samchain/econo-pairs-v1 huggingface dataset:
The risk-sensitive management of a bank therefore needs to be matched by risksensitive regulation. The risk-weighted capital ratio requirements address this, ensuring that a bank engaging in transactions with higher returns – and hence higher risk – also has to hold more capital. Accordingly, the risk weight applied to a speculative foreign investment is markedly higher than that applied to a mortgage in Switzerland. That being said, it is often difficult to estimate and model risks precisely. For this reason, a simple, non-risk-based capital ratio has now also been introduced, stipulating that a bank’s 2  3 4  These banks thus had a de facto state guarantee – their creditors could assume that the government would cover large losses and indemnify them in the event of a bankruptcy. Accordingly, they were prepared to deposit money with the banks at comparatively favourable terms. This funding advantage in turn allowed the banks to take on large risks. Overall, such a constellation is not ideal from the perspective of society as a whole as it creates a ‘moral hazard’ issue. The short-term parameter is referred to as the Liquidity Coverage Ratio, while the longer-term requirement is known as the Net Stable Funding Ratio. The risk-weighted capital requirement is referred to as the Risk-Weighted Assets Ratio, or RWA Ratio for short. Banks are permitted to use their own models for calculating RWA. However, to prevent overly low RWA figures being reported and ensure comparability between banks, the framework stipulates an ‘output floor’ for the RWA calculated by the banks.

10 They must also put measures in place to ensure that they will remain able to act in the event of a crisis and that the bank can be restructured or wound down in an orderly fashion. This second set of measures thus reduces the risks stemming from systemically important banks in that it strengthens the crisis resilience of such institutions while also enabling a restructuring or orderly wind-down. 5 6  7  8  9  10  The ratio of capital to total assets is known as the Leverage Ratio. The financial crisis showed that it is not only the amount of capital that is important, but also its quality. Basel III therefore also raised capital quality requirements. In particular, the regulation ensures that eligible capital can already be used to absorb losses before insolvency proceedings are initiated. This is the only way that such capital can act as a buffer and counter the threat of the bank having to cease operations. The international regulatory framework has also put in place further measures to reduce systemic risks in the banking sector. For example, the risk of contagion within the banking sector is to be reduced through more consistent measurement and control of concentrations of exposure to specific counterparties (e.g. other banks). The procyclicality of regulation is also addressed – in phases of excessive lending the regulator can set a countercyclical capital buffer. This increases the capital requirements for banks during upswings, releasing the capital again in downturns.
These uncertainties and complexities, of course, are the reason for monetary policy committees and heavily staffed central banks. If monetary policy is complex under normal circumstances, the complexity is multiplied in a financial crisis, especially a crisis as deep as the one that Iceland has been going through. Some of the markets that are important for monetary policy transmission stopped functioning to a substantial degree. Financial institutions became impaired, and they responded differently to the Central Bank’s monetary policy instruments than they did before the crisis. The relationship with the rest of the world changed. The link between exchange rates and interest rates weakened. And expectations became seriously unstuck. Matters were further complicated because we had to change the rules of the game in response to the crisis; for example, by imposing capital controls. It is important to remember this when evaluating monetary policy in Iceland under the current circumstances. At present, the monetary policy framework is defined by the economic programme agreed between the Icelandic Government and the International Monetary Fund (IMF). The other key elements of the programme are the medium-term fiscal sustainability plan and the financial market restructuring plan. According to the programme, the most important task of monetary policy is to promote exchange rate stability. One reason for this is the currency crisis that accompanied the financial crisis, pushing the exchange rate far below levels previously thought possible, let alone desirable. This currency collapse fuelled inflation, of course, and amplified the debt crisis faced by households and businesses.

