samchain/econo-pairs-v1 huggingface dataset:
to yours: sooner or later, this would cause a political and social crisis, or a crisis of confidence among international investors. Indeed, it is easy to criticise, but hard to act. However, a credible debt reduction strategy is possible by combining three ingredients. All of them are necessary, because none of them is sufficient on its own. The first is time, acting over the long term, while starting rapidly as soon as the Covid-19 crisis ends in 2023. Over the next ten years, we must bring France’s public debt down to at least below its pre-Covid-19 level, i.e. below 100% as clearly as possible. The second ingredient is growth, to be raised by the abovementioned reforms. The third ingredient, which is also essential, consists in improving the efficiency and control of our public spending, which accounts for the highest share of GDP not only in Europe but in all developed countries. Page 14 sur 15  Discussions on this issue often become very sensitive: in France, more than elsewhere, public sector reforms are easily associated with austerity, or even with a liberal ideology of which they would be the Trojan horse. However, Sweden, which is not reputed for being a liberal country, has managed to lower its public spending to less than 50%, while we have increased ours. This is the French paradox: we are always denouncing an austerity that is, however, a long way off.

vii This largely falls within national remits, but should be pursued within an upward-levelling European convergence: namely the Northern European solutions, including a much greater development of apprenticeships and professional training. Lastly, by pooling our funding. I mean, partly, public investment programmes, such as those enabled by the famous "Next Generation EU", that decisive breakthrough from the Covid crisis. But a private driver is at least equally important: Europe must be able to harness and  Page 7 sur 15 redirect its domestic savings, which are the largest in the world; in recent years, we have had a surplus of domestic savings over investment of almost EUR 300 billion per year. These savings should be channelled towards the equity financing of companies, which is a method of financing that is particularly well suited to innovative projects – which are inherently riskier and require long-term support, but which are also more profitable if successful. Our lag visà-vis the United States in this area is striking: the largest European venture capital firm appears to be three times smaller than the 10th largest US one. The technical agenda has been identified, but politically is not very clear and is far too slow in its implementation: it is the Capital Markets Union (CMU). On the one hand, we have resources – savings – and on the other, the investment needs of companies: we must decisively accelerate a European financial ecosystem that better allocates the former to the latter, if we want to finance the forthcoming digital and environmental revolutions. III.
For us  BIS central bankers’ speeches  3  to achieve this goal, the BOT will adhere to our economic and financial stability mandates while reaching out to other public policy dimensions to promote a common vision of all policymakers to achieve a more competitive Thai economy. This common vision must however reflect the desired policy result based on real needs of the people. Through outreach and humility, we will also engage more with our stakeholders in pursuit of Thailand’s sustainable economic wellbeing so that Thailand can cross the transitional gateway and stand on the world stage with strength and stability. 4  BIS central bankers’ speeches

Thomas J Jordan: Financial Stability Report – potential risks and actions Introductory remarks by Mr Thomas J Jordan, Vice Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2011. *  *  *  In my introductory remarks today, I would like to present the most important points from our recently published Financial Stability Report, in which we consider potential risks to financial stability and identify where action may be needed. General economic and financial conditions for the Swiss banking sector improved further in 2010. Overall, global economic growth was stronger than expected last year, despite the expiry of fiscal stimuli. In Switzerland, too, economic development was robust and growth was high in an international comparison. Against this background, the profitability and capital situation of both big banks improved further, and remained good for banks with a domestic focus. However, the economic environment remains fragile, and a renewed, sharp deterioration over the next twelve months cannot be ruled out. In the short term, the prevailing uncertainty primarily affects the two big banks, which are still exposed to considerable credit and market risk relative to their loss-absorbing capital. For domestically focused banks, by contrast, the risks are largely of a medium-term nature, and are related to potential adverse developments on the Swiss real estate and mortgage markets. In view of these risks, all Swiss banks should ensure that they have a broad and high-quality base of loss-absorbing capital.
While it is recognized that the global reforms have been designed to address problems not faced in our financial system and are guided by different value and incentive systems, it is still important that we embrace initiatives that will enable us to avoid the same such mistakes. As more of our banks and insurers venture abroad into the regional markets, financial institutions will also be assessed by investors, analysts and market participants against these global standards. Moving forward, after a consultative process with the industry, the following enhancements will be incorporated to the Risk Weighted Capital Adequacy Framework for banking institutions:  4  BIS Review 146/2010    higher capital requirements to support risks in trading activities, securitizations and counterparty credit exposures;    strengthened definitions and criteria for the recognition of Tier 1 and Tier 2 capital; and    higher levels of common equity, Tier 1 and total minimum capital requirements which also provide for capital conservations buffers. The appropriate timing of transition to the new requirements, will be determined in 2011. While the Basel Committee has set a generous timeframe for implementation of the new requirements, we anticipate that given the current position of strength of our banking system and together with other jurisdictions, including those in this region, we are in a position to be on a faster track to adopt the new requirements.

