samchain/econo-pairs-v1 huggingface dataset:
However, this required estimating the cyclical position of the economy and the elasticity of public finances to the cycle, which have proven to be notoriously difficult to estimate in real time. In fact, evidence shows that in the case of the European Union, estimates of potential output are revised up to ten years after the first release. Second, while the current economic environment bears little resemblance to that of the 1990s, the reference values were included in the Treaty as if they were “structural permanent values” of the economies. These limits were calibrated on the basis of the average macroeconomic conditions at the end of the 1990s. But economies are subject to structural transformations over time, and such limits should therefore be updated. Third, despite its focus on fiscal sustainability, the framework did not prevent a general and consistent increase in public debt. Again, experience shows that this is to a large extent 2 For a more detailed discussion on the reform of the fiscal governance framework in the European Union, see Alloza, M., J. Andrés, P. Burriel, I. Kataryniuk, J. J. Pérez and J. L. Vega. (2021). “The reform of the European Union’s fiscal governance framework in a new macroeconomic environment”. Occasional Paper 2121. Banco de España. 3  related to a failure to comply with the rules, particularly in good times, which were not used to build up fiscal buffers for periods of economic distress. This is not surprising.

Andrew Gracie: Cyber in context Speech by Mr Andrew Gracie, Executive Director of Resolution of the Bank of England, at the UK Financial Services Cyber Security Summit, London, 2 July 2015. *  *  *  It is the prerogative of the keynote speaker to take an Olympian view. I am not sure what the gods on Olympus would have made of cyber. Indeed from the goings on in Greek mythology, it could well have been that they were cyber perpetrators rather than protectors. So perhaps it is fitting that there are hacks now like ZEUS that carry their names. But my Olympian view will try and put the work that we are doing as authorities and with the sector in context. The sector’s role is important. After all, it is the responsibility of firms first and foremost to ensure that they are resilient to cyber attack. From an authorities perspective, cyber is somewhat different, but it relates to the same underlying goals that drive our policy interventions elsewhere in relation to operational resilience. I want to describe this relationship before turning to the specific steps that we have taken in the UK over the last two years under the aegis of the Financial Policy Committee (FPC). Cyber is relevant to many of the functions of the Bank of England as a financial authority. We are responsible as prudential supervisor for the safety and soundness of banks, large investment firms, insurers and financial market infrastructure.
The measures imposed, while quite restrictive to the shareholders, were deemed as appropriate by the legislator and the judicial system in light of the wider public interest of maintaining financial stability at a low cost to the government and the tax-payers. All in all, I think that it is fair to say that the outcome was not too bad, given the circumstances. I am also not too worried that the measures imposed have led to a weakening of market discipline in this country. Nevertheless, this does not mean that we could not have done better if the appropriate legislation had been in place already at the outset of the crisis. Moreover, I am afraid that it may be more difficult to handle a crisis by drafting temporary legislation in the midst of a crisis today. First, the banking sector is more internationalised. In the Swedish case, many banks are part of large cross-border banking groups with strong intra-group links, which may not be easy to dissolve quickly. This means that it is not obvious that a crisis could be handled on a national basis. Second, Sweden is now a member of the EU. Any measure taken will thus have to be in compliance with EU legislation. Sweden has actually also had recent experience of the failure of a deposit taking institution. The failure in 2006 of the credit institution Custodia again displayed the problems in relying on the ordinary corporate bankruptcy regime. Custodia was tiny, so there was clearly no systemic risk.

