samchain/econo-pairs-v1 huggingface dataset:
21 The scenario is set out in full in Bank of England (2019) 22 In 2014, the FPC took action to insure against the build-up of highly indebted borrowers in the UK housing market, see Bank of England (2014), and also Bunn and Rostom (2015) and Mian and Sufi (2014). 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  In this extremely important sense, we have moved on from an approach that argues that because we are not able to identify when financial sector risk-taking is unsustainable, the best course is to wait until the adjustment happens and vigorously mop up afterwards. What has proved more difficult has been using macro prudential policy in a time-varying, counter-cyclical way. It is pretty clear, as I have said, that one characteristic of the system is a build-up of leverage, growth in asset prices and risk-taking over time followed by a correction – a characteristic we describe as the ‘financial cycle’. It is desirable therefore to increase the resilience of the system, its ability to withstand losses, as risks build up. But it takes time to build up resilience and identifying where we are in the financial cycle, and the risk of a correction, is a very challenging task. We are not wholly without indicators. 23 Empirical evidence, for example, suggests that rapid debt growth is a forward indicator that a correction is approaching. Research, including recent Bank work, shows that a build-up in credit predicts worse recessions.

1  16  All speeches are available online at www.bankofengland.co.uk/speeches  16
Second, the development of pan-European individual retirement savings products to increase workers’ mobility and offer a new source of long-term financing for European companies. Third, the reinforcement of ESMA which is necessary to supervise capital markets in a harmonised way, while duly involving national authorities when appropriate. Completing the Banking Union and accelerating the Capital Markets Union will therefore be essential in order to lay the basis for a sound, diversified and integrated financial intermediation. Yet, we should go even further and achieve a real “financial Eurosystem”, made up of stronger and pan-European financial institutions and shared market infrastructures. Brexit, in this sense, represents an opportunity. Let’s be clear: there will not be a single City for the continent, but rather an integrated polycentric network of financial centres, with specialisations based on areas of expertise. Our ability to adequately regulate and supervise these changes in financial intermediation will be determinant for growth and innovation. Europe must effectively transform its own savings, in order to enhance its ability to finance the real economy. This is what Governor Villeroy de Galhau calls the Financing Union for Investment and Innovation. This involves better steering the euro area’s abundant savings to absorb shocks within the euro area more effectively and 8/9  to meet investment and innovation needs in fields such as digital technology, energy transition and the equity financing of SMEs.

I would like to conclude my speech by quoting Bill Gates: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction”.3 The Banque de France tries to heed this warning. Although we do belong to the (very) “old world” – the Banque de France was created more than 200 years ago by Napoléon –, as any incumbent, we need to adjust and adapt to the “new world”. In order to do so:   we have adapted our organisation and governance with the creation of a Fintech hub within our supervisory function (which has supported more than 300 Fintechs), the appointments of a Chief Digital Officer and a Chief Data Officer, and the launch of a Lab to foster innovation within the Banque.   We experiment with new technologies: the Banque de France was the first central bank to implement a full-scale project based on DLT which is fully operational 4 and we successfully run eight artificial intelligence projects.   We also host discussions between regulators, academics and the industry: the latest working group on artificial intelligence will deliver its conclusion by end of this year. But this call for action is addressed to everyone, and especially to you, the next generation.
But my confidence will be bolstered if my colleagues adopt the First Law of Holes espoused in the late ’70s by then-British Chancellor of the Exchequer Denis Healey: “If you find yourself in a hole, stop digging”. BIS central bankers’ speeches  5  The housing market is well along in repair;5 the economy is expanding; cyclical unemployment is declining. To be sure, there will be individual data points that appear to challenge confidence, like the just-released employment report for December. But I believe the odds favor continued economic progress. And I believe that continuing large-scale asset purchases risks placing us in an untenable position, both from the standpoint of unreasonably inflating the stock, bond and other tradable asset markets and from the perspective of complicating the future conduct of monetary policy. The eye of the needle of pulling off a clean exit is narrow; the camel is already too fat. As soon as feasible, we should change tack. We should stop digging. I plan to cast my votes at FOMC meetings accordingly. Thank you. 5  See “The Long-Awaited Housing Recovery”, by John Duca, Federal Reserve Bank of Dallas Special Report, January 2014, www.dallasfed.org (note: the report will be available online on Jan. 15). 6  BIS central bankers’ speeches

