samchain/econo-pairs-v1 huggingface dataset:
This suggests that burden sharing may be an issue in reconstruction as well. Scenarios like the ones I’ve sketched suggest that negotiation could be extremely complicated and may hold up the entire crisis management process – I know how extremely complicated things can get even when a crisis is contained within national borders. It is obvious that the organisation of supervision, crisis management and crisis resolution for cross-border banks are strongly linked to each other. The avenues we choose in any one of these functions will have an impact on the effectiveness of the other. Therefore, we cannot deal with supervision, crisis management and crisis resolution as separate issues. The success of crisis management and crisis resolution depends on coordinated arrangements for burden sharing with respect to deposit guarantee schemes, emergency liquidity assistance and public  6  BIS Review 39/2006  money being spent in the aftermath of a banking crisis. If the uncertainty about this burden sharing cannot be reduced, there is a great danger of failure in the attempts to manage a bank in distress and that the overall burden of a crisis will be greater for all of us to bear. To me, it seems clear that some prior agreements outlining responsibilities for decisions and potential loss distributions are necessary. There is, of course, also the accountability issue. For the host country’s authorities, there is a risk that domestic opinion would not consider that the home country’s authorities were doing enough to save a cross-border bank or group, and vice versa.

While the lack of economic convergence among Asian economies may make an Asian Monetary Union a more challenging prospect, it is interesting to note that quite a number of governments in this region have already chosen to sacrifice some monetary policy autonomy for exchange rate stability. Hong Kong, Mainland China, and Malaysia choose to fix their exchange rates against an external currency, the US dollar, while other regional economies operate managed floats. There are indications that some economies are considering using the renminbi as a reference currency in their currency regimes, although a hard peg to renminbi is still not possible until full convertibility is achieved. It might  2  BIS Review 19/2005  also be the case that, while Asian economies are more diverse than European economies, they are flexible in ways that can compensate for the loss of independent monetary policy, for example, in their high degree of price flexibility and fast adjustment to economic shocks. It may seem premature to turn now to the technical issues surrounding Asian monetary union, but the devil is in the detail. The first set of technical issues involves the exchange rate arrangements themselves, including the transitional arrangements prior to the introduction of a single currency. For example, would Asia adopt a basket peg or choose an anchor currency? If a basket, what would be the weights for individual currencies, and would the basket include external currencies, such as the US dollar?
7  The 3-month Euribor rate is very close to the 3-month GBP Libor rate (1.28%) but considerably higher than the 3-month USD Libor rate (0.66%) while the 6-month Euribor rate virtually the same with the six-month GBP Libor rate (1.49%). 8  For example, the short-term (i.e. below one year) bank lending rate was 3.52% in March 2009, some 2.5 percentage points below its peak value (6.03%) reached last October. This is still somewhat higher than the corresponding US bank lending rate at 2.04% in March 2009. 9  Of this overall figure of EUR 790 billion, USD 130 billion refer to the writedowns of euro area large and complex banking groups (LCGBs); while USD 49 billion relate to other euro area banks. 10  Of this total amount of USD 192 billion in capital raised, almost USD 155 billion refer to euro area LCBGs while over USD 37 billion have been raised by other euro area banks. 11  See International Monetary Fund (2009). BIS Review 65/2009  5  Independently of the total potential impact of the financial turbulence and the weak economic activity on euro area banks’ net income and capital position, it is evident that they will need to strengthen their balance sheets.

In order to restore an adequate flow of credit to the economy, banks should take advantage of governments’ commitments to support banks’ balance sheets through capital injections, the provision of government guarantees on new bank debt, as well as through asset relief schemes aiming at removing troubled assets from banks’ balance sheets. The common goals of these government measures in Europe and elsewhere are to safeguard financial stability, help restore the provision of credit to the economy and bolster confidence in the soundness of the financial system and in the prospects of the economy. Needless to say, the ongoing structural adjustment in the banking sector and the low confidence of investors in the soundness of some institutions cannot be counteracted by monetary policy and the provision of central bank liquidity. IV. Bank support measures and fiscal stimulus  At present, the European economy is experiencing a mutually reinforcing interaction between, on the one hand, the weakening of economic activity and rising unemployment, and, on the other hand, the deleveraging of banks’ balance sheets and the persisting bank stresses in some bank funding markets. The deleveraging process and the emergence of an adverse feedback loop between the real economy and the financial sector will affect the favourable impact of monetary policy and liquidity provision on the economy. These developments underscore the importance of effective implementation of the government measures to strengthen bank balance sheets and improve banks’ medium-term market funding.
Our aim must be to ensure that the negative consequences, both to banks and to the real economy, remain manageable. Putting in place a shock-absorbing leverage ratio to complement the risk-weighted framework of Basel II will help us get one step closer to this goal. 8  BIS Review 158/2008

