samchain/econo-pairs-v1 huggingface dataset:
Importantly, there was also for EU members an explicit prohibition concerning fiscal dominance, i.e. a prohibition against fiscal policy being financed by monetary expansion. Of course, the amount of work depends crucially on what type of institution is to be built. Will monetary policy be a joint decision between the participating countries’ central banks, institutionalised through the creation of a common central bank, or some alternative in between? Although centralisation is a natural part of a common monetary policy, decentralisation is pivotal through its role in accountability and acceptance. The national central banks will in this respect continue to play an important role. The convergence criteria for the euro area concern price stability, government finances, exchange rates and long-term interest rates. Each member state must satisfy all four criteria in order to be able to participate. More generally, the criteria could be described as an absolute as well as a relative measure of macroeconomic health. Absolute, since no economy benefits from, for instance, an excessive fiscal deficit or a high rate of inflation. Relative, since differences between member countries should not be too large. Of course, a common monetary policy would be made much more  BIS Review 73/2006  3  difficult, if inflation rates were to diverge substantially already at the outset. In this respect, the development among the EAC countries is very promising, as is the harmonization of statistical practices. The size of the fiscal deficits in Uganda and Tanzania, on the other hand, is less promising.

Therefore, perception mismatch among frontline staff about what really represents “good customer outcome” is something that banks must be careful to avoid. 8. Another interesting observation from the exercise is about perception of performance gauges. An area that banks have been putting a lot of emphasis in the past few years is reducing the weight of financial performance in incentive systems. Nevertheless, our review found that the perception of incentive structure differs greatly among different staff levels. More simply put, while senior management and supervisors think that the incentive systems are more balanced among business targets and non-financial factors such as compliance and customer outcomes, frontline staff generally still take financial  performance and business targets as the highest assessment priority. This possibly reflects that some other forces maybe at work, such as social interaction and recognition among bank staff. 9. The HKMA published the final report of this review last month. We highlighted in the report the above observations and a number of other interesting points which, I think, is definitely worth a read. In the report, we also put forward incentive system design principles and useful practices identified from the review. We are in the meantime collating the observations on individual participating banks, and will communicate the useful findings to them individually. I truly hope that banks will make good use of the review outcome to assist in their ongoing risk culture journey. Mandatory Reference Checking Scheme 10.
In the EU, many dealers are “investment firms” and so are already subject to the same Directives as banks on capital adequacy. That is not true of finance companies in many jurisdictions. Perhaps there should be a size threshold for applying bank-style capital and liquidity regulation to such non-bank banks. BIS central bankers’ speeches  3  Securities dealers and the “rehypothecation” of client assets That last set of points was about firms acting as principals. Major issues arise from the use of client assets – money and securities – to finance the principal risk-taking of some financial firms. This has become apparent from the Lehman and MFG bankruptcies. Quietly in the background, something extraordinary has happened over the past decade or so. Let me explain. You place £ of your securities portfolio with your broker/dealer in safekeeping (as a subcustodian in a way). You borrow a much smaller amount of money from your broker and, reasonably enough, they take some of your securities as collateral; in effect, they have financed your holding of that part of your securities portfolio. An observer might think the rest of your portfolio would sit in a segregated client account. Not a bit of it. Unless you have been very careful, the broker/dealer has repoed out your securities for cash, and used the proceeds to finance its own businesses. To make this simpler, imagine you have placed surplus cash with your broker-dealer. As likely as not, it is being used to finance the dealer’s business.