With increased international mobility of talent, the global war for talent will intensify. Successful financial institutions will be those that are able to develop, attract and  BIS Review 146/2010  7  retain talent. Financial services professionals also need to be regionally oriented and able to integrate cross-border businesses effectively. The blueprint will also address this issue to ensure that the sector will be well supported. In charting the future for the industry, the foundation for financial stability will be strengthened. The focus will be on addressing systemic risks and strengthening crisis management capability. Regulatory cooperation will be enhanced in surveillance and in capacity building for effective cross border resolution of problem institutions. Domestically, significant supervisory attention will be directed towards achieving regulatory consistency in respect to risk assessment for financial groups taking into account the trade-offs and the need for safeguards. Underpinning the more competitive and dynamic financial sector will also be a deep-seated core value system, with financial service providers operating responsibly, with integrity and offering financial products and services with dignity. More specific institutional arrangements will be considered for market conduct and consumer protection. In realizing this shared vision for the financial sector, of critical importance is the cumulative participation of the public sector and the industry in the development of the Plan and its implementation. This combined effort will ensure that the new blueprint is comprehensive, relevant and realistic.
Or would it be better to take the more direct, but less nuanced approach advocated by some and simply break up the most systemically important firms into smaller or simpler pieces in the hope that what emerges is no longer systemic and too big to fail?1 As I will explain tonight, I believe we should continue to press forward on the first path. But, if we fail to reach our destination by this route, then a blunter approach may yet prove necessary. As always, my views may not necessarily reflect those of the Federal Reserve System. What is the too-big-to-fail problem? The root cause of “too big to fail” is the fact that in our financial system as it exists today, the failure of large complex financial firms generate large, undesirable externalities. These include disruption of the stability of the financial system and its ability to provide credit and other essential financial services to households and businesses. When this happens, not only is the financial sector disrupted, but its troubles cascade over into the real economy. There are negative externalities associated with the failure of any financial firm, but these are disproportionately high in the case of large, complex and interconnected firms. Although the moniker is “too big to fail”, the magnitude of these externalities does not depend simply on size. The size of the externalities also depends on the particular mix of business activities and the degree of interconnectedness with the rest of the financial industry.

