samchain/econo-pairs-v1 huggingface dataset:
With the support of the G20 leaders, the Financial Stability Board (FSB) has initiated an impressive number of reform projects. 3 Good progress has been made on many measures. In some important areas, however, decisions have yet to be taken. In line with proposals by the FSB, I believe we need to pursue a dual-track approach to reforming the global financial system, combining preventive measures with measures facilitating the orderly resolution of large international banks in the event of a future crisis. An ounce of prevention We have all been told that an ounce of prevention is worth a pound of cure. Considering the enormous costs associated with the cure of the current crisis, this holds especially true when it comes to financial stability. Most importantly, we need to strengthen the shock absorbers of the financial system. In the context of banks this means that they have to hold more capital and more liquidity. Strengthened shock absorbers in the form of higher capital and liquidity buffers have several beneficial effects. Bigger buffers enable banks to absorb larger negative shocks without triggering an idiosyncratic, let alone a systemic crisis. Furthermore, bigger buffers ensure that banks themselves bear a larger share of their downside risks. Not only does this reduce the potential burden for taxpayers, but it also creates stronger incentives for the banks themselves to operate prudently.

In difficult times, banks will be allowed to fall significantly below the target levels defined for good times. Allowing banks to draw down capital without violating any minimum requirements helps to mitigate the harmful effects of deleveraging. Overall, regulators must no longer allow banks, especially systemically important ones, to operate at such worryingly low capital levels as have been observed in the buildup of the current crisis. At the beginning of this month, the finance ministers and central bank governors of the G20 were very explicit on this. More robust liquidity requirements The crisis has also provided a number of important lessons regarding liquidity. In short, banks’ liquidity holdings were insufficient. This holds true for the quantity but also for the quality of liquidity. One of the explanations for these insufficient holdings of liquidity was that the stress scenarios considered by banks were far too optimistic. While secured funding remained the most stable source of refinancing, it was much less stable than what banks and  BIS Review 115/2009  3  regulators had assumed. Moreover, it quickly became apparent that liquidity problems at single banks imposed considerable stress on the entire international system. As in the area of capital, the FSB and the Basel Committee are working at full throttle towards an internationally coordinated liquidity standard for banks.
As one illustration, Chart 2 plots successive forecasts by the Bank of England of UK productivity growth since 2008, while Chart 3 shows IMF forecasts of productivity across advanced economies over the same period. These charts point to a string of material and serially-correlated forecast errors over recent years. Productivity growth has consistently underperformed relative to expectations, since at least the global financial crisis. This tale of productivity disappointment, in forecasting and in performance, has been extensively debated and analysed over recent years. Some have called it the “productivity puzzle”. 1  With each year that passes, and as each new turning point in productivity has failed to materialise, this mystery has deepened. This has led some to conjecture that the world may have entered a new epoch of 2  sub-par productivity growth, an era of secular stagnation. Various possible causes of this stagnation have 3  been posited, including adverse demographic trends and diminished rates of innovation. The secular stagnation hypothesis is striking in its gloomy implications for future growth in living standards. 1 2 3  For example, Barnett et al (2014), Bryson et al (2014) and Weale (2014) For example, Gordon (2014) and Summers (2013). Gordon (2014). 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  It is striking, too, because of the starkness with which it contrasts with a second topical hypothesis. This posits that we may be on the cusp of a Second Machine Age or Fourth Industrial Revolution, an era of 4  secular innovation.

It means these assets are often not valued fully by investors and lenders. This raises the cost of capital for these firms to sub-optimally high levels – a market failure. Remedying that market failure, by ensuring intangible assets are consistently and coherently valued, is important if these companies are to grow to reach their full potential. 61  57  For example, Song et al (2015) find that virtually all the rise in earnings dispersion between workers is accounted for by increasing dispersion across the average wages paid by different firms. 58 Andrews et al (2015) and Dabla-Norris et al (2015). 59 HM Government (2013). 60 Aghion et al (2017). 61 Big Innovation Centre (2017b). 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  More broadly, it is possible that current UK corporate governance practices may act as a brake on innovative companies. A recent report by the Big Innovation Centre makes important proposals for re-purposing UK companies to support long-term investment and productivity. 62  The government recently initiated a Patient  Capital Review to explore how best to support the financing of innovative companies as they scale-up. 63  A third category of policy measure focusses on the fortunes, not of innovative frontier companies, but the long tail of low-productivity non-frontier firms. These companies have tended to be focussed on somewhat less historically. Indeed, their large numbers and disparate characteristics may be one reason why this is the case.
6  BIS central bankers’ speeches  Unquestionably, this scenario of new technologies and new emerging competitors poses a challenge to the traditional banking business. However, technical progress is also an opportunity for the more dynamic banks to generate efficiency and to extend the services provided to their customers. For instance, banks are proving very adept at developing instant payment services. And some of them might be well-positioned to develop direct lending facilities (P2P) competing with the new non-bank operators (e.g. crowdfunding). Banks retain advantages in terms of experience, market roots and the ability to offer a full range of transactional and intermediation services which should help them face competition which, nonetheless, will be increasingly intense. In our capacity as regulators and supervisors, we should seek to strike a balance between facilitating technical progress, supporting the development of new products and services, and properly safeguarding customers and financial stability. 3.3  Consolidation  Finally, orderly correction of the excess capacity in the banking industry will foreseeably require greater consolidation in the sector. I spoke to you about this exactly a year ago in this same forum and I believe that since then the view that such a process is becoming increasingly likely has become widespread. Ideally, consolidation should take place at the European level, in order to overcome the strictly domestic vocation of the overwhelming majority of banks.

