samchain/econo-pairs-v1 huggingface dataset:
Integration of the risk management function  One of the most notable advances in risk management across all three financial services sectors is the growing emphasis on developing a firm-wide assessment of risk. This constitutes the first trend in the Joint Forum’s report. Improvements in technology and telecommunications have made it easier for firms to gather, collect, and analyse large amounts of data on their exposures and business activities efficiently and increasingly in near “real time.” To make the best use of firm-wide data, some organisations have established a dedicated risk management function to foster more highly integrated and systematic approaches to risk measurement and management. The risk management function typically promotes the use of common risk measures across business lines. It can then report the firm-wide risk data to senior management. Reports may range from daily updates on “value-at-risk” trading positions to regular, if less frequent, compilations of the results of stress testing. The broader use of shared definitions to guide the comprehensive reporting of risk across the firm enables the integrated risk management function to identify concentrations of risk. Concentrations matter particularly when various business lines within the firm have different kinds of exposures to the same counterparty. Comprehensive and consistent reporting helps, moreover, to ensure that the firm is aware of the wide range of risks to which it is exposed; that it understands the relative importance of various risks and how they may interact; and that the firm is less likely to ignore material sources of risk.

In the United States and United Kingdom, it happened that banknotes issued by private banks were traded at a lower value than was printed on them. The advantage of government issue is that government banknotes are usually considered to be completely safe. This is the main reason why the government, via the central bank, is granted a monopoly on issuing banknotes. Quite simply, it has turned out to be easier for central banks, which are run in the national interest, by what is also best for society in the long term, to build the required confidence than it is for private companies that have profit motives. Substantial costs arise if confidence in the value of money disappears Right up until modern times, the value of banknotes and coins was linked to the value of a precious metal, such as silver or gold. But this link could be problematic as it meant that the supply of money was determined by access to precious metals and not by activity in the economy. 7 When production increased at the same time as the money supply was fixed, deflationary pressures arose. The bestknown example of this is the depression of the 1930s, when the restrictions under the gold standard led to serious deflation. Research has revealed the existence of a relationship between how quickly a land chose to abandon the gold standard and how quickly its economy started to recover.
Therefore, should a concrete medium-term fiscal program, which safeguards the sustainability of debt dynamics and budget discipline, be established, it is possible that market interest rates will remain at low levels permanently. Distinguished members of the press, To sum up, growing perceptions that recovery in the global economy will be slow and gradual, saving rates will remain high and global interest rates will remain low for quite some time; enabling monetary policy to provide a more concrete perspective for the future. Within this framework, forecasts are based on an outlook, which envisages that short-term interest rates will be somewhat further eased and not raised until the end of 2010. The monetary policy for 2011 and thereafter will be determined according to the course of variables affecting the inflation outlook. With the end of the crisis, should the fiscal discipline be reestablished in a gradual and forceful manner, short-term interest rates are projected to remain in single-digits throughout the forecast horizon of three years. Distinguished guests, Even if our primary objective is to achieve price stability, I would like to reiterate that we will continue to take all the necessary measures and use all policy instruments available in a timely and due manner should the likelihood arise that problems in international markets adversely affect domestic financial markets. Therefore, strengthening the commitment to fiscal discipline and the structural reform agenda is also critical to facilitate expectations management and to support the effectiveness of monetary policy decisions.

Should global conditions and consequently domestic economic activity further deteriorate, the CBRT would consider another cycle of rate cuts, and then maintain policy rates at low single digits for an extended period of time. Another possible scenario is a surge in capital inflows to emerging markets owing to the relative improvement in creditworthiness of these countries. In this context, receding risk premia and appreciating currencies would present downside risks regarding inflation prospects. These circumstances could also trigger acceleration in rate cuts, or another easing cycle, which could then bring policy rates which hover around low single digits for a prolonged period of time. Increasing budget deficits worldwide continue to pose risks on inflation expectations and thus on global interest rates in the long term. The medium-term forecasts presented above envisage that the slow recovery in global economic activity and rising saving rates will keep global interest rates at low levels for an extended period. However, the lack of a clear exit strategy from global fiscal stimulus packages creates upside risks regarding global inflation rates and therefore longer-term global interest rates. Counter-cyclical fiscal policies to curb the contractionary effect of the crisis on economic activity, which have also been introduced in Turkey in line with global trends, have accelerated the rise in budget deficit. The relatively low level of public sector indebtedness in Turkey compared to other countries implies that we have a broad fiscal space.
10  BIS central bankers’ speeches  Table 2 International baseline scenario assumptions 2014 2015 (f) Jun.15 MP Report  Sep.15 MP Report  Dec.15 MP Report  Growth  2016 (f) Jun.15 MP Report  Sep.15 MP Report  Dec.15 MP Report  2017 (f) Sep.15 MP Report  Dec.15 MP Report  (annual change, percent)  Trading partners' GDP  3.4  3.3  3.1  3.0  3.7  3.4  3.2  3.4  3.3  World GDP at PPP  3.4  3.4  3.2  3.1  3.7  3.5  3.4  3.5  3.5  United States Eurozone Japan China India Rest of Asia (Excl. Japan, China and India) Latin America (excl.

