samchain/econo-pairs-v1 huggingface dataset:
The Fed also backstopped the commercial paper market (formerly funded in large part by money market mutual funds) by introducing the Commercial Paper Funding Facility (CPFF). When wholesale funding for non-residential mortgage securitizations evaporated, the Fed rolled out the Term Asset-Backed Lending Facility (TALF). These actions ultimately stabilized funding markets and crowded back in private funds. But, they were an emergency response, not a sustainable long-term solution. After all, because most of the special Fed liquidity facilities were authorized under Section 13.3 of the Federal Reserve Act, they were required to be temporary in nature and to end when times were no longer “unusual and exigent.” Much has been done over the past few years to mitigate the structural flaws that make wholesale funding a point of weakness in the global financial system. The New York Fed, for example, has led a Federal Reserve effort to make the tri-party repo system more resilient to stress, while the SEC has taken steps to address risks associated with money market mutual funds. Nonetheless, some important issues and vulnerabilities remain. Moreover, because  BIS central bankers’ speeches  3  the Dodd-Frank Act raised the hurdle for the Federal Reserve to exercise its Section 13.3 emergency lending authority, extraordinary interventions will be more difficult to undertake, perhaps causing investors to be even more skittish in the future. This is why it is essential to make the system more stable. To that end, I look forward to hearing the insights and suggestions that come out of today’s workshop.

As is well known, the long lags of policy creates a need for central banks to “take the punch bowl away when the party gets going”. Given the longer duration of financial cycles, the need to act well before the risks become obvious may mean that central banks will have to “take the punch bowl away even before the party gets started”. But that is a political economy challenge that needs to be resolved and managed through careful redesign of central bank mandates. Heed must be paid also to institutional arrangements, especially for central banks where the financial supervision authority lies with another body as coordination will be harder. This will take time. But the risks to financial stability is immediate. In the interim, central banks may need to interpret their mandates more flexibly and avoid overly narrow and zealous interpretations of price stability. Inflation targets need to be implemented flexibly and over longer horizons. All the while explaining clearly and consistently the logic of policy. In doing so, it should be stressed that fundamentally, macroeconomic and financial stability are two sides of the same coin. Macroeconomic trajectories cannot be sustainable 9  if the financial sphere is out of equilibrium. And the avoidance of financial boom-bust cycles leads to better economic outcomes over the long run. The perceived trade-off between growth, inflation, and financial stability, therefore, is to a large extent an artifact of the short horizon focus of policy.
However, it has long been a cross-party objective for people to be able to own their home if they wish. Chart 5: Strong house price inflation As we can see from the chart, inflation-adjusted house prices have fluctuated over the past 150 years. House prices reached a preliminary peak in 1899, the year before the housing market crash in Kristiania (the name of Oslo at the time), falling thereafter, especially during and after the two world wars. If you had bought a home just before the Kristiania crash, it would have taken more than 80 years for you to recoup your investment. And after the fall in house prices at the end of the 1980s, 12 years passed before prices returned to 1987 levels. Following the banking crisis at the beginning of the 1990s, house prices took off and in real terms are now more than twice as high as before the housing bubble burst at the end of the 1980s. A home purchase has been for many years an exceptionally good investment. Thanks to rapid house price inflation, many of us have accumulated considerable wealth – at least on paper. Chart 6: How much housing can an average wage buy? In the most of the past century, Norwegians experienced a substantial rise in prosperity. Larger and cheaper housing was a significant contributor. This meant an ordinary wage could by more housing space, even though the real price of housing also rose sharply.

