samchain/econo-pairs-v1 huggingface dataset:
Banks will continue to be linked through interbank loans, and problems in one institution may still lead to considerable spill-over effects even if the settlement risk of the net settlement has been eliminated.2 Moreover, the risk may increase for other institutions which must grant more credit (to those in need of liquidity for the gross settlement) or for institutions which do not receive settlement as quickly as before (due to queuing problems with the gross settlement). -  Second, the transition to gross settlement may increase the liquidity costs for settlement participants. Whenever transactions are to be settled concurrently, there is always a risk of “gridlock”, i.e. that settlement is halted because liquidity has been unevenly distributed. However, this is a well-known situation and is resolved in many countries by the central bank providing loans to system participants. Third, there is greater need to balance risk against efficiency In recent years, more attention has been drawn to weighing risk against efficiency. This is particularly the result of experiences we and other central banks have had with the new payment systems and the accompanying operating rules. RTGS systems are relatively liquidity intensive, and the cost of collateral may be fairly high. Compared with the initial situation - “non-secure” net systems - this cost was widely considered as a reasonable price to pay. However, a number of “in-between solutions” i.e. hybrids - have appeared over time, blurring the distinction between net and gross systems.

Norges Bank can be of assistance in helping the industry to make the “proper” choices by providing a regulatory framework which maintains competition, while also encouraging that participants are faced with relative prices reflecting the real costs of the systems. Allow me to comment on these factors: 4.3.1. The importance of reliable information on risk and a clear division of responsibility  It is important that the banks provide more information on the actual risk in the payment systems, so that the risk is known and understood (see the second Lamfalussy minimum standard). Our knowledge of settlement risk in the Norwegian system is still insufficient. We know too little about exposure throughout the day, how it arises and the optimum approach to reducing it. We have to gain more insight into these factors, particularly since risk information will be an important element in granting licenses to interbank systems. Moreover, this information is also essential for the correct pricing of risk in payment services. In this connection, I would also like to point out what it means to specify the respective responsibilities of the netting provider and the participants (see the third Lamfalussy standard). I firmly believe that the law’s requirement that there shall be “one operator who is responsible for the establishment and operation of the system” may result in the necessary clarification of the division of responsibility in the payment system. For this reason, this requirement is not just a formality, but a real opportunity to create more transparency relative to the present system.
01.09.2020  The impact of the COVID-19 crisis on financial stability Closing address to the seminar “The financial system in the COVID-19 crisis. Challenges and commitments”, Universidad Internacional Menéndez Pelayo, organised by the Spanish Financial Press Association Pablo Hernández de Cos Governor  Good afternoon ladies and gentlemen. It is an honour and a pleasure to participate once again in this summer course organised by the Spanish Financial Press Association. It is clear that the scope of the pandemic and its impact on the world economy are very extensive. Following a 5.2% decrease in Q1, with respect to the previous quarter, Spanish GDP fell by 18.5% in Q2, when the restrictions linked to the state of alert were at their height. These declines represent the greatest contraction in economic activity in our recent history. An improving path has been seen during Q2 and Q3. However, this recovery is incomplete, and uneven across sectors and agents. It is also subject to a high level of uncertainty owing to the doubts as to the course of the pandemic itself, as shown by the fresh outbreaks. It therefore seems clear that some of the pandemic's effects will be long-lasting.

