samchain/econo-pairs-v1 huggingface dataset:
Risk measurement and management  The return on the SNB’s assets – particularly on currency reserves – fluctuates dramatically from year to year. The absolute loss can be considerable. While it is true that earnings fluctuations have been reduced by the scaling-back of dollar and gold holdings in recent years along with the improved diversification of currencies and investment categories, it is not possible to continue reducing risks ad infinitum. Hence, hedging the currency reserves’ dollar and gold risks to a high degree, for instance, is impracticable, as these reserves would then no longer serve their intended purpose. Professional risk measurement and management is thus crucial for the SNB. The risks attached to the National Bank’s assets are primarily assessed using the value-at-risk (VaR) method. This widely used risk indicator quantifies the level of loss that will most probably not be exceeded within a specific period of time. The SNB calculates the VaR based on a 95% probability and a time horizon of one year. Value-at-risk analyses are undertaken both for individual portfolios and the total assets. The current VaR for the total assets of approximately CHF 100 billion amounts to roughly CHF 4.5 billion. A value-at-risk analysis gives no indication of how much could potentially be lost beyond the specified level of 95%. Furthermore, it is based on current risk and correlation structures that are not necessarily an accurate reflection of future risks. This is particularly the case at the moment – at a time when market volatility is low by historical standards.

Obviously the changes in the Bank’s remit announced in May 1997 by the incoming Labour Government, and largely enshrined in the 1998 Bank of England Act, were profound ones. The arrival of monetary independence meant that the work of the MPC – of which I am one of the nine members – has scarcely been out of the news. Less obtrusively, the departure of banking supervision to the new FSA meant the end of one substantial – though actually comparatively recently acquired – function; and the shift of debt management to the DMO brought to an end another, much older one. So does the “new” Bank have a new relationship with the financial services sector? Let me first say that, though the Bank has been through a period of profound change, its core purposes remain the same. One is obviously to promote monetary stability; and there our role is now much more substantial and overt. But the Bank has two more core purposes, and both relate directly to the financial services sector. 1  BIS Review 43/1999  The first is to promote the overall stability of the UK financial system. This role is not new, though it has recently been set out explicitly in the Memorandum of Understanding between the Bank, HMT and the FSA. Broadly, promoting systemic stability means working to ensure that the financial system continues to perform its key roles in support of the wider economy – settling transactions, providing liquidity and allocating savings.
Between 2004 and 2009, this expanded at an annual average of 5.3%. On the other hand, government investment remained broadly unchanged during this period and declined in the last two years, in part because actual outlays often fell short of targets. The dual challenge of maintaining a high level of investment spending while reducing the budget deficit, therefore, implies that it is recurrent expenditures that must be cut. Progress has already been made by reducing subsidies, through the privatisation of the shipyard and by aligning utility rates more closely to production costs. For next year, however, while an increase of less than 1% in recurrent spending is planned, few specific cuts have been identified. In this context, the latest Annual Report of the National Audit Office suggests there is ample scope for controlling expenditures more effectively and for improving revenue collection. 13 While taxpayers have every right to expect value for their money, a substantial, durable fiscal correction requires a fundamental reappraisal of the role of the state in providing services. The need to prioritize expenditure programmes has not been fully addressed. As a result, the most difficult challenges, such as how to ensure sustainable funding for tertiary education, pensions and health services, remain to be tackled. 14 Domestic consumption must return to a sustainable level. It is an inevitable adjustment for economies like ours that have lived beyond their means for far too long.

