samchain/econo-pairs-v1 huggingface dataset:
Their business model is fascinating, Quaker-even, in its orientation. They offer only basic banking services, mortgages and small business loans, to people in a tight, locally-defined catchment area. All credit decisions are taken locally by people, not centrally by a computer. No bonuses are paid and no one has a sales-target. When the whole firm out-performs, a contribution is made to a pooled fund which is invested on employees’ behalf. The fruits of success are distributed equally and gratification is deferred. 6  BIS central bankers’ speeches  For banking, this is back to the future. If that sounds attractive, then it is down to us – not regulators, not politicians, you and I – to deliver it. If as bank customers we want to change the culture of banking, then we should start by supporting those banks who are delivering that change. Putting your money where your mouth is would deliver far greater and more durable change than any amount of banker-bashing. Already there are some encouraging signs of the winds of change blowing through the system, not just from the new entrants but among the UK’s oldest banks too. The new heads of the UK’s biggest banks have committed to restoring trust in their institutions and improving their social usefulness. And those words are beginning to turn into actions. Barclays and today Lloyds are seeking to change their sales-oriented culture, returning to their Quaker roots. There is the quiet, but unmistakable, sound of a leaf being turned.

At the same time, the ballooning of trading activities was starving basic banking of resources. In consequence, the offering to bank customers became a rather different one. The humble, regional loan officer was pensioned-off, replaced by a centralised credit risk model which neither answered back nor required a pension. Branches were closed in an effort to contain costs. Banking became a transactional business, underpinned by a sales-driven, commission-focussed culture. The down-escalator Nonetheless, as long as asset prices were rising, the cheap credit strategy seemed to be working like a dream. For those who had borrowed, debt was being inflated away, not by the traditional route of goods price inflation but by asset price inflation. The world was experiencing the biggest bank bubble, perhaps in its history. In 2007, that bubble burst. Asset prices and balance sheets collapsed. The dream turned into a nightmare, as asset price deflation combined with high debts to put many balance sheets underwater. As the most leveraged institutions on the planet, banks were deepest underwater. To prevent those institutions sinking without a trace, governments were forced to ride to the rescue. This support came from both governments and central banks, in both cases underpinned by the tax-payer. All in, this support to the financial sector amounted to perhaps as much as two-thirds of annual GDP in the UK and US, somewhat less (but still rising) in the euro-area. Those government transfers were not shared equally even across the financial sector, with a strong skew towards institutions deemed too-big-to-fail.
What we saw in the international financial markets—after the bond markets’ crash in 1994 or the Mexico/Barings unrest in 1995—is an interaction between market tendencies in a more limited sense and weak public finances or other credibility problems. High international interest rates and currency unrest have aggravated the problem of public finances,  BIS Review 56/1997  -7-  so that on these occasions economies such as Sweden’s have moved from a virtuous to a vicious circle. Examples of how one could analyse exchange rate developments in the above terms can also be found in events of the last half-year. An explanation of developments with respect to the krona has to do with the position of the Swedish and continental economies in the business cycle. In recent months the dollar and the pound especially have appreciated relative to continental currencies. Monetary policy in the USA and Great Britain has been relatively tight. (Figure 4). This is still not the entire explanation. The krona has also fallen somewhat against continental currencies, especially during the winter and spring. In part, this has coincided with concerns with respect to the EMU process, possibly strengthened in Sweden’s case because Sweden’s position on the EMU issue is unclear. In addition there has been some uncertainty about the steadfastness of long-term economic policy connected with, inter alia, continued high unemployment. The studies that have been done by the Riksbank indicate that there is room for an appreciation of the krona.

