samchain/econo-pairs-v1 huggingface dataset:
But, I would prefer having such a tool available in extremis given the potential need to buy time for coordination and critical decision-making. I think it is important to ensure that one can “get to the weekend.” Finally, the work needed to ensure that CCPs can always recover has not yet been completed. This is an issue of increased importance given that their role in the financial system has become more prominent. Where the pendulum may have swung too far At the same time, there are some areas where the pendulum may have swung too far, where the costs of regulation—including compliance costs and the potential impact on the provision of services—are likely to exceed the benefits. In this vein, I favor regulatory relief for smaller banking organizations. First, such firms individually are not systemically important, and therefore do not pose a significant risk to the viability of the U.S. financial system. Second, the regulatory burdens on smaller firms can be heavy because they don’t have the scale over which compliance and other regulatory costs can be spread. Regulatory requirements should be appropriately calibrated to avoid inadvertently creating a competitive advantage for larger financial firms. 5/7  BIS central bankers' speeches  I also think that the Volcker rule could be modified so that its implementation would be less burdensome. As I see it, regulators could review the criteria for permissible market-making. Trading activity should be viewed as market-making when it is customer-facing and inventories are not excessively large or stale.

31  All speeches are available online at www.bankofengland.co.uk/speeches  31  Table 2: Regressions of investment, R&D and productivity on UK-listed firms’ mark-ups Investment rate  Innovation rate  Log TFP  Log labour productivity  0.095*** (0.027)  0.023*** (0.009)  0.097*** (0.026)  -0.036 (0.045)  -0.041** (0.017)  -0.018** (0.008)  0.162*** (0.014)  0.041 (0.034)  -0.002 (0.006)  -0.000 (0.002)  -0.054*** (0.005)  -0.022** (0.013)  -0.011 (0.012)  -0.007** (0.003)  0.005 (0.006)  0.019 (0.013)  0.018 (0.012)  0.009*** (0.003)  -0.010** (0.004)  -0.018 (0.014)  Firm fixed effects  Yes  Yes  Yes  Yes  Time fixed effects  Yes  Yes  Yes  Yes  N  21874  7386  28371  21268  0.058  0.057  0.305  0.054  Log mark-up Log mark-up squared TFP distance Log mark-up * TFP distance (interaction term) Log mark-up squared * TFP distance (interaction term)  R  2  Sources: Thomson Reuters Worldscope and Bank calculations. Notes: Standard errors in parentheses; * p < 0.10; ** p < 0.05; ***p < 0.01 In regressions associated with columns 1 and 2, lagged Tobin’s Q and the lagged sales-to-assets ratio were included as controls. In regressions associated with columns 3 and 4, the terms involving TFP distance are lagged by one year. ‘Investment rate’ defined as capital expenditure as a proportion of the previous year’s net property, plant and equipment level (PPE).
The increasing interaction with the banking system would help to clarify your plans and reduce the financial risk, providing you with the opportunity to focus on business risk administration you are specialized in. Completing my discussion related to stable development of the country, I would like to underline that the banking system can and should do more in this respect. The financial system is the brain of a market economy; it determines the expected return and risk of investments in the economy, enabling later on the prioritized use of limited financial funds. Despite its good performance, the Albanian banking system should do more to incorporate macroeconomic and sectoral analyses, and also the country’s financial stability in decision-making. The development of research units within large banks is actually a requirement of the time we are living in. Moreover, more efforts should be made, to increase the support of small and medium-sized enterprises with  4  BIS Review 158/2009  funds. In addition, a more aggressive marketing of derivative instruments, which will lower the corporate financial risk, particularly of those operating in the export sector, requires a greater attention from the banking system. What I just mentioned will be an important part of the future philosophy of the Bank of Albania in the field of structural reforms in the financial market and in developing and advancing its supervisory and regulatory function in it.