Small wonder that I delighted when President Clinton asked me to become deputy U.S. trade representative and help implement NAFTA – even if it meant matching wits with formidable negotiators like Luis de la Calle and Herminio Blanco! Small wonder that as president of the Federal Reserve Bank of Dallas, I have delighted in working closely with Guillermo Ortiz and Agustín Carstens. Small wonder that at meetings of the Federal Open Market Committee or in U.S. banking circles, I have often argued Mexico’s case. Or taken sheer pleasure in pointing out to U.S. congressmen and senators, and in speeches and media interviews, that the Mexican government – unlike my own government – actually can agree on a budget, keep deficits under control, bring about structural change and resist interfering with the workings of an independent central bank. BIS central bankers’ speeches  1  I am full of pride for Mexico. I am full of pride that this country, the country of my happiest childhood years, would now choose to honor me with the Order of the Aztec Eagle. The citation for this honor speaks of my being a fierce defender of price stability. In the parlance of central banking, I am referred to as a “hawk.” Well, it may not surprise you to learn that taxonomists place the eagle and the hawk in the same bird family.
The other view was that higher interest rates would not have altered the expected long-run equilibrium value of sterling, but would have led to an immediate upwards jump in the exchange rate, as the greater interest rate differential with other countries would have shifted up the uncovered interest rate parity path from OA to QA in Chart 8. That would have meant even weaker external demand, and a more depressed domestic economy. 30 Higher interest rates would have moderated domestic credit growth and asset prices, but only at the expense of slower output growth, rising unemployment and a prolonged undershoot of the inflation target. 31 Everything would have hinged on the success of the strategy in bringing down the expected equilibrium level of sterling in the long run to avoid a further rise in sterling in the short run and a damaging recession. At best, persistently higher interest rates would have implied an initial slowing of growth, a deliberate attempt to weaken sterling, and an under-shooting of the inflation for a period. At worst, we would have seen the exchange rate appreciate further. The decade would have been characterised by rising unemployment and very low inflation. To have deviated from our statutory remit in a direction that would have imposed real costs to output and employment would have been a big gamble. But the costs of the ensuing crisis have been so great that we cannot stop there and say that nothing could have been done. 29  Broadbent (2012).

DLT may provide a more efficient alternative to credit bureaus that compile consumer credit information from banks. The insurance industry in Singapore is looking at how DLT can help prevent duplicate insurance claims. 2/5  BIS central bankers' speeches  Probably, one of the potentially more powerful applications in financial services is in customer verification, the so-called “know-your-customer” or KYC process. Banks spend an inordinate amount of time and money on KYC, and yet struggle to effectively detect and deter money laundering, tax evasion, and other forms of illicit finance. DLT brings about opportunities for a shared industry-wide KYC utility that can verify customers and transactions in a more efficient and robust manner. This is not just conjecture. It is beginning to happen. In Singapore, OCBC Bank, HSBC and MUFG announced last week that they have completed a KYC blockchain project to reduce the duplicity of KYC processes, providing convenience for customers and efficiency across the banks. The “killer app” for DLT is really in cross-border transactions. When multiple entities across different jurisdictions are involved, there is no natural trusted central party. DLT allows the possibility of various parties working directly with one another to make crossborder transactions cheaper, faster, and safer. Cross-border trade is a good example. In Singapore, we are exploring two specific applications – trade finance and trade documentation. In trade finance, DBS Bank and Standard Chartered Bank are exploring the use of DLT to prevent the problem of duplicate invoicing while preserving client confidentiality.
We must use the opportunity before us and study the events in September and March to identify the root causes for the market stress and disruption.9 We need to understand how changes in the market ecosystem—whether due to regulation, technology, or other factors—have influenced market resilience. Like the post-financial-crisis reforms, this is an opportunity to think hard about what changes will help fortify the financial system against future shocks. 2/4  BIS central bankers' speeches  The Role of Central Banks Despite our best efforts, we should not fool ourselves that we can design a system that is bulletproof against every circumstance. The events of the past year have demonstrated the critical role central banks can and must play in extraordinary times when market stress and dysfunction threaten to spill over into the economy. No private institution has the ability to provide liquidity at the speed or scale that the Federal Reserve and other central banks have this year. Although we often talk about the Fed in terms of monetary policy and interest rates, the Federal Reserve System was originally created to ensure the stability of the financial system.10 That role is as relevant today as it was 107 years ago, and will continue to be in the future. Conclusion Let me conclude by returning to my analogy of these critical markets as the heart of our circulatory system. Recent events have reaffirmed what many already knew.