One of the strengths of the UK monetary policy framework is that MPC members are individually accountable for their decisions and votes. The resulting expression of different views, and implied necessity for debate among them, guards against the emergence of ‘group think’ and thereby helps improve the robustness of final policy decisions. Given different appraisals of the economic situation and outlook, these different views reflect different assessments of how the MPC should act to achieve its common goal. Because, even if MPC members are individually accountable for their decisions, they don’t get to choose the MPC’s objectives. They are individually responsible for the means, but not the ends, of monetary policy. The ends of monetary policy are handed to the MPC in the form of its remit, which achieves democratic legitimacy through its roots in legislation approved by Parliament. [4] That remit has three main elements. First, it establishes the primacy of price stability in the mandate for UK monetary policy. Second, that primacy takes concrete form in the 2% inflation target, which holds at all times. And third, the remit requires the pursuit of the inflation target to be achieved sustainably in the medium term, while avoiding excessive and undesirable volatility in output and employment. Given the current situation, pursuit of this remit faces risks on both sides.
The SNB in the centre of political debate Nowadays, credibility is even more important because of the fact that financial markets are extensive and closely linked. In the past, central banks were able to demonstrate their regulatory power by intervening in markets to influence rates and prices, particularly exchange rates. These days, they face global markets where the relative paucity of their means requires them to use tact rather than force to achieve their objectives. To this end, they depend upon their credibility. This smoothes out price volatility and makes it possible for monetary decisions to impact fully on market expectations. In other words, credibility is a precious monetary policy asset. We need to devote all our efforts to maintaining it. The SNB cannot merely rely on the good results it has achieved in the past. It must be able to convince markets of its determination to deploy all the means at its disposal to maintain monetary stability in the country, now and in the future. Nowadays it is generally recognised that a central bank is only credible if it can deploy its resources without having to obtain prior authorisation from the government, and without the risk of being penalised by the state authorities. This is why it is essential that a central bank be independent. In Switzerland, the independence of the National Bank is guaranteed under article 99 of the Federal Constitution and article 6 of the National Bank Act. This legal framework is sufficient. However, credibility is not merely a matter of legal independence.

Keynote address by François Villeroy de Galhau, Gouverneur de la Banque de France, Official Monetary and Financial Institutions Forum webinar, 25 September 2020 « ROLE OF CENTRAL BANKS IN THE HEART OF THE ECOSYSTEM i »  Contact presse : Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banque-france.fr)  Page 2 sur 10  Good morning and welcome to this webinar, jointly organized by the Official Monetary and Financial Institutions Forum and the Banque de France. What better way to demonstrate the digital transformation than holding an event in cyberspace. It has been common in recent years to hear about disruptive technologies but over the past 6 months, information technology has instead been a crucial source of continuity in a highly disrupted world. Digitalization is one among many factors transforming central banking and this will be my broader theme this morning. The ECB Strategic Review rightly launched by Christine Lagarde, with an explicit list of challengesii, is the opportunity to reflect on how the Eurosystem should respond to them. The shocks that have hit the economy in the past decade have been unprecedented, but in hindsight, many long-term structural shifts were occurring that have caused the unstable and complex situation we face today. Global natural interest rates had already been falling since the early 1980s driven by the demographic transition and risk-aversion in key emerging markets. Digitalisation and globalisation, combined, have been pressing for “lowflation”. Financial vulnerabilities were also steadily, but invisibly, rising since the socalled Great Moderation.
Svante Öberg: Economic conditions for wage formation Speech by Mr Svante Öberg, First Deputy Governor of the Sveriges Riksbank, at the National Mediation Office, Stockholm, 16 June 2011. *  *  *  The Riksbank’s task is to maintain a low and stable level of inflation. But the development of wages affects inflation and inflation affects the development of wages. Wage formation and monetary policy are consequently connected, and, consequently, the Riksbank monitors wage formation with great attentiveness. The message of my speech today can be summarised by two points:   Wage formation has worked well since the mid-1990s, and my assessment is that it will continue to work well in the years ahead.   But if wage increases were to be slightly less than the approximately 3.5 per cent per year that the Riksbank estimated in April, not only inflation and unemployment could be lower, but so could interest rates. I will start by taking a look back at wage formation over the last 40 years. Following this, I will address the economic conditions for wage formation in the years ahead. I will base this on the Riksbank’s most recent forecast for Sweden’s economy, from April. A look back at wage formation over the last 40 years Wage formation did not work well in the 1970s and 1980s Following the “record years” of the 1960s, a period of weaker development for Sweden’s economy began in the mid-1970s.

But in the long term, this strategy was unsustainable. Expectations that increased costs could be compensated for though devaluations weakened the incentive for restraint in price and wage formation. Put rather simply, for a devaluation to be successful, price and wage increases after the devaluation must return to the same level as among competitors. Sweden never succeeded with this in the 1970s and 1980s. BIS central bankers’ speeches  1  The two larger devaluations of the early 1980s were followed by the deregulation of the credit market in the mid-1980s. This was followed by the dramatic expansion of credit and rapidly increasing property prices. This led to the overheating of the Swedish economy, a property bubble that eventually burst, and, subsequently, the banking crisis of the early 1990s. Following increasingly persistent speculation on a new devaluation, the fixed exchange rate was abandoned in November 1992. Wage formation has worked well since the mid-1990s Since the mid-1990s, conditions for the strong development of the Swedish economy have improved significantly, compared with the 1970s and 1980s. In particular, three important changes have taken place. Firstly, the framework for fiscal policy has improved. After the crisis and the large public finance deficit at the start of the 1990s, a new fiscal policy framework was established.
25  All speeches are available online at www.bankofengland.co.uk/news/speeches  25  When there is an economic shock, the FPC can release the CCyB to 0%, reducing banks’ capital requirements. This frees up capital to absorb losses and preserve lending capacity. By continuing to lend, banks help to cushion the economic shock, and promote a quicker economic recovery. That is, the ability to cut the CCyB reduces GDP-at-risk, improving overall welfare.27 To give you some idea of scale, a cut in the CCyB from 2% to 0% today would preserve banks’ capacity to lend to UK households and businesses by £ By comparison, net lending was around £ over the past year. This is a stark departure from the pre-crisis framework. Banks’ capital requirements were determined by microprudential supervisors focussed on the safety of individual institutions. When shocks hit, this incentive created by a purely microprudential objective was more likely to motivate supervisors to conserve capital at all costs, with the consequence that banks restricted lending and exacerbated the macroeconomic downturn. The CCyB also supports the central GDP forecast by ensuring banks do not have to carry at all times sufficient capital for an elevated risk environment, with the associated knock-on to borrowing costs, investment, and output. For example, Bank of England work suggests that - had the current capital framework been in place before the crisis - the CCyB would need to have been between 3.5% and 5% to absorb losses.

