samchain/econo-pairs-v1 huggingface dataset:
BIS Review 71/2004  3  We perhaps need to look again at the process for considering, and reaching a conclusion about, the fundamental “design parameters” some of which I have touched on today. This is no small task, but if agreement could be reached on the fundamentals, these could be stated as clear principles in a preamble to any new standard, to guide the more detailed requirements. And it might enable the widely-held vision of a less detailed and prescriptive standard to be realised, to replace the hundreds of pages of complex rules. To address this, however, raises three questions: (i) On what is early consensus necessary? (ii) How should the transition be approached? And (iii) What does this mean in institutional terms? Early consensus Early agreement seems to me particularly important in three areas. The first is to review the conventional understanding on who the accounts are for, and clarify how the different interests of different stakeholders are to be met. The second is to agree where the standard should be placed along the spectrum between historic cost and fair value measurement. A particularly difficult conceptual question in this area is: precisely what economic meaning is there in so-called fair valuation of instruments in which (a) there is little or no secondary market, or (b) there is a market, but a clear intent to hold an instrument to maturity? Finally, the implications of any increase in measured volatility will need to be assessed.

It reflects the growth of publicly-traded markets, coupled with rapid growth in innovation and complexity. The potential for opacity has therefore increased, so it is essential that accounting standards are clear and capture the economic substance. This is important for the various stakeholders, and for financial stability generally. It is also important that the actual processes for developing accounting standards command widespread support from companies, investors, creditors and the public authorities. I have set out a few steps that might be of relevance in achieving this. On IAS 39 specifically, it would seem to me sensible to try first to reach consensus on the fundamental issues I started with before moving to detailed drafting of a new accounting standard. This will require a continuing effort on the part of standard setters to engage all interested parties, flexibility from everyone involved and a high level of transparency within the process. A lofty goal perhaps, but important if the benefits are to be secured and we are to avoid the cacophony of today. 4  BIS Review 71/2004  In conclusion, although I have focused on controversies in accounting, we should recognise that we may be on the threshold of a truly significant step forward in accounting practice. From next year, companies throughout the European Union will be using the same set of high quality, international accounting standards. And there is the tantalising prospect of convergence between international and American standards. The challenge now is to realise the full potential of these changes. BIS Review 71/2004  5
Question: Do you feel completely certain that this interest rate cut represents no danger of inflation to any part of the euro zone, I am thinking, in particular, of smaller, more dynamic economies, such as the Irish one. And secondly, is it fair to conclude that the opposition to a rate cut came from the representatives of those countries? Duisenberg: I will not allude to any opposition by anyone in the Governing Council. We do believe that this rate cut, otherwise we would not have done it, will not pose any additional threat of inflationary pressures arising either in small or in large countries. Question (translation): President Duisenberg, with regard to risks and side-effects. First question: will you keep the interest rate at 2.5% even if a recession occurs? Have we understood you correctly in this respect? Second, is it indeed so that too much capital flowing to the United States at high interest rates flows could become a problem for the external stability of the euro? I mean, the higher interest rates in the United States indicate that, at the moment, still more capital will be flowing to the United States. Third question: did you intend to increase the pressure on lenders, i.e. also on the banks, because your impression was that, in the light of the official rate of 3%, they were not answering borrowers’ demands for cheaper loans? Duisenberg: I am not going to speculate about a potential recession if we do not see one coming.

Over the course of the program, our purchases ran at about the same pace as the total net Treasury supply coming to the market. Moreover, with the completion of the program, the SOMA portfolio holds about 18 percent of the outstanding stock of Treasury securities. Our share of the market is even higher at intermediate maturities, where our purchases were concentrated. Part of the challenge to the Desk was to structure our operations in a manner that would allow the market to absorb such a large volume of purchases. Several features of the program’s design may have helped to promote robust participation by market participants, including the decisions to relax the 35 percent limit on SOMA holdings of individual issues and to include recently issued securities in the range of eligible issues in nearly every operation. These features allowed our counterparties to offer us a wide range of securities at each operation. In the end, dealers participated aggressively, with an average offer-to-cover ratio of over 3.5. Moreover, we managed to execute these purchases at prices that were, on average, at or very near the indicative quotes on these securities that we collect as a pricing reference. In addition to focusing on the performance of our operations, we have also monitored measures of liquidity in the Treasury market. The market seems to be functioning well despite our sizable presence. Measures such as bid-ask spreads, quote depth, and trading volumes have held relatively steady at favorable levels over the life of the program.
William C Dudley: Some lessons from the crisis Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Institute of International Bankers Membership Luncheon, New York, 13 October 2009. *  *  *  Thank you for having me here to speak today. It is a real pleasure to have this opportunity to discuss the challenges ahead in making our banking and financial system more resilient and robust. We have learned a great deal over the past two years about our financial system and its vulnerabilities. The challenge ahead is to put these lessons to good use. Regulators and market participants failed to fully appreciate the degree to which the various aspects of our financial system are interconnected, and to foresee what those tight linkages would mean for market function when even one reasonably large institution – let alone many – became distressed. We also did not fully appreciate the strength of the amplifying mechanisms that were built into our financial system; the consequence of which was to exacerbate the boom on the way up and worsen the bust on the way down. Contributing to these pro-cyclical dynamics were inadequate incentives for firms to curb their risk-taking and to more effectively manage the risks they did face.

