samchain/econo-pairs-v1 huggingface dataset:
8  Shortcomings in the TBTF regulations before the crisis Ladies and gentlemen, the global financial crisis has clearly demonstrated that, not least for Switzerland, the ‘too big to fail’ issue is real and the costs and risks for society as a whole are too high for this state of affairs to be simply accepted. 5 6 7 8  Cf. Horton et al. (2009). Cf. Swiss National Bank (2008). Cf. Swiss Federal Council (2011). Share of balance sheet total relative to Swiss and US GDP respectively at end-2017: ZKB 25%; Raiffeisen 34%; UBS 138%; Credit Suisse 112%; JPMorgan Chase 13%; Bank of America 12%. Page 5/14  a) ‘Too big to fail’ issue: recognised but insufficiently addressed by regulation ... Looking back today, it is clear that this issue was underestimated before the crisis – both in general and by the regulators. For instance, before the crisis, neither the international recommendations on banking regulation nor the Swiss regulatory provisions contained anything that explicitly addressed the systemic importance of individual banks and the associated risks. And this despite the fact that people were aware of the issue before the crisis – both in Switzerland and elsewhere. 9 The term ‘too big to fail’ itself already featured in political debate during the 1980s in the US, in the context of difficulties experienced at a number of financial institutions.

The first bank that was referred to as ‘too big to fail’ was the Continental Illinois National Bank and Trust Company, at that time the seventh-largest bank in the US, which sought recourse to state support in 1984. 10 So, at this point, one could legitimately ask the question: why didn’t legislators, regulators and supervisory authorities tackle this known problem more vigorously before the crisis? The short answer is: The risks stemming from ever larger and ever more globally interconnected banks were underestimated, and as a result, the true magnitude of the ‘too big to fail’ issue was likewise underestimated. The pre-crisis era was dominated by a general mood of self-confidence and optimism. This is hardly surprising, considering the long phase of comparatively low macroeconomic turbulence. In such an environment, concerns over the sustainability of economic development appeared to be misplaced. Thus, the risks attached to the growth and the globalisation strategies of many banks were ignored. Moreover, the underestimation of risk was closely bound up with the prevailing regulatory paradigm at that time, which overlooked the significance of mutual dependencies between banks. Instead, it was assumed that the stability of the system as a whole was ensured, so long as each individual bank held enough capital to cover its own risks. Yet this assumption disregards the fact that, as a bank’s size, market share and interconnectedness increase, the economic costs associated with bank failure rise disproportionately.
And, finally, new precautionary motives may lead to a fundamental indeterminacy in the demand for reserves. The future demand for reserves As mentioned above, during the crisis, foreign exchange reserves were used as a tool for internal – as well as external – financial stability. National Central Banks, especially in Latin America, acted as dollar lenders of last resort to their domestic banks. This function will develop in the future and is bound to impact the demand for reserves. In a sense, countries face the same dilemma as private institutions. They need liquidity in times of stress but it is costly to hold in normal times. Their reactions, however, are opposite. Private institutions tend to underestimate their liquidity needs because, in case of shock, the Central Bank can step in as a lender of last resort. For countries, the bias goes in the other direction. Provision of international liquidity, whether private or official, is contingent, conditional and uncertain. With no international lender of last resort, precautionary motives could lead to unlimited accumulation of liquidity. This may be seen as major market failure and source inefficiency but is also unavoidable in the current financial architecture. One characteristic of liquidity shocks is that the net demand for liquidity may become almost infinite. Ex ante, no buffer is ever big enough. No amount of reserves will fully protect a financially open economy against a systemic shock.

