samchain/econo-pairs-v1 huggingface dataset:
This weakened incentives to conduct prudent screening and a thorough monitoring of loan quality. Credit became plentiful and market liquidity expanded at a pace that could ultimately no longer be justified. Looking ahead, three steps will be required to a more resilient system. •  First, the tendency for finance to become pro-cyclical even at a system-wide level needs to be strongly mitigated. The quality and quantity of bank capital and their liquidity buffers have to be improved in good times to provide a sufficient buffer for bank equity when the cycle turns. The cyclicality of market economies is inevitable. But the financial system should not be allowed to amplify swings. •  Second, the transparency of the financial structures needs to be enhanced. Informed decisions by market agents are a key element of market economies. Lack of transparency of financial products masked abuse and led to disaster. Looking into the future, all institutions, instruments and markets of any relevance for systemic stability need to enhance risk disclosure. •  Third, once more, incentives need to be aligned. Market participants – traders, loan managers, risk committees and boards of directors – were given strong economic incentives to focus on short-term profits. Long-term value creation was not a concern in the pre-crisis world. Collectively, this has resulted in excessive risk taking. A reform of the executive compensation schemes and practices is an essential part of our effort to secure financial stability. At the financial level, reform in Europe will follow a two-pronged approach.

Vítor Constâncio: Implications of the Single Supervisory Mechanism (SSM) on the European System of Financial Supervision (ESFS) Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at a Public Hearing on Financial Supervision in the EU, Brussels, 24 May 2013. *  *  *  Ladies and gentlemen, Thank you very much for inviting me to open this session on the implications of the Single Supervisory Mechanism (SSM) on the European System of Financial Supervision (ESFS). At present, the only answer that can really be given on this issue is, “it depends”. While the SSM will in principle be just another supervisor around the table, its impact on the ESFS will clearly depend on how many Member States eventually decide to join. In our view, the more Member States take part, the better it will be for the functioning of the ESFS and the single market more generally. First, having as many as possible countries in the SSM will reduce the scope for coordination failures. This will in turn facilitate the coordination function of the European Banking Authority. Second, a larger SSM is the best way to safeguard the single market in financial services. The more membership overlaps between the EU and the SSM, the more consistent will be the application of supervisory and regulatory practices.
As you may know, Peter Fisher, an executive vice president of the New York Fed, chaired a working group of the Euro-Currency Standing Committee of the G-10 central banks, which published a discussion paper on “Public Disclosure of Market and Credit Risks by Financial Intermediaries” in September 1994. This so-called Fisher report described how trading and financial risk management practices had developed far beyond the public disclosure of financial information, creating a gap between the precision with which a firm’s management could assess and adjust the firm’s own risk exposures and the information available to outsiders to help them assess the riskiness of that firm’s activities. Recognizing that such an asymmetry of available information could cause the misallocation of capital among firms and amplify market disturbances, the Fisher report recommended that all financial intermediaries -- regulated and unregulated -- move in the direction of publicly disclosing periodic quantitative information. The information requested would provide estimates relied upon by the firm’s management of: the market risks in the relevant portfolio or portfolios, as well as the firm’s actual performance in managing the market risks in these portfolios; and the counterparty credit risks arising from the firm’s trading and risk management activities. By and large, these proposed measures for reporting risk have been adopted voluntarily by many major banking institutions around the world, with many others moving in that direction. As such, they have contributed importantly to improved transparency in financial markets.

