samchain/econo-pairs-v1 huggingface dataset:
There are precedents for such an approach. At the introduction of Basel II, temporary floors were introduced into aggregate capital requirements, set at 80% of Basel I requirements. And under the Collins amendment to the Dodd-Frank Act, banks using internal models will be subject to a 100% floor based on the simpler standardised approach. 19 But these measures only take us so far. Regulatory-imposed floors do little by themselves to simplify the underlying regulatory architecture. Only by removing internal models from the regulatory framework can this be achieved. As an alternative foundation stone, simplified, standardised approaches to measuring credit and market risk, on a broad asset class basis, could be used. Indeed, there have been already been small steps in this direction. A consultation document on the fundamental review of the trading book issued in May this year proposed a greater role for standardised approaches. 20 This would be a turning back of the clock, restoring the regulatory framework as a backstop to commercial risk management. Legal rules and regulatory rules have followed a similar historical path. In response to crisis events and case law, both have evolved into a complex tapestry. In his book “Simple Rules for a Complex World”, Richard Epstein suggests this legal tapestry can be unravelled into six basic threads (Epstein (1995)). The same unravelling ought to be possible in banking. (b)  Leverage versus capital  The Basel III framework will introduce for the first time an internationally-agreed leverage ratio – a 1/N rule.

With that in mind, policymakers should follow the general principle of “same business, same risks, same rules”. That is important. As banking supervisors, we focus on risks related to banks. In that regard, we are working on a number of projects. Take bank licences, for example. We see a rising number of applications related to fintechs. In response to this, we have teamed up with the national supervisors to work on a joint policy approach. It will ensure that applications are treated in the same manner across the entire euro area. Risks that are specific to fintechs will be assessed appropriately and proportionately. We are also seeing more and more supervisors exploring and setting up mechanisms to facilitate the authorisation process for fintech banks. Innovation hubs and sandboxes are two of the key words here. And we too are seeking to implement a euro area-wide hub for fintechs. We are also assessing the risks that might arise when banks or fintechs outsource data or even entire IT systems. We already carried out some work in this regard; in 2015, we did a cybercrime survey, which was a unique project at the global level. As a follow-up we implemented a data base to track and analyse cyber incidents in large euro area banks. And last but not least, concerning the business models of banks, we will explore potential 2/3  BIS central bankers' speeches  risks that emanate from fintechs and other non-bank competitors. In that regard, fintechs are among our supervisory priorities.
If world economic activity had remained strong, it would have been reasonable to count on the Riksbank continuing to raise the repo rate. BIS Review 26/2001  1  A look at the threats we perceived in December as being liable to push inflation up above our forecast, shows that they have become less troublesome. At the same time, the clouds that were gathering over the U.S. economy have thickened and darkened. To date this year the Federal Reserve has cut its interest rate a total of 1.5 percentage points. The first cut, announced in January in between the regular monetary policy meetings, surprised the market by its magnitude as well as its timing. Another cut came at the end of January and a third last week, on 20 March. There has been a spate of negative news about the global economy in general and certain companies in particular and international stock markets have remained turbulent. US economy difficult to assess The focus at present is on the U.S. economy. Its future path is highly important for economic developments in Sweden. In order to arrive at a clear picture of the situation, we need to judge the effects of alternative outcomes. During the 1990s the United States experienced its longest economic upswing ever without any serious signs of accelerating price and wage increases. A more efficient economy, with strong competition and functional product and labour markets, accompanied by advances in computer and telecom technology, are said to have contributed to a higher rate of potential growth.