The choice made was  2  BIS Review 100/2006  imposed by the circumstances: lack of developed financial instruments and institutional financial structure; absence of the interest rate transmission mechanism, and high interdependence between the aggregate demand and money supply. In October 1995, NBRM made a shift towards monetary strategy of targeting the nominal exchange rate against the German Mark, and later against the Euro, with the Denar exchange rate stability being the intermediate monetary policy objective. Such a strategy, applied in a small and open economy such as ours, has proved to be very successful for maintaining the price stability until present day. All reforms in the monetary policy instruments since the independence have been directed towards introducing indirect, market-oriented instruments for enabling efficient monetary policy conduct. Therefore, in 1993 deposit and credit auctions were introduced, and at the end of 1994 CB bills auctions were introduced. The initial development and strengthening of the financial system of the Republic of Macedonia, especially of the government securities market, enabled us to include new instruments, following the example of the modern central banks. In April 2005, we promoted the overthe-counter market for government securities. In the same year, we launched the general repo agreement and we started with repo operations when concluding lombard credits. In March this year, together with the Ministry of Finance we introduced Treasury bills for monetary policy purposes. The transition of the monetary strategy and of the monetary instruments would not have been successful without adequate banking reforms.
[Go to slide 3] Silicon Valley Bank (SVB), which was virtually unknown to the general public before its collapse last March, was a - if not THE - tech bank and as such had a specific business model, based on two pillars: - its sources of funding were heavily dependent on uninsured deposits, stemming from a highly concentrated customer base of entrepreneurs and venture capitalists in the tech and digital world. - a very high share of these deposits was invested in long-term government bonds, issued by the US federal government or federal agencies, at fixed rates, since these securities are intended to be held for the long term. In 2022, the change in the US economic and financial environment transformed SVB's business model into a source of vulnerability to liquidity and interest rate risk. This vulnerability, combined with major failures in the bank's management and governance system, proved fatal. Indeed, in this new environment marked by rising interest rates and slowing growth, the cash flow needs of tech companies led them to withdraw a portion of their deposits, causing a liquidity problem for SVB, which forced it to sell part of its government bond portfolios. These forced sales, which were not anticipated by the bank, resulted in the crystallisation of unrealised losses, real losses in other words, as the securities sold shed value with the increase in key interest rates decided by the US central bank (the FED).

The blue line is a measure of the cost of finance for risky investments: it’s the profits of UK-quoted companies relative to their market value (debt as well as equity). The graph shows that, despite a protracted and significant decline in risk-free interest rates, firms have had to generate significantly more profits than in the past to raise a given amount of finance. The spread between the two lines is a measure of the risk premium on new investments, and it’s gone up significantly in the past few years, including since the EU referendum in 2016. Chart 11 carries a similar message. Here the orange line is a similar measure of that spread, between the rate of profit for private-sector firms11 and the yield on gilts. The blue line is the rate of growth of their investment spending. 10  In the simplified way that macro-economists sometimes use to describe the supply side of the economy, using a so-called “production function”, the elasticity of productivity with respect to the cost of capital – the proportionate response of the first to the second – is the product of two numbers: the share of national income going to capital (as opposed to labour), and something called the “elasticity of substitution” between the two inputs. In the data, the first is around one third; empirical estimates for UK put the second at around one half. Multiply the two and you get a figure of around one sixth. 11 The two charts use slightly different measures of profitability.
Some of these involve marking assets to market and discounting liabilities at a risk-free rate. This, too, has the potential to generate pro-cyclical loops, with sales of risky assets whose prices are already falling and purchases of risk-free assets which in turn increases the market value of liabilities and the incentives to hedge further. Regulatory Rules: Risk-based regulatory rules can contribute further to these pro-cyclical tendencies. For example, consider a pension fund or insurance company operating close to its risk-based capital or funding requirement and whose bond portfolio is downgraded and suffers a drop in price. This has the effect of both reducing measured solvency due to marking to market and raising required risk-based capital requirements – a double whammy. In response to this, ICPFs may have an incentive to sell their downgraded assets to de-risk their portfolio. But this will tend to depress further asset prices in a pro-cyclical spiral. Merrill et al (2012) provide evidence of just this dynamic at work. Following downgrades of nonagency RMBS in the US, insurance companies had an incentive to sell their downgraded securities to reduce their capital requirements. Merrill et al show that this selling occurred at lower prices among those insurance companies marking-to-market. What additional evidence do we have of such pro-cyclicality? One piece comes from looking at investment allocations by institutional investors over time. As an example, Chart 6 plots growth in the S&P 500 against the change in the portfolio allocation to equities among US life insurers between 1996 and 2012.

