samchain/econo-pairs-v1 huggingface dataset:
Sweden had no inflation target; it had a fixed exchange rate that was defended through changes in interest rates. The exchange rate, rather than inflation in Sweden, acted as the anchor for monetary policy. The Swedish krona was pegged to currencies in countries with low inflation. However, it was not possible to generate confidence in this policy. The krona was devalued five times between 1976 and 1982, partly as a result of recurring cost crises. The large devaluation in 1982 was an offensive devaluation aimed at stimulating growth in the competitive sector. It assumed a tight fiscal policy to restrain domestic demand. During the 1980s both the credit and foreign exchange markets were deregulated, partly as a result of international developments. This was done gradually, but the credit market was formally deregulated in 1985 and the final parts of the foreign exchange regulations were abolished in 1989. Demand was high during the second half of the 1980s and the economy became overheated, resulting in high inflation, large wage increases and very large increases in property and share prices. Sweden’s competitiveness was undermined and finally the Riksbank could no longer withstand the speculation against the krona. In November 1992 the krona was allowed to float and it depreciated around 30 per cent in just a few months. The 1990s crisis was not merely a consequence of stabilisation policy failures. The situation was aggravated at the beginning of the 1990s by the tax reform – which stimulated increased saving – and an international slowdown in economic activity.

It has established technical working groups to address inter alia consolidated supervision, crisis management and Basle requirements and has put in place the requisite instrument to facilitate information sharing and cooperation with foreign regulatory bodies. Your members are also active participants in supervisory colleges where banks span several countries and I am aware that yesterday three supervisory colleges were held. Much emphasis has been placed on ensuring that the banking sector remains safe and sound, however, there are non-bank institutions that could severely threaten such safety and soundness and consequently the same level of attention/emphasis should also be directed to those institutions. Perhaps, CGBS could consider expanding its conference scope in the future to include regional non-bank regulators with whom your constituents interface. Both banks and non-bank financial institutions are integral to the safety and soundness of the financial system. Ladies and gentlemen, let me conclude by saying that our approaches to supervision and the depth of our regulation would continue to require proactivity and enhancement as the financial landscape continues to change. The Central Bank Governors of the region will continue to rely on the CGBS to provide the advice and guidance needed to keep our region safe. Success in this regards depend on the thoroughness and robustness of your work and 2  BIS central bankers’ speeches  the reliability and efficacy of the methods you employ.
When the RMBS market closed and Granite could not continue to expand, the management team had a backlog of mortgages that the bank was temporarily warehousing but was likely to be unable to finance permanently. That undermined confidence in the bank itself. And if the bank had been downgraded, Granite might have had to pull its funding. So they were very inter-twined. For accounting purposes, Granite had to be consolidated. For regulatory capital purposes, Granite was largely off-balance sheet. The Basel Supervisors Committee is now reviewing its capital rules on securitisation. But another basic principle may commend itself; we should not allow one management team to run two apparently separate and significant vehicles in a completely joined up way – one a de jure bank, the other a de facto bank – when the funding and risk interlinkages are so strong. Some commentators have argued that the extent to which the securitisation market has the economic characteristics of banking goes deeper than that. 10 This account goes broadly as follows. The Lehmans crisis and its aftermath had at its core a run on repo financing of holdings of, amongst other things, RMBS and other ABS. The banking system had originated assets and issued them into capital markets via ABS. But the same banking industry financed investors’ purchase and holding of those ABS; and then financed themselves via short-term reverse-repo of those assets.