Although a large part of this increase results from the valuation effect deriving from the peso depreciation, its level is high from a historical perspective. Moreover, the increase accumulated in the past seven years is high by emerging economies’ standards (figure 9). On the other hand, although the financial indicators of SVS-listed firms have not changed much since our last Report, debt is high and profitability is low, historically (figure 10). Anyway, various indicators show that the balance sheet exposure of these firms to exchange rate risks has remained low. Turning to the real-estate sector, housing sales remain dynamic and prices are on an upward trend, albeit with some moderation lately (figure 11). Advance purchases associated with the upcoming tax reform explain the strength of the sector to an important extent. Actually, most of the properties sold are either off-plan or in construction phase. The low interest rates on mortgage loans also explain part of this dynamism. The growth in housing prices has been reflected in the dynamics of mortgage loans, which are rising nearly 10 percent annually in real terms, due mainly to an increase in the average debt and, to a lesser extent, to an increase in the number of debtors. Notably, although many lending indicators remain stable, such as the loan to value ratio and the debt to income ratio, the share of households with more than one mortgage has increased: from 20 to 25 percent in the last five years. As for office space, the vacancy rate continues to grow.
4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 5: Growth in unsecured lending accounted for by car finance and student loans  Car finance Student loans Other consumer credit  25  Per cent  Per cent  Per cent of disposable income 30  Chart 6: Stock of mortgages still higher than precrisis average, interest cost well below average  120  8  100  20  6  15  80  4  10  60  2  Interest payments to income (LHS) Debt to income (RHS) Pre-crisis average (both series)  5  -  1994  1999  2004  2009  2014  Sources: Bank of England, ONS, FLA and Bank calculations. The stock of student loans has been projected to 2018 Q3. FLA data for car finance interpolated and used up to 2012. ‘Other consumer credit’ is predominantly personal loans, credit cards and overdrafts. 1987  1997  2007  40 20  2017  Sources: ONS, Thomas and Dimsdale (2017) sheet M12, Bank of England, and Bank calculations. Pre-crisis averages calculated over the period 1993-2007 Q2. Second, even when there aren’t structural changes in the nature of debt, other things can affect its affordability over time. The most important is the neutral or equilibrium rate of interest. Unlike consumer loans and credit card debt, the stock of mortgages is still significantly higher than it was 25 years ago (Chart 6).

If we are hit by a critical crisis in one or more of the major financial institutions today, the regulatory and supervisory framework is not sufficient. Second, we need to move forward and find a modified framework before problems arise. My experience is that if a crisis hits an unprepared authority, the choice of solution will suffer. Third, we should move ahead gradually, since there are obvious political difficulties and it is uncertain what the first-best solution would look like. In a political world, it is difficult to achieve first-best directly. Instead we have to move stepwise and ensure that we have our compass firmly in our hands to ensure a move in the right direction. To solve some of the problems of coordination of information and assessments, I propose the establishment a new pan-European body, a European Organization for Financial Supervision (EOFS). The idea is to create a separate agency to follow the major cross-border banking groups in Europe. The EOFS should only focus on the presently about 40 truly cross-border banking groups and not deal with the about eight thousand European banks with a predominately national character. The EOFS should have three tasks: It should gather information about the banking groups and their activities in different countries. Importantly, it should also create unified risk-assessments of each cross-border banking group. Finally, it should also oversee the activities and risks of these banking groups. To achieve these tasks, there is a need for a separate agency, staffed with a sufficient number of competent employees.
These taxonomies help mobilise capital by reducing the need for financial institutions to conduct their own assessments of environmental impact. At present the two leading taxonomies are those recently developed by the Mainland and by the European Union. The two taxonomies differ in some important aspects, including definitions of economic activities eligible for green investment. Such differences could present impediments in tackling what is a global challenge: this has particular relevance for Hong Kong, which is a regional hub for global institutions committed to responsible investment. 24. It is therefore gratifying to know that in May this year, the Mainland authorities have taken important steps to reconcile some of the critical differences between the two taxonomies. For example, clean coal is no longer considered green in the revised bond catalogue. We 3/5  BIS central bankers' speeches  expect more harmonisation work to be done by the two sides, though this may take a bit of time. 25. We are making progress on “harmonisation” within Hong Kong, too. This year, the HKMA, together with other financial regulators and relevant Government bureaux, formed the Green and Sustainable Finance Cross-Agency Steering Group. The Steering Group has two main aims: to co-ordinate management of climate and environmental risks to the financial sector; and to help accelerate the growth of green and sustainable finance in Hong Kong.