It is also expected that the forum will result in attaining better alignment of project scope with stakeholder needs, and in particular buy-in from both private and public sector stakeholders in each country covered. Ladies and Gentlemen, this roundtable forum brings together some decision and policy makers, from both the private and public sectors of the countries covered by the project, to a single regional event representing government and central bank officials, trade and payment system experts, international development community, mobile network operators, international money operators, payment service providers, academics and researchers involved in the topics of small-scale cross-border trade and payment services. I am very positive that the symposium shall achieve the stated objectives and wish to encourage you to actively and freely participate in the deliberations. With these few words, Ladies and Gentlemen, I declare this roundtable symposium open. Thank you! 2  BIS central bankers’ speeches
Woodford, Michael (2007b), “Forecast Targeting as a Monetary Policy Strategy: Policy Rules in Practice”, in Koenig, Evan, and Robert Leeson, eds., From the Great Moderation to the Great Deviation: A Round-Trip Journey Based on the Work of John B. Taylor, forthcoming. Daniel K Tarullo: Equipping financial regulators with the tools necessary to monitor systemic risk Testimony by Mr Daniel K Tarullo, Member of the Board of Governors of the Federal Reserve System, before the Subcommittee on Security and International Trade and Finance, Committee on Banking, Housing, and Urban Affairs, US Senate, Washington DC, 12 February 2010. *  *  *  Chairman Bayh, Ranking Member Corker, and other members of the Committee, thank you for inviting me to testify today. I also want to thank all of you for taking the time to explore a subject that is easily overlooked in the public debate around financial reform, but that will be central to ensuring a more stable financial system in the future. The recent financial crisis revealed important gaps in data collection and systematic analysis of institutions and markets. Remedies to fill those gaps are critical for monitoring systemic risk and for enhanced supervision of systemically important financial institutions, which are in turn necessary to decrease the chances of such a serious crisis occurring in the future.

These includes the ways the loans are classified, their provisioning requirements, their potential individual or group guarantees, the supervisory norms of the loan quality etc.. In addition, the counterparty risk is indirectly controlled by the requirements in capital adequacy of the institution. There are also other risks that are considered in the regulation, for which certain requirements have been defined. For the liquidity risk, there have been set up various norms for maintaining sufficient liquid assets and limiting the duration of the loans. For the concentration risk, the regulation requirements focus on the lending activity, and set out the norms for the net exposure in relation to the total assets of the institution. This regulatory framework is  2  BIS Review 88/2005  meant to be actively orienting the activity of the microfinance institutions, and as such, will be revised as the developments may require. Besides these two regulations, the examinations manual of these institutions has been prepared. It is based on the CAMELS system we use for banks, and is aiming at assessing the adequacy of the internal policies and procedures, the quality of the management and the identification, assessment and monitoring of risks. The Accounting Manual is also prepared and is based on the national accounting standards, adjusted for the microfinance activity. We retain current regulatory framework, after some expected changes and approval, is adequately monitoring microfinance activity in Albania while not becoming an impediment for its development.
The Central Bank pursues and will continue to pursue its monetary policy objectives with determination within the context of its historical mission and responsibility, as stated in the legal framework and the guidelines that were determined in 2001. In this framework, inflation targets are determined jointly with the government; while the choice of the monetary policy tools and their implementation principles are determined by the Central Bank. In other words, the Central Bank was provided with the instrumental independence by its law. The instrumental independence enables the Central Bank to design and implement its monetary policies with a medium term perspective. Distinguished Guests, Following the establishment of the institutional and legal framework of the monetary policy in accordance with the modern central banking principles, significant steps were taken in the fight against inflation. Thus, a rapid disinflation process was experienced and all of the inflation targets were attained for four consecutive years due to the macroeconomic policies, especially the fiscal policy that were implemented consistently with the inflation targets. The inflation rate of 7.7 percent realized at the end of 2005 was the lowest figure, which was recorded in the last thirty-five years. However, price stability could not have been achieved yet despite all these favorable developments and achievements. Our fight against inflation still continues. It should not be forgotten that this is a long and challenging process as confirmed by the inflation figures of 2006.

The rising expenditures, especially the investment spending increase the demand for machinery and equipment; and this demand can be met by imports due to the structural peculiarities of the Turkish economy. This process leads to the enlargement of the difference between the domestic savings and investments, which is an indicator of the current account deficit and causes the need for foreign resources to arise. With the help of the macroeconomic stability and the inflow of foreign capital, Turkish currency is appreciated and the process is reiterated giving way to an increase in the current account deficit in the environments where this resource can be provided and foreign borrowing becomes an option. A similar process was experienced due to the improvements recorded in the macroeconomic stability in the last five years and remarkable increases were observed in the current account deficit owing to the effect of high speed of growth. The current account deficit reached 34.4 billion USD in October per annum and the ratio of the current account deficit to national income in the third quarter of 2006 became 8.5 percent. However, the reasons besides the financing method should be examined in order to determine the extent of the risk that the current account deficit poses with regard to the macroeconomic balances. Current account deficit today basically originates from the faster increase of investments in comparison with the savings. Additionally, high increases observed in energy prices and especially crude oil prices influenced the increase in current account deficit in a vast amount.
Third, at an ad hoc meeting held in June, we decided to activate the flexibility in reinvestment of redemptions coming due in the PEPP portfolio, as the first line of defence to counter the pandemic-related risks to the transmission mechanism being seen. Fourth, at the latest meeting of the Governing Council held last Thursday, we decided to raise all three ECB policy rates by 50 bp, taking the deposit facility rate to 0%, thus moving out of negative territory for the first time since 2014. At the same time, we approved the new Transmission Protection Instrument (TPI), designed to safeguard the transmission of monetary policy. That is, we felt that a larger increase than signalled at the previous meeting was required, for two reasons. First, the updated assessment of the risks to inflation, including the materialisation of certain upside risks in the short term. Second, we took into account the reinforced support for the effective transmission of monetary policy provided by the new TPI. This 50 bp hike means an accelerated exit from negative interest rates, but does not imply a higher terminal rate in the hiking cycle. The pace at which we approach that level will be determined by the incoming data that we observe at our future meetings and how they affect our medium-term inflation target of 2%. In other words, our interest rate decisions will be made on a meeting-by-meeting basis.

