samchain/econo-pairs-v1 huggingface dataset:
Of course, persistently strong demand for financial assets – crudely, rising prices – created an illusion of liquidity but, beyond that, the willingness and terms on which “market-makers” underpinned liquidity depended on their access to credit to finance inventory. And the ultimate private sector providers of such credit are commercial banks. One big question, therefore, is how far we could get in dampening the credit cycle by focusing on the provision of liquidity, and so leverage, by banks to other financial firms. That goes to whether hedge funds and other vehicles need to be brought within the net. Frankly, it is hard to know whether, internationally, the regulatory community tried and failed to control the leverage available to the non-bank financial sector; or whether it was not really attempted taking into account system-wide conditions. Either way, more information from non-banks would probably be needed to make such a policy workable. But a second question, perhaps the biggest, is whether “dampening the credit cycle” should be the goal at all; or, alternatively, whether it is a realistic goal. A very slightly more modest – but, in truth, still demanding – objective might be to concentrate on making banks themselves more resilient to economic or market shocks, so that it is less likely that they expose banking system fragility that amplifies an economic downturn. A third big question is about instruments. Lots of candidates are canvassed. Dynamic provisioning under which banks would, in the manner of previous generations, set aside general provisions as loan books grew.

Capital requirements that increased with the rate of  BIS Review 39/2009  5  growth of balance sheets, or some measure of incipient stress. Variable margin requirements on the terms of credit provided to financial, or even real-economy, borrowers. A fourth big question is whether the chosen instrument(s), whatever it is, could be operated by rules or would require an element of top-down judgment. On that, I am inclined to the view that our community is unlikely to be able to write down a suitably robust rule. I have two reasons for that. One draws a parallel with monetary policy. The history of monetary policy, not least in this country, is littered with failed attempts to design an optimal rule, giving way to efforts to constrain the discretion of policymakers making judgments. I cannot see why we would be any better at developing rules for financial stability. As the structure of the financial system evolved, we would need to adapt the rule and would probably fail to spot the need to do so. But there is also something about the nature of financial stability problems that makes “rules” implausible to me. In the upswing of the credit cycle, there is often a collective-action problem. Even though individual banks may perceive risk as underpriced, not knowing for sure whether or when the party will end they hesitate to step off the rollercoaster for fear of damaging their business franchise.
They signed up to a package, a clear set of rules, including a Pact. This is a contract not just among governments but a contract with every single citizen of the euro area. It is on the basis of this contract that they have accepted the loss of their monetary sovereignty. And it is on this contract that the confidence in our new currency, not just of European citizens, but also of markets and of those on the outside looking in, is based. If you break this contract, this confidence will be lost. I acknowledge that these are not easy times, that conditions are adverse. But the difficulties that some of you now face were not entirely unforeseen. Not unforeseen when the Pact was signed. Not unforeseen when the conditions were more favourable. You were warned. The rules were not designed just for the good times, but also for the bad. The difficulties that some of you now face do not provide grounds for tinkering with the rules. They call for their implementation. The rules are there to help not to hinder efforts to put the house in order. They should be allowed to do what they were designed for. Otherwise I fear the Pact will unravel, the contract with the people will be broken. Without the right foundations, you cannot build a stable house. I hear some of you say that the house needs more than stability. It also needs growth. Of course you are right. Stability and growth go hand in hand.

