought I will end off with a quick 9 / 11  BIS central bankers' speeches  progress report on what has been happening in the sandbox. The sandbox basically provides a conduit for both regulated and unregulated firms to engage MAS with innovative ideas and proposals. Since its launch in June 2016, MAS has provided guidance to more than 140 firms and individuals. We have received more than 40 sandbox applications, covering a broad range of financial services and technologies. The services offered include investment management, broking, crowd funding, cross-border funds transfer, insurance, and financial advisory. We see interesting applications of big data, distributed ledgers, machine learning and artificial intelligence, to increase efficiency or derive new insights. Of the 40 over applications we received:  Nearly half withdrew their applications for various reasons, exemplifying the fluidity of innovation and the natural volatility in the business of start-ups. About a third proceeded without the need to be tested in the sandbox. We take this as a positive reflection of our existing regulations, which provide sufficient flexibility for innovative models while safeguarding against risks. It is not necessary that innovation needs to happen only in a sandbox. The remainder of the applications—about one in five—were approved or are under review. To cite a few experiments in the sandbox: Kristal Advisors, is experimenting with machine learning to determine and recommend suitable investment portfolios for its customers.

Maintaining financial stability and trust are central to MAS’ mission. The annual report summarises our many regulatory and supervisory initiatives – to make derivatives markets safer, to enhance cyber security, to promote a good risk culture in our financial institutions. The annual report also devotes two pages of infographics to the enforcement actions MAS has taken against those who breach our regulations or fail to meet our standards. MAS does not tolerate: abuse of our financial system for money laundering or tax evasion; misconduct or manipulation in our securities markets; or mis-selling to consumers who place their trust and money in our financial institutions and their representatives. But being a no-nonsense regulator does not stand in the way of being also businessfriendly. For financial institutions who want to grow their business in Singapore, build up the skills of their employees, or want to innovate or experiment with new technologies, MAS is a happy partner and collaborator. 1 “The Goldilocks Economy – Will the Three Bears Return?”, Speech by Mr Ravi Menon, Managing Director,  Monetary Authority of Singapore, at UBS Wealth Insights Conference, 15 January 2018. 11 / 11  BIS central bankers' speeches
This step was necessary at this time to stop the turmoil in Turkey’s financial markets and calm depositors’ nerves. Now, as we all know, the 100 percent coverage may subject both bankers and depositors to moral hazard in the form of willingness to take greater risks to earn higher returns. Depositors may encounter moral hazard when they ignore greater risks associated with their choice of a depository institution which offers them higher rates for their deposits. But even though all the drawbacks of the present system of deposit protection are well known, current conditions in the world financial environment and their effects on the Turkish financial system have prevented us from making the necessary changes in the existing deposit insurance scheme just now. Once we manage to stabilise the macroeconomic environment, we will be able to reduce the 100 percent coverage to internationally acceptable levels. BIS Review 31/1999  4  How a powerful and effective supervision could be implemented for the Turkish banking system was foreseen many years ago. The system in effect during the 1930s had revealed its inadequacies, but the first step was not taken until 1959 with the establishment of the Board of Sworn Bank Auditors. The system was first applied to the Turkish economy under the direction of the Ministry of Finance. The Board recruited many valuable employees, trained them, and gained the power to supervise the system.

A soft landing after one of the sharpest upswings ever would represent a success confirming beyond all doubt that the Icelandic economy is highly adaptable and can respond more quickly than larger and more cumbersome systems, and that the largest investment in the country’s history followed by restructuring of the banking sector and housing market has not proved too much of a challenge for economic policy. It would be going to far to call such an outcome a miracle, but it would certainly be satisfying. Because over this same short period, enormous assets have been built up in Iceland. The infrastructure of the economy, and know-how within it and in the main business sectors have all strengthened, and Iceland’s competitiveness and potential for expansion at home and abroad have improved enormously. The old cliché of Iceland’s undiversified economy which also happened to be a fact is a thing of the past.