Indeed, this gap in the regulatory framework has been demonstrated in the recent period of financial turbulence, where a number of countries have found it necessary to take extraordinary measures with regard to banks and other financial institutions in order to maintain financial stability. Today, I will try to sketch the broad features of such a resolution framework. In brief, it is a question of finding a system that makes it possible to close banks quickly and efficiently at a low cost to the deposit guarantee system, while making shareholders and uninsured creditors bear the responsibility for their investment decisions. But it must also allow for special measures to be taken in the exceptional situation where the failure of a bank risks destabilising the financial system as a whole. Also in such situations the government needs to have a strong negotiating position against the shareholders. But, first, how did I arrive at this conclusion? Well, from an analysis of the role of the banks in the economy and the safety net which has been built up around the sector. And from some  BIS Review 62/2008  1  experience from dealing with real crises. To get the right perspective, I think it is useful to start at this end. What is so special about bank failures? Bank failures have always been a problematic issue for governments.
Monetary policy must then be oriented towards bringing inflation back to target over time while avoiding wide variations in output and employment. It takes time for interest rate changes to feed through to real economic variables, and it takes even somewhat longer for the changes to have a clear impact on inflation. How long it takes to reach the inflation target – and not least – the time deemed desirable for reaching the inflation target will depend on the nature of the disturbances to which economy is exposed. It may be appropriate to differentiate between supply-side disturbances and demand-side disturbances. If the economy is marked by weak demand, with low growth and low inflation, monetary policy should quite clearly be expansionary. This will stimulate both the level of activity and push up inflation. Inflation will then move towards the target and output will move towards potential output. By the same token, if there are pressures in the economy and inflation is high, a tighter monetary stance will restrain both activity and inflationary pressures. In such situations, it may be desirable to bring inflation back to target quickly. There is no conflict of objectives. Low inflation in Norway is not the result of declining demand, activity or employment, but is rather a result of favourable developments on the supply side both in the Norwegian and international economy.

This means that energy prices are included but they have considerably less weight than in the CPI. Of the measures that we use for underlying inflation, the CPI-ATE has tended to be lowest. All four measures indicate that inflation has been moderate in recent years and have implied an expansionary monetary policy. The rise in prices we have recently observed could affect inflation in the period ahead through compensation for earlier inflation, the pass through of costs to selling prices and through expectations of future price inflation. By using various measures of underlying inflation, we seek to capture the portion of the rise in prices that may influence future inflation. It is always difficult in real time to determine which price movements will persist and which will only have a short-term effect on the CPI. An assessment of underlying inflationary pressures should probably be based on several different indicators and developments in these should be followed up by discussion and interpretation of the underlying causes. Allow me to conclude. Developments over the past 40 years have illustrated that the most important contribution monetary policy can make to sound economic developments in the long term is low and stable inflation. This provides the economy with a nominal anchor. In its conduct of monetary policy, Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment.
These different agents may have different opinions as to what level is most appropriate for business continuity and crisis recovery planning. The Riksbank’s tasks The Riksbank’s role with regard to business continuity and crisis recovery planning can be divided into two areas. One of these concerns our role in mediating cash and payments and the other is our role of overseeing financial stability. With regard to the first role, the Riksbank issues banknotes and coins. We are also responsible for the system that makes large-value payments between the banks and for lending money intraday so that these payments can be made. The business continuity and crisis recovery planning for cash management is aimed at security for values and personnel and also reliability of supply. With regard to the RIX system, the business continuity and crisis recovery planning are aimed at being able to continue activities despite problems. It is also a question of maintaining a capacity to trace and remedy faults. The ultimate purpose of the Riksbank’s role as overseer of financial stability is to prevent both conventional and financial crises in the financial system. In concrete terms, the work entails following developments in the financial sector in the short term, primarily in the major banks, and working with structural changes, crisis management and regulation. An important part of the Riksbank’s work in this field concerns cooperation with other authorities and companies in the financial sector.