But the risks that these and other businesses bring to the system certainly matter. And the channels through which this crisis spread underline the need for more transparency around key financing markets. For example, too few realised the significance for the system of how the securities lending markets had developed. Central banks ought to be able to make a contribution to this, sitting as they do at the centre of the mainstream repo markets and through standing ready to discount a wide range of securities in their liquidityinsurance facilities. But there is a key job for prudential supervisors and securities regulators in ensuring that leverage and maturity mismatch is understood and transparent. For those forms of financial intermediation that are dependent on banks for leverage and liquidity, it may be that we can develop macroprudential instruments that could be deployed to restrain excess by influencing banks’ supply of credit to them. That is another major area of work. 15 But where a form of shadow banking provides an alternative home for liquid savings, offering de facto deposit and monetary services, then I think we should be ready to bring them into the banking world itself. In the latest episode, constant-Net Asset Value, instant-access money funds and the prime brokerage units of the dealers seem to have been examples of that. We have not seen the last of regulatory arbitrage.
•  Any short-term international capital flows that occur must be carefully examined to determine their direction and nature. In addition, the ratio of usable external reserves to short-term debt must be kept at reasonable and internationally accepted levels. •  Weak banking systems have been the most important contributors to past crises. A sound and transparent banking system is an absolute requirement for avoiding future crises. Risk-taking strategies should be appropriate to a market system. Off-balance-sheet items and cross-border lending should be under tight discipline. An independent supervisory authority is the best guarantee of efficient, sound, and effective banking supervision. BIS Review 50/1998  -3-  •  Last but not least, the pursuit of sound macroeconomic policies in a low-inflation environment is an essential precondition for building public and market confidence. Confidence also requires that both public and private sector institutions be guided by strong, high quality governance and accepted ethical rules.

We now follow a “fixed rate full allotment” tender procedure and have significantly expanded the maturity of our operations. Banks have been granted access to essentially unlimited liquidity at our policy interest rate at maturities of, initially, up to six months. This is an exceptional mode of operation. In normal times we auction a given amount of central bank credit and let competition between the bidders determine the interest rate. This unusual mode of operation implies that we currently act as a surrogate for the market in terms of both liquidity allocation and price-setting. •  Our second building block is the long list of assets that we take as collateral. This list was already very long before the crisis, but we have extended it even further and now accept an even wider range of securities as collateral. •  The first two building blocks offer unlimited refinancing against a very wide range of collateral. But they can only reach the financial system if they are coupled with the third building block, namely the very large number of counterparties that have always been able to take part in our refinancing operations. Even before the financial crisis, this number was higher than for the other major central banks. Following the changes to our operational framework in October last year, this number rose further. All these non-standard measures have now been supplemented by further exceptional steps that the ECB’s Governing Council decided to take at its last meeting on 7 May.
Muhammad bin Ibrahim: Reflection on professionalism, Hippocratic oath and the banking industry Remarks by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 20th AICB Chartered Banker's Graduation and Awards Ceremony, Kuala Lumpur, 13 May 2017. * * * Thank you for the opportunity to speak at the 20th AICB Chartered Banker’s Graduation and Awards Ceremony. My congratulations to the 1,062 graduates who have been certified across 15 qualifications. Today, you join the ranks of the over 18,600 banking professionals in the nation. Your graduation is not only an important step in your own careers, but also contributes to our shared aspirations of elevating the banking profession towards greater heights. When we reflect about professionalism, the medical profession often comes to mind for its dedication, devotion, care and interest for society. Over 2,000 years ago, the Hippocratic Oath was first introduced to the world. Today, most medical school students profess some form of the oath upon graduation. While written in antiquity, its principles are held sacred by doctors to this day. Its words have evolved with history. But its message remains the same: treat the sick to the best of one’s ability, preserve patient privacy, teach the secrets of medicine to the next generation, and much more. What is interesting is not the oath itself, but the principles it expounds and the deep philosophical values that have firmly grounded the medical profession over the years.

The number of vacant jobs is significantly higher than two years ago, specifically by about a third. Many industries are facing a shortage of workers, including both specialists and low-skilled workers. Speaking of the inflow of labour migrants, it has already returned to the pre-pandemic level, according to recent data. However, as the demand in the industries with a large portion of labour migrants (in courier services and construction) has surged over this period, companies still experience a deficit of labour migrants. Consequently, the rise in the demand for labour in various groups of employees is translating into the steady increase in nominal wages. In the course of the discussions preceding our today’s decision, several executives of our regional branches stressed that increasingly more companies were forced to raise wages at a double digit pace to be able to retain their employees. The staff shortage is a factor limiting enterprises’ capacities to expand output. It is hard for them to catch up with growing demand. This suggests that proinflationary risks brought about by labour market gaps are strengthening. Monetary conditions continue adjusting to our earlier decisions on the key rate. After the meeting in October, nominal interest rates, including on federal government bonds, deposits, and loans, continued to go up. Yields on federal government bonds rose over the entire curve. The growth of short-term yields has been mostly driven by the increase in the key rate and the updated forecast of its further path, whereas long-term yields are largely influenced by the escalation of geopolitical tensions.
I would also like to stress that the application of the Bank’s policy instruments and powers is in the hands of three committees comprising internal and external members. Each of the committees has clearly defined objectives, as well as policy instruments to achieve them. They take independent decisions that they must account for publicly. This arrangement ensures both transparency and distribution of power. In 2021, the Central Bank took the step of capping loan-to-value ratios on residential mortgages at 80%. It also capped debt service-to-income ratios at 35%. We are now seeing signs that these measures have begun to make an impact. By wielding its policy instruments, the Central Bank can dampen demand for real estate, prevent speculative activity, and keep households from taking excessive risk. But there is also a shortage of residential property in the capital area, and real disposable incomes have risen steeply. This will naturally contribute to house price inflation. Iceland has plenty of land at its disposal, and if we use it sensibly, we will not need to wait too long for the market to rebalance. Honoured guests: Last May, the Central Bank of Iceland was the first Western central bank to raise interest rates after the steep rate cuts early in the pandemic. The Bank’s policy interest rate is now 2.75%, where it was pre-COVID, and has therefore risen by 2 percentage points in the past twelve months.

