samchain/econo-pairs-v1 huggingface dataset:
And they are typically much less leveraged. But increasingly they do offer a liquidity promise – that the investors can redeem the value of their investment at very short notice. In this way they can create liquidity mismatches when investors in funds are offered a greater degree of access to investment than is consistent with the ease with which the assets in which they are invested can be sold without a big impact on price. A particular concern occupying both the FPC and authorities internationally is that simultaneous redemptions from open-ended funds offering short-term redemptions could test the resilience of market liquidity, with wider adverse effects through mark-to-market pricing and collateral calls. This risk has increased due to the growing importance of open ended mutual funds. As described in the FPC’s July 2015 Financial Stability Report, global assets under management have grown significantly over the past decade, to around $ trillion. Within that, the share of funds typically offering investors near-term redemptions such as open ended mutual funds has increased, from just below 40% a decade ago to approaching half. This could give rise to particular risks where a liquidity promise offered by a fund gets too out of line with the liquidity characteristics of the assets the fund holds. Corporate bond funds could be relevant here. These funds have more than doubled in size over the last 10 years, from $ trillion to almost $ trillion AUM.

Further, the invasion is having a negative impact on the global supply chains for certain productive processes, with signs of a worsening of bottlenecks, after the partial improvement in the fourth quarter of 2021, although the lockdowns in China to check the pandemic may also have contributed to this. In any event, the latest indicators of export orders point to a slowdown in trade flows. Amid so much uncertainty, preparing macroeconomic projections is even more complicated than usual. The Banco de España’s latest forecasts,1 published on 5 April, confirm that the gradual recovery in activity has been blown off course by the invasion of Ukraine: GDP growth has been revised down and inflation up, compared with the previous projection exercise in December 2021. These projections were prepared on the basis of still-incomplete information for the first quarter of the current year. According to the data available, the recovery in activity continued in the period leading up to the war. This is reflected, for example, in the information on social security registrations, despite the effects of the spread of the Omicron variant of COVID-19, probably due to the beneficial effects of the high rate of vaccination. However, the same social security registrations data also show that employment growth had already begun to falter in March and early April, following the invasion of Ukraine. Through the above-mentioned channels, the war has led the output growth projections for 2022 and 2023 to be revised downwards by 0.9 pp (to 4.5%) and 1 pp (to 2.9%), respectively.
This put us in a situation with a gross public debt of 84 per cent of GDP, a central government debt of 76 per cent of GDP and interest expenditure amounting to over 6 per cent of GDP in 1996. (Slide: Sweden’s central government debt and gross public debt). Like the countries in the euro area whose public finances are in a poor state today, Sweden had also experienced problems with the development of costs. However, unlike these countries, it was possible for us to limit the loss of competitiveness by means of a depreciation of the currency, just as in the United Kingdom today. We also had a long-established pattern of substantial surpluses in public finances in normal times, which probably increased the credibility of our consolidation measures and thus limited our costs for financing the central government debt. At the beginning of the current downturn we had a surplus in public finances of around 4 per cent of GDP in 2007 and it looks as though we will have a deficit of approximately 1–2 per cent of GDP in 2010. This is a weakening of the budget balance of the same magnitude as that expected for the euro area, and unlike most other EU countries, it appears that Sweden will be able to stay above the stability and growth pact’s deficit limit of 3 per cent of GDP. The comparison with the euro area and the United Kingdom is striking. (Slide: General government net lending in Sweden, the euro area and the United Kingdom).

