samchain/econo-pairs-v1 huggingface dataset:
They will range from 1% and possibly up to 3.5% of the CET1 ratio after the phase-in period (e.g. 2019). We have seen in the past that complex financial institutions relied too much on wholesale funding that could quickly evaporate in times of stress; the new liquidity ratios (LCR, NSFR) help to promote the short-term resilience of the liquidity risk profile of banks and a sustainable maturity structure for assets and liabilities. The recently agreed finalisation of Basel III reinforces the monitoring of internal models and capital requirements on more complex activities, including the FRTB, the CVA3 and the CTP4 on market activities. Before 2008, we lacked the tools to implement an orderly restructuring of a bank that was failing or likely to fail. The Bank Recovery and Resolution Directive now requires banks in Europe to establish resolution plans (also called “living wills” by the US regulators) to anticipate the restructuration needed in case of trouble. By defining ex ante the seniority of every creditor and by making it possible to bail-in some of these creditors (including some senior unsecured debt) in case of crises, we should have potentially limited the need for public funds to resolve private bank failures. Second, not only banking regulation but also the enforcement of its supervision have positively reduced the detrimental effects of bank complexity. The new supervisory framework is more consistent and harmonised.

For example, the gross market value of the OTC derivative markets increased from USD 2 trillion in 1998 to USD 35 trillion at the end of 2008. The intensive use of complex and off-balance sheet products distanced the final borrower from the final investor. As underlined by a recent IMF study, 1/3  BIS central bankers' speeches  most of the pre-crisis financial globalisation had taken place through cross-border activities with little involvement from global banks in local retail activity. It ultimately led to a reduction in efforts from banks to monitor the creditworthiness of their borrowers and mitigate the associated default risks. These two levels of complexities were exacerbated during the European sovereign debt crisis as European banks were put under funding pressures by market participants concerned by the opaqueness of their portfolio composition and the lack of credibility of the previous resolution mechanism. B – A comprehensive and strong policy response: both on the regulatory and the supervisory sides However, I just want to convince you of how strong the regulatory and supervisory responses have been since then, in curbing the detrimental impacts that overly complex organisations or overly complex activities might produce. First, the new regulatory framework treats global and complex banks differently. Global Systemically Important Banks (aka GSIBs) are subject to higher capital requirements explicitly determined by the importance of their cross-jurisdictional claims and liabilities, their OTC derivatives, and their Level 3 assets exposure.
The regional network provides figures for the same quarter far earlier. In 2008, the regional network was able to provide clear evidence that mainland output fell markedly in the fourth quarter as early as December of the same year. National accounts figures for the fourth quarter were published more than two months later, on 19 February 2009. Employment in Norway has held up well through the downturn. It appears that unemployment will be considerably lower than expected. Seasonally adjusted registered unemployment was 2.9 per cent in August. Over the past year, the level of unemployment has risen most in the counties of Aust-Agder, Sør-Trøndelag, Østfold and Vestfold and least in Sogn, Akershus and Finnmark. Unemployment is highest in Oslo, at 3.9 per cent in August. Unemployment may be low because firms have chosen to retain their employees. Perhaps firms are opting to keep a certain labour reserve because of recruitment problems and high costs experienced during the previous cyclical turnaround. Higher government expenditure has contributed to holding up public sector employment. Unemployment may move up if global developments deteriorate and have a stronger impact on output in Norway. Between 1000 and 2000 new jobseekers from other countries are still being registered each month, even though work permits were no longer required for nationals from new EU countries as of 1 May for work lasting less than three months. The level of registered work permits, however, seems to have stabilised over the past year.