For example, one might want to set the conversion terms so that the debt holders could expect to get out at or close to whole – at par value. This is important because it would reduce the cost of the contingent instrument, making it a considerably cheaper form of capital than common equity. Consider the advantages that such an instrument would have had during this crisis. Rather than banks clumsily evaluating whether to cut dividends, raise common equity and/or conduct exchanges of common equity for preferred shares and market participants uncertain about the willingness and ability of firms to complete such transactions and successfully raise new capital, contingent capital would have been converted automatically into common equity when market triggers were hit. If these contingent capital buffers were large, which they could be because the cost of these instruments should not differ much from straight debt, then the worst aspects of the banking crisis might have been averted. If shareholders had faced the potential of automatic and substantial dilution, they may have demanded better risk management and disclosure during the boom. If common equity had been automatically bolstered during the early part of crisis, investors would have been much less concerned about the risk of insolvency. Counterparty risk concerns would have been much less significant – potentially short-circuiting one of the important amplifying mechanisms of the crisis.
If, on the other hand, the banking sector consists of a number of strong players and there also are plenty of alternatives, it is much more conceivable that a large market share or high profitability is a result of a genuinely competitive product range. A European investor perspective So what do we know about Swedish banks' competitiveness – how do they fare in an international perspective? Looking at the European banking sector from an investor’s point of view, we can note that the profitability of Swedish banks is very average. In a selection of the 25-30 biggest listed banks, the Swedish banks come close to the median value for return on equity (see Figure 1).1 The Swedish banks’ net interest margin – net interest income in relation to interest-bearing assets – also appears mediocre at first glance. But if we take into account their very low loan losses, then for three of the four major Swedish banks the “loan-loss-adjusted” net interest margin is actually higher than for the European median bank. Also as regards cost efficiency, measured in terms of the C/I ratio, the Swedish banks are among the best. 1  This and the following comparisons are based on full-year results during the period 2002-2004. 1/4  But if Swedish banks are relatively good at earning money on lending without incurring excessive loan losses and moreover are cost-efficient, it seems a bit strange that this does not result in an even higher return on equity.

But this market has grown very weakly and in real terms is smaller today than it was at the start of the 1990s. It is not that the market for company financing has shrunk, but it seems to have scaled back its connections to the major banks. That is partly because large Swedish companies can turn to foreign banks or directly to the capital market for funding. Also, it is probably partly because Swedish banks in the wake of the banking crisis have made a conscious decision to reduce their share of risky lending. However, it does not seem as if the Swedish banks have fully managed to compensate for this lower lending through increased advisory services or other ”intermediary services”. In essence, Swedish banks have strong positions in a number of areas but these markets are either mature or else the banks’ shares are shrinking. If we were to assume that the trend oracle will be right, I envisage two possible ways forward for the major Swedish banks, both of which represent extremes. The first strategy would be based on the banks’ proven proficiency in terms of organisation and distribution, and to refine this strength and also become better at peripheral advisory services. Fewer resources would be invested in product development and risk-taking – products can easily be copied and risks sold on to other, hungrier investors.
I noted earlier that, to ensure continued momentum of expansion, what we need to see in Thailand this year is a stronger turnaround in domestic demand, especially in private sector investment. This is, in a way, the most important must-have macro development for Thailand this year. Financial environment supporting private sector investment, I think, is very positive and conducive this year, with lower oil prices, easing domestic inflation, ample liquidity, and a more stable interest rate environment. But to substantially lift investment, what we need to see in Thailand is a continued improvement in business sentiment and confidence. Here, therefore, lies an important issue for policy. On this, I am quite confident that the ongoing efforts by the Government to promote growth with stability will successfully lead to continued improvements in business sentiment and confidence, which will be positive for our investment going forward. I want to end my brief remarks this morning with a few year for our domestic banks and financial firms as they continue to support the economy while preparing for a number of important regulatory changes that are set to take place this year. Beginning this month, Basel II will be launched in the G7 economies. For Thailand, this means we will have less than two years to prepare for our own eventual adoption of Basel II, which has been slated for end 2008. At this time, most banks in Thailand have already decided on using the standardized approach for the calculation of minimum capital.