In the Baltic countries, which have not yet adopted  4  BIS Review 56/2010  the euro, but have retained fixed exchange rates throughout the crisis, one can even see falling wages. The situation of the United Kingdom has certain similarities to that of the group of countries I have just described. Following several years of a deficit in the region of 3 per cent of GDP, the crisis entailed a rapid deterioration to a deficit of 13 per cent in 2009. According to the OECD’s forecast, gross public debt in the United Kingdom will double between 2007 and 2011. Here, too, we can see an increase in unit labour costs compared to the euro area, but the crucial difference is that the weaker pound has made it possible to strengthen competitiveness. (Slide: General government net lending in the United Kingdom). Things look better in Sweden Public finances in Sweden are in a much better state than in many other countries. However, our experience of the severe Swedish crisis in the early 1990s is reminiscent of the situation I have just outlined for some of the euro countries today. At that time, our public finances deteriorated from a surplus of 3 per cent of GDP in 1990 to a deficit of 11 per cent of GDP in 1993. (Slide: General government net lending in Sweden).
Final considerations The NBA of 2004 gave the SNB new options in investment policy. We used these for a consistent and comprehensive further development of our investment policy. In particular, we significantly improved the risk/return profile of our foreign exchange reserves through a number of diversification measures. As I have shown, our equity investments played an important role in this process. However, although the SNB is a large global investor, its main task is monetary policy in the service of the Swiss economy. Consequently, monetary policy affects both the size of our investments and the criteria and principles we apply in managing them. My comments have 6  BIS central bankers’ speeches  shown that the options available to our investment policy are limited in several areas by the primacy of monetary policy. This includes the fact that we cannot hedge currency risks with respect to the Swiss franc. These limitations are sometimes reflected in the annual results. Even though we have continually extended our investment policy, thereby improving our return options, there have occasionally been years in the past with negative results. This may be repeated in the future. Given the current level of our foreign exchange reserves, a small loss in percentage terms can mean a high figure in Swiss francs. That is why it is all the more important for me to stress, once again, the SNB’s main task, which is monetary policy.

History of investment policy at the SNB At the SNB, the move towards a sustainable investment policy aimed at optimising risk and return began as early as the 1970s. At that time, the management of foreign exchange reserves focused exclusively on the highest possible level of security and liquidity. Imagine a situation whereby, until 1978, a residual term of only three months was a legal requirement. As a result, foreign exchange reserves consisted primarily of short-term US dollar investments, particularly US treasury bills. This led to considerable concentration risk. At the same time, the potential return was extremely low. Despite narrow statutory provisions and market-related limitations, the SNB tried to make use of the existing room for manoeuvre as regards returns. However, it was not until after the partial revision of the NBA in 1997 that strategic importance was attached to the generation of returns. This became possible because of the abolition of the maximum residual term of one year for foreign exchange reserves, which had applied until then. A further important step towards a sustainable investment policy was the entry into force of the fully revised NBA in 2004. Although, at the time, the changes to investment policy did not attract much public attention, they were very important for the SNB’s investment activities. Within the monetary mandate, investment policy was defined as one of the SNB’s core tasks for the first time. Moreover, most statutory restrictions with regard to investment instruments were removed.
During 2010 the Banco de España also pursued a series of initiatives to help generate muchneeded confidence. Firstly, in July it took transparency to a new level with the publication of the results of the stress tests, both because of the high proportion of institutions analysed (representing 95% of the system, compared with the figure of 50% required in Europe) and the degree of detail of the information provided. Secondly, it reformed the provisioning system that same month, to ensure appropriate balance-sheet write-downs. And thirdly, it urged institutions to provide the market with highly accurate information on their exposures to the real estate development and construction sector and on their financial structure and liquidity position. Likewise in July 2010, Parliament approved the savings banks reform, included in Royal Decree-Law 11/2010. This paved the way for a new legal structure for savings banks, under which the pursuit of their banking activity may be through a bank, to which the bulk of assets and liabilities are transferred. This corporate model, conceived for adoption on a voluntary basis, although it has become obligatory for savings banks that receive further aid as I shall mention later, is imposing itself extensively on the sector owing to its advantages in terms of the ability to tap the markets for capital, to promote best management practices and to generate the necessary confidence on the part of customers and investors.

