samchain/econo-pairs-v1 huggingface dataset:
Simon Topping: Improving the management of risk through implementation of Basel II Speech by Mr Simon Topping, Executive Director, Banking Policy, Hong Kong Monetary Authority, at the ACIHK The Financial Markets Association Basel II Seminar, Hong Kong, 27 September 2005. *  *  *  Only a few years ago it might have seemed a bit strange to invite a regulator to speak on the subject of risk management. After all, a regulator was supposed to have the same relationship to risk as the preacher did to sin: he was against it. Historically, regulation and risk management were opposites. Regulation was supposed to be all about stopping banks from taking risks. Risk management, by contrast, was concerned with how you take on risk and how you manage it. Regulation has been criticised, rightly in my view, for taking insufficient account of modern risk management techniques such as credit risk and operational risk modelling, stress-testing, and portfolio management. Thankfully we are beginning to move away from the days when regulators were perceived as regarding taking any sort of risk as "a bad thing." Regulators care, above all, that the banking system should be sound and stable. One of the most important factors in a sound banking system is that banks should be profitable; and regulators recognise that without risks there is no chance of banks making money. What matters are not the risks that banks take, but how good they are at identifying, monitoring and controlling them.

Policy actions may turn out to be ill-timed or miscalibrated in the face of these uncertainties. There is thus an inevitable short-term volatility in UK inflation, which monetary policy makers have  Page 6  to live with. And when the shocks driving that short-term volatility are large, then the amplitude of this short-term volatility in inflation can be large. This story remains an important part of what the UK has experienced of late. Recognising the impossibility of fine tuning inflation developments on a month-to-month basis, the MPC has long emphasised its focus on achieving the inflation target over the medium term. This medium-term orientation of monetary policy is crucial if the inflation target is to be met in a sustainable manner and monetary policy is not to become a source of inflation volatility itself. At present, the desirability of adopting this medium-term orientation is bolstered by the nature of the underlying drivers of UK inflation. The large rises in the prices of international goods and energy not only directly raise UK inflation, but will also weigh on domestic incomes and demand through the terms of trade channel. [10] As a result, in taking monetary policy decisions today, the MPC needs to take account not just of the immediate inflationary impact of higher energy prices in the coming months, but also the potential disinflationary impact of higher energy prices through weaker incomes and demand at longer horizons. This distinguishes the situation we face from that in other jurisdictions – notably from the US.
The proposed reduction in the corporate tax rate for companies seeking listing in the stock market as well as those already listed, and the postponement of the restoration of the VAT rate until September 2002 will further set the stage for more support in the revival of domestic demand. Additional stimulus will come from the 71.3 billion baht village fund designed to boost investment and facilitate job creation in rural areas. It is important to emphasize that the planed increase in fiscal spending does not compromise the Government’s commitment to fiscal discipline. Total public debt will remain below 60 percent of GDP while debt service (principle and interest) will account for less than 16 percent of the budget. In regards to monetary policy, the inflation targeting framework gives the Bank of Thailand sufficient flexibility to respond quickly to fast changing domestic and external developments. With inflation remaining subdued and likely to remain contained in the range of 1.5-2.5 percent for 2002, the emphasis in the near future will be to strike a proper balance between domestic growth and external stability. While the current stance of monetary policy under the inflation targeting framework with emphasis on external stability is accommodative and appropriate given current conditions, the Bank of Thailand is constantly monitoring developments and will move decisively should circumstances change.