With a joint endeavour, the Bank and the Government faced down the challenge, focusing on households with targeted support measures and interest rate cuts. The Bank also used its international reserves to maintain exchange rate stability throughout the pandemic, thereby supporting the implementation of wage agreements. The economic recovery is now well underway, and unemployment has subsided. But even though the pandemic is more or less over, the fallout from it is still in evidence – fallout that was not entirely foreseen. Consumer demand has shifted worldwide. The household is now a workplace and a gathering place to a greater  1  degree than before, and people have chosen not only to kit out their homes more fully but also to move into larger space. At the same time, production has been disrupted in various ways, and delays in shipping over longer routes have led to shortages of a range of goods. And many people who lost their jobs during the pandemic have remained outside the labour force even though new jobs have been created, although this has not been the pattern in Iceland. It appears that a labour shortage is in the offing throughout the West. Isn’t it simple, then? When demand grows and supply shrinks, prices rise. For quite a while, many central banks expected the price hikes to be short-lived. Supply would surely respond. Inflation would taper off. But these views no longer hold sway. The problem is much bigger than that.
But the transitions to a more sustainable equilibrium could also bring greater volatility in asset prices, less stability in macroeconomic outcomes, slower growth and more uncertainty. The strength of the financial system is an important factor in assessing the probabilities associated with, and the potential impact of, the greater volatility that might be associated with these transitions. Where financial systems are strong and resilient, they provide more of a cushion against shocks and help improve the effectiveness of monetary policy in those circumstances. Where they are weaker, they can amplify the impact of shocks on macroeconomic activity and reduce the effectiveness of monetary policy in mitigating shocks. I believe the changes in the U.S. financial system over the past two decades have produced a stronger and more stable system. The large financial institutions at the core of the system have substantial capital cushions and larger and more diversified earnings capacity. These institutions maintain capital above both the regulatory minimums and their internal economic capital measures. The technology and practice of risk management has improved dramatically. All types of risks in financial intermediation are more broadly dispersed. The financial infrastructure is stronger. The combined effect of these changes seems likely to have made the U.S. financial system more stable across a broader range of circumstances. Although a substantial degree of uncertainty surrounds any forward looking judgment about financial resilience, the U.S. financial system seems less vulnerable to specific shocks and better able to absorb larger shocks than was true in the relatively recent past.