Any hasty short-term reactions, like the ones we have been attesting to over the course of the present year and in the early days of this week, bring about individual financial cost to those undertaking them, as well as financial cost to the economy. No economic agent is stronger than the foundations. The high volatility and uncertainty in the foreign exchange market do not have any real base. The euroisation of the economy is a visionary idea, not only for Albania but for the entire region as well, since its final aspiration is the membership into the European Union. It encourages the domestic and the regional market, and the European authorities, to speed up the convergence process. However, convergence in the Euro area is a derivative of continuous structural reforms and strengthening of financial systems, wherein the stability of  BIS Review 119/2009  1  the currency is of prime importance. There can be no European integration without a longterm equilibrium of the national and European currency. In the long run, the exchange rate will inevitably reflect the sound foundations of the Albanian economy, which are to remain so. The past years’ equilibriums remain real indicators of the potentials of the Albanian economy. In the long run, we remain deeply convinced of the benefits the free floating exchange rate regime brings about. It will be the passport to and the best support to the Albanian economy in its path to European integration.
International Journal of Central Banking 9(2), p. 121–169. Mian, Atif and Sufi, Amir (2011), Consumers and the Economy, Part II: Household Debt and the Weak U.S. Recovery. FRBSF Economic Letter, January 18. Federal Reserve Bank of San Francisco. Norges Bank (2013), Monetary Policy Report with financial stability assessment 3/13, September. Nyberg, Lars (2005), House price developments and monetary policy. Speech at Evli Bank, Stockholm, 19 December. Sveriges Riksbank. Nyberg, Lars (2011), Monetary policy and financial crises – some reflections. Speech at Danske Bank, Stockholm, 21 December. Sveriges Riksbank. Paciorek, Andrew (2013), Supply constraints and housing market dynamics. Journal of Urban Economics 77, pp. 11–26. Reserve Bank of New Zealand (2012), News release announcing 2012 Policy Targets Agreement, 20 September. SEB (2013), Allt fler tror på högre bostadspriser. (More people believe housing prices will rise.) Information to the media, 11 November. SKOP (2013), Hushållens förväntningar om bostadsmarknaden. (Households’ expectations regarding the housing market.) 7 November 2013, press release. Smets, Frank (2013), Financial Stability and Monetary Policy: How Closely interlinked? Sveriges Riksbank Economic Review 2013:3. Jubilee issue. Stein, Jeremy C. (2013), Overheating in Credit Markets: Origins, Measurement, and Policy Responses. Speech at “Restoring Household Financial Stability after the Great Recession: Why Household Balance Sheets Matter”, research symposium sponsored by the Federal Reserve Bank of St. Louis, St. Louis, Missouri. Svensson, Lars E. O. (2013), Some Lessons from Six Years of Practical Inflation Targeting. Sveriges Riksbank Economic Review 2013:3. Jubilee issue. Swedbank (2013), Bostadsbristen kostar 21 miljarder per år. (Housing shortage costs SEK 21 billion a year.)