I would therefore like to encourage more countries to follow the initiative taken by the EU countries. 6  BIS Review 134/2008  Concluding remark Let me now conclude. The crisis we have seen over the last one and a half years will most likely redraw the global financial landscape in various ways. And even if the recent measures taken by governments and central banks have improved market conditions somewhat, it is far from certain that the crisis will be over any time soon. What will come out at the other end of the crisis is also still much too early to tell. Today, I have given you my views on some of the issues that need to be dealt with in the aftermath of this crisis. It all adds up to a quite significant to-do list, including various aspects of regulation, crisis preparedness, central bank policy and assessment and so on and so forth. It will most certainly take time before we can put an end to these discussions. In the meantime, the financial industry and the responsible authorities have to make certain that the costs of the prevailing financial turbulence are kept as low as possible. For me, as a central banker, this task translates into standing by the commitment to provide key markets and sound institutions with the liquidity needed to ensure that the financial system can function properly. Thank you! BIS Review 134/2008  7
The 1.1 percentage-point gap we’ve seen between Texas and national job growth over the current recovery corresponds almost exactly to the long-run (40-year) historical gap between our growth rate and the nation’s. The shortfall in jobs at the national level is but one indicator of the pervasive anguish of American households since the Panic of 2008. Another sign of that anguish is that average real per capita net worth in the United States has not regained the losses incurred in the latter part of the last decade. At the end of the first quarter of 2011, average per capita net worth was nearly 14 percent below the peak seen four years earlier. Real income has not fared as badly, but per capita salary income is, nevertheless, almost 2 percent below its peak in the first quarter of 2008. A likely widening of income dispersion over the period, however, suggests that median income has probably fared worse. We will get a better read on this when the Federal Reserve Board completes it triennial Survey of Consumer Finances early next year. I do not expect that survey to paint a pretty picture. I am most aware, as are many of you, that if history is any guide, getting back to where we were will be no small task. The 2008–09 recession was precipitated by a banking crisis.

A number of you, including Ken Rogoff, have shown that downturns associated with banking crises tend to be the most severe, and that clawing back lost employment and output in the aftermath of a financial crisis is most vexing. My colleague Mark Wynne, who directs our Globalization and Monetary Policy Institute, has written an excellent brief on this for our Economic Letter publication, which should be posted on our website today. BIS central bankers’ speeches  3  This chart of output relative to precrisis trend summarizes Mark’s conclusion: Since the onset of the financial crisis in 2008, “performance of real GDP in the U.S. is almost exactly in line with what we might have expected based on the average experience of other countries that have gone through banking crises.”1 This chart is most definitely not a pretty sight. Small wonder that American consumers – and the businesses that hire and serve them – remain in a defensive crouch. The question is: How do we change the picture? How do we get the pistons of job creation, income growth and wealth restoration pumping again? This is the gist of the discussion at the FOMC table. The press and others delineate the viewpoints around the table on an ornithological scale, dividing us up into doves and hawks. I am classified according to that delineation as a hawk. I am not offended by this, but, not unlike the stereotyping of Texas, I consider it simplistic.
Jaime Caruana: Basel II - a review of ongoing work Keynote address by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the 20th Annual General Meeting of the ISDA (International Swaps and Derivatives Association), Barcelona, 16 March 2005. *  *  *  Mr Moulds, Mr Pickel, Ms. Sebton, distinguished guests, It is an honour for me to be invited to join your meetings today and it is furthermore my pleasure to welcome you and the International Swaps and Derivatives Association to Spain. It appears to me that you have all of the ingredients for a stimulating and memorable conference. The agenda is ambitious and addresses the latest topics in the ever-evolving derivatives markets. The speakers are distinguished, deeply experienced, and represent a wide range of perspectives and institutions at the forefront of financial services. And, of course, I must commend you on your selection of a marvellous location for your annual meeting. Barcelona has undergone a fantastic transformation, is a gateway for the world and a city that celebrates the ancient and the innovative. I hope that you take some time outside of your sessions to explore its blending of the old and the new. A walk through the “Gothic” quarter serves as a window into our past. A visit to any of the creations of Antoni Gaudì – after whom this conference hall was named – offers a vision of Catalan modernism through architecture.