As for interest rates,  BIS Review 11/2007  1  going forward, it is not yet certain whether the US long rates would need to rise in order to facilitate the financing of the US current account deficit. This would depend essentially on the relative ease with which the US deficit can be financed. So, I think we need to watch these developments closely because financial markets can adjust much more rapidly than the real side of the economy. Turning to the Thai economy. Last year, the economy showed considerable resilience, notwithstanding many adverse shocks affecting it, especially the higher oil price and political uncertainties at home. Growth, estimated at about 5 percent last year by the market, is satisfactory while the second round effects of the oil price increase on inflation were well contained. Overall, the economy's fundamentals remain sound with economic stability intact. Last year, monetary policy in Thailand was focused on limiting the second round effects of the oil price increase on inflation. That focus I think was well met. Policy rate has been held steady from midyear last year, and since then, inflation pressure looks to be moderating. Latest data show a further consolidation of inflation in December. So, under the current softening trend, baring no surprises on the oil price, there is also a possibility that, in Thailand too, inflation could be less of a policy concern this year. Under this scenario, therefore, there could be greater room for monetary policy to aim for a balance between growth and inflation.
Despite a decline in interest rates and a modest increase in capital inflows in January 2001, the damage of the crisis in November 2000 on the banking system, especially on the state-owned banks, increased the vulnerability of the system. In this period, the maturities of the funds obtained from both international and domestic markets gradually got shorter. It was observed that, while external funds began intensifying in overnight transactions, also residents preferred short-term investment instruments. In particular, TL deposits of one-month started to increase and its share in the total deposits rose to 35 percent in February 2001 from 12 percent in October 2000. In February, the unfavorable developments that had occurred on the day before the Treasury auction caused a panic in the already fragile markets. Market confidence in the system was completely lost and the Turkish lira was once more faced with a new currency attack on 19 February 2000. The banking sector purchased US dollar 7.6 billion from the Central Bank, to be settled the next day. This exerted pressure over the exchange rates. In order to alleviate this pressure, the Central Bank did not roll over the repurchase agreements maturing next day and US dollar 6.1 billion that had been purchased the previous day were sold back to the Central Bank. However, the remaining amount of TL caused trouble to the payments system due to the state-owned banks’ daily liquidity needs.

Another problem encountered in 2000 was the lack of a front-loaded Supplemental Reserve Facility, which would support foreign exchange reserves when needed in the course of the program. The adverse developments in November 2000 and in February 2001 compelled the Central Bank to pursue policies aimed at stabilizing the financial markets. Priority was given to make the payments system function again by providing liquidity to the market, after having been switched to the floating exchange rate system. In this context, the Central Bank lowered its bid and offer rates in the interbank money market starting from 26 February 2001. Liquidity was given mostly to the state-owned banks, and to the banks that had been transferred to the Saving Deposits Insurance Fund through overnight quotations under open market operations. Besides overnight funding via open market operations, the  2  BIS Review 35/2001  Central Bank has also started providing the markets with liquidity through forward transactions since the mid-March. At the same time, the Central Bank withdrew the excess liquidity by way of repurchase and reverse repurchase transactions at the Istanbul Stock Exchange and by way of the CBRT interbank money market, when needed. The Central Bank has also provided banks with cash via foreign exchange deposits and limited foreign exchange interventions to help them fulfill their external obligations.
More recently, petroleum revenue spending over the fiscal budget has been less than 3 percent of the value of the fund. This has happened in a situation where the economic cycle has turned up at the same time as the value of the fund has increased rapidly. Fiscal restraint has proved to be a wise policy. Together, the oil fund and the fiscal rule have shown themselves to constitute a robust framework. This framework enjoys cross-party support. After the fiscal rule was introduced in 2001, all succeeding governments have based their policy on this guideline The advantages of this framework are many. First, it allows us to separate spending from income. When we smooth petroleum revenue spending over time, we reduce the risk of crowding out private businesses. At the same time, we protect public budgets from substantial fluctuations in revenues. Second, the considerable savings amassed in recent years mean that future generations will also benefit from petroleum revenues. Norway’s petroleum wealth does not only belong to those living today. We try to be good stewards, like the farmer who cares for the soil and passes it on to succeeding generations so they too can harvest from it. In the case of Norway, we pass our natural resource wealth on to our descendants in the form of financial assets. Chart: The GPFG – Governance model Before continuing, let me say some words about the fund’s governance structure and the interaction between the Norwegian parliament, the Ministry of Finance and Norges Bank.