Liquid, wellfunctioning markets for Treasury and related securities are absolutely essential for credit to flow and the economy to prosper. Assuring that these markets are robust and resilient to unknown future circumstances may seem like a daunting task, but as Captain Picard also taught us, “Things are only impossible until they’re not." Thank you. 1 John C. Williams, Rising to the Challenge: Central Banking, Financial Markets, and the Pandemic, Remarks at  the 16th Meeting of the Financial Research Advisory Committee for the Treasury’s Office of Financial Research (via videoconference) (July 16, 2020). 2 U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Reserve Bank of  New York, U.S. Securities and Exchange Commission, and U.S. Commodity Futures Trading Commission, Joint Staff Report: The U.S. Treasury Market on October 15, 2014, July 13, 2015. 3 John C. Williams, LIBOR: The Clock is Ticking, Remarks at the 2019 U.S. Treasury Market Conference, Federal  Reserve Bank of New York, New York City (September 23, 2019). 4 John C. Williams, Money Markets and the Federal Funds Rate: The Path Forward, Remarks at the MFA Outlook  2019, New York City (October 17, 2019). 5 Federal Reserve Bank of New York, Statement Regarding Repurchase Operations, September 20, 2019. 6 The impact of these strains on liquidity in the Treasury market is discussed in Michael Fleming and Francisco  Ruela, Treasury Market Liquidity during the COVID-19 Crisis, Federal Reserve Bank of New York Liberty Street Economics, April 17, 2020.
Chart 1 in Figure I depicts the evolution of the current account deficit prior to the end of the episode of sizeable capital inflows (“0” on the horizontal axis). This depiction reflects the identity typical of the balance of payments, namely that the current account deteriorates during the episode of massive capital inflows. At the same time, the end of the episode of heavy capital inflows overlaps the initiation of current account adjustment towards levels seen in the run-up to the reversal. The V-shaped pattern of current account developments is sharper in low- and middle-income countries (Reinhart and Reinhart, 2008). In line with expectations, real GDP growth is relatively high during a capital flow bonanza and is followed by a sudden drop in the year when the episode ends and a relatively fast recovery thereafter. In other words, subsequent to the end of the cycle of heavy capital inflows, the GDP trajectory is V-shaped, as illustrated in Chart 2, Figure I. The attempt at identifying a pattern on how inflation fared was the most difficult, because the data presented in the literature vary to a great extent, which could be an indication of the major role played by monetary policy both before and after the large capital inflows.

In particular, because no new entity is required, it will not be necessary over a resolution weekend to authorise a new entity, or to change the contract documentation to which the firm is a party, and memberships of Financial Market Infrastructures can remain intact. But, whichever approach is pursued, the essential elements of the transaction are the same. These are set out in the KAs and are included in some detail in the BRRD: •  Entry into resolution: The trigger for entry into resolution is twofold 2: first, a firm must be failing, or likely to fail to meet its conditions for authorisation; second, it must be reasonably likely that no action is available to remedy this situation within a reasonable timeframe. This is intentionally forward looking; it is designed to allow recovery actions to be taken to remedy a breach, or likely breach, of threshold conditions, when the existing owners and management of the firm can take actions that might be successful in rectifying the breach. But, when recovery is not reasonably likely, resolution authorities have the option to put the firm into resolution and deploy their toolkit. And the BRRD goes beyond this – it includes the obligation that, when these two triggers are met, capital instruments are written down or converted to the extent necessary to meet resolution objectives, putting in statute the Basel Committee’s requirement that capital must be fully loss-absorbing when firms meet the point of non-viability.
In its role as a bank supervisor, the Federal Reserve has the responsibility to see to it that this credit support does not dry up at critical times. One of our primary tasks is to be certain that nothing interferes with the credit intermediation process of banks. This is why bank soundness is so important to us. The events of last August illustrate what can go wrong with financial markets and why we were so concerned when the global credit markets seemed to seize up following the announcement by the Russian government of an effective devaluation of the ruble and a debt moratorium. These actions were so unexpected that they shocked investors all over the world. In the United States, the correction of stock prices in the wake of Russia’s announcements was not of exceptional size or concern, and had even been anticipated by some astute observers. But the abrupt and simultaneous widening of credit spreads globally for both corporate and emerging market sovereign debt was an extraordinary event beyond the expectations of investors and financial intermediaries. The abrupt shift in investor behavior, in fact, served to intensify price movements and to undermine confidence in market dynamics. It was not just the rebalancing of portfolios that was of concern in the days and weeks following the Russian government’s announcements, but also the rush away from risk altogether. In short, it was this seizing up of the credit intermediation process that was of most fundamental concern to us as central bankers.