The way forward We have made some progress on the TBTF problem, particularly in reducing the likelihood that a large complex firm will reach the point of distress at which society faces serious costs. But we have a considerable ways to go to finish the job and reduce to tolerable levels the social costs associated with such failures. Further international coordination is almost certainly going to be necessary to ensure that bankruptcy regimes interact in ways that minimize negative externalities. At home we also need to ensure that different authorities and resolution regimes operate in a mutually consistent manner. In particular, we may need to revisit the SIPC regime that governs securities firms in bankruptcy. At present, the bankruptcy of a securities firm is very disruptive because the claims of all counterparties are typically frozen for a considerable period and the value of these claims is not easy to ascertain or monetize quickly. As I have argued above, we shouldn’t focus on solving TBTF exclusively at the level of the individual firm. We need significant changes in market structures and practices as well in order to have a financial system in which the key players can fail without big social costs. We also must continue to ask ourselves the question of whether the steps in train go far enough. For example, one could make a good case that the capital surcharge for systemically important firms should be higher than that contemplated by the Basel Committee.
The spread between the rate of return on risky investments and the risk-free rate of interest has been historically high since the financial crisis. I think this has probably contributed to lacklustre investment and weak productivity growth over that period. But the risk premium seems to have taken another leg up since the EU referendum in 2016. And if you believe the surveys, the perceived downside risk in this case – the thing the firms seem to view most negatively – is a no-deal, no-transition outcome to Brexit. The economics also tells you that the value of waiting for relevant news – and therefore the disincentive to invest in the meantime – is higher if you think that news is going to arrive relatively soon. This helps to explain why the impact of Brexit uncertainty on investment seemed to intensify as we got closer to the assumed exit date of March 2019. It also explains why the firms most reluctant to invest have tended to be those that expect an early resolution to the Brexit process. It would be wrong to conclude from this that the best thing for investment is to resolve this uncertainty as soon as you can, by any means necessary. Deliberately choosing the outcome firms say they view most negatively is more likely to mean that capital projects that have so far been deferred are then simply cancelled. And however long the process actually lasts, investment is likely to perform better if firms don’t continually expect an early resolution in the meantime.

But the flip-side is that this process has moved forward in fits and starts, it has not enjoyed a broad degree of consensus and it has sometimes failed to be as rigorous and ambitious as the gravity of the situation required. Likewise, since the onset of the tensions there has been – occasionally notable – headway in the ongoing adjustment of the most vulnerable national economies, sometimes in step with the strict conditionality imposed under the financial support programmes under way. But here, too, action has broadly tended to be behind instead of ahead of events. BIS central bankers’ speeches  1  In these conditions, it is the European Central Bank that has positioned itself as the fundamental bulwark against the crisis. And, ultimately, this is buying time for the Member State governments, in both their responsibility for domestic economic policies and as co-managers of the common European Project, to make resolute progress in resolving the problems at the root of this crisis. We should not forget that the extensive range of non-conventional measures deployed by the ECB since the start of the crisis – the 3-year LTROs being one of the most recent and successful examples here – are, by their very nature, limited over time. And, more important still, these measures do not affect the fundamental imbalances which are ultimately at the source of and responsible for the crisis.
Detailed analysis of trade exchanges confirms high concentration of Albanian exports in certain geographical regions or in certain product groups and their low value added. For stable growth of exports and sound adjustment of the trade deficit, the policy-makers’ attention should focus on increasing the competitiveness of domestic products and expanding the base of exports through accelerated structural reforms. Financial market developments have reflected the low risk premia and inflation, hence enabling better transmission of easing monetary policy signals that started at the beginning of this year. Interbank interest rates have performed in line with the key interest rate, with slight volatility. The primary market yields on government securities have dropped sharply, particularly on longer-term maturities. Over the last months, the interest rate cut was faster on deposits but lower on loans. Interest rates on loans responded more slowly than other market rates due to low lending to economy during the last months. Monetary developments highlight continuation of weak inflationary pressures in the economy. The annual money-supply growth acceleration reflected primarily the private sector’s added demand for financing over the last two months. Also, households’ and businesses’ demand for money remained weak. Private sector credit slowed down sharply, and at the end of May it was 0.2% lower than a year earlier. The weak lending performance  2  BIS central bankers’ speeches  is increasingly reflecting the businesses’ lower demand for loan, alongside the tight lending standards.