However, not all incumbent banks are able to fully bridge the technology gap, particularly for newer services; d. This results in migration towards digitally-focused challenger banks such as Atom, Fidor and Monzo that will provide similar services of traditional banks, but utilise technology to deliver faster and cheaper services that better meet the needs of customers; and e. The implication of this is that the landscape of finance will remain largely filed by banks, but a new breed of purely digital banks will gain in significance. The names that we immediately think of for financial services will change from the current banks that we are so familiar with. The fourth scenario is what I call ‘the Tech take-over’ a. Like scenario one, this is a more extreme and less probable scenario, but still one that is worth a thought. In this scenario, technology adoption by incumbent banks is low, with a high level of fragmentation among finance providers; b. However, in contrast to scenario three, technology firms enter as the new preferred provider, successfully capturing the loyalty of consumers due to superior ability in using data to deliver customer-centric solutions; c. Financial services will thus be offered via a wide range of providers such as social networks (e.g. Facebook, Wechat) and e-commerce platforms (e.g. Amazon, Alibaba); and d. Growing comfort with the ability of technology to ensure secured transactions also gives rise to the popularity of peer-to-peer financial services.
Internationally, a number of empirical studies have been conducted on the effectiveness of exchange market interventions. The studies of interventions in the 1990s find that they were more effective than 5 studies conducted in the 1980s. This may be due to shifts in monetary policy regimes and greater emphasis on transparency. It is probably easier to win credibility when market participants know that interventions are anchored in stabilisation policy considerations rather than a short-term exchange rate objective. However, this presupposes market confidence in the ability of economic policy in general and monetary policy in particular to deliver nominal stability. It is first and foremost the signal effects of interventions that have been found to be effective and particularly when interventions are made publicly known and justified by the central bank. 4  Lars E. O. Svensson. ”Independent Review of the Operation of Monetary Policy: Report to the Minister of Finance”, February 2001. 5  L. Sarno and M.P. Taylor. ”Official Intervention in the Foreign Exchange Market: Is it Effective, and if so, How does it Work”, Discussion Paper No. 2690, February 2001, Center for Economic Policy Research. BIS Review 74/2001  7  For Norges Bank, it may be appropriate in special situations to intervene to a limited extent to stabilise inflation, should the krone move to a level that we do not consider reasonable on the basis of fundamentals, and if this could contribute to stabilising inflation. However, Norges Bank will not act in a way that prompts unilateral bets against the krone.

A clear parliamentary majority supports the Government long-term strategy for the use of petroleum revenues. At the same time, the Government stresses, with the support of the Storting, that fiscal policy must also be used to stabilise economic developments. The annual budget resolutions will provide an indication of the emphasis placed on this consideration. BIS Review 74/2001  1  The Government was also of the view that there was a need for a clearer anchoring of monetary policy to underpin economic stability. Norges Bank was thus given an operational monetary policy target, which means that the Bank is to use instruments to maintain low and stable inflation. The inflation target is set at 2½ per cent. The inflation target is linked to the annual rate of increase in consumer prices. The monetary policy regulation explicitly refers to factors that the Bank shall in general not take into account, such as the direct effects on consumer prices resulting from changes in interest rates, taxes and excise duties. The regulation further stipulates that Norges Bank shall regularly publish the assessments that form the basis for the implementation of monetary policy. Report no. 29 2001 "Guidelines for economic policy" also states: "Consumer price inflation is expected to remain within an interval of +/-1 percentage point around the target " This must not be misconstrued to mean that the inflation target is an interval. Norges Bank aims at an inflation rate of 2½ per cent two years ahead.
The day prior to the decision the implied forward rates indicated that market agents had prices a level for the repo rate of 4.0 per cent during the first quarter of 2008, that is, around the same as the main scenario later published by the Riksbank. In the longer term the Riksbank’s main scenario and implied forward rates differed. With effect from the middle of 2008 onwards, implied forward rates were above the new interest rate path published by the Riksbank. The market information the commercial banks sent to their customers showed a similar picture. One can not, therefore, say that the Riksbank’s June forecast on the whole contained abnormally large interest rate increases. Why were the market reactions so strong? Both the market information and pricing in the market thus indicated that analysts if anything were counting on a higher repo rate in the longer term than the forecast later published by the Riksbank. Nevertheless, the yield curve for implied forward rates rose by around 15 points over the entire period following the interest rate announcement on 20 June (see Figure 10). Why were the market reactions so strong? Firstly, international interest rates rose that day, which probably reinforced the rise in Sweden. Secondly, there are many signs that market agents had expected the Riksbank to publish an interest rate path that was lower than the path it actually published.