Mr McDonough discusses the role of central banks in the global financial markets Remarks by the President of the Federal Reserve Bank of New York, Mr William J. McDonough, before the Economic Club of New York, New York City, on 14/12/98. Good evening, ladies and gentlemen. I am delighted to be here tonight and to share the podium with my good friend Dick Grasso. Dick and I have worked together for many years now, and I have come to value greatly both his warm friendship and his thoughtful counsel. Dick has spoken eloquently about how equity markets have developed globally over the past several years and some of the concerns he has going forward. For my part, I will focus on the global debt markets and the interests of central banks in the stability of these markets. The role of central banks in the fixed-income and related capital markets may not be immediately obvious because, one can argue, debt markets are a zero-sum game. One side of a trade gains what the other loses. If only it were as easy as that! In fact, trading in the global debt markets serves an important purpose and it does not follow that central banks have no interest in the stability of these markets. Quite the contrary. Central banks are and should be deeply concerned about the functioning of these markets, their dependability, their liquidity, and their transparency.
But, at the same time, this must be done in way that ensures the financial system retains sufficient dynamism so that it can allocate capital efficiently to support innovation and economic growth. The crisis revealed a number of significant weaknesses in the global financial system. First, many leading financial institutions at the core of the system did not have enough high-quality capital to be able to retain access to private funding markets in the face of the large credit and mark-to-market losses. In particular, they often held grossly inadequate capital against their trading book exposures and the counterparty credit risk generated by activities such as their over-the-counter (OTC) derivatives business. Second, individual firms and the system as a whole had inadequate liquidity buffers to withstand marketwide disruptions. Indeed, there was widespread overreliance on short-term funding to finance long-term illiquid assets. This was especially evident among the major securities dealers, which depended on tri-party repo funding to finance much of their securities inventories, and in the so-called shadow banking system, in which entities such as structured investment vehicles and conduits were dependent on short-term funding to finance their long-term assets. Banks that had provided liquidity guarantees to these shadow banks were in turn exposed to runs on those entities. Third, a lack of transparency exacerbated uncertainty about the creditworthiness of many institutions. Some of this was due to the complexity of the assets – collateralized debt obligations (CDOs), in particular, were very hard to value even in normal times.

I believe that the requirements were the outgrowth of at least four major considerations: 1. What type of losses could banks expect to occur in a crisis? In other words, how thick a buffer was needed to absorb shocks? This is represented by the 2.5 percent capital conservation buffer. Although this is not thick enough to protect every bank in every crisis, it does create a loss-absorbing cushion so that banks will retain their ability to access the capital markets even after incurring significant losses. 2. How much common equity must a bank hold to be viewed as viable by financial market participants? This is important because beyond a certain point banks lose their access to the capital markets, and this makes failure much more likely. The 4.5 percent minimum common equity requirement is set at a high enough level so that a bank operating above this level would very likely still be able to access the capital markets to replenish its capital base after large losses. 3. What was achievable internationally? It is important to have international convergence in terms of standards. This is necessary to minimize competitive inequity and to avoid creating incentives for a race to the bottom. If standards differed markedly around the world, then the conversation would inevitably shift to “what will help my banks competitively” from “what levels of capital do we need to have a sound financial system”. 4. What is the appropriate tradeoff between benefits and costs?