First, the euro area needs a permanent macroeconomic stabilisation mechanism – with revenue-raising and borrowing capacity – to complement the single monetary policy. Second, it is imperative that the banking union be completed with the establishment of a European deposit guarantee scheme. A common fund, with risk-pooling, would ease the sovereign-bank nexus that proved so damaging in the European sovereign debt crisis and would align financial responsibility with centralised decision-making in banking supervision 4  Such as the important projects of common European interest, which include the development of batteries, microelectronics, hydrogen technologies and cloud services. 7  and resolution matters. It is also essential that the regulatory barriers that are hindering the emergence of a fully-fledged European banking market be lifted. Third, headway must be made in the construction of the capital markets union, so as to boost the euro area’s resilience to macro-financial shocks, better distribute the costs of asymmetric or idiosyncratic shocks, reduce the risks of financial fragmentation and provide an environment more conducive to private investment. At present, the relatively small size of equity markets and the considerable home bias of asset portfolios limit risk sharing in the euro area. Moreover, a deeper capital markets union could help channel high aggregate savings towards investment in infrastructure, energy and innovation, where private investment is crucial.5 Lastly, a key feature for a genuine, more integrated and deeper European capital market would be the existence of pan-European safe assets on a significant scale.
And, on the price front, they note that the disinflationary pressures of 2009 and 2010 have given way to inflation rates closer to what I and the majority of Fed policymakers see as the Fed’s objective of 2%. These considerations lead many to say that when adding up the costs and benefits of further accommodation, the risk of over-shooting our inflation objective through further policy accommodation exceeds the potential benefits of speeding the improvement in labor markets. I would argue that this view is extremely, and inappropriately, asymmetric in its weighting of the Fed’s dual objectives to support maximum employment and price stability. Suppose we faced a very different economic environment: Imagine that inflation was running at 5% against our inflation objective of 2%. Is there a doubt that any central banker worth their salt would be reacting strongly to fight this high inflation rate? No, there isn’t any doubt. They would be acting as if their hair was on fire. We should be similarly energized about improving conditions in the labor market. In the United States, the Federal Reserve Act charges us with maintaining monetary and financial conditions that support maximum employment and price stability. This is referred to as the Fed’s dual mandate and it has the force of law behind it. The most reasonable interpretation of our maximum employment objective is an unemployment rate near its natural rate, and a fairly conservative estimate of that natural rate is 6%.