These include the rise of non-bank financial intermediation, and the deep pockets of opacity and interconnections with the banking system – as we have seen in cases such as Archegos, Evergrande, Greensill and Huarong. In addition, medium-term structural trends such as the ongoing digitalisation of finance and increasing climate-related financial risks are so cross-sectoral and global in nature that they can only be effectively addressed through greater cooperation across sectors and across jurisdictions. 2/3  BIS - Central bankers' speeches  My third point is that cooperation can, and should, take different forms. While regulation – most notably the Basel framework – is perhaps the most visible product of global cooperation, there are a number of other, equally important, dimensions. Supervisory principles and guidelines, while often high-level in nature, are a powerful tool to help raise the bar when it comes to the quality and effectiveness of risk management practices and supervision, and to help provide a common global baseline. Supervisory cooperation, including through the sharing of supervisory intelligence and best practices, is a vital channel for authorities to assist and learn from one another. Indeed, merely having a continuous and ongoing channel of communication among authorities is perhaps one of the most important levers available to us. Equally, cooperation should be multi-faceted in scope, and should encompass both microprudential and macroprudential financial stability dimensions.
We intend to retain the current interest rate level for now and will monitor its effects closely. With respect to setting interest rates and supplying the money market with liquidity, the SNB’s monetary policy decisions have been very bold by international standards. All things considered, the Swiss franc nevertheless remains significantly overvalued. Were Switzerland not to have negative interest rates, and hence have a narrower interest rate differential with other countries, demand for Swiss francs would be even greater and our currency would be even stronger today. We are aware that the current exchange rate situation is extremely difficult for exporters, tourism and industries that are particularly exposed to competition from abroad. While we recognise the scale of the challenges facing the affected companies, it is worth remembering that in the current climate there is, regrettably, no easy solution that would absorb all external disruptions. We must accept these challenging economic conditions for the time being. That said, we are convinced that, under the circumstances, the SNB’s current choice of monetary policy will best serve Switzerland’s overall interests in the long term. Ladies and gentlemen, thank you for your attention. It is now my pleasure to give the floor to Jean-Pierre Danthine, who will present our Financial Stability Report. BIS central bankers’ speeches  3

Community banks often use a unique “relationship-based” approach that, for example, leverages personal knowledge of their customers’ creditworthiness and local business conditions to customize lending decisions and meet demand for credit and other financial services. This allows both consumers and small 1/6  BIS central bankers' speeches  businesses to contribute to economic activity. Community banks also provide important financial services to key – often underserved – sectors of the economy. For example, a study from a few years ago found that almost one out of five U.S. counties has no other physical banking offices except those operated by community banks.1 As a second example, in the typical county in the Second District (excluding Puerto Rico and the Virgin Islands), community banks account for about half of all banking deposits. It is the ability of smaller institutions to leverage “soft information” in important ways and reach underserved sectors that gives community banks a unique and critical role in driving sustainable economic growth. Supervisors are also keenly aware of the potential unintended consequences of the supervisory and regulatory framework. One of our goals as supervisors is to ensure that our efforts are not having an adverse effect on the ability of firms to provide credit and financial services that supports economic growth at businesses of all sizes. As I said in an earlier talk, in my view, it is entirely appropriate to continuously evaluate and rigorously debate whether the supervisory and regulatory framework is meeting its objectives efficiently.2 I’ll return to this topic shortly.
USD 1.7 trillion, of which a mere 3% resulted from off-shoring to countries of low manufacturing costs. It is expected that in 2008 the global trade in services will amount to ca. USD 2.4 trillion, of which 10% will represent off-shoring of business processes and ICT to countries with low manufacturing costs. For a comparison, the travel industry represents ca. 30% of trade in services according to the OECD data, whereas transport – 20%. Based on an analysis of eight representative sectors, McKinsey Global Institute estimated that in 2003 18.3 million jobs in the services sector could have been off-shored (this applies mostly to such sectors as the IT – 2.8 million, banking – 3.3 million, insurance – 2.3 million, health care – 4.6 million, retail trade – 4.3 million). Extrapolating these results for the global economy, it may be estimated that in 2008 there may be as many as ca. 160 million jobs in the services, i.e. 11% of the estimated 1.46 billion of global employment in the services sector, may be performed at a distance from the service recipient. Most evidently, the off-shoring of business processes to various corners of the world to optimise the process of manufacturing or performing services will grow, and the scale of this phenomenon will probably surprise many architects of the economic policy. In many rankings, Poland holds one of the leading positions for its off-shoring attractiveness 17 , which is also reflected by the business decisions taken.