However, if we describe the entire chain, from the Swedish Social Insurance Administration beginning the payment process until Ingrid actually has the money in her hand, there is a fairly substantial amount of infrastructure, infrastructure communications and payment flows required. In addition to the basic infrastructure of electricity, telecommunications and post, the computer systems at the Swedish National Debt Office, the banks, the Riksbank and the Bankgirocentralen are used to implement ordinary, simple pension payments. In order for Ingrid the pensioner to receive her pension, the social insurance office sends a payment order to the Swedish National Debt Office and one to the banks the Swedish Social Insurance Administration uses to execute its payments. It is the Swedish National Debt Office’s job, in its role as bank to the central government, to pay pension money to a number of banks as instructed by the social insurance offices. These banks in turn distribute money to the pensioners’ accounts in their own banks, if the pensioners have bank accounts there. For those pensioners who have accounts in banks other than those with which the Swedish Social Insurance Administration has an agreement, the money is forwarded to these banks through Bankgirocentralen. The pensioners who do not have a bank account at all are instead given a payment slip that can be redeemed at any bank or at Svensk Kassaservice. The Swedish National Debt Office makes the payment of pension funds by temporarily, over the day, using its credit with the Riksbank.
The swap lines are not at present a permanent and a reliable feature of the international monetary system; for instance, they have been strongly challenged in political discussion in the US. Furthermore, there are important unresolved governance issues, such as who should decide which countries get a swap line and which do not. It is thus an important item on the reform agenda to clarify the extent to which standing foreign currency LOLR facilities for solvent cross-border banks can be set up. In the meantime, cross-border banking will retreat because of this risk, and smaller countries in particular will be more reluctant to provide a home base for cross-border banks. BIS central bankers’ speeches  1  Let me now move to the EU/EEA level. Here the main fault line is the contradiction between, on the one hand, the area-wide permission to operate based on home licensing and a common regulatory framework (the European passport) and, on the other hand, national supervision, a national safety net of deposit insurance and LOLR, and national crisis management and resolution regimes. The underlying principle is the same as in many other areas of the EU: an equal and harmonious competitive position throughout the area. In that ideal world, the location of headquarters and the size of a banking system relative to that of a country should not matter. The crisis revealed that this framework is deeply flawed. First, it ignores the FX liquidity risk that I discussed earlier.

In any case, both at the national and at the global level, there is a need to monitor imbalances and mismatches in banks’ balance sheets much more closely than was the case before the crisis. In the absence of global and EU reforms, the size of a national banking system relative to GDP will be a matter of concern. This will require tools within a macroprudential framework to affect the size of the banking system. Work is needed in this area. Let me conclude by saying that, although I have focused on the fault lines and risks in crossborder banking in my remarks today, we should be aware that financial globalisation has important benefits. This gives us all the more reason to find ways to mitigate the risks. 2  BIS central bankers’ speeches
ISO 20022 will make a big difference to cross-border payments: but it also offers a wealth of other opportunities, which the individual firms can benefit from. While the roadmap is a G20-led initiative, the targets are international, and our goal is to improve payments across all countries and payment corridors. Making progress therefore depends on sharing best practice widely and achieving change worldwide. To that end, the World Bank and IMF, along with the G20 Central Banks, are developing a technical assistance programme available to countries wishing to enhance their national payments infrastructure or policies. We have achieved a lot already but there is still more to do, and much more to gain. We have built the foundations and a framework to support a holistic set of changes. Now we need to act and there is a role for everyone. I look forward to helping to smooth the path ahead in my role as a policymaker and a payment system operator. I hope that many of you will join and play your part in this exciting and transformational journey towards the shared vision that benefits companies, individuals and whole economies through enhanced cross-border payments. I would like to thank Andrei Pustelnikov, Paul Bedford, Anna Koch and Mark Streather for their help in preparing these remarks. 1. See Building blocks for a roadmap to enhance cross-border payments: letter to the G20 2. See Enhancing Cross-border Payments: Stage 3 roadmap 3. See Targets for addressing the four challenges of cross-border payments: Final report 4.