Simon M Potter: Role of central bank interactions with financial markets Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at New York University’s Stern School of Business, New York City, 27 November 2012. *  *  *  It is a pleasure to have the opportunity to speak to you today. Having taught classes at New York University (NYU), I know firsthand the quality and analytical rigor of the students and faculty. You should all be proud of the excellent curriculum and education you are receiving here at NYU. I would like to thank Kim for giving me the opportunity to speak this evening and the public service he is providing through his leadership of the center. My remarks today will focus on the role of central bank interactions with financial markets. Because of the New York Fed’s position within the us financial system, our staff is in continuous contact with financial market participants, including investors, intermediaries, financial market utilities and analysts. Much of this contact occurs through the Markets Group at the New York Fed. For most of my professional life prior to becoming head of the Markets Group earlier this year, I had been a research economist working at the New York Fed. Like many research economists, I was trained to understand the economy with mathematical models that contain at best a rudimentary description of a financial system.
Let me reaffirm that this is still one of our primary goals. To be sure, broadening access to financial services does not mean ready availability of loans for unscrupulous spending. It does not mean consumers can more easily borrow to finance extravagant consumption and lifestyle that they cannot really afford and are unlikely to be able to repay their debt. Broadening access to financial services must come hand in hand with responsible lending on the part of service providers and responsible borrowing on the part of consumers. Failure to observe these fundamental principles can lead to very painful  BIS Review 64/2008  1  consequences and adjustments for lenders, consumers, and the economy as a whole. It is essentially this kind of failure that lies at the heart of current global market turmoil which, as we all know, originated from loose or non-existent credit underwriting standards in the US subprime mortgage market. And this is exactly the kind of problems that we sought to prevent a few years ago when we introduced a package of prudential measures related to unsecured personal and credit card loans. These measures – such as pre-requisite minimum income, cap on credit lines in multiples of income, and minimum monthly installments – were aimed at pre-empting excessive household debt, especially by people in the lower income group, who could otherwise have faced severe financial distress and led eventually to social problems at large.

Non-bank players have also been aggressively competing for market share in the personal loan and credit card market, although with focus on people in the lower range of income groups. Considerable amount of investment has been made to revolutionize network channel, operational process, and risk management system in order to reduce the operational cost and service delivery time, and to manage risks more effectively. Functionalities of traditional delivery channel such as ATM have been greatly expanded, while new e-banking tools such as internet banking, mobile banking, and electronic money service have been introduced. Use of ATM, debit and credit cards continues to grow steadily, whilst internet banking transactions and use of electronic money services increase markedly both in terms of the number of users and the value of usage. Modernization of operational process and risk management system includes automating application process, credit approval process, and increasing use of credit scoring models and credit information system. Ladies and Gentlemen, We view increased competition and innovation in the retail banking business as beneficial to consumers and the financial system as a whole. Banks’ loan portfolios have become more diversified, while a greater number of people have been given access to financial services. Many of you will recall that one of the primary objectives of the Bank of Thailand’s first Financial Sector Master Plan was to broaden access to financial services for the underserved segments of our society, including people in the lower income group, in the rural areas, and small and medium-sized companies.
On the prospect of global economic recovery, the consensus forecasts of world growth for 2009 have been continuously revised downward as the severity of the financial crisis hits the financial markets and the real sectors of industrialized economies. The latest IMF forecast expects the global economy to be stagnant this year and some economies in Asia to record negative growth. BIS Review 15/2009  1  As a result, it is most likely that international trade and investment cannot be a major driver of growth for a large number of economies. Intra-regional trade, which has strong ties in Asia, is also likely to decelerate. Most economies will have to turn inwards to look for domestic demand as a source of growth. This is why room for policy maneuver and domestic confidence are important at this juncture. Amid the tremendous challenges that we face, I am cautiously optimistic that Thailand will be able to weather the storm relatively well. Allow me to share with you the reasons behind this. First, the growth momentum of domestic demand has been cushioned by supportive monetary and fiscal policies, and declining costs of production. As Excellencies have already followed recent policy initiatives, there continues to be room for the Government to pursue fiscal initiatives for stimulus and social safety net protection as the public debt is low, accounting for about 37 percent of GDP.