Therefore, the Basle Committee has quite rightly advised that regulators and banks should approach it with caution even with regard to the simplest approach to Basel II. We commenced our journey one year ago, together with the industry, and we will move slowly, but steadily, towards full implementation of the basic approach, hopefully in 2008. We will, however commence our test runs in parallel with Basle I in 2006, fine tuning our systems for full compliance as we go along. This would be in line with the widely accepted policy that countries should adopt the options and approaches that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. In Sri Lanka, as in most countries, the banking sector enjoys predominance in our financial system. As is to be expected, the financial environment, domestically, is becoming more innovative and competitive to meet the sophistication of peer foreign banks and the needs of investors and consumers. This naturally increases their risk profile. Increasingly, therefore, our remit as regulators is to ensure an efficient risk management framework and the adequacy of resources to mitigate risk. Against this background, therefore, Basle II is synonymous with good risk management, not only of the core risk of credit default, but of a wider range of risks such as market risk and operational risk in Pillar I .
Brian P Sack: Implementing the Federal Reserve’s asset purchase program Remarks by Mr Brian P Sack, Executive Vice President of the Federal Reserve Bank of New York, at the Global Interdependence Center Central Banking Series Event, Philadelphia, 9 February 2011. *  *  *  It is a pleasure to be back in my hometown of Philadelphia and to be invited to speak tonight at this event hosted by the Global Interdependence Center (GIC) and the Federal Reserve Bank of Philadelphia. The GIC has an impressive history of promoting public dialogue about monetary policy and other topics, and it is a privilege to be able to participate in that process. Tonight I will focus my comments on the implementation of the recent monetary policy decisions of the Federal Reserve and the associated implications for its balance sheet. As always, the views I will express are my own and do not represent those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. Unconventional policy decisions In the second half of 2010, the FOMC made two important policy decisions about the size and composition of the Federal Reserve’s balance sheet. In August, it decided to begin reinvesting the principal payments from its holdings of agency debt and mortgage-backed securities into longer-term Treasury securities, thereby keeping the amount of domestic assets held in the System Open Market Account (SOMA) portfolio unchanged at about $ trillion.

If a particular security is scarce in the market, we will presumably not be shown offers at attractive terms, and hence we will not end up removing additional supply of that security. 9  The Desk tends to avoid conducting operations on days that coincide with FOMC announcements and on days that are known to have lighter liquidity conditions. 10  The Desk has begun publishing additional information from its operations, including information about the prices paid for each security, on a monthly basis. In addition, under the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve will publish additional information about its open market operations, including the individual securities purchased, the transaction prices and the counterparty, with a two-year lag for all transactions subsequent to the legislation. 11  Implementing the program over an eight-month period would not be expected to significantly reduce the speed or magnitude of its effects on financial conditions and, ultimately, on the real economy under the view that the program’s effects arise from the expected stock of our holdings rather than the flow of our purchases. Under this view, financial conditions react immediately to the announcement of the program, bringing forward its effects on financial conditions. This view provides policymakers with some flexibility regarding the amount of time to implement the total amount of purchases. BIS central bankers’ speeches  3  The flexibility of this procedure can be seen in the patterns of our purchases over time.
But it cannot yet be said that productivity growth in the Swedish economy has improved to the same extent. Neither have we registered a similar growth of investment, which could then be a leading indicator that the new technology is being introduced on a wide front. In the 1990s the stock of corporate capital, for example, grew twice as fast in the United States as it did in Sweden. It is certainly conceivable that the high level of the Stockholm stock exchange represents expectations that productivity growth will also move up in Sweden. The sum of the values of individual companies can serve as a yardstick of what is expected of the stock market as a whole and this presumably reflects expectations of how the total economy will develop. And if current share prices are regarded as reasonable, there will clearly have to be an appreciable increase in future profits. This can then be interpreted as expectations of an overall improvement in productivity growth and thus of a higher potential output. An alternative interpretation could be that the stock market is at least partially over-valued. A third possibility is, of course, that the development of share prices is explained by a combination of these two factors. It still seems too hazardous, however, to assume that potential growth in Sweden has moved up towards the level in the United States. It is possible - perhaps even probable - that similar supply factors will emerge in the future and the Riksbank must be alert to this.

