samchain/econo-pairs-v1 huggingface dataset:
The second reason for greater attention to prudential concerns is that we are in the midst of substantial changes in the structure of the U.S. financial system. The largest financial institutions in our markets are substantially larger than even a decade ago in the scope and complexity of their operations and in terms of their importance in the markets in which they operate. Hedge funds and other financial institutions that operate outside the scope of regulation or consolidated supervision now play a more important role in our financial markets. And we have seen a new way of financial innovation in credit risk transfer techniques and many new derivative instruments that have allowed risk to be measured and managed more effectively and distributed more broadly. These developments have contributed to what seems to be a significant improvement in the overall stability and resilience of the US financial system, by reducing the vulnerability of individual institutions to a broader range of potential shocks. They may also, however, add to uncertainty about how well the system might function in the context of a major systemic shock. And in this sense, they create some exacting challenges for risk management. Let me focus on three areas where this is the case: counterparty risk management with respect to hedge funds and other unregulated entities; risk management and market infrastructure issues in credit derivatives and other instruments; and stress testing and scenario analysis.

Another problem was that Teknikföretagen, an employers’ organisation in the engineering industry, revoked the Industrial Agreement last year. The Industrial Agreement is an important reason that wage formation has worked so well since the mid-1990s. The revocation of this Agreement by one of the signatories meant that the future of the Agreement became uncertain. This has been sorted out now, with a new proposed Industrial Agreement having been accepted by all parties except the Swedish Paper Workers’ Union. I view the new Industrial Agreement as a success. It cements the principle that the parts of the business sector that are exposed to international competition should play a normative role in wage bargaining and gives the impartial chairmen a stronger role in the coordination within the manufacturing sector. It is thus positive that there is a new Industrial Agreement. But there is reason to remind ourselves of our experiences from the wage bargaining rounds in 1995. The coordination of the demands from the Swedish Trade Union Confederation failed in these wage bargaining rounds. The Swedish Paper Workers’ Union and the Employers’ Federation of Swedish Forest Industries were first out then, and concluded a relatively high agreement that set the level for a large part of the labour market. The result of this was wage increases of over 5 per cent in the years 1996 and 1997, levels which were altogether too high in relation to the inflation target and the weak employment situation.
In banking, seven local banking groups have consolidated into three stronger groups. Foreign shareholding limits on locally-incorporated banks have been removed, allowing them to tap the equity market more flexibly, and if they desire, to form strategic partnerships with foreign banks. Six banks with regional and international standing and the potential to contribute to our financial sector have been awarded Qualifying Full Bank (QFB) licences. This has intensified competition in retail banking and widened consumer choices. Foreign banks also continue to be active players in the wholesale banking market and in wealth management. International banks are using Singapore as their base to service corporations and high net worth individuals (HNWIs) in the region. In insurance, a formerly closed industry has been substantially deregulated. We have enhanced disclosure requirements of products, tightened up sales practices and raised the overall professionalism of insurance advisers. The financial advisory industry has also seen substantial growth. A diversity of firms and business models now cater to different market segments. Service and conduct standards of financial advisers have gone up. The wealth management industry has grown dramatically. Annual growth rates in private banking assets under management (AUM) average almost 20%. In 2003, institutional AUM grew by 35% yearon-year to $ 465 billion. A majority of these assets are internationally sourced. Close to 1,000 investment professionals, comprising portfolio managers, analysts, asset allocators and economists now work in this high value-added sector. Fund managers have been extending their value chain of activities here.