CEPS Forum: Reconstructing the Union EMU governance: a reality check Address by Dr Mario Vella Governor of the Central Bank of Malta Brussels, 23 February 2017  The Five Presidents’ Report on Completing Europe’s Economic and Monetary Union argues that economic and political convergence underpinning EMU needs to go deeper if it is to ensure prosperity for all its members and fairer outcome for its citizens. In the first phase, which was meant to be completed in June, the report envisages a number of steps including: −  a new boost to convergence, employment and growth, through the creation of a euro area system of competitiveness authorities and stronger implementation of the Macroeconomic Imbalance Procedure;  −  the completion of the banking union and the launch of the capital markets union;  −  the establishment of a new advisory European Fiscal Board;  −  a reorganisation of the European Semester, with greater parliamentary control and accountability. The Commission should soon be publishing a related White Paper on the future of Europe. Before moving forward, let’s see what’s been achieved so far. In the twenty-five years since the Maastricht Treaty was signed, the euro has been established a successful currency. It is widely accepted as a medium of exchange and store of value, not only within the euro area itself, but also beyond it. It enjoys popular acceptance and support.
This is a major challenge: climate risk is very different from traditional financial risks, and we cannot rely on historical data to size it. Another factor that makes this difficult is the need for banks and insurers to understand the carbon impacts of the real economy firms they finance. It can be hard to judge where real economy firms are, never mind where they are going – and it is the latter that is most important when thinking about future risks. The Climate Biennial Exploratory Scenario (CBES) The Bank’s exploratory climate scenario exercise – which we call the ‘CBES’ – was launched last year and is intended to help address these capability gaps. For the largest UK banks and insurers, we asked for granular analysis of the risks they might face, and their strategic responses, in three stylised 30-year scenarios: An ‘early action’ (EA) scenario where climate policy is ambitious from the beginning, with a gradual intensification of carbon taxes and other policies over time. As a result, global warming (relative to pre-industrial levels) is successfully limited to 1.8°C by the end of the scenario, falling to around 1.5°C by the end of century. You could view this as a reasonable best-case scenario for climate risk. A ‘late action’ (LA) scenario where policy measures are delayed by a decade, and then are implemented in a sudden and disorderly way, leading to material economic and market disruption.

In a more broad-based market downturn, though, we would be concerned that a repricing of financial assets could trigger sudden and large redemptions from these funds, possibly resulting in forced asset sales, which could amplify stress in less liquid markets. This would have wider implications in the form of impaired market liquidity and possible spillovers to the real economy. While leverage in the euro area fund sector is low on average, there are also pockets of high leverage among some types of alternative funds, and these need to be monitored closely. Even if leverage of UCITS funds is not excessive, it can still add to the procyclical selling of assets if a fund tries to keep its leverage constant during periods of stress. I hope that gives you a good perspective on our current assessment of financial stability risks. I look forward to hearing your own views on these and other vulnerabilities for the euro area financial system. 2/2  BIS central bankers' speeches
We have therefore worked with the Government on two measures to enhance the resilience of the SGS market. MAS will be empowered to either adjust the issuance size or vary its subscription amount to stabilise an auction. This will mitigate the risk of disorderly trading in specific securities or further volatility in the secondary market. In the event of extreme market conditions or disruption, MAS will be empowered to cancel an auction. In ensuring stability and resilience of the financial sector, a key anchor is a central bank backed by a strong balance sheet. We have increased our total capital and reserves to $ billion, representing close to 11% of MAS’ total assets of $ billion. This will position us well to navigate through a potentially volatile financial market environment, and allow us to implement a broader range of measures to stabilize the Singapore financial system should the need ever arise. While local institutions withstood the crisis and remained sound, a large number of local investors were adversely affected when the credit-linked structured notes they bought defaulted or were redeemed early. Although the defaults were triggered by an unprecedented financial crisis, it has been a painful experience for affected investors. MAS has responded by taking prompt measures to require affected financial institutions to review complaints rigorously. MAS’ approach was for financial institutions to review complaints on a case-by-case basis. Settlement offers are made by the financial institutions taking into account the particular facts and circumstances of each transaction.