Africa Meeting of the Econometric Society  Introductory Speech of Mr. Abdellatif Jouahri Governor of Bank Al-Maghrib  Rabat, July 11 2019  Honorable guests, Distinguished researchers and professors, Dear friends and colleagues, Ladies and gentlemen,  First of all, I would like to assure you that I will not venture giving a lecture in front of such an audience. I am here today more to listen. That being said, I would like to start by expressing how pleased I am to welcome you in Bank Al-Maghrib and to wish our visitors from abroad a wonderful stay in Morocco. I would also like to thank all officials for joining us, the distinguished researchers for kindly accepting to speak at the plenary sessions and the mostly-young researchers for coming from different spheres to present their works. I also extend my warmest thanks to Econometric Society which approached us to organize this conference, thus paving the way for a valuable cooperation between both teams. We view this meeting as an opportunity for us as a central bank, as well as for all the national institutions here represented today, to inquire about the progress made in economics research, namely with regard to quantitative economics. It is also an opportunity to strengthen the bonds with the academia and initiate new cooperation relationships.
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This contributes to the ongoing work in the Eurosystem, in which we decided on 14 July to launch a prototype, and to decide accordingly in 2023 about the launch of a digital euro, which could be concretely achieved around three years later. As regards artificial intelligence, last July we organised the first ACPR Tech Sprint to test the market on the concept of algorithm explainability. The challenge was for teams of data scientists to design tools to explain credit risk models with which they were unfamiliar. The event was a great success, with 24 teams registered, including some students in order to raise awareness of these issues among our future data scientists. Allow me to quote the testimony of one of the banks that designed one of the models for the ACPR’s Tech Sprint: “It is interesting to create community dynamics around these issues because we can see that it is not the banks against the ACPR or the banks against each other: trust in artificial intelligence is a matter for everyone and we really stand to gain from working as an ecosystem on this subject”. I would like to conclude with a quotation from Georges Bernanos, who was certainly not a lover of technology, but was a great writer: “We don’t endure the future, we create it”. Faced with the acceleration of digital technology and Bigtechs, we must develop a more “Schumpeterian” finance capable of fostering the emergence of innovative European players.
Now I have the privilege of working with leaders like Roger Ferguson, the Vice Chairman of the Federal Reserve, and Jerry Hawke, the U.S. Comptroller of the Currency. Their hard work, and the hard work of the other supervisors participating in the discussions, have strengthened the quality of the capital rules. They and others have helped to ensure that the New Accord will be flexible, forward-looking, and fit for the service of twenty-first century banking. The process of revising the rules has involved formidable challenges. That should come as no surprise. Capital requirements make up the foundation of the regulatory framework. Even more importantly, capital is a key ingredient to the health of the banking sector. The changes we are proposing to ensure that banks hold adequate capital will have broad implications not just for the banking sector, but also for financial markets and the broader economy. But the new Basel Accord is about more than just capital, it is also about keeping a level playing field and about reinforcing incentives to foster sound risk management though three reinforcing pillars: risk sensitive minimum capital requirements, coordinated supervisory review, and enhanced market discipline through greater transparency. Supervisors and risk managers know that a bank’s management and controls make up its first and most important line of defence. The New Basel Accord seeks to capture the relationship between capital adequacy and risk management.

Jean-Claude Trichet: Interview in Bild Interview with Mr Jean-Claude Trichet, President of the European Central Bank, in Bild, Germany, conducted by Mr Oliver Santen and published on 15 January 2011. *  *  *  Mr Trichet, in one word, how would you describe the state of the euro today? If you allow me two words: credible and stable. Will the euro crisis get worse this year? Let me be very clear: this is not a crisis of the euro. Rather, what we have is a crisis related to the public finances of a number of euro area countries. All governments have to put their finances in order, and above all those governments and countries which have lived well beyond their means in the past. How are the euro area countries ever to reduce the debt, now totalling € trillion? This year, the budget deficit in the euro area will be half as high as that in the United States or Japan. Virtually all advanced economies face acute fiscal problems. This is something that is often forgotten. That being said, this is no time for any complacency. Let me repeat: the ECB expects the governments in the euro area to make enormous efforts to bring down their debt. Some countries have to get their debt under control again. Can you understand that many Germans are afraid of inflation? The Germans are right to be fiercely against inflation. Inflation hurts in particular the poorest. Price stability is a precondition for growth.
The assessment was thus that there are several factors pointing towards a favourable development in the global economy going forward, but there still remain some causes for concern. The funding crisis in Greece has still not been resolved, and the situation in Russia and Ukraine is also creating continued uncertainty. Rising global inflation in the years ahead Internationally, inflation has fallen in recent years and is under the inflation target in many countries, see Figure 2. The falling oil price over the past year has contributed to this downward trend. However, the effects of the falling oil price on inflation are expected to gradually decline. Unemployment is also falling in many parts of the world and this trend is expected to continue in the years ahead. This contributes to a higher rate of wage increase and rising demand for goods and services. International inflation can therefore be expected to rise in the coming years. Recovery in the rest of the world contributing to a broad upturn in Sweden Sweden is a small, open economy and therefore dependent on what happens in the rest of the world. The weak international demand following the financial crisis has thus led to weak development for Swedish exports. But a continued recovery abroad will benefit Swedish exports and growth going forward. Domestic demand is expected to continue growing relatively fast, partly due to relatively strong private consumption. The rising wealth level in the household sector and the low interest rates create scope for relatively high growth in consumption.