The key difference is that the inflation target is symmetric – the monetary policymaker’s loss grows equally when inflation is either under or over the target, whereas the macroprudential policymaker’s loss function is asymmetric – increases (ie deteriorations) in GDP-at-risk are far more costly than the benefits of the reductions in GDP-at-risk. The relationship between the primary objective of financial stability and the macroprudential policymaker’s loss function can be represented by a decreasing and convex function, 𝑓(·). This means the marginal gains from taking action to protect financial stability grow as GDP-at-risk increases. Conversely, the marginal benefit from reducing GDP-at-risk falls as tail risks decline. This is illustrated in Chart 7. Financial risks increase moving along the curve to the right. A policy to reduce GDP-at-risk (lines A) is more valuable to the policymaker at higher levels of GDP-at-risk (line B) than lower levels (line C). The weight the macroprudential policymaker places on the central GDP forecast relative to GDP-at-risk is also determined by 𝜙 (“phi”). 𝜙 is analogous to the monetary policy’s 𝜆, the weight monetary policymakers place on output stabilisation relative to inflation stabilisation. 𝜙 is strictly greater than 0, as dictated by the “stability of the graveyard” clause in the Act that the FPC should not take action detrimental to medium-to-long term growth.13 In its annual remit letter, the emphasis the government places on this clause, and therefore the FPC’s secondary objective, can be thought of as changing 𝜙.
Having more money on deposit than is covered by the deposit 4/5  BIS central bankers' speeches  guarantee scheme involves risk. Perhaps new private payment solutions may be able to offer some of these characteristics, but a possibility which is also being discussed is the introduction of electronic central bank money – in addition to cash. This possibility raises many questions which Norges Bank and other central banks are trying to answer. This is a long-term process and we do not yet know what the answer will be. Conclusion The Norwegian payment system was digitalised at an early stage and this has benefited private individuals, businesses and banks. We can be justifiably proud of our payment system. Digitalisation is now going through new phases. The deliveries of customer services and the underlying infrastructure are being separated from one another, and we are witnessing the arrival of new market entrants. Global platform providers are interested in the payment market. We must make full use of the opportunities to improve the payment system and we have made a start. Further changes will come. Today I have emphasised some of the tasks which the industry and Norges Bank must solve in the coming years: Introduce instant payments and develop a better solution through the BRO project. Mobile instant payments and BRO. Agreement on a single alias register as a common infrastructure. A more coordinated and systematic effort to reduce cyber risk. Managers and owners must be aware of their responsibility, also when operations are outsourced.