The three consortium members have completed many successful twinning projects in the financial sector and have gained a sound project management capacity. We have strongly committed ourselves to this project for various reasons. We are encouraged by the progress achieved by the financial supervision authorities in Montenegro in bringing financial sector regulation closer to the EU requirements. Also, there are many signs of already built cooperation with the Montenegrin authorities that need further strengthening. Bulgaria, the Netherlands and Montenegro are in the same IMF constituency  BIS Review 168/2009  1  which has created good mutual knowledge of their economies and fostered long-term cooperation on financial issues. We consider our experience relevant to Montenegro not only because of the scale of the economy, but also because of the similarities of the supervisory structures. In the accession process we have learnt several major lessons. Bulgaria did not ask for any transitional periods or derogations concerning the banking sector acquis communautaire. Furthermore, all EU directives in this sector were transposed in time and most of them long before the deadlines. This approach has turned to be a success since the early adoption of the EU rules in financial supervision contributed to the smooth functioning of the financial market and fostered the stability of the financial system. One of the main keys to the smooth transition in the accession process is the cooperation between the institutions involved in financial regulation and supervision.
In Sweden, economic policy has charged the economy with a good deal of stimuli that can help to generate a broader increase in demand now that the stocks cycle is beginning to have a favourable effect and the prospects for the international economy are brightening. As a result of lower taxes and increased transfers, for example, most things suggest that household purchasing power is rising comparatively strongly this year. Seen over a complete economic cycle, the Riksbank’s instrumental rate is comparatively low. Considering the rate of inflation and the signs that activity is picking up, the real repo rate (the repo rate less the rate of inflation) can be said to be low. Then there is the weak exchange rate, which has subdued effects of the international slowdown and is now helping to stimulate the export-oriented sector. All this amounts to not inconsiderable stimuli to general demand in the Swedish economy, stimuli that look like materialising successively. How heavily should we tread on the accelerator? If inflation, even disregarding the temporary effects, is above the target initially, activity is entering an upward phase and economic policy’s impact on the economy is expansionary, then monetary policy ought to contribute to a somewhat lighter foot on the accelerator. But if most of the unduly high inflation stems from transient increases in the price level and if an economic upturn is not yet assured, it may then indeed be advisable to somewhat defer an upward adjustment of the instrumental rate.

This initiative is experimenting a new coordinating mechanism between the European Union and our region, bringing together representatives from parent banks, subsidiaries, home and host supervisory authorities, international financial institutions and the European Commission. Moreover, the European Central Bank is assuming a new supervisory role for 130 systemic banks in the euro area, some of which operate in Albania or other countries of the region through their branches or subsidiaries. This role, which is expected to become functional in the field as of November this year, will be exercised in cooperation with national supervisory authorities and will have implications for Albania and other countries of the region, given the presence of euro area-based banks in our banking sectors. With the establishment of the Single Supervisory Mechanism, the European Central Bank will become the home supervisor for a number of banks operating in Albania. In addition to improving the quality of banking supervision, this mechanism has the potential to facilitate cooperation between home and host countries, hence fostering cooperation between the European Central Bank and central banks in the region on financial stability. Dear participants, the common challenges that lie ahead of us are numerous and should be solved within a short period of time. On behalf of the Bank of Albania, I would like to assure you that we will continue to be in close contact with the European Central Bank and Eurosystem central banks, furthering our existing open and sincere communication.
To day I would like to reflect on that complexity and its consequences, drawing extensively on a recent illuminating paper by Andrew Haldane from the Bank of England as well as on previous work published by the Federal Reserve Bank of New York. Complexity comes in two forms. First, it appears in financial instruments themselves, as financial innovation has led, in recent years to a proliferation of so called structured – and, indeed, very complex – products. Second, complexity shows up in the structure of the financial systems, which are based on interdependence between multiple actors and counterparties. Transmissions of shocks occur through networks whose structure and architecture is constantly transformed by financial innovation and regulatory arbitrage. This potentially creates numerous feedback loops and amplification effects. Looking more specifically at the last decade, this increase in complexity had four main features and consequences: •  As techniques for managing and allocating risk became more sophisticated, the network of counterparties expanded in scale and in complexity. This was, truly, a systemic change that was properly understood but not fully captured by regulators at the time. Credit and market risk was supposedly more broadly spread. But counterparty risk increased. Overall, the overall impact on financial stability may well have been negative. •  Complexity led to loss of information, a point underlined by Gorton. Through the chain of tranching and distributing the risk, fundamental values and risk profiles of underlying assets became impossible to reconstruct, even for the most informed investors. There may be a deep paradox here.

Thomas Jordan: The Swiss National Bank’s monetary policy in turbulent times Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Geldmarkt-Apéro of the Swiss National Bank, Zurich, 19 March 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial market crisis has now widened into a global economic recession, and the Swiss economy is feeling the full impact. The SNB has taken prompt and decisive action in response, and substantially relaxed its monetary policy. In mid-March, as a result of the sharp economic downturn since December 2008, a further major expansion of monetary policy became necessary. However, the SNB was already operating a de facto zero interest rate policy (ZIRP), and the natural limits of conventional monetary policy had been reached. The SNB therefore took three unconventional measures: increasing the number of transactions in repos with longer terms, purchasing Swiss franc bonds issued by private sector borrowers, and buying foreign currency on the open market. In implementing these unconventional steps, the SNB has demonstrated that, even in an environment of zero interest rates, it still has a number of tools at its disposal which allow it to react flexibly to any undesired tightening of monetary conditions. In this context, it is important not to misinterpret the foreign currency measures as the start of a “beggar thy neighbour” policy.