One of the most relevant areas of work under way seeks to correct the excessive variability of risk-weighted assets (the denominator of the capital ratio) prompted by the use of insufficiently homogeneous internal models. Such heterogeneity leads to inadequate risk measurement and generates competitive distortions, harming those institutions subject to more demanding regimes of model supervision. The current challenge is to come up with a parameterisation of the new requirements that enables risk measurement to be enhanced without significantly increasing capital requirements for the system as a whole, as this is one of the commitments announced by  4  BIS central bankers’ speeches  global supervisory authorities, in order to hold prudential requirements at levels compatible with the pursuit of banking activity on a proper footing. Banks must also meet the requirements stemming from the new resolution regulations, which seek to minimise the need to use public funds to manage bank crises. In particular, under the Bank Recovery and Resolution Directive (BRRD), significant institutions shall, in addition to meeting the established capital requirements, have a minimum volume of liabilities enabling losses to be absorbed should it be necessary. That is to say, they shall have debt instruments at hand that may be converted into capital if they experience problems of viability. These requirements will likely prove a binding restriction for some financial institutions. The issuance of these instruments may pose a challenge, especially for unlisted banks with little experience in the issuance of convertible instruments or of subordinated debt.
The Rt Hon Sir Edward George GBE: New economy - same old problems  Speech by The Rt Hon Sir Edward George GBE, Governor of the Bank of England, at the CBI National Conference, held in Birmingham, on 7 November 2000. *  *  *  Thank you, Mr President. I’m honoured to have been invited back to address your annual conference. I remember very vividly my earlier visit to your conference in 1996. I remember reporting to you that the British economy was then into its fifth consecutive year - its nineteenth consecutive quarter - of relatively steady growth at an annual average rate of 2.6%; that unemployment had fallen, pretty well month by month for most of that time, to below 7½%; and that inflation had averaged 2¾% over the previous four years - compared with over 10% on average in the preceding two decades. The question then was could we keep up - or even improve upon - that performance. And my answer was a cautious yes - provided we met three conditions: a continuing firm grip on inflation; continuing prudent and sustainable fiscal policy; and continuing structural, supply-side flexibility. Well, that cautious optimism was amply justified.

And many people in Germany, as elsewhere, on seeing that they are hardly earning anything on their savings, are wondering if we are ever going to see an end to quantitative easing. Today, the risks for growth and inflation are tilted to the downside. The best service that the ECB can provide to the citizens of the euro area is to fulfil its mandate so that inflation returns towards 2%, which requires the economy to pick up again, jobs to be created and exports to the euro area to find solvent outlets. We are aware that the low interest rates also have negative effects, notably on savings, and could pose risks to financial stability if they were to stay low for too long. We don’t want this monetary policy to last too long, but we will apply it for as long as necessary in line with our mandate. 2  BIS central bankers’ speeches  In other words? Governments need to take action and implement the necessary reforms in order to consolidate confidence and growth, and to demonstrate a credible fiscal policy. If the euro area policy for growth rests exclusively on the ECB’s shoulders, things will end badly! Admittedly, we are nowhere near that point. But we sense that there is a temptation to rely entirely on the ECB. What key measures do governments need to implement specifically in order to restore growth?
Figure 4 Mortgage failure in U.S.  Mortage deliquency  Mortage in foreclosure process  (% of total credit)  (% of total credit)  8  21  6  14  4 3 2  4  7  2  0  98  00 Total Prime  10  02  04  06  Subprime  08  1 0  98  00 Total Prime  02  04  06  08  Subprime  BIS Review 124/2008  Figure 5 Monetary Policy rates in G3 (percentage) 7 6 5 4 3 2 1 0 01  02  03  04  US  05  06  EU  07  08  Japan  Source: Bloomberg. Figure 6 Spreads between LIBOR and Overnight Index Swaps (OIS) (basis points) 160  Spread Libor/OIS 1 month Spread Libor/OIS 3 months Spread Libor/OIS 6 months  140 120 100 80 60 40 20 0 -20 Jan.07  Apr.07  Jul.07  Oct.07  Jan.08  May.08  Ago.08  Source: Bloomberg. BIS Review 124/2008  11  Figure 7 Real interest rates (percentage) 6 5 4 3 2 1 0 -1  92  93  94  95  96  97  98  99  US (1)  00  01  02  03  04  05  06  07  08  OECD (2)  (1) 10 year nominal bond return, minus same period expected inflation.