Norges Bank has been tasked with managing the fund since its establishment. The legislative basis for the fund is decided by the parliament, while the Ministry lays down the management mandate that is issued to Norges Bank. Moreover, the Ministry has established a practice whereby decisive changes are submitted to the parliament for approval. According to the management mandate, the Norges Bank shall seek to achieve the highest possible long-term real return with moderate risk. The mandate sets the benchmark index and tracking error limits. In addition, the mandate imposes constraints on the fund’s investment universe. The investment strategy is largely determined by the mandate. The role of the Bank and its Executive Board in formulating and elaborating the management mandate is to advise the Ministry. This is an important job. For the Ministry, the formulation of the management mandate, reporting and supervision will be important tools for ensuring that investments are managed in line with objectives. Thanks to its extensive reporting, the fund enjoys a reputation of being one of the world’s most transparent sovereign wealth funds. For a fund with the entire population as actual owners, transparency is 2/4  BIS central bankers' speeches  vital for ensuring democratic control and confidence in investment management. Chart: A large fund Since the first transfer to the fund was made in 1996, the value of the fund has risen to almost three times mainland GDP. During periods of substantial oil and gas revenues, large capital transfers have been made to the fund.
Aggressive hike is not warranted as the Thai economy is still in the early phase of recovery, while it could risk derailing the recovery. A gradual approach is needed to strike a balance between facilitating a smooth take-off of the recovery and minimizing the impact from potential bumps. • Measured: Policy decision will be calibrated taking into account economic conditions and circumstances prevailing at the time. If a pause is required, we will pause. If 50 bps is necessary to meet our policy objective, we will raise 50 bps. But with the current circumstances, aggressive rate hikes or too early withdrawal of financial measures can jeopardize the economic recovery given pockets of vulnerabilities and the uneven impacts on different groups. c. We have taken first steps towards this at the Financial Institutions Policy Committee (FIPC) meeting on June 30th and the Monetary Policy Committee (MPC) meeting on August 10th. • The FIPC decided to withdraw some of the blanket-type measures including FIDF fee cut and bank dividend payment restrictions. • The MPC voted 6 to 1 to raise the policy rate by 25 bps. Part 3: What is our rationale for monetary policy normalization? [3.1 MPC decision: 10 August] Two weeks ago, the MPC has delivered the first policy rate hike after having held the policy rate at its historically low level for more than two years.

Key drivers should carry their growth momentum going into H2/22 as we see high growth in consumption and better-than-expected tourist numbers, as well as more broad-based improvement in employment and income. Despite softening global economic outlook, tourism is gaining traction from pent-up demand to travel and not that sensitive to global slowdown. b. For stagnation to occur, we should expect to see severe slowdown in key drivers. For example, we should expect to see very low tourist numbers for the remainder of this year or sustained price increases that severely affect consumption. This is unlikely to occur. (4) Most concerning risk to a smooth recovery is risks to the tourism sector from unpredictable and volatile shocks, e.g. a new covid variant which could trigger a ban on international travel, and geopolitical risks. Part 4: Concluding remarks 1. Aggressively rate hikes in order to curtail aggregate demand and bring down high inflation may be the right approach for some. It is however not universal and depends critically on the underlying nature of high inflation, the cyclical position of economic activity, as well as structural features of the economy that determine the degree of persistence of price shocks. The right policy approach is thus more nuanced and country-specific. 2. In the Thai context, the decision to start a gradual and measured monetary policy normalization only recently reflects our cyclical position, where the recovery is gaining traction later than others.