The Governing Council therefore decided that for the next two main refinancing operations the same conditions will apply as for the three main refinancing operations settled earlier this month. This means they will be fixed rate tenders conducted at an interest rate of 3.0% Furthermore, the Governing Council confirmed that it did not see a need for continuing the application of the narrow interest rate corridor beyond the date of 21 January 1999. It was thus decided to revert to the interest rates on the Eurosystem’s two standing facilities, which it had set for the start of Stage Three. It set the marginal lending rate at a level of 4.5% and the deposit rate at 2.0% with effect from 22 January 1999. This decision has to be seen against the background of the experience with the functioning of the euro area-wide money market since the beginning of the year. Difficulties of some market participants with the functioning of the area-wide money market have diminished substantially over time. As a consequence, overall, the integration of the euro area money market has therefore reached a satisfactory state only three weeks after its creation. The first regular longer-term refinancing operation, which was conducted using parallel tenders with three different maturities of one, two and three months, was also settled successfully on 14 January 1999. It was conducted as a standard variable rate tender, using the single rate allotment procedure.
The discussions on the completion of the Banking Union are already at a standstill; we need, at least, to fully harness the existing measures! Supervisors must allow the effective implementation of liquidity waivers provided for in the level 1 text. In this regard, the fact that the SSM published guidance mentions the need, in a first phase, to comply with 75% of the liquidity requirements at the individual level in order to grant a cross-border waiver creates an additional obstacle. And we shall not give up on the extension of intra-group waivers to MREL and capital requirements. Let me add three possible ways of making progress: we could first think of a system of workable guarantees between the parent company and its subsidiaries. Backed by the common supervisor, they should provide enough reassurance to host countries, so that they could support waivers in local subsidiaries. Another step would be to ensure preferential treatment for intragroup exposures within the Banking Union. There should be no cases where there is a difference between the treatment of domestic and cross-border intra-group exposures, be it for liquidity or capital requirements. To go further, in parallel with the aforementioned options, we also need to explore the possibility of relying more extensively on the branchification of subsidiaries located in other Banking Union countries. This was the core of Andrea Enria’s statement yesterday. The branch would then abide fully by the home country’s prudential rules. The example of Nordea demonstrates the feasibility of such an option.

And we don’t have much time to succeed, in the very next years. *** In conclusion, let me come back to the natural complement to the Banking Union: the Capital Markets Union. We all agree that we badly need it, even more so after Brexit: here in Eurofi, on 3/4  BIS central bankers' speeches  the Governing Council, and – in principle – around the Ecofin table. But almost nothing, or very little, has been done. One paramount reason for this failure is that our technical product has not so far engaged sufficient political ownership. We need a stronger purpose, a more visible “flag”. Let me suggest one: the implementation of the European Green Deal will require the reallocation of resources towards “green” activities, in a Financing Union for Sustainable Investment. To keep its leadership in the green transformation, Europe must act as a united block in its financing. Moving forward on the Banking Union requires effort, but the rewards will make it more than worthwhile. Thank you for your attention. 4/4  BIS central bankers' speeches
It is assumed that overall activity will decline somewhat when Snøhvit and Ormen Lange are completed, but that the high oil price will contribute to maintaining investment at a relatively high level throughout the projection period. The fiscal rule implies a gradual phasing-in of petroleum revenues into the economy, approximately in pace with the expected real return on the Government Pension Fund – Global, formerly known as the Petroleum Fund. The Government Pension Fund – Global is likely to expand sharply in the years ahead. On the basis of our assumptions for developments in oil prices ahead (oil futures prices), a mechanical application of the 4 per cent rule implies that the use of petroleum revenues will increase by more than NOK 31 billion from 2006 to 2009. This is somewhat higher than expected in the Government’s supplement to the budget for 2006. The difference can partly be explained by the fact that at end-2005 the Fund’s capital was higher than that estimated by the Government, and partly that the Government assumed that oil prices ahead would be lower than current oil futures. For 2007, we assume an approximately unchanged structural non-oil deficit. With continued solid growth in the Norwegian economy, it would be in line with the fiscal rule if the use of petroleum revenues is lower than the expected real return on the Government Pension Fund – Global over a few years.

There is an ongoing debate about the reasons for the decline in long-term real interest rates over the last few years. I will not elaborate on that debate here; it is a subject worthy of a seminar by itself. One particular possibility, pertaining to the discussion of the roles of the real interest rate, is that the fall in long-term interest rates may partly reflect market participants’ assessment that the neutral real interest rate has fallen. During a business cycle, it is the real interest rate’s deviation from the neutral real interest rate – the real interest rate gap – that indicates whether monetary policy is expansionary or contractionary. The neutral real interest rate is difficult to estimate and may change over time. Nevertheless, we have tried. On an uncertain basis we estimate that the neutral real interest rate for Norway may now be close to 2½ per cent, having come down approximately 1½ percentage points since the mid-1990s. Forecasts in the latest Inflation Report indicate that the short term real interest rate in Norway will be close to its neutral level in about four years. According to this, the real interest rate gap (the difference between the neutral rate and the actual rate) has been negative since 2004. There is evidence that monetary policy has had the desired impact both on the real economy and on inflation. Monetary policy at the present phase of the cycle Growth in the Norwegian economy has been high since summer 2003. The expansion has gradually broadened.
Its behavior has been atypical compared to previous episodes following a recession. This fall was especially marked in the euro area, from 2.7% in 2011 to 0.8% in December 2013. Recently, developments in the euro area have started to diverge downward from some other advanced economies such as United States and Canada. The sources and reasons for such a low inflation are complex and multiple. There are many uncertainties. Temporary and global factors may be at play in the euro area with import prices going down. I also think there are more permanent and deep forces pushing inflation down both at the euro area and global level. Besides there is still an important unused capacity – commonly labeled as “slack” -in most advanced economies, as demand has not yet caught up with its pre-recession levels and firms, as a consequence, have not recovered their pricing power. Commodity price inflation has been trending down recently. This is true both for energy and food prices. Commodity prices have a global impact and react very amply to small changes in supply and demand equilibrium. They act as amplifiers and transmitters of disinflationary pressures. Powerful headwinds – and disinflationary forces- are coming from the deleveraging process especially in the euro area, due to the importance of the banking sector and the amplitude of its balance sheet adjustment. We are working very hard to repair the bank-lending channel in the euro area.