BIS Review 156/2010  3  the Bank on price and wage setting in Malta shows that although just over half of respondents would cut prices if their competitors did so, 36% would not. Unsurprisingly, the most flexible firms were those in the manufacturing and tourism sectors, where foreign competition is strong. This suggests that there is still scope for increasing the degree of domestic market competition. Sometimes, the connection between market liberalisation and exports may be indirect. As the recent experience in the communications sector has shown, liberalisation drove down costs and prices. This opened up new export opportunities outside the communications sector itself, for example, in financial services and remote gaming. The importance of keeping costs under control cannot be overemphasized. Malta’s inflation performance over the last ten years illustrates this point. Whereas the euro area inflation rate averaged 2.1% between 2000 and 2009, domestic inflation averaged 2.5%. The record for inflation excluding energy prices shows a similar unfavourable trend. It is an established fact that in a currency union rates of inflation consistently above the average result in a loss of competitiveness. Apart from more competitive markets, containing domestic inflation implies a need for wage moderation. For many years employee compensation has grown faster than real labour productivity. Whereas the former increased by around 31% since 2000, productivity rose by only 2.5%. The resulting rapid growth in unit labour costs, more than 28%, compares with an average of 20% in the euro area.
It will then return gradually to 3% by the second half of 2013, to stay in the neighborhood until the end of the projection horizon, this time the third quarter of 2014. The CPIEFE will converge to 3% later than foreseen in June (figure vi). This trajectory assumes that wages will be adjusted according to productivity and the inflation target. A methodological assumption is that the RER will remain around its recent figures during the forecast horizon. Finally, the baseline scenario uses as a working assumption that the MPR will remain stable over the short term. The baseline scenario reflects the developments that the Board believes to be the most likely to occur with the information at hand at the statistical closing of the Report. However, there are risk scenarios that, if materialized, might change – significantly, in some cases – the macroeconomic outlook and, therefore, the course of monetary policy. On this occasion, after evaluating the alternative scenarios, the Board estimates that the risk balance for output and inflation is unbiased. Abroad, the risks described during the past several quarters have not changed significantly. The situation of the Eurozone is complex. The materialization of the announcements will not be easy and the passing of time will bring more problems to the economies of peripheral Europe, so a severe aggravation of the financial crisis in the Eurozone or even more extreme scenarios with systemic implications cannot be ruled out.

In our Report’s baseline scenario we forecast that in 2012 and 2013 the current account will post a deficit of around 3 to 4% of GDP. These balances contrast with what has been the behavior of the current account in recent years. It is striking because it happens at a time that, despite the complex external scenario, the terms of trade facing our country are favorable. The persistence and expansion of high current account deficits may generate factors of vulnerability for the Chilean economy when facing an external shock. Although an economy’s current account deficit is not a sufficient condition to anticipate a crisis of some sort, it does help increase its probability of occurrence. For example, due to the importance that this variable may have in sovereign risk, external credit conditions and, ultimately, on access to the sources that sustain such deficit. In the past, a significant part of the crises that the country endured have had to do with persistently, high current account deficits. Accordingly, the Board cannot overestimate the importance of closely monitoring the factors underlying our current deficit, in order to prevent the incubation of imbalances affecting the future performance of our economy. However, a big difference with the past is that today our economy has made progress in devising mechanisms to deal with external shocks and imbalances. Thus, as I said before, we need to maintain and permanently improve the macroeconomic pillars that have made  BIS central bankers’ speeches  7  our economy stable and resilient.
I am mindful of the fact that Zanaco’s base rate is one of the lowest in the country but would like to urge Zanaco to live by its slogan, “big, strong & reliable” by being proactive and set an example of supporting our efforts in developing the economy. At the central bank, we have continued to do our best, in support of government’s effort of reducing inflation, stabilising the currency and implementing sound monetary policies. With inflation of 8.4%, the lowest in the last 30 years in the history of our country and other positive developments, we surely would not be asking for the impossible for commercial banks to respond favourably and reduce their lending interest rates further. BIS Review 72/2006  1  At this point, ladies and gentlemen, I would like to declare the Zanaco bill muster officially launched. Thank you. 2  BIS Review 72/2006

In 2003 it was able to raise its profits substantially in spite of a mixed macroeconomic and financial environment. Thanks to these profits, banks were able to bolster their capital significantly, thus enhancing their capacity to absorb shocks. The resulting capital ratios in the banking sector are high both in historical terms and by international standards. This impression of pronounced robustness in the Swiss banking sector is corroborated by the relatively low level (in historical terms) of the stress indicator. This is a new indicator calculated as a synthesis of different stress symptoms. The indicator considers in particular the capital ratios, profits, share prices and risk premiums on bonds in the Swiss banking sector. As far as the outlook is concerned, we believe that the macroeconomic environment and the financial markets do not present any significant threat to the stability of the Swiss banking system. The forecasts for 2004 point to a rebound in economic growth in Switzerland and the European Union along with a continuing upswing in the United States. Moreover, the rise in prices on the Swiss real estate market has remained moderate by both historical and international standards. It is thus unlikely that this market will see any abrupt downward adjustment - traditionally a major stress factor for the banking sector. And finally, the available indicators suggest that the major global banking sectors are  BIS Review 39/2004  1  also relatively robust. At present, therefore, the risk of contagion - i.e. of a crisis having repercussions on Switzerland - is remote.
While it may still be too early to understand the long-term impact of a fully-remote staffing model on trust, it is interesting to note that over the last few years, a number of large firms that had favored a highly remote workforce, including Yahoo and IBM, had begun to reverse course, asking employees to return to the office to increase personal interaction and collaboration.9 We can perhaps learn by comparing firms that intentionally transitioned to a virtual work environment with limited personal interactions, to those that relied heavily on personal interactions and were forced into a fully remote posture. Indeed, we will explore how proximity impacts trust as part of a panel on trust and decision-making that I’m moderating on December 2 for the New York Fed. 3/5  BIS central bankers' speeches  Severed networks. The second dynamic is severed personal networks. Beyond formal networks and hierarchy within an organization, the value of informal networks should not be underestimated. As I mentioned, the financial sector has been quite effective in maintaining core services and operations during the pandemic so far. One hypothesis is that this success reflects, in part, the development of personal relationships, teams, and networks over years, and possibly decades. As people came together during the initial months on the pandemic, it is likely that they relied on their existing networks and leveraged the strength of existing relationships.