And, for derivatives, there simply may be no further fallback. You can imagine the litigation risk when the reference rate for a 20-year contract disappears and there’s no clear path to replace it. Now imagine 190 trillion dollars’ worth of those contracts. This is a DEFCON 1 litigation event if I’ve ever seen one. Where Are We Now? Those are the issues that the ARRC, the other IBOR working groups, and central banks in general have confronted over the last few years. Let me turn now to the work at hand. There are two urgent tasks for every market participant with LIBOR exposure. First, if you find yourself in a hole, stop digging. What market participants must do right now is stop writing new contracts on LIBOR and start using SOFR or at least another robust alternative. And, especially if you need to keep using LIBOR, make sure your new contracts have strong and workable fallback language. That was one of the original recommendations the various official sector groups made as far back as 2013, but the people writing the contracts don’t seem to have been paying attention. As I’ll describe in a moment, very soon there will be specific fallback language that represents the consensus best practice to use in each type of U.S. dollar LIBOR-linked 3/8  BIS central bankers' speeches  financial product going forward. The second urgent task is to deal with the trillions of dollars of existing contracts that extend past 2021 and don’t have effective fallbacks.
8 See ‘Fair and Effective Markets Review – Implementation Report’, July 2016, available at www.bankofengland.co.uk/markets/Documents/femr/implementationreport.pdf 7  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  7  It is why alongside the necessary development of ‘hard law’ to enforce minimum standards of conduct and accountability, such as the Senior Managers Regime, the Bank is using its influence to bring together market participants to solve collective action problems, for example, through the FICC Market Standards Board, to set expectations on behalf of broader society about expected behaviours and to encourage adherence to voluntary market standards. Addressing ethical drift – and persuading broader society that it has been addressed and that markets work for the benefit of society – is a huge challenge for financial markets and the financial centres in which they are concentrated. I do not want to go into detail tonight – though I would encourage you to read Minouche’s excellent speech on the subject. I would just want to emphasise one crucial point – industry leadership is and will remain vital if this challenge is to be met. Resilience and regulation  Restoring public support also requires authorities and the financial sector to demonstrate that the risks that are posed by large, very complex and highly interconnected financial markets can be effectively managed. I am not sure whether my namesake in 1914 would have recognised the term ‘financial stability’ let alone ‘macroprudential’ policy. There certainly was no Deputy Governor for financial stability in those days.

Hence, approximation of the auditing role with the best and contemporary international standards, learning about specifics and characteristics of the audited entities, and further  BIS central bankers’ speeches  1  intensification of inter-institutional cooperation during the processes are some of the elements having a key role in the work and results of this institution. In conclusion, I am fully confident that, by promoting the above-stated factors, the ALSAI will continue to perform at its best vis-a-vis the duties and challenges imposed by current developments and will succeed in accomplishing its mission towards the improvement of institutional governance. Thanking you for your attention, I wish you success in your work in 2016. 2  BIS central bankers’ speeches
Figure 4  10  CPIEFE inflation (2) (annual change, percentage) 10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  10  CPI inflation (1)(2) (annual change, percentage)  07 08 09 10 11 12 13 14  07 08 09 10 11 12 13 14  MP Report Sep.2012  MP Report Dec.2012  (1) December 2012 figure uses median of monthly inflation forecast in the EES. (2) Gray area, as from the fourth quarter of 2012, shows forecast. Sources: Central Bank of Chile and National Statistics Institute (INE). 10  BIS central bankers’ speeches  Figure 5 MPR and expectations (percentage) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  FBS first half December 2012  11  12  13  14  EES December 2012  MPR  Source: Central Bank of Chile.

Household credit has continued to grow  2  BIS central bankers’ speeches  in tandem with disposable income, although the increase in loans by non-bank suppliers – with a higher penetration in lower-income households – has been smaller than in previous periods. Corporate debt has grown somewhat above GDP, driven by strong local banking credit and external financing via bonds, in a context of favorable financing conditions in international markets. In turn, the banking system keeps robust indicators, with capital significantly above regulatory levels, a more diversified external funding base, and a stable liquidity position. Toward 2013, the Board estimates that GDP growth will be within the range of 4.25 to 5.25 percent. This range is above the one foreseen in September. In this scenario, domestic demand will increase 5.7 percent y-o-y, further amplifying the current account deficit to 4.6 percent of GDP. This projection supposes that macroeconomic conditions facing the Chilean economy will remain fairly unchanged in the near future, and that the economy will grow in line with trend rates, which the Board continues to estimate around 5 percent (table 1). Internationally, the baseline scenario foresees that in 2013 and 2014 the world economy and Chile’s trading partners will grow by averages of 3.6% and 3.8%, respectively, not far from those of 2011–2012. Important differences remain between the performances of the developed world and the emerging world. The recession in the Eurozone has settled and is expected to last some more time.