The reason for the figure of 2 per cent was not that research had determined that this was the absolutely most appropriate level; it was probably more because this was the approximate level of inflation in most of the countries that began to introduce inflation targets and it appeared to be a reasonable figure in general. And until the financial crisis there was no real reason to question whether an inflation target of 2 per cent entailed a sufficient buffer for monetary policy. However, since the crisis, many countries have cut their policy rates to the “near zero lower bound” and been forced to change over to other, more unconventional means of conducting monetary policy, sometimes for several years. If the inflation target had been set higher from the start, there would have been a greater possibility to stimulate the economy in the normal way, through lower real interest rates. It is possible that the effects of the crisis would then have been less and it would have been easier to emerge from it into a more normal situation, some people argue. 15  Examples are Blanchard et al (2010), Ball (2014) and Krugman (2014). Representatives of central banks have also taken up this issue recently, see Rosengren (2015), for instance. BIS central bankers’ speeches  7  Many say that the motives for a higher inflation target have recently been reinforced and are not merely linked to the fact that it would be easier to extricate oneself from crises.
In the coming years, the greater global participation in this developmental process, both directly and indirectly, would enhance the potential role that Islamic finance would have in contributing towards greater global financial stability in the international financial system. BIS Review 136/2008  5

Today, it amounts to 13%. It was also said at the time that one franc out of three was made abroad. Today, it is one franc in two! The 1990s marked the real turning point in our economy’s trend toward globalisation. Our commercial relations with China are exemplary in this regard. After having levelled off at approximately 900 million francs a year in the late 1990s, our exports to China grew at a rapid pace in more recent years, reaching 2.9 billion francs in 2004. With regard to Chinese exports to Switzerland, the trend is just as spectacular, but much more steady. Sales of products manufactured in China in the Swiss market have risen continuously for 20 years now, be it textiles, electronic equipment or - naturally - product components that are reintegrated into our domestic production. Owing to soaring exports to China, our trade balance with this country has thus flattened out steadily; toward the end of the 1990s, it was clearly negative, in 2004 we even had a slight surplus. Despite the rapid expansion of our trade with China, its overall significance remains modest, amounting to just 2% of total Swiss trade. From a Chinese perspective, the relative importance of trade relations with Switzerland is even smaller. Switzerland accounts for less than 1% of Chinese imports and exports. A similar picture can be observed with respect to Swiss foreign direct investment here. Despite a thirty-fold increase between 1993 and 2003, it still amounts to less than 0.6% of total Swiss investment abroad.
We are already seeing that technology developed in the petroleum sector serves as a springboard for jobs in the green sector. Turning to my next topic, how are the structural changes in energy markets shaping the outlook for energy prices and inflation? On this, I will be humble and say, that predicting the level of energy prices in the years ahead is difficult. As we have already heard, different aspects of the green transition will affect prices differently, and possibly, with opposite signs. Outcomes will depend on technological developments, the supply of raw materials and minerals and on political decisions related to climate and energy security. In the short to medium term, we should be prepared for a potentially higher frequency of negative, and possibly, more persistent supply-side shocks originating in the energy market. [1] With an increasing share of intermittent renewables in the energy mix and insufficient energy storage systems to act as balancing mechanisms, supply could become more unpredictable. Coupled with low short-run demand elasticities, shortrun fluctuations in supply could potentially trigger large price movements, reinforcing a well-documented characteristic of energy markets. Turning to how movements in energy prices feed into inflation. Although household energy costs make up a fairly small share of the CPI basket, as we all witnessed last year, large movements in energy prices can have a material impact on headline inflation. Energy price changes also have an indirect effect through firms’ input costs.