This will offset the impetus to consumption and investment provided by the near-zero interest rates. 7. Some academics believe that the effectiveness of the quantitative easing policy in the US is also undermined by the fact that the US property market has not yet bottomed out and US households need to continue to de-leverage. Many policy measures introduced in the US recently aim to reduce the pain of households in a falling property market and slow down the process of foreclosures. Even though property prices have already fallen significantly, more than 50% in some places according to anecdotal reports, potential buyers still prefer to wait as they fear that prices may fall further once the huge stock of foreclosed properties are put back to the market or when interest rates return to more normal levels. In other words, while measures to slow the downward adjustment of the property market are well-intentioned and have their political merits, they could prolong the time needed for the market to reach a new equilibrium or find the so-called clearing price. In my view, this may delay a true recovery of the property market and create a negative drag on the repair of US  2  BIS central bankers’ speeches  households’ balance sheets, making the recovery of consumer confidence farther and farther away. 8. Finally I would like to share with you a few policy lessons learnt from the latest crisis:  (a)  Households, companies and governments alike must avoid excessive leverage or borrowing.
With respect to the Federal  Reserve’s current dollar swap lines, for example, when a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate. The Federal Reserve holds the foreign currency in an account at the foreign central bank. The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the New York Fed. When the foreign central bank lends to institutions in its jurisdiction the dollars it obtains by drawing on its swap line, the dollars are transferred from the foreign central bank’s account at the Federal Reserve to the account of the bank that the borrowing institution uses to clear its dollar transactions. By using its account on the books of the Fed to receive swap proceeds and distribute them, rather than accounts at private-sector bank, the central bank avoids much of the risk of public identification of its borrowers and itself avoids the credit risk, and other risks (operational, reputational, etc.) of a private sector bank account. Moreover, the overall size and ramping up of potential liquidity operations can be virtually unlimited, subject only to the policy limitations set by the central bank counterparties themselves.

The risk may arise from differences in fiscal positions even though these are to be constrained through the Stability Pact. Or it may result from economic shocks of some sort that have a bigger impact on some countries than on others. The rise in oil prices in the early 1970s or German reunification are classic examples. BIS Review 23/1998  -2So the risk of divergent monetary policy needs within the euro area is real. And the damage it could cause if serious tensions between member countries were to emerge is substantial, because alternative adjustment mechanisms, such as labour migration or fiscal redistribution, that exist within individual countries, and which help to alleviate the similar regional tensions that arise at the national level, are not well-developed at the pan-European level. The Maastricht Treaty, of course, recognised this risk, and the famous convergence criteria were designed precisely as a means of reducing the risk to manageable proportions by requiring that, before they join the euro club, countries should have achieved at least a minimum degree of macro-economic convergence - demonstrating their commitment to macro-economic discipline through both fiscal consolidation and monetary policy directed at effective price, and exchange rate, stability. And there is no doubt that all European Union member states have made huge progress towards macro-economic stability over the past few years. The betting in financial markets is therefore that when, in early May, the Heads of State come to make their decision, a broadly based euro will indeed go ahead.
These systems must be solid enough to cope with increased flows of trade and capital. Some countries are not sufficiently well prepared to handle the new conditions of the world economy. Sometimes, countries have deregulated their economies too quickly or in the wrong way. Industrialised countries have deficiencies too. Secondly, requirements increase on coordination of policy among countries. The countries of the world are increasingly dependent on one another. A financial crisis in South-East Asia has effects in Sweden as well. For this reason, we also benefit from other countries on the other side of the world acquiring better systems for, for instance, bank supervision and bankruptcies. This means that we have greater reason to become involved in global issues. We also have reasons to show lenience on issues that are important for Sweden sometimes, in order to create common rules of play and agreements that will benefit everyone. The old slogan “international solidarity” is national self-interest in a very concrete way. International collaboration is thus of great value. Therefore, we have reason to take a great interest in the multilateral organisations for collaboration that exists. The “Bretton Woods institutions” - the IMF, the World Bank and WTO/GATT - were established fifty years ago during a period when the countries in the world economy drew the lesson that the trade wars of the 1930s, payment obstacles and competitive devaluations contributed to unemployment, lower prosperity and war.

I hope that the trend towards increasing economic and cultural openness will continue. People continually seek new opportunities to trade and communicate with one another, and find new ways to benefit from one another’s knowledge and possibilities. It is fundamentally a very positive development which gives poor and rich people enormous opportunities for greater wealth and reduced suffering. In order to make use of this potential, intensive international collaboration is required, and energetic national efforts. Sweden and all other countries must adapt their national systems so that they can cope with the increased contacts with the outside world and so that other countries can benefit from increased contacts with us. Issues of financial stability and macroeconomics are intimately related to this. The IMF therefore has an increasingly important function to fill. Economic developments, not least in the financial sphere, take place quickly, however. In order to be able to make an active contribution, the IMF and other financial organisations must continually be reformed and keep in step with this development. The meetings in Prague are a part of this reform process. 7  BIS Review 78/2000