In this scenario, either much of the past decade of prosperity was an illusion or, alternatively within the space of only a few years, the productive potential of the U.S. collapsed for some unexplained reason. I suppose it is natural to believe that some elements of the story are true. But for me, the evidence for this is minimal, and the implications for productive capacity are exceedingly pessimistic. And even if it is true, the market mechanism should cause wages and prices to adjust in order to reemploy unused resources. For example, there should be some lower real wage that would make it profitable for firms to fund the necessary on-the-job training for workers who need some modest acquisition of skills. According to this pessimistic hypothesis, something is preventing the market’s pricing mechanism from achieving such results within a satisfactory time frame. My own view is more optimistic and, I believe, more consistent with the idea that our best days are ahead. Without a compelling explanation for the hypothesis that the productive capability of the U.S. has been diminished, I think the evidence favors the belief that aggregate demand is simply much too low today. After all, today there are roughly 14 million unemployed Americans. Only a few years ago, there were only about half that many. It is hard to believe that an additional 7 million Americans have suddenly lost the necessary skills to work in today’s economy, and I have not seen any evidence supporting such a dramatic and rapid loss of skills.
This standard describes advanced methods of evaluating interest rate risk in banking books in detail, such as sensitivity testing of the net present value (NPV) and of the economic value of equity (EVE) in terms of interest rate risk. Moreover, the BCBS standard devotes special attention to the assessment of non-standard instruments vulnerable to interest rate risk, that is, instruments without a defined maturity date (in particular, demand deposits), and instruments with built-in optionality (in particular, loans with an early repayment option). In order to evaluate to what extent the methods of interest rate risk assessment and management used in Russian banks are consistent with international best practice, the Bank of Russia conducted a survey of 27 of the largest banks about how their systems of interest rate risk management and assessment are currently organised. In general, there is pronounced variation in the methods used by surveyed banks to assess interest rate risk. Among the respondents we can find both banks applying advanced methods close to BCBS standards, as well as banks using the Bank of Russia’s regulatory methodology. This is a natural consequence of the differences in banks’ sizes, their business models and the structure of their assets and liabilities, and does not represent a disadvantage. At the same time, it can be expected that the BCBS standards of interest rate risk assessment will be reflected in Russian banks’ regulation practice in the near future.

The full implementation of this fiscal rule will contribute to a reduction in the risks to financial stability associated with fiscal volatility and commodity cycles. On the subject of the Bank of Russia’s monetary policy, the existing balance of risks allows for a gradual lowering of interest rates to take place, however monetary policy should still remain moderately tight. This is due to the need to maintain inflation at a level close to the target, and to reduce inflation expectations in the medium term, taking into account the internal risks and potential volatility of external factors. The steadiness of changes to interest rates, and the attendant high level of predictability in monetary policy, leads to a reduction in the risks posed to financial stability. 2) On capital flows and global risks For the most part, the situation in Russia reflects overall improvement in sentiment on global markets in the context of a revival in economic activity in the leading economies. We have begun to see clear signs that economic dynamics are being restored not only in the U.S., but also in the Eurozone, where the economic situation has been unstable for a long time. In general, the indices of economic activity PMI for both the leading economies and the global economy as a whole currently sit at 6-year highs. The upward swing of the economic cycle is gaining momentum. These conditions have led to increased optimism of global market participants and growth in capital inflow on the markets of emerging economies.
Central banks can – and probably should – use our non-monetary policy portfolios as a tool for addressing climate change. Actually, the Banco de España has led by example in recent years in adopting these considerations. Since 2019, we have applied sustainability and responsibility investment principles to our non-monetary policy portfolios, which has effectively led to an increase in the share of green bonds in these portfolios. This is just one example of the kind of measures conducive to the greening of our economies that central banks can adopt. But surely more can be done in the realm of non-monetary policy operations. There was an important step in this direction last February, when the Eurosystem agreed on a common stance for climate change-related sustainable and responsible investment principles for euro-denominated non-monetary policy portfolios, with the aim of promoting disclosures and a sounder understanding of climate-related risks. Following this agreement, the Eurosystem aims to start climate-related disclosures for non-monetary policy portfolios within two years. As regards our monetary policy operations, in my view, any action in this area should be based on our price stability objective, which is the single primary mandate bestowed on the ECB by the Union's treaties. But be no mistaken by this relatively narrow scope, there is plenty of room for climate action within this remit.

Therefore, we must make sure that financial firms address these risks. In particular, we should contribute to identifying climate-risk drivers and their transmission channels, to the adequate measurement of the economic and financial impact of the different risks, and to the definition and development of the potential mitigation and riskreduction measures. If we succeed in incorporating these risks into the decisions of the financial sector, this will translate into a change in the relative prices of financial instruments. And, in turn, that will help to internalise those consequences originating from both transition and physical risks that affect directly providers and users of funds. This will be a powerful and much-needed complement to the use of the fiscal and environmental instruments that are needed to fight against climate change. In practical terms, climate risk can probably be captured in the traditional financial risk categories (credit, market, liquidity or reputational risks). However, several crucial limitations and challenges are coming to light when trying to measure these risks. In particular, there are few sufficiently deep and harmonised databases to analyse and understand the potential effects of physical and transition risks. Data granularity is particularly important given the high heterogeneity of the potential impacts. And, while we are working hard to improve available information, we lack sufficient historical depth to be able to use the past as a guide to estimate future developments.