This revision takes into account the recent developments in global commodity prices. 6  BIS Review 91/2009  Monetary policy In October last year, in light of the weak economic environment and easing inflationary pressures, MAS shifted to a 0% appreciation of the $ policy band. This was followed by a re-centring of the policy band to the prevailing level of the $ in April 2009, while keeping the 0% appreciation path. At this juncture, notwithstanding the sharp rebound in the economy in Q2 2009, growth remains below trend and inflationary pressures continue to be muted. We assess that the current policy stance remains appropriate to support the economic recovery and ensure medium-term price stability, which in turn underpins confidence in the Singapore dollar. Our next monetary policy review will take place as scheduled in October. Conclusion Going forward, it will be important for central banks and regulators around the world to remain vigilant and to continue addressing financial system risks as the markets remain fragile and uncertainty remains. Singapore is not insulated from pressures in other parts of the world. We need to understand the changes and anticipate how they would affect us in order to take the right actions. MAS will continue to build on our key pillars of having sound financial institutions, ensuring well functioning markets and maintaining confidence of investors. Building on such strong fundamentals and adapting to new challenges, we can ensure we emerge stronger. Thank you. BIS Review 91/2009  7
The article was intended to serve as a basis for public debate; in our opinion it provided the best foundation that was then available for discussing the krona’s long-term value. The krona’s equilibrium value is naturally something that the Riksbank considers continuously and the analysis is constantly being developed. Accounts of various aspects of the exchange rate have been presented in the Inflation Report. The material that will be produced in the event of Sweden deciding to participate in ERM2/EMU will have to incorporate the additional information since 1996. It should also be noted that the levels and intervals that were presented in the article refer to the krona’s trade-weighted exchange rate and are therefore not directly applicable to the question of a reasonable central rate for the krona against the euro. Furthermore, the euro is a new currency. Arriving at just the right future exchange rate for the krona against the euro is therefore not exactly easy. Although the financial markets are naturally eager to know, at this stage it is too early to allow the discussion of the krona’s path to focus on specific intervals or levels. But the course is clear—in the event of a euro peg, the rate for the krona will be stronger than the current level. Current monetary policy In conclusion I should like to say something about the monetary policy situation in Sweden. International economic prospects gradually deteriorated during 1998.

The European experience offers valuable insights in synchronising and pacing the integration process in the ASEAN region. The European path to integration -- based on trade integration, with the removal of restrictions on the movements of goods and all factors of production at the early stages, followed by increased monetary and financial linkages at the subsequent stages - presents ASEAN with an important reference point in our own monetary and financial integration efforts, in particular, in relation to the trade and investment liberalisation initiatives to facilitate greater regional economic integration. 1/2  Tremendous opportunities in ASEAN for the EU There is certainly much that ASEAN can learn from the EU experience. The EU is now the world's largest single market and with the introduction of the Euro. The EU has become the ASEAN's third largest trading partner. Of its total trade, the trade of the ASEAN 5 (that is, of Indonesia, Malaysia, the Philippines, Thailand and Singapore as a group) with the EU accounted for 12.4% in 2004. Meanwhile, the EU's trade with the ASEAN 5 accounts for 4.5% of the EU's total trade. Against a backdrop of sustained growth and macroeconomic and financial stability in ASEAN, there is significant potential for expanding the trading and investment links between our two regions. Focusing on the areas of complementarities would maximize the mutual benefits to be gained from the strengthened relationship.
This could generate material benefits to society – and to insurers – provided they maintain discipline in their leverage, that is, the extent to which they deploy debt capital and use reinsurance to back their promises to policyholders. Taking on new BPA business in volume, over a relatively short period, will also involve significant hedging programmes via interest rate, cross currency and inflation swaps, more complex investment arrangements, and will increase interconnectivity with the wider financial market. Insurers therefore need to understand, as they take on these vast sums of assets and liabilities, how they may become greater sources or amplifiers of liquidity risk. In this context, insurers need to focus on the feasibility of their own management actions under stress. Our 2022 Life Insurance Stress Test feedback[16] noted that concurrent reactions in stress can reduce the effectiveness of any assumed management actions. Better and more frequent information, improved modelling capabilities and enhanced liquidity management will inform this, but firms cannot fully resolve these uncertainties via these methods. Senior management therefore need to limit their need to rely on trading and rebalancing in stress, as such activities may destabilise financial markets further, which would be to their own detriment. Additional supervisory measures And so, to dessert, which consists of the additional supervisory measures announced in the Government’s Solvency II reform package, to create Solvency UK. The PRA has accepted the Government’s final view on the key elements of the Solvency II review and is focused on implementation, subject to legislation in Parliament.