My sense is that presently, we could do this: (a)  While still maintaining the attractiveness of investing in Treasury and agency securities relative to other highly liquid sovereign markets and not sparking significant increases in rates;  (b)  Simultaneously providing some alleviation of the collateral shortage we have helped create, and;  (c)  Reducing the need for the New York desk to perform the complicated jujitsu we at the FOMC have tasked it with in creating alternative strategies that stretch its traditional mandate and which may give further rise to congressional criticism of the Federal Reserve and a New York Fed that some influential lawmakers already consider to be either too big for its britches or not being able to fill out its suit. This would make crystal clear to Congress and the public our stated desire to make the ON RRP facility a temporary one that will be eliminated when it is no longer necessary. Mind you, the above proposition does not imply any rush to raise the fed funds rate or its equivalents, such as the rate on excess reserves. That will depend on progress made toward meeting our dual objectives of maintaining price stability around the FOMC’s 2 percent target while facilitating full employment. Nor should it be interpreted as a criticism of the very able people we have on the trading desk: I hold them in highest regard; they perform their duty admirably.
A rapid build-up or sell-down of positions is therefore not profitable even if prices change. Over many years ahead, the amount of nominal fixed income investments will exceed the amount of real assets. In the long run, it is conceivable that investments in the two classes may be more equally distributed. In the development of the investment strategy that I have presented, weight has been given to exploiting the Fund’s long-term investment horizon and size. The strategy is based on objectives and expectations regarding the Fund’s overall real return over time. Moving forward, Norges Bank’s operational management of the Fund should probably shift towards absolute return and absolute risk. BIS Review 145/2010  7  Transparency and accountability A clear division of responsibility between the Ministry of Finance as owner and Norges Bank as manager is an important component of the Norwegian model. Moreover, it is important that transparency and accountability are prominent features of the model. Management objectives have been clearly defined. Norges Bank and the Fund’s owner have always given weight to transparency with regard to the management of the Fund. The standard was set at an early stage when the Executive Board decided that an exhaustive list of the Fund’s investments should be published at the turn of each year and the first complete list was published in the annual report for 1998. This decision has paved the way for all the subsequent discussions about various individual investments.

Det framtidige omfanget av petroleumsvirksomheten på norsk sokkel” [The future of petroleum activity. The future scale of offshore petroleum activity in Norway]. BIS Review 145/2010  1  The Committee had limited confidence in the government’s ability to save: The Committee stated the following concerning a savings fund: “It is up to the political authorities to determine whether such a fund construction designed to avoid a future decline in income is realistic. The Committee chooses not to build on such an assumption.” The notion of a sovereign oil fund matured through the 1980s. The government, under the premiership of Kåre Willoch, called for the establishment of such a fund in the Long-Term Programme presented in spring 1986, and the Act on the Government Petroleum Fund was passed in 1990. The main rules are: First: The totality of government petroleum revenues is transferred to the Fund. Second: The Fund is integrated into central government budgets and accounts. The non-oil deficit is covered by an annual transfer from the Fund. The government cannot borrow to finance current expenditure as long as there is capital in the Fund. Third: The capital in the Fund can only be used for domestic spending via general budget transfers, and not for earmarked transfers. Fourth: The Fund’s capital must be invested abroad. When the Act was enforced, the Norwegian economy was in a deep downturn, with high unemployment and government budget deficits. Projections also indicated that offshore production would pass the peak in the early 1990s 5 .
This implies not only that the banking system itself has remained robust, but also that it has fulfilled its mission, providing significant support to the economy, restructuring loans and granting new ones. Specific figures are well known, but still I would like to repeat these data again. Last year, corporate lending expanded by 10%, which is nearly two times more than in 2019 before the pandemic. Lending to small businesses increased by 20%. Disbursements peaked in spring when businesses desperately needed financial resources and their revenues plummeted. Lending was largely a way to support wages and repay loans, and so on. The banking system was thus capable to address this challenge in spring. Of course, the Government’s preferential lending programmes were also of major importance. We can see that mortgage lending surged last year by over 20%, but I will dwell on this topic later. Both preferential mortgage lending programmes and interest rate decreases in the economy in general played a significant role in this respect. Consumer lending used to be a matter of our concern before the pandemic, but last year it was growing moderately, in our opinion, adding about 9%. In this regard, banks were reasonable and conservative in their assessments of borrowers’ risks. Moreover, borrowers themselves preferred not to increase their liabilities in such an uncertain environment. Loan restructuring has become one of the main channels for the financial system to support the economy.