In view of this, it was decided to impose broad-based capital account restrictions and thereby create the scope for less restrictive monetary policy than would otherwise have been feasible. As is usually the case, there were probably other options available at the time. But because I prefer to focus on the current situation and the road ahead, I would prefer not to spend time rehashing the past and ruminating about hypothetical options. Such speculation cannot change the past. Generally speaking, however, it seems to me that other options would have entailed significantly higher interest rates – initially, at least – and more risk to the exchange rate. But that doesn’t change the fact that, although the capital controls provided a certain temporary shelter, they also entail significant cost and inconvenience, which probably vary directly with the length of time the controls are in place. That cost will ultimately cut into GDP growth for the short term and reduce the level of GDP in the longer term. Understandably, then, we do not wish to maintain the capital controls a minute longer than necessary. Strictly speaking, monetary policy is not based on an inflation target at present – at least, not for the short term – as the interim goal of arresting the fall of the króna and then stabilising it has taken priority. Ultimately, of course, this policy is consistent with the attainment of the inflation target.
Page 6/10  indicated, the two distinct interest rates applied to reserves provide incentives for banks to trade their reserves. A money market rate that is compatible with the incentives of both borrowers and lenders must lie between these two interest rates. As shown on this slide, the demand curve is thus capped in the upper left segment by the upper remuneration rate and it is bounded in the lower right segment by the lower remuneration rate. Accordingly, SARON will lie in the corridor between 0% and 0.5%. With the transition to a positive policy rate, we no longer want SARON to be in the lower or middle part of the corridor. We want it to be close to the upper bound of the corridor, at 0.5%. This is because, in introducing our new approach to implementing monetary policy, we placed our policy rate at the upper bound of the corridor instead of keeping it at the lower bound as we had done in the negative policy rate environment. If the SNB were not to absorb reserves, the stock of excess reserves would still be sizeable. Because of the large supply of reserves in the interbank money market, SARON would be close to the lower bound of the corridor at around 0%, as shown on the slide.

Eddie Yue: Remarks at Media Standup Remarks by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at Media Standup, Hong Kong, 2 October 2019. * * * Ladies and gentlemen, 1. Today is my first working day as the Chief Executive of the HKMA. Apart from the transition to a new position, I will also be faced with a challenging external and domestic environment. This includes the weakening of global economic momentum, uncertainties over the ChinaUS trade conflict and Brexit, unpredictable monetary policy stance across central banks especially in the US, and the social events in Hong Kong in recent months. All these have presented huge challenges and uncertainties for the Hong Kong economy. 2. Our key priority in the next few years is to maintain Hong Kong’s monetary and financial stability. 3. And, the foundation for this stability is the Linked Exchange Rate System (“the Link”), which has helped Hong Kong weather different financial storms since 1983. I’ve been involved in the operation of the Link throughout my career in the HKMA and I have also gone through two financial crises. I firmly believe that the Link is the most appropriate monetary system for Hong Kong. We see no need and have no intention of changing this well-established system. 4. Our banking system is also robust and sound. I’m confident that Hong Kong’s financial system is well positioned to cope with market volatilities. 5. We will also reinforce Hong Kong’s role as a premier international financial centre.
I want to commend WAIFEM for this initiative which has become an important platform for policy dialogue between the two arms of government and more importantly, strengthening the capacity of the parliaments in the vital areas of economic and financial management. It is in the realization of the useful role of such platforms in forging greater understanding among key stakeholders in the policy process that the Committee of Governors of Central Banks of ECOWAS member countries called for the reactivation of the periodic Consultative Forum of Ministers of Finance and Central Bank Governors of ECOWAS countries at its meeting in Dakar, Senegal on June 16, 2004. Looking at the pertinent issues to be dealt with in the course of your deliberations and the calibre of resource persons to facilitate the process, I have no reason to doubt that you are in for a round of stimulating and fruitful deliberations. Permit me therefore, to anticipate that you will come up with concrete and implementable proposals to facilitate a harmonious working relationship between the legislature and the executive in pursuance of their shared economic management objective. Towards regional monetary integration This has become particularly urgent in the light of the need to ensure that West African countries stay the course in their commitment to achieve economic convergence. But as you are aware, virtually all the countries have found it difficult to achieve and sustain, over time, the required level of economic performance under the convergence criteria.