Issuance of Euro denominated non-government 4 bonds has more than tripled between 1998 and 2002. It is quite difficult to isolate the specific impact of European Monetary Union, due to the fact that large issuances during the 1999-2001 period were also linked to the refinancing needs arising from intense merger and acquisition activity. Looking ahead over the medium-term, growth in the bond market is likely to be driven by such elements as the development of pension fund assets, while retail savers may move away from bank deposits to invest in other savings products. In turn, the design of savings products will benefit from the standardisation and diversification of fixed income 5 issuance. The integration of interest rate markets in the euro area has been accompanied by a new phase in the development of derivative markets. The proportion of worldwide open interest contracts traded on 6 European derivative exchanges went from less than 1% to more than 15% in 15 years. As derivative  2  BIS and IMF statistics - quoted in RAJAN and ZINGALES - 2002. 3  OECD - Debt management and Government securities in the 21st century - 2002. 4  From about EUR 100 bios in 1998 to about 300 bios in 2000, 2001 and 2002 - source Bondware. 5  RAJAN and ZINGALES - 2002 - Second ECB international banking conference. 6  RAJAN and ZINGALES - 2002 - Second ECB international banking conference .
Possible market-turning events Previous soft phases of the insurance cycle have ended, sometime quite dramatically, with a major loss. Examples include Hurricane Andrew in the early 90s, Asbestos, Pollution and Health losses in the mid-90s and “9/11” in 2001. Whilst it is understandable that some in the industry talk of the need to have naïve capital and capacity cleared out of the market, restricting supply and supporting premium above the technical price level, there is a sense that, this time, things may be different. Many believe that further capital is “waiting in the wings” to invest in the sector in the event that prices rise. Nonetheless, it is sensible to plan on the basis that a significant, market-turning event might occur at some point. Taking this as the starting point, we think there is an opportunity for firms to think through what issues might then arise and to consider what steps can be taken now to plan for these events, not least because we know some firms will be very keen to respond to any improvements in market conditions which might arise after a large loss event. We are publishing today a consultation paper setting out our expectations of firms in planning for these types of extreme insurance loss events; focussing on some of the governance, risk management, capital management and reporting capabilities that we think firms need to consider.

Managing risk in a soft market Speaking to firms about their approach to the market, they often talk about prioritising margins over growth, focusing on more profitable lines of business – for example, where they have established strong market positions or a particular niche, and making more active use of reinsurance. These all seem sensible approaches for an individual firm but, in aggregate, the risk must end up with someone. One indicator of the competitive pressure on insurers to source new business in the wholesale markets is that brokerage commissions have been increasing as a share of gross written premiums despite the common desire to lower costs in line with lower premium rates. Looking forward, the key challenge for insurers is how they preserve or even grow their activities while avoiding the “Winner’s Curse” of under-pricing in order to get the business. The PRA is a not a price-regulator. But we are concerned to see that firms are adequately managing their exposures – that they can identify and quantify the risks being covered, manage and control overall exposures, and estimate likely claims costs under different loss scenarios. Against this background, I make no apology for repeating the points made earlier this year by my colleague Chris Moulder, our Director of General Insurance, in a Dear CEO letter and subsequent speech.
For many firms, including Italian imprenditori, their market naturally expanded from their domestic market to the whole of the euro area. According to empirical studies, the euro has thus led to a 5 to 15% increase in trade between Member States. An internationally recognised currency The economic size of the euro area and the stability of its currency allow the euro to play an international role. Before the euro, in 1995, only the Deutsche Mark was an international reserve 2/6  BIS central bankers' speeches  currency, with a share of 15% of global reserves. Today, our shared currency accounts for 20% of international reserves, in second place behind the dollar. An internationally recognised currency generates economic gains: the financial markets are more attractive for foreign investors, more liquid, and therefore more efficient. But it also carries a political weight: I know that when Mario Draghi speaks at the G7 or at the G20, the whole world listens to Europe attentively. In the global financial arena, which has become turbulent, this union is our greatest chance; none of our countries would have such clout in insolation. Our sovereignty relies necessarily on European sovereignty. * * * The euro makes us more robust, and gives us more confidence in our currency: this is a considerable asset amidst so much uncertainty. The euro has naturally also provided us with a strong symbol of unity among European nations.

b) The euro is an “all-risks insurance” for all Member States This view appears to be the opposite of the preceding one; in fact it stems from an equally false perception: attributing excessive evils or benefits to the euro. A currency is an essential nominal value; but this alone does not determine the real performance of the economy. In the first part of the 2000s, once it had acquired the collective gain of the euro, France and Italy, like many 3/6  BIS central bankers' speeches  Southern European countries, wrongly believed that it was possible to let up on competitiveness efforts, which are nonetheless an ongoing imperative – “there is no free lunch”. Today we are suffering the consequences: we have lower economic growth and employment than some of our neighbours, such as Germany and Spain, which succeeded in carrying out the reforms necessary for enterprise (corporate sector), employment, education and expenditure reduction (public sector). Contrary to what some say, our lag in growth is not due to excessive fiscal discipline. The government debt to GDP ratio has more than doubled in Italy since 1980, and it has risen fivefold in France. When my generation was 18 years old, debt stood at 20% of GDP in France. For your generation today, it verges on 100% of GDP in France and in Italy stands at over 130%. We have failed when it comes to intergenerational solidarity and sustainable development.