This implies that sooner or later, if nothing were done, the rapid growth at present would lead to overheating and an acceleration of inflation. One factor behind the current trend has been monetary policy’s stimulatory direction ever since the repo rate cuts that were initiated in 1998. This illustrates that over a complete business cycle, the repo rate of 2.90% that applied up to last November is too low. GDP growth at the current rate of 3.5-4% implies an expansion of demand that clearly exceeds the rate of 2-2.5% that the economy can cope with in the longer run. It is only feasible in a limited, transitional period, that is, for as long as there is a supply of labour for the available jobs. The repo rate hike may not suffice; inflation prospects set the pace As monetary policy works rather like the helm of an oil tanker - it takes rather a long time to shift the economy onto a new course - it was necessary to make the adjustment to a more neutral monetary stance. Thus, GDP growth will continue at a higher rate for some time to come and then, after perhaps one to two years, successively slacken towards the economy’s long-term potential. The task the Riksbank is endeavouring to perform is to achieve an economic transition from a fairly normal upward phase to a growth trend that is more sustainable. This task, which is not simple, follows implicitly from our statutory function of “maintaining price stability”.
In this context, the ECB and the 3 Level 3 Committees, predecessors of the ESAs, are proceeding in a dialogue on issues of common interest. V.  Concluding remarks  Let me conclude. The ESRB will have a challenging task considering the high level of expectations about its impact as well as the difficulties surrounding the area of financial stability which I mentioned earlier. The success of the ESRB will also depend on the commitment of all stakeholders to contribute effectively to its mission. The ECB, on its part, is fully committed to ensure all the necessary support to allow the ESRB to fulfil the important responsibilities assigned to it by the Member States. The ECB is committed to continue to invest on its analytical capabilities so as to enhance risk surveillance processes and produce high quality risk assessments with a view to inform ESRB decisions. It is also committed to devote efforts to develop a coherent macroprudential policy framework, thereby contributing to the efforts being done at the global level in this domain, also well reflected in this conference. Having said this, let me recall that the most important contribution that a central bank can provide to the maintenance of financial stability is to preserve price stability. Maintaining price stability has been, and will continue to be, the primary mandate of the European Central Bank, and it will not be affected at all by the assignment of new responsibilities in the macroprudential area. BIS Review 125/2010  5

BIS central bankers’ speeches  3  To get the real benefit from the advancement in ICT, we need to educate and persuade customers to change their behavior in using other payment instruments, from cash to non-cash instruments. In addition, the central bank needs to coordinate with financial institutions and service providers to make electronic payments to be more accessible, reliable and, of course, available at reasonable price. The third consideration is the implementation of principles for financial market infrastructures. From the regulatory point of view, the important payment and settlement systems need to be appropriately regulated. The recent financial crisis has shown that financial market infrastructures, such as payment and settlement systems and central counterparty, can be sources of financial shocks or major channels that shocks are transmitted across domestic and international financial markets. To enhance safety and efficiency, the principles for financial market infrastructures have been prescribed by the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) in April 2012 with objectives to limit systemic risk and foster transparency and financial stability. In response to the new international standard, the Bank of Thailand intends to adopt these principles to our systemically important payment and settlement system which is BAHTNET system. Moreover, we will coordinate with other regulators to ensure that all systemically important payment and settlement systems are adequately supervised.
Even in cases where the authorities managed to be innovative, perhaps to an extent not normally expected of bureaucrats, and did the right thing, there is always the easy, popular but legitimate question of why action was not taken earlier. The Political Process of Monetary Management 6. In Hong Kong, the grievances of the community are enthusiastically and effectively aired by politicians. Whether directly or indirectly elected, the politicians have the BIS Review 87/1998  -2-  mandate of the people and the people of Hong Kong are well served by them. But one of the peculiarities of the system of Hong Kong is that the politicians, although having the mandate of the people, do not actually have the authority to direct government policies. A consequence of this is that the Administration is always kept on its toes, much more so than in many other jurisdictions. There are lively debates on almost all issues of significance, not to mention those that are controversial. This obviously has the benefit of ensuring that the Administration performs to its best ability. But the inevitable disadvantage is simply that there can be too much of everything, to the extent of eroding rather than enhancing the efficiency and effectiveness of government. But this is the reality of Hong Kong today and we all have to live with it. 7. The management of any public issue of significance involves first getting the technicalities right, then explaining them patiently and clearly to all those concerned, and then handling skillfully the politics surrounding it.