Given this outlook, there was an evident need to restructure the sector and to support the process with an instrument that would help strengthen the solvency of those institutions that decided to pursue plans to improve their efficiency by means of mergers or other integration operations. In July 2009 the FROB was duly created. And over the course of 2010 it granted – or committed itself to – aid amounting to € billion for eight integration processes (although one of these did not finally go ahead when the initial Banco Base project collapsed) and for the restructuring of a non-viable institution, CajaSur, and its integration into BBK. The other savings bank officially intervened due to its lack of viability, Caja Castilla-La Mancha, received aid from the Deposit Guarantee Fund, at a time when the FROB had not yet been created. The year 2010 also saw successive episodes in which the public debt of euro area countries whose finances looked weak was punished. In spring we witnessed the Greek crisis and, at the end of the year, the Irish crisis. Although Spain’s macroeconomic indicators were not in the least comparable with those of Greece and Ireland, these episodes affected Spanish public debt spreads, owing to the uncertainty and to the difficulty ever-present in these situations of correctly assessing the information available. Later, into 2011, the country affected was Portugal, although at this stage of market tensions Spain was able to distance itself from the eye of the storm thanks to its resolute reforms policy.
Expressing my sincere gratitude to the Ministry of Culture of the Republic of Macedonia, the National Institution Stobi and the Embassy of the United States in the Republic of Macedonia, I invite His Excellency, the Ambassador of the United States, Paul Wohlers and the Minister of Culture of the Republic of Macedonia, Elizabeta Kancheska-Milevska to take the floor. 2  BIS central bankers’ speeches

David Clementi: Current Threats to Global Financial Stability - a European View Speech by Mr David Clementi, Deputy Governor of the Bank of England, to the British-American Chamber of Commerce, New York, on 22 January 2001. *  *  *  Introduction It is a great pleasure to be here in New York. I was last at a British Chamber of Commerce meeting towards the end of 1998 when I talked about the readiness of London for the arrival of the euro. My message then - that while the UK might be outside EMU, the City of London was very much part of the Euro area - has been borne out by events. London remains by far the largest financial centre in Europe and the most international. Nowhere has a larger concentration of foreign banks, or greater daily turnover in foreign exchange and derivatives or trading in foreign shares. And much of the new business in euro is conducted through London. The majority of euro-denominated debt is issued in London; and more than a third of deals on the London Stock Exchange take place in euro. US financial organisations, many of them represented here tonight, make a significant contribution to this success. This evening I would like to address two rather different subjects. The first is to reflect on recent developments in the US economy and the potential impact this has for the UK and for the stability of the financial system more generally.
The prices of the most volatile items (food and energy) will increase more than core inflation, so headline inflation will converge to the target sooner than the core measure. Thus, the baseline scenario continues to estimate that in the coming months headline inflation 2  will decline to levels near the floor of the tolerance range, and will return to 3% at the end of the year and hover around this figure until the end of the projection horizon, mid-2019 (figure 2). First-quarter data confirmed the strong impact of the Escondida strike on the sector’s output, aggravated by reduced production in other mines (figure 3). Thus, mining activity fell by nearly 14% annually in the period, dragging along power generation and some local activities, according to various respondents to the May Business Perceptions Report (IPN) survey. Moreover, recovering former production levels has taken longer than expected, so the effect in mining output has extended into the second half. After considering these elements, the mining sector is projected to drop this year by nearly 2.5%, compared with the 1.5% increase we expected in March. Other sectors' activity continues to show two trends. On the one hand, the weakness of construction activity and related services; on the other, the more stable performance of private consumption, driven strongly by growth in durable goods.

And third, the National Bank’s investments in equities and corporate bonds can have a noticeable impact on risk premiums on the capital markets, especially in illiquid markets. These considerations primarily concern equities and bonds issued by Swiss firms. They are therefore excluded from the National Bank’s investment universe. Holdings of foreign equities and corporate bonds do not present a problem in this regard. A passive management strategy based on indices with liquid, listed securities is followed for equities portfolios. Consequently, we do not engage in stock picking or sector picking. As a rule, we do not exercise our voting right at annual general meetings. In the case of corporate bonds, attention is given to broad diversification from issuer-specific risk. Despite active management, therefore, the corporate bond portfolio cannot deviate from the market index to any considerable degree. 3. The new investment process: different functions largely separated  The market and credit risks of individual transactions increase as the investment spectrum becomes broader. Operational risks, including conflicts of interest and the problem of insider know-how, also gain in importance as asset management strategy becomes more active. We have therefore evaluated the investment process with a view to the requirements of good governance. Important changes in this process include the following: investment and monetary policy decisions have been largely uncoupled, the definition and implementation of strategy have been segregated, controlling has been made an autonomous function, and the National Bank’s Bank Council has been tasked with integral monitoring of the investment and risk processes.
As pointed out in our IEF Report, in the local corporate markets the lower risk premiums have also helped to improve financing conditions, which have been showing sustained improvement since mid-last year and into 2014 to date (figure 6). Despite the lower cost of credit, banking credit has expanded less in recent months, mainly in commercial loans, which relate to the financing of inventories, working capital and fixed assets. Aside from demand-side factors, the Bank Lending Survey shows that credit access conditions have tightened in recent months. The opinions taken from April’s Business Perceptions Report agree with this assessment. In contrast, annual growth in mortgage credit posted a slight increase, which is attributed to the completion of various real estate projects and committed sales. International financial markets look calmer than in the second half of 2013 and early 2014. Thanks to this the stock markets improved, sovereign risk premiums and long-term rates declined, and emerging market currencies appreciated. Why? Because of a number of factors. On one hand, in the U.S. the withdrawal of unconventional stimulus measures has proceeded as expected and the Eurozone has made advances on the fiscal and banking fronts. In the latter, there are also additional monetary measures recently applied to avert a deflation. On the other hand, in China risks are still present affecting the financial system and economic growth. The authorities have announced some focalized fiscal stimulus packages and capital market reforms, and the latest stress tests showed good capital adequacy levels.