It helps the Banque de France make sure that the economy is supplied with enough financing to grow, and it enables us to track developments in financing for businesses, households and general government simultaneously. The Monetary Policy Council will keep a close eye on other indicators, including all leading indicators of changes in prices, such as capacity utilization rates, production costs, developments in incomes and commodity prices. The Monetary Policy Council will also monitor long-term interest rates and the current account balance. *  *  *  Before announcing the Council's monetary policy decisions for 1997, I would like to discuss the results achieved in 1996. 1. The 1996 results are in line with the targets we set. The ultimate monetary policy goal, which is price stability, was met. Businesses delayed passing on part of the August 1995 two-point increase in the standard rate of VAT until the beginning of 1996. The twelve-month rise in consumer prices was equal to and then above 2% during the first seven months of 1996, but subsequently fell back to 1.ó% in August and September, once the VAT effect had disappeared. The twelve-month increase stood at 1.5% to 1.ó% in November and the latest forecasts predict a price rise of close to 1.5% for the end of 1996. The twelve-month price increase thus resumed its pre-August 1995 trend and will be less than 2% at the end of 1996, in line with the objective set by the Monetary Policy Council.
Dimitar Radev: Recent achievements in resolving Bulgaria's banking sector issues Address by Mr Dimitar Radev, Governor of the Bulgarian National Bank, at a forum of the Association of Banks in Bulgaria on the occasion of the 25th anniversary of its foundation, Sofia, 24 May 2017. * * * Dear colleagues, First of all, I would like to congratulate you on the occasion of the 25th anniversary of your Association. During this, sometimes turbulent, period the Association proved itself not only as a branch organization supporting its members in their banking business, but also as a reliable and reputable partner to public authorities and institutions, including BNB. We highly appreciate this role. It was also demonstrated in the best of ways in the implementation of the measures in the banking sector after the turmoil in 2014. In the short period after it we went together a long way. As a central bank, we focused on improving supervision and building a reliable institutional framework for resolving banking sector issues. Undoubtedly, however, our most important joint effort was the asset quality review and the stress test conducted last year. An exercise unprecedented in its scale that was a real challenge and a test not only for the central bank, but for our banking system as a whole. Only two days ago, our achievements in the banking sector were a subject of an objective and independent discussion.

Fourth, we have thoroughly analysed the issue of nonperforming loans (NPL), both at banking system level and at an individual bank level, and we are developing comprehensive measures which would create conditions for reduction of these loans, including strengthened loan-loss provisions, higher NPL write-offs, improved collateral valuations, enhanced disclosure practices, and strengthened data collection. Fifth, we are continuing the efforts to bring the regulatory framework fully in line with the EU law. For example, we are drawing up a completely new law on payment services and payment systems which, inter alia, would strengthen the requirements for security of payments made electronically and via Internet. I mention all these priority tasks of the BNB because for their performance we would largely rely on our constructive partnership with you, as we have done so far. Of course, we are well aware of the specific challenges that you too are facing. The strong pressure on profitability with a still weak, though increasing, and demand for loans requires that you keep seeking solutions for greater efficiency. The topics of credit risk management and costs policies would more and more be high on the agenda also because it is likely that we would witness another cycle of rising interest rates, given the worldwide trends and the expectations of such a development in the euro area sooner or later. These are topics that we will continue to discuss. Thank you for the good cooperation, and congratulations on the 25th anniversary! 2/2  BIS central bankers' speeches