Friedman, at least at the time he wrote, trusted neither of the two and advocated a constitutional rule for constant money growth as his preferred solution of the long-standing debate on “Rules versus authorities in monetary policy” (which is the title of the classic paper by Henry Simons from 1936). His concerns reflect what I would regard as a healthy distrust of the unfettered “rule of men” as opposed to the “rule of law” which he much prefers - in line with the long and venerable tradition of British liberal thinking. Friedman, at the time, was quite sceptical on central bank independence and asked whether it was “really tolerable in a democracy to have so much power concentrated in a body free from any kind of direct, effective political control?” This is why I believe it is important to stress that, if an independent central bank is assigned a clear and limited mandate, this represents a constraint on the discretionary exercise of power by the government but also by the central bank itself. In the absence of a complete and universally applicable rule for monetary policy an independent central bank which focuses firmly on the single overriding goal of price stability is the closest realistic and credible substitute for a literal “rule of law”. In particular such a central bank does not have the discretion to pick and choose at will among several objectives. A clear commitment to a single overriding objective is the key to credibility and it is also the key for accountability, i.e.
Øystein Olsen: The conduct of monetary policy Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 14 May 2018. * * *  Accompanying slides Thank you for this opportunity to report on the conduct of monetary policy. My introduction here today is based on Norges Bank’s Annual Report for 2017 and our monetary policy assessments up to the monetary policy meeting at the beginning of May. The various components of economic policy must interact to achieve sound and stable economic developments over time – with high employment and low unemployment. The primary objective of monetary policy is to maintain monetary stability. Since 2001, the operational target of monetary policy has been low and stable inflation. This has been retained in the new regulation on monetary policy issued by the Government on 2 March this year. The regulation clarifies the monetary policy mandate and will not result in significant changes in the conduct of monetary policy. I will return to this topic later, but first of all I would like to go back to just over a year ago. At the beginning of 2017, the level of spare capacity in the Norwegian economy was still fairly high and there were prospects that inflation could remain below the inflation target in the coming years. International interest rates were very low.

In fact, this is the first crisis episode when the initial reaction of the National Bank was loosening and not tightening the MP. This time, despite the strategy of de facto fixed exchange rate, solid fundamentals and strong official reserve buffers allowed for loosening of the monetary policy and adopting regulatory flexibility. Also, our initiative for access to the ECB backstop facility, which was also supported by other central banks in the region, and the positive ECB response, allowed for wider space for accommodative policies. The symbiosis of these actions has enabled conducive financial conditions, i.e. decline of borrowing interest rates at historically low levels and uninterrupted credit flows growing at a rate of 6% annually, double than in the EU, that helped "ring –fencing" of the labor market, preserving wages and jobs. Where do we stand now, what are the major challenges ahead and is it time for complacency? A common denominator for all policy makers at the moment is the lingering uncertainty. Many scenarios are in place, from smooth and orderly recovery, through strong rebound with price pressures, ending to stalled recovery amidst new and more virulent strains. From a central bank perspective, our advantage is that there is still policy room for maneuver, although narrowed.
One of the key channels through which this economic disruption might take place is the inability of lorries to move seamlessly through UK ports. To track this disruption in the event of a disorderly Brexit, the Bank put in place a system for monitoring traffic flow around the UK’s main ports using geospatial data from Google Maps. This allowed close to real-time monitoring of potential port bottlenecks. As an illustration, Chart 18 plots traffic times into and out of Dover during February, March and April this year. The first highlighted mini-spike in traffic times is the Friday evening and Saturday morning before the school holidays. The second is Easter weekend. A disruptive Brexit would potentially have pushed these needles off the Richter scale. There is huge potential for more extensive use of geospatial data such as these to track goods and service flows across the economy, in normal as well as abnormal times.41  40  Haldane (2018a). A geospatial commission has recently been set up, under Sir Andrew Dilnot, to look at precisely these questions. See Geospatial Commission (2019) for a discussion of its work to date and longer-term priorities. 41  30  All speeches are available online at www.bankofengland.co.uk/speeches  30  Chart 18: Traffic times into and out of Dover  Sources: Google Maps API and Bank calculations. A second example concerns the housing market. This, too, is a local market. That is why the most popular house-buying show on TV is called “Location, Location, Location”.