This is due, in part, to my reading that monetary policy today is not as accommodative as one might think judging just from the level of short-term rates. But, the path will ultimately be determined by how the economic outlook evolves and how financial market conditions respond to monetary policy. I expect that there will be many twists and turns in the road ahead. As we make this journey, I will do my best to explain what I am seeing and how I think I might react as conditions change in the future. Thank you so much for your kind attention. I would be happy to take a few questions. BIS central bankers’ speeches  7
However, as shown in Chart 5, the average homeowner still is substantially more leveraged than before the crisis and has lower net worth. One significant problem is the trajectory of home prices. Homeowners have lost more than $ billion in home equity since the housing market turned. For homeowners with mortgage debt, about one-quarter of these homeowners have mortgage debt that exceeds the value of their homes. The loss of home equity is a serious problem in itself of course, but it has been exacerbated by the fact that many households have found it very difficult to refinance to take advantage of lower mortgage rates. Without a substantial improvement in the ability to refinance, the outlook for real estate prices, and in income prospects, it seems likely that many of the households that ended up with too much debt after house prices fell 30 percent from their peak may need to deleverage further. This implies that for the household balance to fall and provide an impetus to growth, those households with low debts will have to spend more of their income. In many ways these households are in a similar situation to large corporations: their balance sheets contain substantial liquid assets. They are undertaking precautionary saving as a response to greater uncertainty about the economic outlook and their long-term prospects. In more normal times, lowering short-term interest rates would induce households and businesses to spend more or invest more in less liquid long-term assets as the real return on their liquid short-term assets fell.

Indeed, I believe it would be desirable if the committee were able to provide additional guidance as to the economic conditions that the committee would expect to see before raising interest rates. And we could purchase more longer term financial assets. If additional asset purchases were deemed appropriate, it might make sense to do much of this in the mortgage-backed securities market. This would have a greater direct impact on the housing market and would be less likely to disrupt market functioning compared with further purchases in the Treasury market. At the same time, we do have to recognize the costs as well as the benefits of further action. Forward commitment entails some risks to our credibility since it is difficult to capture all the considerations that go into policy judgments in simple and concise language. And balance sheet expansion has potential costs, as well. These potential costs stem not only because some may view balance sheet expansion as sowing the seeds of future inflation – an incorrect view in my opinion – but also because balance sheet expansion increases the amount of interest rate risk in the Federal Reserve’s portfolio of assets and could, if carried to an extreme, harm private market functioning. BIS central bankers’ speeches  5  Because reasonable people can differ over the costs and benefits of further action, you should not be surprised that there is vigorous debate among FOMC participants about whether more monetary policy stimulus should be applied.
In terms of analysis by socio-demographic groups, the survey results show that the monetary value in “old lek” is more frequently used by: (i) males; (ii) old-aged people; (iii) persons with a low-education level; (iv) unemployed persons in labour market; and (v) individuals with a low level of family income. These groups identified in the survey will be the focus in the projects of this awareness campaign for bringing to an end the use of the wrong term “old lek”. Against this backdrop, the Bank of Albania is launching this awareness campaign, which will extend in time and will aim at being a comprehensive one, affecting various groups of interest. In a medium-term period, and through various channels, we aim at knocking at the doors of every Albanian to uproot the terms “new” or “old”, by avoiding the confusion in the communication of prices and enhancing the correct reading of economic and financial indicators. Lek is the national currency in Albania, and the face value of each coin or banknote is the one written on it. Nevertheless, the fact that this incorrect use is inherited in the day-to-day speaking and has been resistant for more than 55 years, illustrates that the sporadic and isolated efforts of a solely institution to rectify this phenomenon are insufficient. A joint and coordinated commitment among central institutions of the country, media and other relevant actors is crucial in this regard.

Results of the survey show that more than half of interviewees (54%), in terms of a 500 Lekë banknote, in an instinctive manner either wrongly identify or read its value, by adding a “0” to turn its value into “old lek”. The situations or sets where the interviewees, more than 80%, responded that habitually speak with the outdated term “old lek”, are mainly informal or family ones: small shops or fruit and vegetables markets; conversations with family members, friends and colleagues; followed by means of public transport. On the other side, data show that the wrong communication of Lek value occurs very rarely across financial institutions (banks, non-banks, etc. ), only 28.1%, or in the offices of public administration (39.4%), although it might be expected 1/2  BIS central bankers' speeches  these figures would have been even lower In addition to public and financial institutions, another strongminded factor affecting the communication of public is media, the written and audio -visual media. According to 20% of public perception, media always or frequently communicate prices and monetary values in “old lek”. This percentage, though a low one, sheds light on the need for a higher inclusion of media in the efforts to completely eliminate this phenomenon, particularly by bearing into mind its mission to transmit the information truly and accurately to the public, coupled with its educational role.