Our collective efforts, along with developments in information technology and risk management techniques, have already contributed to improved market stability. The growing, and successful, commitment of central banks to the achievement of price stability as BIS Review 60/1997  -7-  their primary goal is another crucial and positive contribution toward market stability. Moreover, where we as central banks see gaps that develop in the global financial system, as we did in the areas of market risk and settlement risk management, we play the role of facilitator to private sector solutions. As central bankers, we tend to view our role in the global financial markets as ensuring that the necessary infrastructure is in place to promote well-functioning markets for all players. Then we step aside and let the markets take care of themselves. BIS Review 60/1997
In its latest report the International Monetary Fund lowered its estimate for world growth for 2015 by 0.3 pp to 3.1%, with the developed and emerging economies expected to perform differently. The pick-up in activity continues in the advanced economies, underpinned by favourable financing conditions and low commodities prices, while inflation is running at very low rates. In most of the emerging economies, activity continues to fall, owing not only to conjunctural reasons in the international environment, but also to more structural factors, such as lower productivity gains and demographic factors. Activity continued to slow in the emerging Asian economies, while in Latin America it is stabilising at very low rates, albeit with notable differences from country to country; in turn, in some cases, inflation stands above the authorities’ targets, due partly to the depreciation of their currencies. Of particular significance for the world economy are the developments in China, which posted an annualised rate of GDP growth of 6.9% in the third quarter. That entails a slowdown, but one milder than anticipated. However, uncertainty over its medium-term growth rate persists bearing in mind the authorities’ intention to lead the Chinese economy towards a more sustainable and more domestic consumption-led model. The consequences of the slowdown on the world economy, mainly via the effect of the decline in commodities prices on exporting countries’ economies, are so far projected to be limited.

This crisis has had very serious consequences: the loss of activity, of income and of wealth, the high levels of private debt, the increase over very few years and by more than 60 pp of GDP in public debt, and the highest unemployment levels in the whole of the EU. These consequences are not behind us, and it will take some time yet to eradicate them. But our economy today is one of the most dynamic in the euro area and in the European Union as a whole. The forecasts available indicate that this strong growth, with a healthy balance of payments position and strong net employment creation, may continue in 2016, though there are external and domestic risks that might upset this prospect. We must build on the reforms undertaken and continue redressing the accumulated imbalances, among which the high level of unemployment and high debt are unquestionably the most serious, without forgetting the need to push through and fulfil the fiscal consolidation commitments required within the European Union. Thank you very much for your attention. 4  BIS central bankers’ speeches
This, together with strong demand, pushed the real exchange rate higher than it would have been otherwise and exacerbated macroeconomic imbalances, as could be seen most clearly in a sizeable current account deficit. These developments and the banking crisis contributed to the currency crisis that struck in the first half of 2008. In formulating the monetary policy framework after capital controls, we must take into consideration the experience that has been gained in recent years in pursuing independent monetary policy in small, open economies with unrestricted capital flows in a world that is increasingly integrated financially. This is becoming ever more difficult, as we saw in New Zealand and in Iceland before the crash, and more recently in countries such as Switzerland and Sweden. We ourselves got a taste of what can happen under these conditions last summer and autumn, when strong inflows of capital into the domestic bond market turned the slope of the yield curve around. This is because capital markets are growing more effective at smoothing out the difference in risk-adjusted asset returns in different countries, with the result that monetary policy transmission along the interest rate channel is severely weakened in small, open, and financially integrated economies where long-term interest rates are determined to an increasing degree by rates in large countries. In such cases, monetary policy transmission takes place to an ever greater degree through the exchange rate channel.

The monetary policy framework must be based on sound theory concerning how monetary policy instruments affect the economy – theory that is well supported by experience and research. Otherwise, there is the risk either that goals will be set which monetary policy has little or no chance of achieving or that appropriate policy instruments will not be used. But the problem is that monetary policy transmission changes with developments in the economy and the financial markets and the effectiveness of different policy instruments can change over time. For example, where financial markets are underdeveloped and repressed, the tendency is to use policy instruments based on various kinds of quantitative restrictions such as lending ceilings and to actively use reserve requirements instead of price instruments such as interest rates, which are usually the most effective tool when financial markets are less restricted and more developed. In order to lay the groundwork for further discussion of the monetary policy framework, I will give you a broad sketch of the key points concerning monetary policy efficacy that must be considered when the framework is developed. In order to save time, I will paint with a broad brush and emphasise the points that are most important and are well supported by theory and research – including research on Iceland. In addition, these are key points that remain valid in spite of the experience of the financial crisis. In this context, two aspects are most important.
Thus, price stability is the main objective of monetary policy in all of these countries and has in fact become the recognized single target for monetary policy in numerous countries. The reason for this emphasis on price stability is that it creates the best conditions for balanced growth and increased welfare. The Icelandic financial market has developed very rapidly over the last ten to fifteen years. It is a small market by definition, but has nevertheless the same institutional set-up as larger industrial countries. Aside from the Central Bank, these include commercial banks, savings banks, securities companies, various investment funds, insurance companies, large and important pension funds and last but not least a stock exchange - linked with the other Nordic exchanges - where the shares of 60 to 70 Icelandic companies are listed and traded on regular basis. Supervision of the activities of all of these institutions is in the hands of a unified financial supervisory authority that has broadly the same legal powers and follows the same methods and standards as supervisory agencies in other European countries. Important rationalisation has taken place in the Icelandic financial system. Until a few years ago, two of the main commercial banks were fully government owned and so were a host of so-called investment credit funds. The funds were unified in a single institution, which was subsequently privatised.