Elvira Nabiullina: Speech at Association of Russian Banks Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the annual meeting of the Association of Russian Banks, Moscow, 18 February 2021. * * * Good afternoon, dear colleagues I am happy to welcome you at the annual meeting of the Association of Russian Banks. At these February meetings, we traditionally sum up the results of the previous year and outline our priorities for the near future. Today, we — the economy and society — are at the stage when the system is returning to its normal functioning. This means that we should and are already able to estimate the situation in the banking system after such a stressful year, its robustness and, possibly, hidden risks, as well as what challenges and prospects we can see. Another aspect of the current moment is that we are shifting from the anti-crisis mode back to dealing with tasks partially suspended for this difficult period. We should understand the pace and the way how we will be jointly addressing these deferred tasks. These are the topics — results, risks, and priorities — I would like to focus on today. First, I would like to talk about last year’s results. Anatoly Aksakov has just said this word — adequate. I also believe that the banking system has adequately overcome the challenges of 2020.
On the occasion of the celebration of the International Women's Day, it is important for us to reflect on the implications of this rapidly changing environment for women. Women account for almost half of the world's population. The integration and full deployment of women in the workforce is therefore a vital part of our quest for higher performance in this new era of the modern economy. Let me begin with some brief words on the economic and financial transformation that is occurring in Malaysia. Indeed, Malaysia is very much a part of this new phase of globalisation in which the concentration of economic power in the global economy is now becoming more dispersed. International trade, investment and financial flows have now become increasingly a two-way process. In fact, it is these very changes that have increased the tolerance level and strengthened the resilience of the economy. The Malaysian economy continues to be transformed in several ways. Firstly, domestic demand has become an important driver of growth compared to previously being export driven. Malaysia has thus become part of the massive cumulative market that is growing in Asia. Secondly, this has contributed to changing significantly the pattern of our international trade. Previously, our trade was predominantly with the major developed economies. Now, almost two-thirds of our trade is with Asia. As the Asian markets continue to expand and as the trade increases, it becomes a mutually reinforcing trend in the region. Thirdly, our economic structure has become increasingly more diversified with new areas of comparative advantages emerging.

Regulation should only be considered if the objective is abundantly clear and if there is overwhelming evidence that market participants lack the incentives or the capability to adequately manage these risks themselves. Rather than seeking regulation, market participants, central banks and regulators should focus on strengthening an already active dialogue with the aim of furthering our understanding of new types of risk associated with modern financial markets. BIS Review 44/2006  1
The announcements following the recent G20 Summit and the associated announcements of the Financial Stability Board reflect the international economic regulatory cooperation that will set the agenda for the conventional standard setting bodies to put in place a framework to strengthen the international regulatory standards. It will also form the basis by which assessments will be made by multilateral agencies such as the IMF. It is therefore important for there to be engagement with the prudential standard setting entities for Islamic finance, not only to raise awareness of whether the new standards being introduced can be applied to Islamic finance and whether modifications need to be made but there could also be possible consequences that are unintended. Equally important is for there to be recognition of the standards that have been issued for Islamic finance specifically by the Islamic Financial Services Board. As a growing component of the international financial system, it becomes important for the interface and engagement with the international standard setting entities to take place given the common interest of global financial stability. Let me conclude my remarks. While the inherent strengths of Islamic finance have contributed to its viability and resilience, going forward into the future, the foundations for its sustainability as a competitive form of financial intermediation will continue to be strengthened.

Some technologies may not materialise quickly enough to prevent uncontrollable and irreversible environmental changes from happening, and solutions that do not rely strictly on technology may also be needed. Focusing only on the climate challenge, for instance, reducing energy demand is critical to achieving ambitious mitigation. Therefore, even though technological innovation is crucial given the magnitude of the task upon us, we will also need to learn frugality (for instance by limiting superfluous or conspicuous consumption), as Pope Francis' Encyclical recommand us for example, or – if you prefer – a form of self‐restraint, as emphasised by Professor Dasgupta in his review on the Economics of Biodiversity. Moreover, while technological innovations will still be crucial to decrease our use of energy and resources, they may not always lead to more production and growth. Widespread use of electric bikes for urban transportation, for example, could reduce our dependency on individual cars in urban areas, but by the same token it could also dampen growth prospects in the automobile sector. Likewise, technology makes it possible to organise various meetings online rather than have participants travel thousands of kilometres, but a diffusion of such norms could also translate into less growth. My point here is not be exhaustive, but rather to show that framing the debate in simplistic ways (e.g.
After the crisis of 2008-2009 the Federal Reserve increased the monetary impulse beyond the usual limits set by the interest rate. It not only took it to zero percent, but it also added a quantitative boost through the purchase of bonds. In a normal environment, it probably would have been unnecessary to take the impulse to such extremes, and probably the economy would have taken less time to react. However, 11  the post-crisis damage was very large and only the persistence of the momentum has allowed the US economy to make a successful recovery after nine years. We see something similar in Europe, with the difference that they took longer to apply the stimulus, suffered a banking crisis in 2011 and, in addition, the very agreement procedures of the European Community make it more difficult to take extreme decisions. Finally, as I said, monetary policy must be credible, in order for the economic agents’ reactions to its impulses to be in line with the objective. If inflation expectations are aligned with the two-year-ahead target of 3%, agents’ decisions, market interest rates, and financial asset prices will harmonize with low, stable inflation. The need for persistence and credibility raises a warning about how inefficient an interest rate reduction may be if perceived as temporary by the market. This is very important, because in practice if agents consider that a rate cut will be very short lived, it will probably have no meaningful effect on the yield curve or on the decisions of households and businesses.