Specifically, in the first half of 2020, the consolidated net result of the Spanish banking system as a whole was negative (around € billion), a decline of almost € billion compared with the profit recorded in June 2019, and making for a return on assets (ROA) of -0.5% (1.1 pp less than in June 2019) and a return on equity (ROE) of -7.3% (15 pp down on a year earlier). This negative performance is due, particularly in the case of the two biggest banks, to the deterioration of the goodwill of their subsidiaries abroad. This illustrates how, in a global crisis such as the current one, the international diversification of Spanish banks’ business will foreseeably be less useful than in past crises for containing and mitigating the attendant effects. Indeed, the net profit of the Spanish banking system as a whole would have been positive had this downturn in goodwill and other extraordinary adjustments not been taken into account. In any event, the fall in profitability was also due to greater provisioning in anticipation of future asset impairment, whereby impairment losses doubled compared with 6  2019. That explains why, for the other banks without an international presence, the reduction in profits averaged 60%. The sector’s profitability is thus far below what investors demand. As a result, the price-tobook ratio (which compares listed banks’ market capitalisation to their book value) contracted markedly in March in Spain, as it did in the other European countries, falling to around 0.4. Subsequently, however, it picked up to some extent.
A large-scale downgrading of this debt, to below investment-grade status, would entail considerable potential losses for the financial system of the European Union (EU) as a whole, a significant part of which would correspond to indirect losses attributable to the forced selling mentioned above. The role of rating agencies in this process is fundamental. When making their assessments, these institutions need to take into account the long-term outlook for the corporation concerned and avoid excessively pro-cyclical behaviour. Indeed, this time round, rating agencies appear to have been more cautious than in the global financial crisis and, to date, phenomena comparable to those seen in the past have not occurred. In any event, the results of this exercise serve to show the systemic importance of this vulnerability and the need to be prepared to provide a sufficient, internationally coordinated response, depending on how the pandemic develops at international level. The impact on general government  A system-wide scenario analysis of large-scale corporate bond downgrades, ESRB Technical Note, 23 July 2020. 10  15  During the current crisis, the activation of automatic fiscal stabilisers associated with lower tax receipts and increased cyclical expenditure (for instance, on unemployment benefit), along with the effect of the discretionary measures adopted by the authorities to mitigate the impact of the crisis, is leading to very significant increases in budget deficits and public debt in all countries. Initially, there were also tensions in European public debt markets, which led to a sharp rise in sovereign spreads.

This is the pathology I worry most about. So I ask: Can my colleagues and I at the Fed cure this with monetary policy? Obviously, businesses cannot create jobs without the means for investing in job-creating expansion, so, yes, monetary policy is necessary to propel job creation. But as I have shown you tonight, the store of bank reserves awaiting discharge into the economy through our banking system is vast, yet it lies fallow. Take a look at this chart of total reserves of depository institutions: They have ballooned from a precrisis level of $ billion to $ trillion. 2  BIS central bankers’ speeches  There is plenty of money available for businesses to work with. Consider this: In fourth quarter 2007 the nation’s gross domestic product (GDP) was $ trillion; at year-end 2013 it was estimated to be $ trillion. Had we continued on the path we were on before the crisis, real GDP would currently be roughly $ trillion in size. That’s a third larger than it was in 2007. Yet the amount of money lying fallow in the banking system is 60 times greater now than it was at year-end 2007. One is hard pressed to argue that there is insufficient money available for businesses to put people back to work. Now, bear in mind that we at the Fed only control the monetary base (cash plus bank reserves), not the velocity with which money is used.
Central banks should be, and need to be, well placed to undertake that analysis, which has rarely been more important than now. 22  I argued this in Tucker, P. M. W. (2006), “Reflections on operating inflation targeting”, speech at the Chicago Graduate School of Business, Bank of England Quarterly Bulletin, Summer 2006, p. 220.

Spreads between Bank Rate and the interest rates charged to many borrowers remain at unprecedentedly high levels, if indeed borrowers are able to access credit at all. When conditions in the banking sector return to something closer to normal, those spreads will contract and the rate at which that takes place will have an important influence on the speed at which Bank Rate will rise. Uncertainty inevitably surrounds both the speed of the rebalancing and the impact of today’s consumer price inflation on tomorrow’s domestically generated inflation. So it is simply impossible to know now at what point monetary tightening will begin. Let me turn now to the Bank’s new Financial Policy Committee (FPC). Its creation is a response to the lesson that monetary policy cannot target stability of both prices and the financial system. Before 2007, the massive build-up of leverage in the banking system, accompanied by a rapid growth of broad money, led to an expansion of bank balance sheets and a rise in financial fragility, but not inflation. In most industrialised countries, central banks successfully set short-term interest rates to combine steady growth of output with low and stable inflation. But this did not prevent the emergence of unsustainable patterns of demand and unstable financial systems. The FPC aims to deal with that problem by expanding the range of instruments available to the authorities. The FPC has been hard at work preparing for our first policy meeting tomorrow and our first report will be published on 24 June.
I’d like to mention one other area of preparations that will affect banks directly: the recalibration exercise. In order to establish a common data set on which to base this review, the Committee has decided to begin the recalibration exercise in autumn this year. We recognise that the recalibration exercise will demand resources from both banks and supervisors. The IIF expressed clearly to us this concern. In this regard I would like to make two comments. First, we discussed this issue yesterday in our meeting and decided to publish a newsletter clarifying some elements of the proposed work that I hope will address these concerns. In this newsletter, available on the BIS website, we underline several ideas. The Committee thinks that this early recalibration, in the spring of 2006, will give banks and supervisors more time to reflect and will facilitate implementation. In order to ensure that the envisaged review is based on recent and high-quality data, the Committee will undertake a so-called fifth impact study between October and December 2005, three months earlier than previously envisaged. The calibration of the revised Framework will be discussed in spring 2006 on the basis of QIS 5 data. As we are conscious of the workload of this exercise, the Committee does not intend to set data requirements or timeframes for the parallel calculation that will be conducted in 2006. So there is no duplication of work.