Existing customers As I have already mentioned, it is likely that AIs will have to upgrade their due diligence procedures in some respects to comply with changing international standards. Obviously, these enhanced procedures would be applied to new banking relationships. But this begs the question about what should be done in relation to existing customers. To what extent should institutions go back and undertake renewed verification of the identity of existing customers? Our current view is that we should not impose an across the board requirement in this respect, but it would certainly be sensible to review those existing customers who fall into higher risk categories. The six major banks in the UK have just announced that they will undertake a risk-based initiative of this type. I would encourage those AIs with a large customer base to do the same. Other triggers for review of existing records may arise when a customer undertakes a significant transaction and where there is a material change in account operation or customer documentation standards. The way forward These are some, but by no means all, of the current issues we are considering in the context of our revised guideline. We hope to have something ready for consultation with the industry later in the year. While this may impose new obligations on AIs, we will try to ensure that these are of a nature that wellmanaged institutions would adopt of their own accord.
A number of commentators have suggested that if policy rates stay much closer to the zero lower bound than in the past, monetary policymakers will have insufficient conventional ammunition to stimulate demand in future downturns. All else equal, this would argue for erring on the side of speed and perhaps higher rates to create future room for manoeuvre. One cannot help acknowledging this concern. If, as seems likely, we are and will continue to be in a lower natural interest rate environment, policy rates will not approach levels seen before the financial crisis. The average level of Bank rate was around 5% for the 20 years preceding the crisis. The current yield curve sees bank rate rising slowly over 3 years and levelling off at under 2% for the next 30 years. The average policy loosening cycle in the UK was around 2% over the pre-crisis period. If that remained the case, we would clearly have less room for manoeuvre in the face of a sharp downturn, particularly if that happened in the near future. However, raising rates faster, and perhaps to a higher level, than warranted to meet the inflation target in order to have the room to cut them in a downturn, assumes that the impact of policy on activity is asymmetric and that monetary policy will have less impact on the economy when it is tightened than when it is loosened.

Since then the picture in the UK has been clouded by the impact of the Brexit vote. The global picture however does I think provide evidence of the slow healing story. Having grown at rates below pre-crisis norms for the post-crisis period, the world saw an increase in growth rates from around the middle of 2016. That return to stronger growth was broad-based both in that it was true for the whole of the G7 – excluding the UK – and emerging markets in aggregate and that it was driven by a pick-up in investment not just consumption. At the same time, in the US, partly in response to very low levels of unemployment, pay and inflation have risen from subdued 1-2% to rates closer to 2-3% over 2015 to 2018. So is there still a case for any ‘stodginess’ in the approach to monetary policy in the UK? Headline CPI inflation is running at 2.4% above its 2% target. The overshoot, however, is entirely due to imported inflationary pressure. This has come primarily from the post referendum depreciation in sterling plus some more recent pressure from the increase in oil prices. The inflationary pressure from sterling’s depreciation is already passed its peak. In May the MPC forecast that CPI would be at 2.2% by the year end. The MPC’s remit is to keep inflation at target ‘at all times’.
The overall impression in the press is that central banks have injected vast amounts of liquidity into the banking system in order to face up to the crisis. This is not true to reality. In volume terms, the amount of liquidity allocated by the Eurosystem has posted slow growth since the summer of 2007. On the other hand, during the crisis, some central banks, such as the Fed and the Bank of England, have had to make adjustments to their operational framework, while others, like the ECB, have been able to rely on their existing framework, up until very recently. This has resulted in a remarkable convergence of central banks’ operational frameworks and fields of intervention around four main areas: -  a lengthening of maturities for central bank lending: these maturities have been increased from a few weeks to a few months. In the case of the Eurosystem, a major share of refinancing operations have a maturity of three months, and, recently, a six-month facility has been introduced;  -  a widening of the range of eligible collateral, i.e. the securities used as collateral.

However, after more than nine months, I think it is already possible to draw first conclusions in three main areas: -  First, the close co-operation between central banks on the one hand and between the supervisory authorities and central banks on the other hand seems, in my opinion, to be a determining factor for efficient crisis management. This point was indeed underscored during the recent work carried out by the Financial Stability Forum. I must say in this respect that the French model of banking supervision, in which banking supervisors have close ties with the central bank, has once again proven its worth in the current context. The necessity of this proximity has also been  BIS Review 78/2008  3  increased by the new accounting and prudential standards which have proven to be pro-cyclical and in which liquidity and solvency are intertwined. In this context, when in a financial crisis, it is crucial to cross-check, at every moment, information on the evolution of banks balance sheet and data on money market functioning in order to assess the risks to financial stability. Such an assessment enables to adapt, as far as needed, the refinancing policy of the central bank, in order to alleviate tensions in the market; those tension being a threat both to financial stability and to the effectiveness of the transmission of monetary policy.
This stocktake was especially important in light of the unusual times the UK finds itself in and the 6 7  Ramsden (2017) Haldane (2017) 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  importance of supply-side developments for the economic outlook. We didn’t change our assessment of underlying productivity, but we have revised down our assessment of spare capacity within firms, which has implications for actual productivity growth in the short term. Productivity growth is the key determinant of the economy's potential growth rate, the rate at which the economy can grow without generating inflation pressures, in other words its speed limit. The most recent data show signs of productivity growth rising in the second half of 2017. But quarterly growth has been volatile of late and we’ll have to wait and see whether the pickup is sustained in the near-term. The MPC’s best collective judgement is that productivity growth will settle at just over 1% over the next three years. That is a pickup from the pace since 2010, but it is still around half the pre-crisis rate. But in terms of the economy’s potential growth rate, these hints of somewhat higher productivity growth need to be balanced by the prospect that workforce growth will slow somewhat, due to lower inward migration and demographic effects. Overall, it’s the MPC’s view that the economy’s speed limit is likely to be around 1½%.