As for the monetary policy, the Monetary Policy Committee has already cut the policy interest rate twice by a total of 1.75 percent from 3.75 to 2 percent. These were significant reductions by the history of Thai monetary policy. The cuts aim to shore up confidence by sending a strong message that monetary policy can now focus on supporting growth now that inflation is not a threat. They also help shore up domestic demand. Nevertheless, we are mindful that, at this juncture, monetary policy easing may transmit slowly to support economic growth. Second, the Thai private sector has strong underlying strengths to withstand economic and financial volatility. Both business and household debts are low. Our production and service sectors, now adversely affected by the global slowdown, were able to build up profits earlier as a cushion. The agricultural sector continues to show signs of growth. Although agricultural prices have adjusted downward, agricultural production cost such as fuel and fertilizer have also declined, which helps reduce the burden of farmers. Third, the banking system is liquid and resilient. Banks have ample liquidity because they do not rely on inter-bank funding but rather predominantly on domestic deposits. But the Bank of Thailand remains vigilant. We maintain close dialogue with the top management of banks concerning important external developments and stand ready to provide liquidity should such a need arise.
These challenges need to be addressed both by raising growth potential and by a concerted effort to complete the clean-up of bank balance sheets. Yet as important as these issues are, they are largely legacies of the recent crisis. What I would like to concentrate on – as you are discussing at this conference – are the forward-looking challenges to the banking sector, and how they will affect banks given the already difficult operating environment. I would like to focus on three that I see as particularly relevant: the payments challenge, the markets challenge, and the regulatory challenge. 1. The payments challenge One of the key challenges facing banks is the impact of disruptive new technologies on their retail payments business – the so-called “rise of the FinTech”. Such competition from non-banks in retail payments services is of course not new. Western Union and Moneygram, for example, are well-established non-bank providers. But what is different now is that various factors are coinciding which look set to fundamentally change the landscape of the retail payments market, and in ways that threaten banks’ dominant market position. First, regulation is opening up market access. With the revised Payment Services Directive (PSD2), the list of activities that payment institutions can carry out is being expanded to include the initiation of payments. They can also provide account information for accounts held at other payment service providers. This will inevitably – and deliberately – weaken banks’ market power. Second, consumer preferences are changing rapidly.

4  ECB (2015), Financial Stability Review, May 2015. BIS central bankers’ speeches  3  3. The regulatory challenge As I said, however, CMU is for the longer-term. For the medium-term, SME financing in the euro area will still mainly come from banks. So we need to make sure that there are no unnecessary obstacles to that process. And this brings me to the third challenge facing banks – the regulatory challenge. The regulatory agenda since the crisis has no doubt been essential. Banks had too little capital, too much short-term funding, too high leverage, and created too great a cost for society when they failed. The reforms that have been introduced so far have increased resilience and, in extremis, made banks less costly to resolve. And there is no reason why this should, in principle, diminish the ability of banks to serve the real economy – research suggests, for example, that higher bank capital has no negative impact on lending. 5 But as new regulation accumulates, we know that it can also come with costs as well. In the economics jargon, policymakers always have to be watchful that, in attempting to internalise externalities, they do not inadvertently create new externalities. The possible risks can be summarised under the headings of complexity, clarity and consistency. As regulations have built up since 2009, they have tended to introduce more complexity, and with that comes an inevitable cost in terms of compliance.
Christian Noyer: Sovereign crisis, risk contagion and the response of the central bank Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Global Interdependence Centre (GIC) Conferences, Paris, 17 June 2010. *  *  *  Ladies and gentlemen, I am very much honored to open this second session of conferences in Paris and I would like to thank the Global Interdependence Centre for having Banque de France as a partner of this full week conference. I will give the point of view of a central banker on the recent events on sovereign markets, the major implied risks and challenges for financial stability and the recovery process. Finally, I will briefly touch on the latest actions of central banks and public authorities to contain those renewed tensions. I am confident that this opening address will give rise to valuable discussions in the panels where distinguished speakers will express views from different perspectives: central banks, rating agencies, investors and academia. Sovereign crisis: origins and dynamics The sovereign debt turmoil is the most recent episode of a crisis that started more than two years ago yet. Some European States are the latest actors of a protracted debt crisis after i) US subprime mortgage borrowers, ii) financial institutions with weak funding situation and iii) non financial companies and households unable to finance their capital needs.