I think, in time, the EU BRRD will come to be seen as one of the most significant pieces of banking legislation to emerge from the financial crisis. 6  BIS central bankers’ speeches  But we must finish the job. For effective resolution to be feasible (i.e. technically practicable) and credible (i.e. widely understood and believable), firms need to be resolvable. MREL is central to this. And for the world’s largest banks, for almost all of whom the EU is either home or host, it is crucial that the FSB develops an internationally-agreed standard that establishes a common framework, like MREL, outside Europe and ensures that G-SIBs have sufficient appropriately loss absorbing capacity should they fail in order to be able to implement an orderly, effective resolution of any firm and therefore end “Too Big to Fail”. BIS central bankers’ speeches  7
But I do think there are some lessons that can be learned from the overhaul of central bank liquidity facilities that could be applied to the provision of liquidity insurance to sovereigns. What would the equivalent enablers be for sovereigns? (i)  Better surveillance, particularly of the vulnerabilities to sudden stops;  (ii)  Stress testing countries’ balance sheets through better debt sustainability assessments; and  (iii)  Better mechanisms for reducing disorderly spillovers. Surveillance The Bank of England’s Sterling Monetary Framework 11 is available to banks and building societies on a presumptive basis – banks with a genuine short-term liquidity can rely on it when a shock hits. A key part of that access is the agreement of supervisors that firms meet micro prudential standards. By contrast, there is no system of pre-qualification for the IMF’s precautionary liquidity facilities, at the margin discouraging sovereigns from relying on the IMF  9  Although I note the governance implications of capital market borrowing need further thought. 10  See Winters (2012). 11  Further information on the Bank of England’s Sterling Monetary Framework can be found here: http://www.bankofengland.co.uk/markets/pages/money/default.aspx. BIS central bankers’ speeches  5  as a form of insurance. One potential means of giving countries greater incentives to rely less on self-insurance could be to offer pre-qualification on the basis of strong economic fundamentals and policy track records as part of the Article IV process of surveillance, on a confidential basis.

Krzysztof Rybiński: A day in the life of Homo Sapiens Globalus Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the 11th Teleinformatics Forum, Legionowo, 21 September 2006. *  *  *  Ladies and Gentlemen, Today, I would like to present a vision of the citizen of the world in the year 2026. Homo sapiens globalus will be found almost everywhere on the globe, and his traits will be identified by his ability to capture the benefits brought by the global financial market, global labour market, and global knowledge market. He will work, obtain information, establish and foster his professional relations as well as arrange his leisure activities primarily with the aid of the Internet. Homo sapiens globalus has mastered the fine art of capturing the benefits of the (continuously improved) functions available on the Internet. He is able to absorb frequent changes, and he turns them to his advantage. This makes him increasingly effective, knowledgeable, and capable of pursuing activities he finds interesting. Let us now consider a typical example of homo sapiens globalus, namely John Global. I would like to introduce him to you, but in order to do so, I have to take you on a short journey. This will be time and space travel. Just imagine that by the time I will have finished the previous sentence, twenty years have passed. This means that we are now in the year 2026.
Despite the increase of light vehicle sales, overall consumer spending has been sluggish. While growth of retail sales in February was reasonably strong in nominal terms, it was considerably less impressive when the large increase of gasoline prices that occurred that month is taken into account. Based on data for the first half of March, gasoline prices are continuing to move higher which will further sap consumers’ real purchasing power. And growth of business investment spending, which was quite strong in the second and third quarters of 2011, entered the new year with little forward momentum. To put the recent pace of growth into perspective, we believe that the economy’s long-run sustainable growth rate (what economists call the potential growth rate) is around a 2 ¼ percent annual rate. We need sustained growth above that rate to absorb the substantial amount of unused productive capacity. Thus, our recent growth rates are barely keeping up with our potential. Although the sharp decline in the unemployment from 9 percent last September to 8.3 percent in February suggests we are doing better than that, it is important to recognize that about half of that decline was due to a declining labor force participation rate. In fact, had the labor force participation rate not declined from around 66 percent in mid-2008 to under 64 percent in February, the unemployment rate would still be over 10 percent. Also, it appears that productivity growth has slumped recently.