In circumstances of permanent changes in the infrastructure of financial markets, the supervisory role of the central bank regarding the payment system contributes to the maintenance of financial stability. Additionally, the systems for large payments contribute to the coordination of the direct participants in the national payment system, such as the Treasury of the Ministry of Finance, banks and clearing institutions, ensuring finality of all payments in the national economy. In this way, the National Bank maintains the vitality of the payment systems as one of the most important components of the financial and economic infrastructure. In terms of achieving the development and catalyst role, allow me to affirm the strategic approach of the National Bank, the Ministry of Finance and the Banking Association in the development of the national payment system of the Republic of Macedonia through the adoption and implementation of the Strategy for the development of the payment system of the Republic of Macedonia for the period 2013–2017. Our shared vision for the development of the payment systems of the Republic of Macedonia until 2017 is the modernization and improvement of the operations of payment systems through the application of high-tech achievements and gradual harmonization with the standards and rules of operation of payment systems in the European Union. In this way, we expect to increase the reliability and efficiency of payments and the acceptance of non-cash payment instruments, simultaneously ensuring gradual compliance with the requirements for integration into the Single European Payment Area – SEPA.
During the financial crisis in 2008, several measures were deployed, such as the so-called swap arrangement, which provided banks with access to liquid government securities in exchange for covered bonds. Smaller banks were given loans with longer maturities. The measures aimed at improving banks’ access to long-term funding. The measures enabled banks to maintain virtually normal lending standards for Norwegian households and businesses. Norway’s swap arrangement and quantitative easing have some common features: bonds shift from private to public hands, and banks’ funding costs become lower than would otherwise have been the case. But there is an important difference. The swap arrangement was reflected in the government’s balance sheet – not the central bank’s. Quantitative easing, which increases the size of a central bank’s balance sheet, as observed in the US and the UK, is still not a relevant approach for Norway. Normally, the provision of capital and liquidity by authorities is not to replace banks’ own sound liquidity management and long-term market funding. Any decision relating to the use of the creditworthiness of government or taxpayers to finance banks and businesses rests with the Government and the Storting (Norwegian parliament). Chart: Liquidity and EUR/NOK exchange rate International turbulence can push the krone in both directions. On the one hand, in periods of severe market turbulence, investors have tended to shy away from presumably less liquid currencies. The krone market is among the less liquid markets. One indicator of liquidity is the so called bid-ask spread.