Clearly, there is room to further unlock the potential of SMEs in Malaysia. While the banking system remains the main provider of funds to support the activities of the SMEs, there is the tendency for this system to focus on the more established SMEs. It can also be argued that the banking institutions also lack the appropriate skills and experience to develop and nurture the SMEs. This is where the presence of DFIs is so critical, that is to provide the complementary services, both financial and non-financial, particularly to support viable but smaller SMEs which are unable to obtain financing from the banking institutions. In Malaysia, there are at present two major DFIs specialising in supporting the development of the SMEs. These are Bank Pembangunan dan Infrastruktur Malaysia Berhad and the Credit Guarantee Corporation (CGC). Each of these DFIs has been assigned the specified mandated roles in assisting the SMEs in Malaysia. Bank Pembangunan is entrusted with the mandate of promoting entrepreneurial development by not only providing financial services to the SMEs, but also assume the nurturing and developmental role through the provision of advisory and consultancy services to this targeted group. Meanwhile, the CGC is mandated to assist the SMEs that lack track record and collateral to have access to financing, by providing credit guarantees to enhance the SMEs' accessibility to credit facilities.
Thomas J Jordan: A changing role for central banks? Speech by Mr Thomas J Jordan, Vice Chairman of the Governing Board of the Swiss National Bank, at the Welcome Event Master of Banking and Finance, St. Gallen, 22 September 2010. *  *  *  I would like to thank Dr. Claudia Strub and Till Ebner for their valuable support in drafting this speech. Introduction The economic cost of financial crises is enormous. The recent crisis highlighted the extent of systemic risk and thus the overriding importance of a stable financial system. It also demonstrated the inadequacy of the instruments and measures used until now to ensure financial stability. More effective measures are needed to check and prevent systemic risk. The key question is how should – or can – this be achieved in the future? In my talk today I would like to address this question by focusing on the role of central banks. Specifically, I will endeavour to answer the following question: To what extent will the lessons learned from this crisis affect or even alter the future role and tasks of central banks? I intend to examine this from three perspectives: In the first part of my talk, I will examine the extent to which central banks need to undertake a fundamental review of their instruments and objectives in the light of recent events. In particular, there is a need to analyse the effectiveness of the monetary policy strategies and instruments used to date, especially in periods of crisis.

In my view, monetary policy measures and instruments alone are inadequate for the task of effectively checking and preventing systemic crises. In the second part of my talk, I shall therefore focus on the regulatory response to deal with potential instabilities within the financial system. One possible response to the inadequacies highlighted by the crisis would be to strengthen macroprudential supervision and regulation. In this case, the interaction between these measures and monetary policy would have to be borne in mind. Thirdly, institutional aspects play a key role in the restructuring of the regulatory environment. I will outline these briefly in the final part of my talk. Monetary policy after the crisis Let me start by reviewing the objectives and instruments of central banks in the light of recent events. Comparing today’s world with the situation a few decades ago, it becomes evident that much has changed. Deregulation of the financial markets has increased and globalisation has progressed extremely fast – in the real economy as well. The brisk level of trading made a significant contribution to the long-lasting worldwide upswing in recent years. This was supported by the credible policies pursued by central banks, which increasingly prioritised the goal of price stability, thus contributing to a global reduction in the level and volatility of inflation. The battle against high inflation appeared to have been won. Overall, this led to firm expectations of low inflation and a dramatic drop in risk premia in virtually all areas of the financial markets.
In contrast, the FOMC’s portfolio-oriented programs have been driven by a desire to expand and lengthen the maturity structure of the asset side of the Fed’s balance sheet in order to put downward pressure on longer-term interest rates. The accompanying growth of reserve balances has been a byproduct of those purchases, not a specified objective. Former Fed Chairman Bernanke referred to this approach as “credit easing,” in contrast to the BoJ’s “quantitative easing.” 9 The FOMC’s different objective for OMOs reflects the primary transmission channel through which LSAPs are understood to affect financial and economic conditions. Central bank purchases of longer-term bonds reduce the stock of such securities held by private investors. Accordingly, the purchases remove duration risk – and in the case of agency MBS, prepayment risk – from the private sector, which drives term and other risk premiums on those assets lower than they would otherwise be. 10 This re-pricing of risk ultimately puts downward pressure on long-term interest rates, an effect that spreads to other assets as some investors rebalance their portfolios. The term premium effect of the Fed’s purchases should continue to influence financial conditions as long as the assets remain in the SOMA portfolio, although the size of the effect will diminish over time as the risk associated with the portfolio diminishes. Some standard portfolio risk measures illustrate the degree to which the Federal Reserve has absorbed extra duration risk onto its balance sheet.

And that might feed the illusion that, once the recession is behind, all countries will recover in the same way. But that will not be so. Each country has singular features that will prove pivotal when defining the path to follow once the crisis is over. Accordingly, my reflections will focus on what distinguishes us from others. The Spanish experience shows that, from 1985 to 2008, growth in the economy was outpacing the EU average, with the sole exception of 1992 and 1993. This spectacular growth over the past 23 years has allowed us to draw closer to the welfare levels enjoyed by the most prosperous EU countries. But what will happen to the Spanish economy when we emerge from the current crisis? Will we witness such satisfactory growth as in the past? The reply, as always in economics, is that "it depends". If we do what we have to do, if the necessary reforms are made, we will once again grow above the European average. But if  BIS Review 18/2009  1  we do not reform we will probably grow at or below the EU average, with convergence with our main economic partners being checked. Yet if we have been able so far to advance without these reforms, is it absolutely vital to adopt them now? Before answering that, let us look at the causes of growth in the Spanish economy in recent decades.