The Government has also reduced its stake in the commercial banks over the most recent years and intends to have them largely or fully privatised by the end of the current electoral term next year. The privatisation process creates opportunities for continued rationalisation in the financial system creating ample opportunities in the period ahead, including closer ties with foreign financial institutions. It is tempting to put recent economic developments in Iceland into the context of developments in some of the other Nordic Countries about a decade ago. Liberalisation of the Icelandic financial markets was more or less completed in the mid-1990s when the last restrictions on the movement of capital between Iceland and other countries were removed. Our liberalisation came a few years later than in the other Nordic Countries. You will recall that in some of the other Nordic Countries, liberalisation was followed by a boom period in the economy, partly or largely fuelled by a rapid growth of credit and in some cases large fiscal deficits. At the same time, these countries were pursuing a fixed exchange rate policy vis-a-vis the ECU. Developments in the domestic economies were such that the fixed exchange rate policy was gradually undermined, the rapid credit growth of banks resulted in weakening loan portfolios when asset prices fell, the exchange rate fixety gave way to floating, the currencies depreciated and inflation rose. The current account of the balance of payments also deteriorated.
This stock of vacant homes will shrink when fewer are foreclosed upon and more of these homes are sold or rented out. 2  BIS Review 137/2010  On the sales side, even though low mortgage interest rates and falling home prices have together boosted housing affordability to its highest level in 40 years, the current pace of sales is quite sluggish. Impediments to home sales include tight lending standards, a weak job market and continued uncertainty regarding the future path of home prices. The large decline in home prices that occurred between 2006 and 2008 is also important. This decline reduced the amount of equity that owners have in their homes, making it difficult for people to come up with the funds needed to “trade-up” and move into better homes. In addition, the steep decline in home prices put many families at risk of mortgage delinquency and, ultimately, losing their homes to foreclosure. With lower home prices, many families now owe more on their mortgage than their home is worth. This means that they cannot refinance or sell their homes easily if they experience a financial crisis, such as a job loss or a serious illness. Recent developments on foreclosures have been mixed. While RealtyTrac reports that foreclosure completions in the United States exceeded 100,000 for the first time in September, it is important to remember that foreclosure is a lengthy process in most states.

The strength of the other four characters on the final shortlist – filmmaker Charlie Chaplin, sculptor Barbara Hepworth, painter William Hogarth, and designer Josiah Wedgwood – gives a sense of the exceptional pedigree of British visual arts – and contextualises Turner’s contribution. To develop this point, I’d like to now introduce a short film from the Committee members celebrating some of the nominated visual artists and outlining their views on the process that led to Turner being chosen. *** So as Darwin is about to be replaced on one of our notes and Churchill is to appear on another, it’s fitting that Turner should be unveiled on the next. And here is the new image for the new Turner banknote. It features Turner’s self-portrait, from 1799, currently on display in the Tate Britain; and one of his most eminent paintings – The Fighting Temeraire – which can be seen in the National Gallery. This painting was a tribute to the HMS Temeraire, which played a distinguished role in Nelson’s victory at Trafalgar in 1805. It also commemorates the Age of Steam replacing that of Wind as this great warship is pulled into harbour by small tug boat. And in classic Turner fashion captures the interplay between light and vibrant colour.
Chaired by Michael Bloomberg, it is in the process of developing consistent, comparable, reliable and clear disclosures around climate-related financial risks. The Task Force has just published its phase 1 report for public consultation in advance of its final recommendations to G20 Leaders over the next year. 11 Improved private disclosure will also support public climate action. Better information will allow policymakers to assess companies’ speed of adjustment relative to countries’ nationally determined contributions (NDCs). It will support more informed policies, including early responses if there are clear shortfalls. Virtuous circles could be more quickly established. If Governments build credibility by implementing their NDCs, this will raise the probability of further action to achieve 2 degrees. Markets can then do what they do best and pull forward that adjustment. Early awareness of the risks and opportunities associated with a low-carbon economy will attract mainstream institutional capital. That impact will be maximised if there are the right vehicles. In this regard, green bonds have the potential to align the interests of issuers and investors. To investors, green bonds offer a stable, rated and liquid investment with long duration. To issuers, they could tap the $ trillion global institutional fixed income investor base. Moreover, the shift to the capital markets from banks will free up limited bank balance sheet capacity for early-stage project financing and other important infrastructure lending.