8 An exit from the krone market may be tight when many investors seek to shift out of krone positions at the same time. This can trigger a considerable depreciation of the krone, as experienced in autumn 2008. On the other hand, Norwegian securities can be perceived as safe havens because the associated credit risk is perceived to be low. Experience has also shown that international turbulence can in periods lead to an appreciation of the krone. A krone that is too strong can over time result in inflation that is too low and growth that is too weak. In that case, monetary policy measures will be taken. In Norway, the key policy rate is the relevant instrument. We still have room for manoeuvre in interest rate setting – in both directions. Foreign exchange interventions are not in principle an instrument suited to influencing the krone exchange rate over a longer period. It would only be relevant should the krone exchange rate move significantly out of line with that deemed reasonable in relation to the underlying fundamentals of the Norwegian economy, and should developments at the same time threaten the credibility of the inflation target. In addition, the interest rate weapon must have already been exhausted. Over the past decade, inflation has been low and stable. This shows that monetary policy has functioned effectively. Transparency about the response pattern and key policy rate forecasts reinforce the impact of monetary policy.
EU level harmonisation often applies to high level principles and minimum requirements, while implementation, additional requirements and enforcement is left to the member states. In practice, this becomes a barrier to integration. An EU bank will be subject to as many different reporting requirements and regulatory relationships as it has countries of operation. For a banking group involved in life insurance and securities trading this number should be multiplied by three. For instance, ABN Amro is rumoured to be dealing with 47 different regulators only in the EU. Second, today’s banking regulation was originally designed to protect the soundness and stability of the national banking system and sometimes even to politically control it. Thus, supervisors as well as central banks have national mandates and responsibilities vis-à-vis their politicians and citizens. This was all fine in the so called good old days of closed national markets. Now, however, it may sometimes be in conflict with the ultimate goal of a single market in financial services. Some of the work needed in these areas has already been started. The Brouwer reports to the Ecofin well describe some of the difficulties. The BSC Task Force on Crisis Management has taken the first steps towards a more structured approach to crisis management of cross-border banking groups, through the signing of a Memorandum of Understanding. CEBS (Committee of European Bank Supervisors) is also trying to take on some of these issues, in particular regarding the convergence of supervisory practices.

Would it be acceptable to use tax-payers money to refund foreign depositors at a larger scale? This might pose problems both for the home and host country. The wide divergence of national systems clearly needs attention. Potential solutions might include increased co-operation and harmonisation regarding fees and entry and exit rules. Crisis management. National central banks have national mandates in extending emergency liquidity assistance. In a future integrated European financial market, the mandate of the lender of last resort will not be as clear-cut. How should this function be organised when the largest banks might be systemically important in several EU member countries? There will also be banks that are very important in one country while being completely insignificant in a European context. Another issue is whose interest a national supervisor will protect in a crisis involving a cross-border banking group strictly its own national interest (the case now) or the interest of all member countries where the group might have operations? Conclusions These issues, or challenges, are essentially political. They are about how to share the risks and costs of financial integration. And as long as these challenges are left unaddressed they constitute political barriers to integration. We all say we want financial integration but as usual, nothing comes for free. Financial integration brings some difficult issues for authorities and politicians. Public authorities will have to rethink their roles and priorities.
Denis Beau: Digital finance, market disruption, and financial stability Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Bank of France Toulouse School of Economics joint conference, Paris, 12 November 2018. * * * Ladies and Gentlemen, I am very pleased to welcome you all today, for the tenth edition of the Banque de France and Toulouse School of Economics joint conference. This year, we have decided to shed light on how digital-based financial innovations are affecting the robustness and efficiency of the financial system. It is a good time to talk about digital finance and market disruption for at least two reasons: - 2018 is both the 10th anniversary of the Lehman bankruptcy and that of Nakamoto’s paper underlying Bitcoin. - those events have unleashed regulatory and market developments and innovations that should contribute to both strengthen and change the role and structure of financial intermediation. As a result, we see a complex set of interactions, involving competition and cooperation, which are developing between “old” and “new” players and which are likely to coexist in the intermediation space going forward. “What does that mean in terms of financial stability?” and “how does this coexistence affect central banking?” are two questions open for discussion at today’s conference. But for the time being, let me quickly follow two leads. I. Promises of digital finance: redefining financial intermediation? First point: The digitalization of finance is prospering on the ground of cutting-edge technologies.

Vibrant economic research is needed to help us dealing with these challenges, notably in three key areas. The first relates to the economics and implications of blockchain and crypto-assets, and will be the topic of David Andolfatto’s keynote lecture and of the concluding panel discussion: What are the implications for the financial system in general, and for central banks in particular? Will Central banks’ monetary policy become less effective and, if so, are Central Bank Digital Currencies a way to restore their effectiveness? The second one, which will be addressed by several research papers today, relates to the financing of the economy: Do alternative and innovative ways to finance the economy (marketplace lending, ICOs, alternative scoring models) perform better than traditional financial intermediation without increasing the risks? What roles can incumbent banks play if financial services are to be driven by data? The third one is not on the agenda for today’s conference, but should be on the research agenda, relates to the use of artificial intelligence in finance: What would be the dynamics of financial markets if most participants were to rely on AI and machine learning techniques? How should regulation and supervision practices adapt to ensure that AI behaves in accordance with a financial and social optimum? Conclusion I would like to conclude my intervention by quoting Bill Gates himself: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”.