In the United States, these rules were not applicable to SVB, as certain exemptions, introduced in 2019 under the proportionality principle, apply to banks that are considered to be less important, this concept being understood in a broad sense since it includes banks with a balance sheet total of up to USD 250 billion. - The post mortem analyses carried out and published by the FED suggest that, had SVB been subject to these rules, it would not have complied with the short-term liquidity ratio as defined by the Basel Committee. Moreover, SVB's heavy reliance on tech companies' deposits should have alerted its supervisor if the additional monitoring tools required by international standards had been put in place. The same FED analyses estimate that SVB's interest rate risk sensitivity was around 35% before the crisis, well above the 15% alert threshold set out in the international rules and supposed to trigger supervisory action. - Monitoring compliance with regulations calls for strict, intrusive and reactive supervision, which, according to the FED, was not the case. Let me reassure you on one point: the European situation is radically different. The Basel Committee's rules are applied in Europe in their entirety and to all banks. By the way, I would like to add that Europe is in the process of finalising the transposition into European law of the latest reinforcements of the Basel III agreements, ahead of the other major jurisdictions.
Concentration has benefits, but it necessarily increases the vulnerability of the system to an operational or financial disruption in a single institution, or the decision by a single institution to exit a particular business. Moreover, to the extent that the  2  BIS Review 18/2004  same set of firms play dominant roles in multiple markets, this concentration can also give rise to linkages between markets that are not apparent in normal circumstances and that could potentially affect how the financial system functions in conditions of acute stress. Increased opportunities for diversification offer the prospect - though not the assurance - of lower overall volatility in earnings, but they also bring much more complicated management challenges in controlling conflicts, reputational risks, and operational risks. The actual gains achieved from diversification depend on the correlation of movements in different sources of earnings and in economic growth among different regions as well as the relative volatility of the new business lines into which the institution is diversifying. To the extent that diversification achieves lower overall volatility in earnings for the major financial institutions, it is clearly good for the stability of the system. But to fully exploit these potential gains requires careful attention to the design of the control and compliance infrastructure, to monitoring and managing credit risk and concentration across diverse types of financial activities, and to managing conflicts of interest. These are formidable challenges even for the strongest management teams.

Needless to say, such reconciliation cannot and must not be “imposed” by foreigners who do not carry the burden of being responsible to the Sri Lankan people. As every Sri Lankan living in the country would readily acknowledge, Sri Lanka’s overall objective in defeating terrorism was not only to win the military battle, but also to place the country firmly on a sustainable path of peace, prosperity and growth for all of its people. For that objective to be achieved, Sri Lanka must follow its own time frames and priorities, and if need be, challenge conventional wisdom as proposed by outside parties, however wellmeaning their intentions may appear to be. BIS central bankers’ speeches  3
Membership in ERM2, for a country on its way into monetary union, is different to the systems of fixed exchange rates in which Sweden has previously participated. This is partly due to the fact that the central rate chosen can be expected to become the conversion rate for entry into EMU. This would reduce the risk of uncertainty over the krona’s development. As a member in ERM2, there would still be scope for the Riksbank to promote price stability, although this scope would diminish the closer to entry we come. Responsibility for stabilising the economy would gradually shift over to fiscal policy. If Sweden were to join monetary union, the interest rate level would be set by the ECB. The differences that exist between the Riksbank’s and ECB’s work methods should not be exaggerated. With the ECB’s latest clarifications, this has become even more obvious. But as regards the internal preparation processes, clarity and transparency, a number of differences remain. If the referendum results in a “yes” to the euro, I will be talking an active part in these issues as a member of the ECB Governing Council. The Riksbank also works with financial stability. In this area, the institutional changes would not be that great as a result of Sweden joining monetary union. In the long term, however, the financial system in Europe would be reshaped.