Financial policymakers will not drive the transition to a low-carbon economy. Only Governments can solve the Tragedy of the Horizon. 9 Financial policymakers can amplify the impacts of those decisions, while ensuring the financial system remains resilient during the transition. With respect to climate, our role is to develop the frameworks for markets to adjust efficiently. Financing the de-carbonisation of our economy is a major opportunity for investors. It implies a sweeping reallocation of resources and a technological revolution, with investment in  6  The FSB brings together national authorities responsible for financial stability from the G20 and other major financial centres, international financial institutions and standard-setters. The FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups. 7  As summarised in the “FSB Chair’s letter to G20 Ministers and Governors on Financial Reforms – Progress on the Work Plan for the Hangzhou Summit” (February 2016), the FSB is working on reducing misconduct risk, including exchanging best practices on governance frameworks and potentially developing a supervisory toolkit or guidance; examining the effectiveness of post crisis reforms to compensation and whether disincentives to misconduct should be strengthened; and sharing national experiences on bank regulators’ enforcement powers.
Subsequently, we have raised the deposit facility rate to 2%, a cumulative increase of 250 basis points (bp), the fastest in the euro's history. We have also created the new Transmission Protection Instrument to ensure the smooth transmission of monetary policy across the euro area. We have amended the conditions of the longer-term refinancing operations, with the specific aim of strengthening the transmission of interest rate increases. And we have announced our intention to stop reinvesting, from early March 2023, all the principal payments from maturing securities under our asset purchase programme, which will give rise to a gradual and predictable reduction in the size of the portfolio. Overall, this monetary policy normalisation process has already translated into a significant increase in market interest rates. But what can we expect in the future? At the last Governing Council meeting we stated that interest rates would still have to rise significantly at a steady pace to reach levels that ensure that inflation will return to its target. As I mentioned earlier, the latest ECB projections forecast inflation of 2.3% (i.e. above the 2% target) in 2025. Those projections were based on the market expectations for the future path of interest rates when they were prepared. Deeming the projections valid, interest rates would therefore need to rise more than the markets expected when they were prepared in order for inflation to return to its target.

Residents are also allowed to purchase, through authorised financial institutions, shares quoted on foreign stock markets, and are permitted to transfer foreign exchange abroad to pay for purchases of such securities. 3. By the same token, non-residents are allowed to buy and sell Turkish securities quoted on the Turkish stock market. They are also allowed to buy and sell Turkish government securities through intermediary institutions operating in Turkey. 4. A substantial part of the controls on capital movements were removed, greatly easing inflows and outflows of credit. Turkey has accepted the provisions of Article VIII of the Articles of Agreement. 5. To avoid excessive risks for the banks, new regulations were adopted governing the foreign exchange position of the commercial banks. The banks are free to set their own rates for buying and selling foreign exchange. Our foreign exchange system, described above, is very convenient for foreign capital flows. Now let me describe the main characteristics of our financial system. Even though our efforts to liberalise the financial system did not begin until 1980, the Istanbul Exchange Market has existed and operated since 1858. It grew out of the activities of Non-Muslim bankers in the Galata district of Istanbul. These operators, mostly Levantines, Jews, Armenians, and Greeks, used to risk their own capital by extending credit to the government, secured by pledges of future tax collections.