To stay ahead of the game, corporate treasurers need to ensure that the treasury function can be transformed to better support international growth in order to capture the immense opportunities in Asia, and at the same time sharpen the management of capital, liquidity, funding and treasury related risks in order to navigate safely in the post crisis intricate market environment. 11. So, as the agenda of this Summit suggests, corporate treasury management can no longer afford to remain in a passive maintenance mode, but need to adopt a proactive and strategic mode. To use a soccer analogy, an effective corporate treasurer needs to be like a good mid-fielder who is able to make lethal passes to the strikers to score goals, and at the same time organise and support the defence to consolidate the victory for the team. 12. Like the mid-fielder in the soccer team, the corporate treasury function needs to be strategically located to support the front line business team in spots where they can strike business deals and where defence can be efficiently organise to handle the risks that may be encountered by the team. In the context of Asia, there is a compelling case for MNCs to set up corporate treasury centres in a financial centre where they can easily capture the China opportunities and where the key treasury functions can be organised efficiently. 13.
In short, being transparent also means being able to explain one’s own decisions and actions. And the final related point about disclosure is that, despite the recent trend on transparency, with more and more central banks moving towards greater transparency, our research shows that there is still no clear convergence of the practice. Central banks continue to practice things differently, although in some areas the established practices are more or less uniform. To illustrate this point, let me now turn specifically to transparency in monetary policy which is the heart of central banks’ responsibilities and operations. In monetary policy, there are six areas where transparency is now well established and is being practiced by most central banks. These are (1) stating clearly what the objectives of monetary policy are; (2) explaining clearly the framework of monetary policy and its operating procedures; (3) having regular economic data release; (4) making known clearly the decision-making process of monetary policy which includes who make the decisions, how often, the timetable of meetings, and the dissemination process to announce the policy decisions; (5) publishing timely economic reports to explain views on the economy and risks as well as the rationale for their monetary policy decisions; and (6) the readiness of central banks to communicate with markets either through the media and public addresses or appearing before public or congressional committees.

Let me begin my discussion on how to achieve that by looking at the current trend towards bank downsizing in the euro area. The trend towards downsizing banks Financing of the real economy in the euro area has historically taken place through banks. The euro area therefore requires and has a large banking sector. The aggregate balance sheet of euro area banks is around 270% of GDP, whereas in the US, where capital markets are deeper, it is only around 70% of GDP. The euro area banking sector, however, expanded rapidly in the years before the crisis from already high levels. From the start of the expansion in 2005 to its peak in 2012, banks assets increased by more than 60 percentage points of GDP. This was associated with the development of unsustainable bank business models. Banks relied too much on debt to finance their lending, and that debt depended too much on wholesale market funding and too little on deposits. The crisis has brought those business models to an end and triggered a process of structural change in the banking sector. European banks have entered a period of secular deleveraging and restructuring. Bank balance sheets declined by around 20 percentage points of GDP in 2013 alone. Loan-to-deposit ratios fell from 142% in the first quarter of 2008 to 117% at the end of last year, and I expect these ratios to continue to fall. Credit growth has consequently been very weak.