13  Figure 3 GDP evolution (real annual change, percent)  3,5  3,5  3,0  Other  2,5 2,0  3,0 2,5 2,0  1,5  Total  1,5  1,0  1,0  0,5  0,5  0,0  0,0 14  15  16  Source: Central Bank of Chile. Figure 4 Other sectors (real annual change, percent)  8  Personal services  6  8 6  Trade  4 2  Construction  0  4 2 0  Manufacturing  -2  -2 Business services  -4 14  15  -4  16  Source: Central Bank of Chile. 14  Figure 5 Consumption  GFCF  (real annual change, percent)  (real annual change, percent)  8 8  8  20  Construction and other works  Durable  Non-durable  4 4  10  0  0 0  0  -4  -4-4  -10  4  Machinery & equipment (right axis)  -8  -8-8 14  15  16  -20 14  15  16  Source: Central Bank of Chile.
The national central banks will purchase the bonds issued by European institutions and most of the domestic bonds, the ECB purchasing 8% of the latter. According to our preliminary estimates, the purchases of Spanish government debt will amount to some € billion over the time horizon considered. The agreement reached means that, in the hypothetical event that losses arise from these operations, the national central banks would assume the risks of their purchases of government bonds, while the risk of the purchases of the bonds of European institutions and of sovereign bonds by the ECB would be shared by all the members of the Eurosystem. Monetary policy leeway in a very low inflation environment Let me now comment briefly on two matters of importance in the current context: the leeway available to monetary policy in a very low inflation environment and the different cyclical moment of monetary policy in the main developed economies. The particularly low inflation rates and the prospect that they will remain at similar levels for a prolonged period reduce the scope for monetary policy to bring the financing conditions of the economy into line with its cyclical position when that position is characterised by notable weakness. Conventional monetary policies based on setting short-term nominal interest rates reach their lower bound when rates approach 0%.

In this respect, the exceptional stimulus measures announced by the ECB and the consequent easing of financial conditions in the currency area, the depreciation of the euro and the sharp drop in oil prices provide a favourable financial backdrop for the euro area and, in particular, for countries like Spain that have made a tremendous effort to correct their imbalances. The benefits of the adjustments made under adverse conditions may now be further bolstered by a favourable financial climate. It is important that the Spanish economy consolidate these gains and that it maintain the pace of reform and the improvements in competitiveness in a framework of stability. BIS central bankers’ speeches  3
On this issue, as on all the others we have discussed this morning, we in the Basle Committee must work and will be working closely with supervisors around the world. To that end, we hope to work with the Core Principles Liaison Group, and the much broader Core Principles Consultation Group, which met earlier this week. One of our goals in 1999 is to enhance further the utility and the dialogue in those Groups, to ensure that we are jointly building the supervisory framework for the 21st century. BIS Review 86/1998

This is precisely one of the objectives of the Institute of Bankers, and with its newly launched Representative Office in Beijing, the Institute will extend its existing good work to the Mainland. It will help promote the training of bank employees on the Mainland, thereby contributing to the effective financial intermediation and smooth functioning of this crucial part of modern economy. The economies of the Mainland and Hong Kong are now highly interdependent. The Institute’s Beijing Representative Office will not only serve to enhance professionalism of the Mainland’s banking sector as a whole, but also contribute to the financial stability and development of both the Mainland and Hong Kong. Let me end this address by wishing the Institute’s Beijing Representative Office every success in its future endeavours. BIS Review 45/2005  1