A decision on participation in ERM2 and on the central rate and fluctuation bands at which the krona should join would be taken through common accord of the finance ministers in the euro area Member States, the ECB, the central bank governors and finance ministers of the applicant country and the other ERM2 countries, i.e. Denmark at present. In practice, a decision would be preceded by contacts between representatives of the ministry of finance and the Riksbank as well as with our colleagues in a number of euro area Member States and Denmark. The first official step in the negotiations would be taken within the framework of the EU’s economic and financial committee (EFC). Only if the committee should fail to reach agreement would direct negotiations between the concerned central bank governors and finance ministers take place. Then, when the irrevocable conversion rate against the euro is to be determined in connection with entry into monetary union, this would be decided unanimously by the ECOFIN Council members from the euro area Member States and Sweden. Central rate in ERM2 The central rate is the krona/euro exchange rate against which the criterion of exchange rate stability would be evaluated prior to entry into monetary union. It is natural to seek to ensure that the central rate is set at a level which also becomes the conversion rate for the Swedish krona in monetary union.
Overall, the outlook and the balance of risks suggest that the key policy rate should be gradually increased in the period ahead. The projections are uncertain. New information may reveal aspects of economic developments that suggest the Norwegian economy is following a different path than projected. Higher capacity utilisation or a weaker krone may, on the one hand, result in higher-than-projected inflation. On the other hand, inflation may be lower than projected if the krone remains strong or productivity picks up more rapidly. Should the krone appreciate considerably more than projected, the interest rate may be increased to a lesser extent or later than currently envisaged. The key policy rate should be in the interval 1¼-2¼ per cent in the period to the publication of the next Monetary Policy Report on 24 March 2010 unless the Norwegian economy is exposed to new major shocks. Thank you for your attention. BIS Review 139/2009  15

In this environment, the UK is running a historically large current account deficit. On the positive side, the deficit is funded in domestic currency and financial reforms have increased the resilience of the UK system, thereby making larger imbalances more sustainable. But the UK’s deficit has also been associated with markedly weak investment and latterly with rapid consumer credit growth. This is not an imbalance that is, as yet, funding its eventual resolution. Moreover, despite the large depreciation around the referendum, the extent to which the UK’s deficit has moved closer to sustainability remains an open question, one whose answer depends crucially on the outcome of the Brexit negotiations. Most fundamentally, the UK relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased. III. Potential Solutions The world economy has been here before. In the 1930s monetary policy was exhausted and fiscal policy was in abeyance. The trap was sealed by a wave of protectionist measures originating in the US and spreading to Europe. As current and capital accounts closed, stagnation ensued. What should be done to prevent history from rhyming? In the simple world of the economist, the prescription is straightforward. Deficit countries should loosen monetary policy and tighten fiscal policy. Surplus countries should do the reverse. roll up its sleeves, it could easily solve this economic Sudoku.
(v)  In case of unforeseen excessive liquidity shortage during the day, which would exert excessive pressure on money market interest rates, the CBRT may announce “Intraday Repo Auctions” in addition to the regular ones announced at 11:00 a.m.  (vi)  The primary dealer banks will be able to conduct repo transactions within the framework of open market operations, between 10:00 a.m. –12:00 p.m. and 1:00 p.m.–4:00 p.m.  Technical interest rate cut and the new operational framework In cases where the liquidity shortage in the market increases and/or becomes pronounced to be permanent, the Central Bank will rearrange its operational framework of liquidity management and opt for a technical interest rate cut. Accordingly, (i)  The Central Bank benchmark interest rate will be the interest rates of one-week maturity repo auctions to be held regularly, which are the basic funding instrument. . The repo auction interest rate will match the Central Bank borrowing interest rate applicable to intra-day transactions prior to the period of technical interest cut. For instance, if a decision was made to make a technical interest rate cut on 15 December 2008, the interest rate on repo auctions would be set as 16.25 percent, the rate applicable to intra-day borrowing transactions by the Central Bank. (iv)  With respect to the technical interest rate cut; a.  BIS Review 3/2009  Overnight Interest Rates: The CBT borrowing and lending interest rates will be set 1.25 points below and above the repo interest rate, respectively.

(vi)  According to the new operational structure, overnight interest rates are mainly expected to fluctuate between the Central Bank borrowing interest rate and the interest rate of the liquidity facility submitted to primary dealer banks during the day. However, under normal conditions while determining the amounts of the auctions for repo and reverse repo auctions with a one-week maturity, the Central Bank, will endeavor to prevent both excessive fluctuation of the ISE Repo-Reverse Repo Market overnight interest rates, which is an indicator of secondary money market interest rates, and systematical formation of the said rates significantly below or above the repo auction interest rates. Additionally, with a view to preventing fluctuations in overnight interest rates and enhancing the flexibility of the banks’ liquidity management, the Central Bank may consider options like narrowing the interest rate band of the Late Liquidity Window on the due date of keeping required reserve ratios and allowing the banks to keep a certain amount of the required  14  BIS Review 3/2009  reserves in the following period or rendering the excess amounts to be effective for the following period. In cases where the liquidity shortage in the market increases and becomes permanent, the funding of the liquidity shortage only by repo auctions with a one-week maturity may have adverse effects on longer-term interest rates and the credit mechanism.