This prevented him from steering the ship towards the sirens himself, and the crew were prevented from hearing him when he would later succumb to temptation and order the ship to be steered towards the sirens’ island. The story cannot be directly transferred to economic management, but the concept of “tying oneself to the mast” is used in promoting mechanisms that prevent short-term objectives from taking precedence over long-term objectives. Precluding the possibility of breaking a promise makes the promise more credible. Ensuring accountability for promises made through reporting and review can be a mechanism that ties us to the mast. A central bank’s most important task is to ensure a stable value of money. The value of money relies on responsible economic policies. For a central bank to be able to keep its word and deliver a stable value of money, it must have the backing of the political authorities. Otherwise, the central bank will not be able to keep its word. In the long term, the instruments available to the central bank allow it to deliver only the promise of a stable value of money. Earlier, this promise was kept by regulating the amount of money issued. Today, the instrument is the interest rate. The central bank cannot steer real wages, the labour supply, employment or the level of unemployment in the long term. But it can contribute to curbing short-term cyclical fluctuations if price stability is firmly anchored. Throughout history central banks have attempted to bind themselves to the mast in different ways.
For Swedish companies, falling share prices in Sweden and abroad thus  4  6  This relates to an increase from over SEK 100 billion to over SEK 577 billion (Statistics Sweden, 2011). BIS central bankers’ speeches  have negative effects on both domestic and foreign sales. Falling share prices also make it more difficult to fund investments by issuing new shares, which reduces capacity utilisation. Figure 6 Share indexes and Swedish consumer confidence in the economy The stock market index January 2006=100 180  40  Sweden (OMXS) Euro Area (EuroStoxx)  160  30  USA (S& P 500) Emerging Markets (MSCI) Consumer Confidence  140  20  120  10  100  0  80  -10  60  -20 -30  40 04  05  06  07  08  09  10  11  Note. The left axis is the stock market index and the right axis the value of the households’ confidence indicator. Sources: Reuters Ecowin and the National Institute of Economic Research  Households’ and companies’ expectations of the future It is assumed that movements on the stock markets reflect the market participants’ expectations regarding profits in the future. The development of the stock exchange is therefore related to the prevailing economic climate and to the households’ and companies’ expectations regarding the development of the economy.

In recent weeks, currencies have depreciated against the dollar and capital flows have fallen. The Chilean peso has followed the global trend, posting a depreciation since the close of the March Report, which in the last few days has fluctuated around 630 pesos per dollar, which amounts to an increase of more than 4.5%. The multilateral exchange rate measures—where the evolution of the peso is compared to a broader set of currencies—show a more limited nominal depreciation. Compared with the currencies of other commodity exporters, the depreciation of the peso has been similar, while it has been in the lower side of the variations in Latin American economies (Figure 7). The fact that the peso depreciation responds to a global phenomenon also implies that the real exchange rate (RER) has increased moderately with respect to the level it has shown since the beginning of the year and with a real depreciation similar to those of other comparable economies, standing around 90 in the 1986=100 index towards the statistical closure of this Report. Our baseline scenario assumes that the RER will return to near its average of the last fifteen to twenty years over the course of the policy horizon (Figure 8). The greater speed of adjustment of financial conditions has not been reflected in a change in the outlook for global activity. Thus, the growth projections for 2018-2020 continue to indicate that, on average, the world economy will grow to outperform the last three years.
Due to the unprecedented financial crisis facing the global economy in general, and the euro area economy in particular, the economic growth in Albania remains below its long-term equilibrium. I refer here to the potential economic growth, or put into more simple words, to the level our economy would grow if it used all its production capacities. We have made attempts in our analyses to find the reasons behind this performance, the consequences and some of the measures that would help smooth out this concern. In the following, I would like to elaborate on some of our conclusions. BIS central bankers’ speeches  1  I will begin the analysis of the economic and financial situation in Albania dwelling on what we have considered as the major cause and source of risks for the future: the severe global crisis. The situation in our trading partners is a product of the developments in global economy, which is facing a hard period in terms of the macroeconomic and financial stability. The high debt levels of governments and the individuals have curbed the capacity of many advanced economies to spend and make investments, thus affecting the economic activity and their capacity to pay off debt adversely. Many reputable representatives from the academia and the business attribute the cause of the crisis (debt-burdened balance sheets of the governments and individuals) to globalization and the competition it generates.

The Riksbank has long pointed out that the Swedish banks should reduce their funding risks by extending the maturity of their funding so that it corresponds more closely to the maturity of the banks’ assets. The aim of the NSFR is to get the banks to do just this. •  Finally, we have the so-called countercyclical buffer, which is one of the new buffers introduced through the capital adequacy regulations in Basel III. This is intended to ensure that the banks build up extra shock absorbers in times when credit growth is particularly high so that they really take into account the risks that such an expansion entails for the financial system as a whole. This may also help to slow down an excessive growth in credit. Once this framework is in place it is in my opinion reasonable, given the course developments have taken in Sweden, that the countercyclical buffer is implemented and activated at a high level. 1  Having 12 per cent CET 1 capital here entails, according to the regulations, a primary capital requirement of at least 13.5 per cent of risk-weighted assets. As 13.5 per cent of 22 per cent equals 3 per cent, the leverage ratio requirement, put simply, corresponds to a risk weight of 22 per cent for mortgages. The calculation is based on a leverage ratio defined with primary capital in the numerator.