The ECB’s entire range of instruments, characterised by a wide corridor between the interest rate on the marginal lending facility and the rate on the deposit facility, weekly repurchase agreements, the acceptance of a large number of counterparties and a wide range of collateral, is based on the money market functioning. If the money market doesn’t work, the mechanism for transmitting monetary policy doesn’t work. The only solution remaining for a central bank at this point is to stand in for the market and perform the role of the banks, even by lending directly to the private sector. Maybe this solution is the most preferable? I don’t believe so. In my opinion, the functioning of the market is a statutory objective for a central bank. It should therefore intervene to guarantee the liquidity of the market. It should be remembered that every injection of liquidity is guaranteed by the collateral deposited by the counterparty banks. This means that banks’ assets are made liquid. It’s obvious that without such a liquidity intervention, the market would collapse, taking the banking system with it. This is always true for last-resort interventions whose objective is to keep a solvent but illiquid system alive. It is at the heart of the role of central banking, particularly in times of systemic crisis. There can be no doubt that the ECB had to take on this role and I believe it has done so in an appropriate way.
Dimitar Radev: Decision about the euro is strategic, not conjunctural Interview by Mr Dimitar Radev, Governor of the Bulgarian National Bank, for Investor Digest, October 2019. * * * Mr. Radev, how would you assess the results of the asset quality review that the European Central Bank (ECB) conducted on six Bulgarian banks? How is the subsequent communication with Frankfurt in view of the goal of entering ERM II? The results are not surprising. They correspond to our own assessments. The communication with the ECB was and remains excellent both when it comes to the work related to the asset quality review and stress test, and when it comes to the overall process of preparing to join ERM II, the Single Supervisory Mechanism and the Single Resolution Mechanism. By definition, the parameters of such stress tests are markedly conservative. The ECB’s approach, however, included some quite unlikely scenarios, such as increasing corporate tax to 30% in the next three years. This could be a negative development for countries like Greece with its 28% tax, or Spain with its 25%, but it seems unrealistic for Bulgaria with its 10%. Wasn’t it logical for the European Banking Authority’s methodology, which was developed for the stress tests on the largest Western European banks a year ago, to be adapted to the conditions in Bulgaria? The technical parameters in the methodology of the stress test’s baseline and adverse scenario are the same as those applied across all the member states by the European Banking Authority.

The last time this was done was back in 2003. There are expectations that the new ECB leadership will initiate such a review. What effect do the low interest rates have on the Bulgarian economy? The immediate effect is positive. The increased credit activity is one of the indicators for this. Such a development, however, is connected with some serious challenges, for Instance the profitability of the banks as a result of the diminishing interest margins. I should say that so far the Bulgarian banks manage to deal with this challenge. Cyclical risks are also accumulating, due to which BNB activated and subsequently increased the level of the countercyclical capital buffer for banks. In recent years we have seen a few large deals in the Bulgarian banking system. Do you expect the consolidation to continue in the future? Is it a completely positive phenomenon? Consolidation is one of the possible responses to the challenges facing the banks. I expect this process to continue. 3/3  BIS central bankers' speeches
These exercises have identified significant differences which would not cause concern if they were due to real factors, meaning different type of business or risk profiles. There would be a cause for concern if the conclusion of such work still undergoing, together with other initiatives taken by the European Banking Authority, showed that those differences were largely due to differences in the application of the internal models approved by supervisors. In this vein, I think that the Single Supervisory Mechanism, once fully operational, will bring a higher degree of harmonization across the euro zone. The results of this exercise demand for the Basel Committee taking measures to reduce those differences, so that the credibility of the solvency ratios is not called into question. However, these measures should not go to such an extreme as to abandon the use of internal methods for calculating capital requirements: these models have been useful for improving banks’ internal management of risk. We think that the solution may lie along the line of using as a reference for the internal models more standardized models, based on parameters determined by supervisors. Let me now move on to the debate on Resolution of financial institutions. I will first refer to the Financial Stability Board’s work, dealing with resolution strategies and loss absorbing capacity. The FSB has developed a framework to address the “too-big-to-fail” (TBTF) problem associated with “global systemically important financial institutions” (G-SIFIs).

As a central bank governor, I would certainly welcome such a development. After all, the credibility of our monetary policy ultimately depends on whether the public believes that we match our words with our actions. BIS Review 55/2006  3