We hit it off immediately. It just so happened that both of us had been thinking about the natural rate of interest. And since Governor Meyer had raised the subject, we moved quickly to develop an approach to answer his questions. Although we didn't know it then, we were following exactly the problem the other John Williams laid out in 1931.3 Simply put, Thomas had a hammer. And we found a new nail. The hammer was the Kalman filter, which is about inferring the behavior of an object from its effects on other objects. And the nail was r-star. A Fast Start On December 14, 2000, after a few short months of working together, we wrote our ideas and results in a memo to the Board of Governors.4 The memo started with the bold declaration: "This memo is a first report on a broader project to study alternative definitions and estimates of the equilibrium real rate (R*) and to evaluate their usefulness in the conduct of monetary policy." And the Laubach-Williams (LW) model was born. Starting in May 2001, r-star estimates made their way into the staff Bluebook prepared for the FOMC.5 Looking back, I am struck by how quickly these ideas came together. I must also acknowledge the unwavering support we received from senior leadership to bring this new research to policymakers. Within a year of writing the memo, we put out the academic version of this work.6,7 The original paper included a section on timevarying r-star's implications for monetary policy.
In this regard, the correct calculation of provisions plays a crucial role in the way banks manage appropriately their credit risk. A consistent level of provisions according to the risk profile of each bank will prevent any undesired impact on solvency levels, which would be the final resource to absorb any loss arising from the ordinary activity of banks that has not been eliminated before by the correct application of provisions. In addition, appropriate macroprudential tools in the hands of policy-makers might help reduce the volatility of credit and business cycles. Allow me to express once again my gratitude to the co-organisers of the event for their excellent work, and to wish all the participants a fruitful conference and a pleasant stay in Madrid. We are all looking forward to hearing from the experts on the different challenges that the new provisioning paradigm entails, so without further ado I give the floor to Fernando Restoy, Chair of the Financial Stability Institute (FSI), to start with the first panel. 7/7

The Islamic financial system also needs to include the capital market to provide an alternative source of financing, as well as to create broader and more diverse Islamic financial instruments for investors. The equity and bond markets will provide a more balanced allocation of financial and economic resources. This would result in a more efficient distribution of risks within the system, thus creating stability in the system. The equity and bond markets would also provide an avenue for raising long-term capital. With a wider spectrum of instruments in the market, fund managers would be able to manage their portfolios better and spread their risk according to their desired risk tolerance, thereby contributing toward greater stability. Complementing these financial markets is the development of non-bank Islamic financial institutions. Takaful, or Islamic insurance, provides the risk protection to its policyholders and serves as an important mobiliser of long-term funds. In addition, development financial institutions, savings institutions and housing credit institutions need to be developed to meet the diversified customer demands. These specialised institutions will meet the different requirements of the economy. IV. Malaysia’s experience in the development and management of the Islamic finance  The strategy adopted by Malaysia has been to develop a comprehensive Islamic financial system. Malaysia started with the establishment of one Islamic bank to spearhead the introduction of Islamic banking products and services, and at the same time, identified the relevant financial segments that were required to support the expansion of Islamic banking activities.
In fact, the observation that bond yields fail to behave in accordance with the simple “expectations hypothesis” goes back much further, to Macaulay (1938). 4  Gabaix (2012). 6  BIS central bankers’ speeches  First, forward interest rates in the UK are very sensitive to news from the US, puzzlingly so. Chart 5 I’ve used before. It plots average responses of sterling yields, at two and ten-year maturities, to various bits of economic news. What’s most striking are the significant reactions to surprises in US payrolls releases. The UK is a relatively open economy, prone to shocks from elsewhere. As the largest economy in the world, the US is bound to exert an influence on our economy and the appropriate level of domestic interest rates. But it’s hard to imagine that one learns more about inflationary pressure in this country from changes in US employment than from those in the UK itself. What seems more likely is that that US employment releases have effects on risk appetite, and this then leads to a high degree of co-movement – relative to that in pure forecasts – between forward interest rates in the two currencies. Table 1, which gives the results of simple regressions of changes in UK interest rates on their US counterparts, suggests this might be a more general phenomenon. It shows that forward yields are much more closely correlated across the two markets than spot interest rates. This doesn’t disprove the expectations hypothesis.

In other words, expanding fiscal and monetary policy will be no panacea to Europe’s growth challenge. Longer-term fiscal consolidation is imperative in light of a rapidly aging European population. On the monetary side, there is no indication that policy is too restrictive in light of real interest rates at or near zero for the Eurozone. Indeed, based on a standard Taylor rule framework, the ECB’s monetary policy stance is equally or in the recent past even more expansionary than that of the Federal Reserve. At any rate, neither fiscal nor monetary policy can ultimately address structural impediments to higher growth dynamics in the Euro area. In an effort to augment the EU’s growth potential, the focus must therefore be on breaking down labour market rigidities for additional labour input on the one hand and on accompanying policy measures to increase productivity on the other hand. Despite the subdued nature of the current growth outlook which is adversely affected by a strong Euro and rising oil prices, there are some promising signs that structural change is under way. Both the gradual dismantling of the 35 hour week in France and the shift to part-time and temporary employment in Germany are boosting labour input. In line with this positive albeit hesitant trend of bringing more workers back into the economy, productivity growth rates have begun to recede in Europe. The primary challenge for the European economy is to compensate this natural initial decline in productivity as a result of higher labour input.
Philipp Hildebrand: Lessons from the financial market turbulence Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Jefferies prize-giving ceremony, Zurich, 27 August 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The current financial crisis is probably the most complex since the 1930s. The extent of international cooperation in overcoming it is greater than ever before. An important part in these activities is being played by the Financial Stability Forum (FSF), which was founded in 1998 and to which Switzerland has belonged since 2007. Six months after the start of the crisis, in April 2008, the FSF published a series of recommendations for enhancing the resilience of the international financial system. There are three main advantages to cooperating internationally in this way. First, it is easier to focus more clearly on identifying solutions. Second, it ensures that particular attention is paid to maintaining a level playing field when establishing regulatory measures. Third, it creates considerable pressure for any recommendations issued to be implemented in practice. The current crisis has shown that the Swiss banking system remains vulnerable to major shocks. As part of its statutory mandate to contribute to financial stability, the SNB has been monitoring developments since the start of the crisis very carefully. The lessons learned by the SNB from the crisis tie in with the recommendations of the FSF.