Moreover, Brookhaven Labs and Cold Spring Harbor Laboratory, as well as a fine array of academic institutions, provide a strong foundation for the island’s tech sector and business sector more broadly. The recent move to create stronger ties between the business community, research labs and SUNY (State University of New York) is a welcome development. It has the potential to help leverage the island’s existing assets to enhance the prospects for economic development. Conclusion To sum up, the incoming data on the U.S. economy has been a bit more upbeat of late, suggesting that the recovery may be getting better established. But, while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods in terms of generating a strong, sustainable recovery. On the inflation front, the yearover-year rate of consumer price inflation has slowed in recent months, and despite the recent rise of gasoline prices, we expect inflation to moderate further in 2012. Looking ahead, the key challenge for the Long Island economy will be to continue to prepare its residents for the best jobs being created here. Expanding educational access and opportunity and the skills that go along with it will go a long way to broadening participation in the economy to all residents and bolstering Long Island in the future. Thank you for your kind attention. I would be happy to take a few questions. 4  For more information, see the New York Fed’s consumer credit panel. BIS central bankers’ speeches  5
We will then be in a better position to evaluate what steps if any might be taken by the relevant authorities to contribute to greater pass-through. Regional economic conditions Our region’s economy was on a moderate upward trajectory before Sandy struck, and while the storm had many severe effects – more on that in a few minutes – I do not expect it to derail the region’s ongoing economic expansion. New York City’s economy has been performing quite well. Employment in the city reached an all-time high at the beginning of this year and it has continued to grow briskly since then, even without help from its key finance sector. While job growth has been considerably more  2  BIS central bankers’ speeches  subdued in the surrounding areas, such as Long Island, northern New Jersey, Fairfield County and the lower Hudson Valley, many workers in these areas commute to New York City for their jobs, so the strength here in the city is helpful to the region as a whole. Still, the unemployment rate in the city remains high, above 9 percent, and this is something that needs to improve. Upstate New York’s economy is also on a generally positive trajectory, although some areas have fared better than others. Albany, Buffalo, and especially, Rochester and Ithaca have recouped many of the jobs lost during the recession, whereas Syracuse and Binghamton have lagged. Looking beyond the employment statistics, I see other encouraging signs across the region. Housing markets here have improved.

The effect is smaller, although significant, by around 0.13-0.16% for Tier 2 instruments or for senior debt. The findings are, in my opinion, perfectly logical and rational. Evidently, a higher capital ratio is a guarantee for those debt-holders situated lower in the hierarchy of credit tranches. As a result, investors are prepared to buy debt at lower rates than those that are demanded of institutions showing lower CET1 levels. As I pointed out, showing a high level of capital is not a disadvantage. In addition to MREL eligibility, a high level of capital evidently enables the bank to reduce its funding costs, likewise improving its external rating and its access to markets. Improving profitability Apart from improved solvency, there are other levers that can help improve profitability. First, headway in reducing non-earning assets is important. Spanish banks have managed to significantly reduce their portfolios of NPLs and foreclosures, although we remain above the figures posted by other European Union banks and the level continues to be clearly above what it was pre-crisis. As their name suggests, these assets are “unproductive“. But, moreover, maintaining them entails high costs in terms of human, financial and – in the case of property – tax and upkeep resources. Evidently, their disposal allows costs to be cut and resources to be freed up and used for other productive activities. In this setting of low margins and high competition, bank mergers are an alternative for gaining competitiveness.