What macroprudential policy can do, with the possible support of monetary policy, is to bridge over the problems – try to ensure that the situation does not worsen while waiting for the supply side of the housing market to begin functioning better. To make a slightly drastic comparison, one might say that what macroprudential policy can do is to give first aid on site while awaiting the ambulance. A first aid effort may be necessary to save the patient’s life, but without continued nursing it is still uncertain whether the patient will survive. Low housing construction is of course one of the “fundamentals” explaining why prices have increased so much. But this is no real comfort. A large part of the problem is, as I mentioned earlier, that we appear over the past couple of decades to have been in a process where housing prices and debt only slow down slightly during economic downswings and then continue upwards again when times improve. This makes households – and thus the economy as a whole – gradually more vulnerable, and this is simply not sustainable in the long run. Several policy areas must collaborate To change course, or reprogram the system, I believe a lot of helping hands are needed. One major challenge is to take measures in a way that avoids as far as possible a rapid and dramatic adjustment of debt and housing prices.
This refers to our organisation as well as to the main substantive issues in monetary policy, regulation and the supervision of financial stability. Prior to the crisis of the 1990s, Sveriges Riksbank was an organisation in which operational tasks, and to a certain extent regulation, predominated. The flagship of our organisation was the trading room, which had the task of maintaining a stable exchange rate, but most of our employees worked with the manufacture and distribution of cash. As long as the regulations governing the credit markets and currency flows remained in place, the Riksbank had scores of employees working with these regulations too. What are the tasks of the central bank? The crisis of the 1990s forced us to reconsider all this. The forced change of currency regime from fixed to floating implied a failure, although in reality the Riksbank could not have succeeded. We had two main goals, maintaining low interest rates but also the fixed exchange rate, but we had only one instrument, namely monetary policy. Instead we became an early adopter of what was then the relatively new concept of inflation targeting, at the same time as the exchange rate was allowed to float. Sweden had also been hit by a severe bank crisis and we saw that the central bank should play an important role in the effort to prevent anything like this happening again. These became our two main tasks, just as they have become in many other countries.

Madis Müller: New models in Northern Europe? Speech by Mr Madis Müller, Deputy Governor of the Bank of Estonia (Eesti Pank), at a symposium organised by the Konrad-Adenauer-Stiftung, Berlin, 28 November 2012. *  *  *  Ladies and gentlemen, Thank you for this excellent opportunity to discuss together with colleagues from Latvia and Lithuania the experience of the three Baltic countries during the financial crisis. While the situation of each country is undoubtedly different, we can still consider if there are any lessons one could learn from the Baltic cases. In my opening comments, I would like to address specifically the question of what is the best pace for economic adjustments once a country has been hit by a crisis. We hear today many suggestions that austerity requirements have gone too far and that we should allow more time for implementing difficult reforms. First, let me start by saying that in more open economies, the crisis was felt almost instantly. In small and open countries such as the Baltic countries, there was no domestic demand to substitute for the lost export income. The economic reality had changed very suddenly. The EU countries could be divided into two groups. The countries that had a higher export dependence had to react fast to the changed economic environment. This applies especially to smaller countries, including the Baltic States, although Germany’s economy is also heavily reliant on exports.
In the SNB’s opinion, the draft legislation proposed by the commission is a good basis for alleviating the “too big to fail” issue. In our view it is important to launch the legislative process as soon as possible after the commission’s final report has been completed. The key elements of these special requirements, such as minimum and maximum capital provisions or the permissible organisational restrictions, will have to be set out in detail in a Federal Council Ordinance. It is essential that the capital requirements are designed to be progressive. This progressive nature should incentivise the banks to reduce their systemic importance. The capital requirements must be sufficiently strict to motivate the banks to bear the risks themselves which, up to now, they have been able to pass on to the general public. Moreover, higher capital requirements can provide an important foundation for a future-oriented business model geared towards sustainability. In the fields of business in which Swiss financial institutions are traditionally strong, well capitalised banks certainly have a competitive advantage. The SNB also takes the view that the organisation and legal structure of the big banks must be modified so that an orderly wind-down in extreme crisis situations is rendered possible. In particular, it must be possible for systemically important functions to keep running without the company as a whole having to be rescued. At the international level, proposals are also being drawn up on measures to address the “too big to fail” issue.

Faced with such a dramatic situation, governments and central banks across the world found themselves having to swiftly implement innovative support and rescue measures on an unprecedented scale, in a bid to stabilise the global financial system and limit the economic downturn. The decisive economic policy intervention was a key contributor in calming the markets, halting the downward spiral and clearing the way for economic recovery. As a small open economy, Switzerland could not avoid being drawn into the global recession. The sharp fall in economic activity, which had begun in the second half of 2008, continued in the first half of 2009. Around the middle of the year, the trough was reached and the economy began to grow again. Over the year 2009 as a whole, GDP dropped by 1.5%, the largest decline since 1975. Nevertheless, Switzerland has so far weathered the effects of the financial crisis better than most industrialised economies. This may come as a surprise, given the importance of our financial centre. A deciding factor behind the comparative mildness of the recession in Switzerland was private consumption, which proved to be an important buttress of growth. Moreover, no major distortion was observed in the property market, and banks did not restrict access to lending. Last but not least, the rapid and decisive expansion of monetary policy also played a supporting role. Despite this positive bill of health compared to other countries, the crisis has clearly left its mark on Switzerland too.