For a context specifically related to supervision,  see “Supervision of Behaviour and Culture: Foundations, practices & future developments,” DeNederlandscheBank, 2015 3 Mirea Raaijmakers, “INTERVIEW: ING’s behavioural risk team seeks to uncover ‘invisible drivers’ of risky  behavior”, Reuters Financial Regulatory Forum, Henry Engler, January 10, 2020. 4 Kevin J. Stiroh, “The Complexity of Culture Reform in Finance,” Remarks at 4th Annual Culture and Conduct  Forum for the Financial Services Industry, October 4 2018. 5 New York Fed Workshop on Culture Measurement and Assessment, June 2017. 6 Conduct, culture and Covid-19” Cara Bloomfield, Peter Ewing, Olivia Fahy, Nafa Ben Haddej and Ted  MacDonald, FCA, June 2020. “Citi investment bank boss predicts resurgence of offices,” Financial Times, May 2020. 7 How to Prepare Your Virtual Teams for the Long Haul,” Mark Mortensen and Constance Noonan Hadley, Harvard  Business Review, May 2020. 8 Supervision of Behaviour and Culture: Foundations, practices & future developments,” DeNederlandscheBank,  2015. 9 Why IBM Brought Remote Workers Back To The Office — And Why Your Company Might Be Next ” Forbes,  October 2017. 10 Don’t Let Uncertainty Paralyze You”, Nathan Furr, Harvard Business Review, April 2020 11 "Lockdown and crisis: why now is THE time to look at behavioural risks” Samhoud, March 2020  5/5  BIS central bankers' speeches
In this context, I should mention that the ECB with the assistance of the Banking Supervision Committee is carrying out work on banks’ stress-testing and contingency funding plans. On all the issues mentioned above, work is already under way at both the international and European level. The ECB is strongly supportive of the work of the Financial Stability Forum, as well as of the European initiatives discussed in the ECOFIN Council. In this context, I would like to once again stress the importance of effective cooperation in any policy actions to be taken at the international level. The impact of globalisation on price developments Ladies and gentlemen, let me turn to the impact of globalisation on price developments. As a preface, let me say that while globalisation could influence aggregate prices in several ways, such impacts are limited to the short term given that inflation is ultimately a monetary phenomenon. The direct, and perhaps most visible effect of globalisation for consumers, is its implication for relative prices. On the one hand, globalisation has dampened increases in euro area  4  BIS Review 3/2008  import prices of manufactured goods given a rising share of imports from lower-cost countries such as China and the new EU Member States. On the other hand, rising demand associated with globalisation has contributed to the significant increases observed in world energy and other commodity prices.