Our critics have told us that we should not have squeezed so hard on interest rates last October and that we should not have increased the cost of borrowing for business and for those who have to service their home mortgages. We should have introduced our measures to strengthen our monetary and financial systems earlier. We should not have departed from our free market policy and intervened in the stock and futures markets. That there was a lack of a “sense of crisis” in how we handled the situation. These are the more significant criticisms. 4. I can fully understand the sentiment behind these criticisms. The people of Hong Kong have been suffering the worst conditions we have had to face for many years. Even the most patient and understanding community will have grievances when the value of the assets they hold has been halved while they have to pay significantly higher interest costs for their liabilities. Furthermore, income has not been growing, and, for some, it has been shrinking. And, worse still, the probability that they may lose their jobs has doubled in the past year. 5. So, whatever the cause of this difficult situation, whether or not it arose from events outside the control of the authorities, it is considered, and rightly so, the responsibility of a caring government to do what it can to relieve these grievances. Refusal or reluctance to do so, even for very sound reasons in the larger long-term public interest, is not looked upon kindly.
BIS central bankers’ speeches  1  Second, guidance on CCP recovery and resolution: in 2014, as a supplement to the PFMI, CPMI-IOSCO published comprehensive guidance on financial market infrastructure (FMI) recovery.3 It considered the types of tools that CCPs and other FMIs can use to deal with severe financial problems that could threaten their existence. In addition, the FSB adopted a framework on FMI resolution.4 Third, specific treatment of banks’ exposures to CCPs: the BCBS has revised its previous Basel II capital framework, which applied a zero capital charge to banks’ exposures to CCPs, in order to better capture the risks stemming from the financial system’s increasing reliance on CCPs. One of the main features of this revised framework is the preferential treatment given to exposures to qualifying CCPs, i.e. CCPs supervised in a manner consistent with the PFMI. Finally, enhancing the understanding of CCP risks via increased transparency: in order to ensure CCPs are providing participants with the necessary information to evaluate the risks linked to clearing, CPMI and IOSCO have published two disclosure frameworks. The Disclosure Framework and Assessment Methodology,5 released in December 2012, and The Public Quantitative Disclosure Framework6 for CCPs, released in February 2015, which require CCPs to disclose information on topics such as the size of their credit risk, liquidity risk, collateral, margins, business risk, custody and investment risks. Let me add that public disclosure requirements are particularly important for indirect members who, unlike direct members, do not play a direct role in the CCP’s risk governance.

The single supervisory mechanism has been defined as an integrated system of surveillance of financial institutions under the clear leadership of the ECB, which in turn benefits from the supervisory experience of the competent national authorities. Specifically, the ECB assumes all the relevant powers in respect of the supervision of credit institutions, and exercises them through decision-making arrangements centralised in a Supervisory Board on which both the ECB and the national supervisory authorities sit. The latter contribute, according to the Regulation, to the preparation and application of the decisions taken in a centralised fashion. The work of the national authorities will be channelled through what are known as the Joint Supervision Teams. These teams, which will regularly monitor each institution, will be made up of supervisory staff from the ECB and from the national authorities. Regular on-site inspections will, as a general rule, be conducted by the national authorities, following centrally set mandates and arrangements. As you can imagine, the work ahead over the coming months will be very intense. Having to assume supervisory powers in scarcely one year will make great demands in terms of organisation. Specifically, several groups made up of staff from the ECB and the national authorities have been set up in Frankfurt and are pushing ahead with the extensive groundwork.
The share of household wealth invested in risky assets 2 is much higher in the euro area than in France (89% of GDP in Q4 2014, versus 74% for France), and nearly three and a half times higher in the United States (250% of GDP). A large part of the gap with the United States can be attributed to the significant role played by US pension funds; however, rates of share ownership are also markedly higher among US households than they are in France. c) On the one hand, this means that French savings generate smaller returns, especially in the current low interest rate environment; on the other, it also undermines France’s economic growth potential, as insufficient savings are used to finance innovative business investments – an area which requires large amounts of capital, particularly equity capital. Let me just give you a few figures by way of comparison: in the United States, the net equity of non-financial corporations amounts to 123% of GDP, compared with an average of 52% in the euro area, which is less than half, and 66% in France. The challenge is therefore this: how can we encourage French savers to take on a greater, sensible amount of risk in order to better finance our economy? The question is even more relevant in light of our current financial and monetary policy stance: interest rates are low and are likely to remain so for a significant length of time.

–  This debate on savings is both technically complex and impassioned – deservedly so as it concerns the wealth of ordinary French citizens. Parliament has worked extensively on the issue, publishing a number of vital reports. It is not my role to decide when or how we go about it, but I firmly believe our country needs to take a dispassionate look at the way it saves. Savings are one of our foremost resources and they are in abundant supply; business investment is one of our foremost needs. We mustn’t miss out on this opportunity in the current context of low interest rates. Thank you for your attention and please feel free to ask any questions. 2  BIS central bankers’ speeches