    ;44=  48B78<48 9  65 61  42626 "9 9 5 9 2  2664 6652 8 5 526 4  452 621  58 4 4 01242 42 24 49 3 18 8 862 0 52 4 2 24 2 8 2 8 18 5  7 1 7431  7 5 347 ! 7   7    47 7 7  7 41 7 7 7 7 3  7   437 371  17174   347  9 9 9 4 9 406 04 104 03 03 406 10 5 # 019 04 4 04 4 1 40 46   5 96 0 44 019 019 4 6 0  57 2810 0   6 2046  107 6 56 10 542846 2 80 15 08 2810 810 57 6 0" 0 2810 2 4 57 56 10 2165 6 0" 26 250 15 2  806 15 4 2810 250 15 6 2810 806 15 806 046 6 2822810 048 41 086 0" 07 2165 010!80 08 2810 806 6  0   806 6 806 6 % 806 6  6 6   3 6 6356 74356 2 6  23 566 6 11 6 521 46 7714 6 7351
So, in the period to come there may be both an increased demand worldwide for risk free assets and much less certainty on their future supply. The search for a liquid instrument which would also provide a reliable international store of value has been going on for many decades. When discussions were held to build the Bretton Woods system, Keynes proposed the creation of a new international currency, the “Bancor” which could serve both as a source of liquidity and a store of value. Thirty years ago, there was extensive discussion in the IMF on the creation of a substitution account. This was a mechanism through which countries could exchange their reserve currencies against SDRs, and get a protection against exchange rate risk. Most recently, Governor Zhu has reopened the debate and suggested, over the long run, the creation of a new “super reserve” currency, while, in the meantime, enhancing the role and status of the SDR. There are good arguments to create international instruments providing a reliable store of value:   First, the safer investors feel about the risk-return profile of their holdings, the bigger the exposures they are prepared to accept. In that way, structural characteristics of the International Monetary System have an influence on the sustainability of global imbalances.   Second, once uncertainty on relative values settles in, it would likely be accompanied by extreme volatility as investors, whether public or private, constantly reshuffle their existing portfolios between countries and currencies in order to manage their exposure.

  Finally, and most important, many oil and commodity producers face an intertemporal choice between extracting resources and keeping them on or under  BIS Review 120/2010  7  the ground. According to standard economic reasoning (the Hotelling rule), one important determinant is the return earned on financial assets, to be compared to the expected commodity price increase over the long run. The possibility of large valuation losses on financial assets makes it optimal to reduce the rate of extraction, which would durably lower the supply of oil and other commodities. However, there are also practical and conceptual difficulties:   A choice would have to be made as to the true nature of the “super reserve currency”. Would it be a basket of existing monies or a new “fiat” currency? If the “super reserve” is a basket of existing currencies (such as the SDR today) it would basically serve as an instrument for diversification of foreign exchange reserves (or private portfolios), and such a diversification can easily be achieved by using existing currencies. On the other hand, the “super sovereign” could be issued as such as a fiat currency. Then, the international community would have a basic choice. Either the new currency could be made “strong” and never depreciate against any other major existing currencies, which probably means that its supply would be severely restricted. Or, the “super sovereign” would be issued according to pre-specified rules, and depreciation against existing currencies could not be excluded.