BIS Review 5/2010  1  In addition, it is common knowledge that Zambians prefer to be in formal employment rather than engage in entrepreneurial activities on a full time basis. The small number of educated Zambians engaging in entrepreneurial activities limits the scale of indigenous businesses as evidenced by the non participation of Zambians in major sectors of the economy like mining or manufacturing. It is however, important to realise that individual entrepreneurs as well as small and medium sized enterprises form the engine of economic and social development as they generate the much needed employment for our people. Hence the need to encourage all efforts aimed at stimulating entrepreneurship. Distinguished Invited Guests, our institutions of higher learning play an important role by molding and developing innovative and creative mindsets amongst our young people. With this belief in themselves, young people can be productive, take responsibility in their respective communities and ultimately drive our economy forward. We need to remind ourselves that Google was founded by students; Facebook was founded by a student; and even Microsoft was formed by Bill Gates as a student. Ladies and Gentlemen, let me assure you that the Bank of Zambia is committed to ensuring the availability of finance to viable entrepreneurs including small and medium sized businesses.
In Spain the current account deficit improved by more than 7 percentage points over the same period. Most of the adjustment has been driven by a contraction in domestic demand. However, in Ireland, Spain and Portugal export performance has been very strong compared with the pre-crisis period. Portugal’s exports of goods and services grew on average by nearly 7% between 2010 and 2012, compared with 4.4% between 1999 and 2008. In particular, gains in markets outside the euro area have been large and there are early indications that the export specialisation of these countries has been shifting in a way that may support further structural export expansion.3 [Slide 4] We have seen a significant improvement in cost competitiveness as measured by unit labour costs (ULC). Between 2008 and 2012, in the three programme countries cumulated ULC growth was about 12 percentage points below the euro area average. Ireland saw by far the largest adjustment, with a cumulated ULC gain of 18 percentage points vis-à-vis the euro area. Greece, Portugal and Spain saw a ten-percentage-point ULC gain vis-à-vis the euro area average. As shown by Buti and Turrini (2012),4 this development was not fully associated with gains in productivity from lay-offs but rather, at least in part, with slower wage growth dynamics. In addition, such a decline in deficit countries seems to have occurred mostly in non-tradable sectors, which is consistent with internal rebalancing.

While ex ante expectations of a fast convergence  1  I wish to thank Beatrice Pierluigi for her contributions to this speech. I remain solely responsible for the opinions contained herein. BIS central bankers’ speeches  1  across euro area countries might initially have been reasonable, given the favourable environment created by the monetary union, the degree of sustainable convergence ex post turned out to be very limited. In many countries, excessive private/public consumption and residential investment spending, partly resulting from excessive debt accumulation, led to persistently higher HICP and unit labour costs with respect to the euro area average. At the same time, the supply side was not able to catch up with demand, due to the fact that investment spending was not channelled towards activities able to generate high future returns and due to important structural rigidities in the labour and product markets, which policy-makers largely neglected to tackle in the years before 2009. This process was aggravated by weak fiscal institutions and prudential supervision. All this contributed to the accumulation of large imbalances and vulnerabilities. In this environment, the EU framework for economic governance proved to be unable to enforce an early implementation of critical reforms or to prevent imbalances. Let me make the point with a few figures. The charts that I will show today focus on the three programme countries as well as Spain. Of course, the adjustment process is in fact taking place in a larger number of countries, some of which joined the euro area after 2007.