Jean-Claude Trichet: Report on the operations of the Banque de France  Introductory letter for the Annual Report of the Banque de France, by Mr Jean-Claude Trichet, Governor of the Banque de France, submitted to the President of the French Republic, the President of the Senate and the President of the National Assembly. *  *  *  I am honoured to present you with the report on the operations of the Banque de France, monetary policy and the prospects for it, as required by law. As is the custom, I also submit herewith the Monetary Policy Council’s comments on the past year, which was marked by the introduction of the euro and the implementation of the single monetary policy. After a brief slowdown at the end of 1998 and the start of 1999, French economic growth became firmer from the second quarter of 1999 onwards. The expansion became more broad-based, which points to robust growth in 2000, as do forecasts and business surveys. Foreign trade, which had an adverse effect on activity in 1998, sustained GDP growth in 1999 thanks to the recovery in exports that started in the spring. Furthermore, domestic demand remained strong. The particularly high level of household confidence, the surge in job creation and the purchasing power generated by continuing subdued inflation fostered firm consumption growth, which rose by 2.2% on average in 1999, while corporate investment recorded sustained 7.6% growth. Overall, GDP increased by an average of 2.9%.
It is important that macroeconomic imbalances should be avoided and that a critical mass of structural reforms should support a sustainable growth path. This lesson holds particularly true for the emerging economies. Over the past several years, I have repeatedly pointed out in my speeches that convergence with the EU along with maintaining macroeconomic stability is the major challenge facing Romania. In recent years, fast-track economic growth drew on external saving. Banks became dependent on external financing and the current account deficit exceeded the sustainability limits, which caused the Romanian economy to grow vulnerable. The global crisis fostered this vulnerability which translated into a marked economic slowdown. Today it has become clear that the natural bias towards speeding up real convergence needs to be balanced by the need to ensure a sustainable convergence process. The NBR has repeatedly warned against the pro-cyclical nature of the fiscal policy, which added to excess demand. We should learn the lesson that allowing wide budget  4  BIS Review 56/2009  deficits while the economy is expanding ends in failure. It would have been much easier today for us to find the means to weather the crisis if our budget had been on a surplus over a two-year period prior to the unleashing of the crisis. 9. The adoption of the euro cannot be a substitute for the need of domestic policy adjustment. This lesson became clearer at the moment emerging economies were hit by the economic crisis.

The latter, along with the overly high level of savings, helped keep interest rates and volatility at bay. All this translated into a new financial texture, in which the bank intermediation model shifted away from "originate and hold" to "originate and distribute". The new products and institutions that changed the fabric the financial system was made of until three decades ago led to the outbreak of the current financial crisis. The financial crisis was triggered by the  BIS Review 56/2009  1  developments in the US subprime mortgage market, as I have mentioned earlier. In turn, it broke out due to the fact that the Federal Reserve System, given the above-mentioned conditions, had no other option but to increase interest rates with a view to maintaining low inflation. With the new financial texture however, rate hikes brought about the emergence of the financial crisis. In view of the above, my opinion is that ample liquidity changed the financial system to the point where monetary policy found itself trapped. Inaction would have resulted in higher inflation. The actions taken brought about financial instability. If regulation and supervision had prevented the excessive build-up of risks by investors, interest rate hikes could not have prompted financial instability. Such developments point to the need of efficient cooperation between monetary policy, on the one hand, and regulation and supervision, on the other, a fact that failed to materialise over the past years in some of the world's leading economies.
The reason for this is simple: the banks will build up capital during the good times, which can then be used during the bad times. The main aim is to increase the banks’ resilience in that more capital can be used to absorb losses during tougher times, so that they avoid becoming insolvent. Moreover, higher capital requirements during the good times will contribute to slowing down the credit cycle by reducing the banks’ lending. However, it is important to remember that countercyclical capital buffers are a broad tool, which affects all bank lending. Other macroprudential instruments are even more specifically aimed at limiting the risks linked to household mortgages, for instance. One means of more specifically limiting the risks in the banks’ mortgage lending is to apply sector-specific risk weights. Put simply, this means that the banks must hold more capital for certain parts of their lending, in this case mortgage lending. Finansinspektionen (the Swedish financial supervisory authority) has recently announced a proposal for a minimum level for risk weights on mortgages. We at the Riksbank have also been arguing for a long time that the risk weights on mortgages in Sweden need to be increased.

Weaker consumption demand has direct effects on growth, and thus also on unemployment (see Figure 7). This in turn has indirect effects on financial stability in that the banks’ loan losses in the corporate sector may increase as a result of the poorer economic activity. Another aspect that can affect financial stability is that an increasingly large share of the banks’ funding is through foreign investors (see Figure 8). Confidence among foreign investors may be affected substantially by a fall in house prices. This could have direct effects on financial stability in that the banks have greater difficulty obtaining funding – historically, foreign investors have proved to be “volatile”. Indirect effects may then arise on the macro economy in that the banks’ lending declines, which subdues demand. A combination of all of these effects may mean that the consequences for the economy are serious, if there is a decline in the housing market. So how much should we worry about this? The Riksbank’s inquiry into the risks in the Swedish housing market, which was published in spring 2011, showed that the high house prices in Sweden can largely be explained by high incomes, low real interest rates and a low rate of construction. The low rate of construction, particularly in metropolitan regions, is something I consider to be a growing problem. At the same time, our inquiry noted that the fact that there are explanations for the high house prices in Sweden does not offer a guarantee against future price falls.