samchain/econo-pairs-v1 huggingface dataset:
Both the involvement of supervisors in assessing a bank’s risk management capabilities and the discipline that greater transparency and active markets bring to bear on management can reinforce a bank’s desire to remain adequately capitalized and in control of its exposure to risks. 2. Improve the risk-sensitivity of the capital framework  The New Accord will likewise achieve the second and parallel goal to align regulatory capital requirements more closely with the underlying economic risks that banks face. It will do so by departing from the 1988 Accord’s "one-size-fits-all" methodology that assesses credit risk based more on the type of borrower, offering instead a selection of methods to evaluate credit risk based more on the potential for loss. Under the new standardized approach, for example, banks with smaller loan portfolios or less advanced risk management systems will be better able to incorporate a borrower’s creditworthiness into their capital management by relying on external assessments of credit quality. Larger or more sophisticated institutions, in turn, will be able to rely increasingly on their own assessments under the internal ratings-based approach. Similarly, now that the industry is developing a more refined sense of operational risk – the risk of losses caused by failures in processes – the New Accord will "unbundle" this risk and allow banks to differentiate between, and manage separately, their exposures to credit, market, and operational risks. 2  BIS Review 52/2002  3.

The Supreme Court was to decide whether a the driver of a car was negligent when in a very difficult intersection he crashed into a car that had the right of way on the other crossing road. The collision occurred in the midst of rush traffic, and the Court argued that crossing traffic should be expected at that time. However, a number of conditions made it difficult for the man to see the traffic before he was close to the intersection. It was dark, with rain and sleet and icy roads. On the other hand, the driver was very familiar with the site and he should have been aware of the all the risks at the intersection. As he did not adjust his driving so that he was able to stop, the Court found that the driver had acted negligently. See Norsk Retstidende (Norwegian journal of law) 1984–91. 36  Preben Munthe, professor of economics, believes that the government was probably surprised by the magnitude of the sterling devaluation. He writes: “When the authorities learned of the British decision, they probably felt they were under time pressure, which is why the situation was not nearly as thoroughly discussed as it actually could have been.” See Jahn Eriksen and Munthe (1996), p. 371.
It has provided all relevant private and public stakeholders with a voice in the process - from the SNB to large banks with an international focus, to smaller and regional institutes. The twelve year history of the Swiss repo market illustrates this principle at work. At the end of the 1990s, commercial banks, financial infrastructure providers and the SNB collaborated  7  It consists of four elements: i) the electronic trading platforms, SIX Swiss Exchange and Eurex (derivatives); (ii) the central counterparty SIX x-clear; (iii) the securities settlement system SECOM; and (iv) the payment systems, Swiss Interbank Clearing (SIC) and euroSIC. Also directly integrated are the central counterparties, London Clearing House (LCH) and Eurex Clearing, as well as the euroSIC payment system. 8  Cf. “International Capital Market Association: European repo market survey.” Number 18, conducted December 2009, published March 2010. p. 10. Cf. also BIS, “CPSS: Strengthening repo clearing and settlement arrangements,” published September 2010., pp. 10–12. BIS central bankers’ speeches  3  closely to develop the repo market. The resulting electronic Eurex Repo trading platform9 standardised repo transactions. Crucially, since 1999 the Eurex Repo trading platform has been linked to the SECOM securities settlement system, which is connected to the SIC realtime gross-settlement payment system. Not only does this make straight-through processing possible, the system also sets itself apart by integrating central bank repos and interbank repos on the same platform.

This leads to my third example, the “Flash Crash” of 6 May 2010. That day, the Dow Jones Industrial Average plunged almost 1,000 points in five minutes, only to regain almost 600 points twenty minutes later. Full explanations for this turn of events have yet to be determined, but a report by U.S. regulatory authorities, the Commodity Futures Trading Commission and the Securities and Exchange Commission, concluded that: “One key lesson is that under stressed market conditions, the automated execution of a large sell order can trigger extreme price movements, especially if the automated execution algorithm does not take prices into account. Moreover, the interaction between automated execution programs and algorithmic trading strategies can quickly erode liquidity and result in disorderly markets.”6 Technological developments would therefore  2  The VIX tracks volatility on the S&P 500 Index. 3  Merrill Lynch Option Volatility Estimate Index. 4  “History of New York Stock Exchange Holidays,” New York Stock Exchange, revised in January 2011. 5  Brady Report 1988, Study III, p. 21. Cited in, “Marc Carlson: A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response,” p. 9. 6  “Findings Regarding the Market Events of May 6, 2010,” Report of the Staffs of the CFTC and SEC to the Joint Advisory Committee on Emerging Regulatory Issues, 20 September, 2010. 2  BIS central bankers’ speeches  seem to be like a dual-edged sword. On the one hand, they increase efficiency and reduce costs.
On the other hand, the consideration of guarding against the risk of future financial imbalances that may disturb activity and inflation somewhat further ahead suggest that the key policy rate should not be kept low for too long. Chart 10: Percentage change in the CPI since the beginning of each decade. 1980s and 2000s Chart 11: Percentage growth in mainland GDP since the beginning of each decade. 1980s and 2000s Drawing some of the threads together from the past decade, it can be said that inflation has been fairly stable and close to the target, which shows that monetary policy has been effective. Compared with the 1980s, for example, inflation has been considerably lower the past decade and growth in the mainland economy has been markedly higher. There has been no conflict between low inflation and high economic growth as many economists previously maintained. 4 The challenges encountered have provided new insight. Inflation is not self-stabilising and there are costs involved in bringing it back to target. The Bank’s analyses and communication have evolved. The Bank has gained insight into how the interest rate functions under an inflation targeting regime. Economic agents have become familiar with our response pattern. In interest rate setting, we do not give weight exclusively to bringing inflation back to target, but also take into account the impact of the interest rate on output and employment. After a decade of learning, inflation targeting has become more flexible. That flexibility is good to have, and easy to lose.

10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15  16  BIS central bankers’ speeches  BIS central bankers’ speeches  17
Slow growth, lack of economic mobility and erosion of trust in public and private institutions are among the factors that are likely to have contributed to this. Like undercurrents before a storm, these trends have far reaching implications for political, economic and social systems. Last but not least, the fifth shift is the advancement of technology. This has and will continue to 1/5  BIS central bankers' speeches  dramatically alter the way we behave, interact and transact. Much has been said about the benefits, but an increasing reliance on technology presents risks that we cannot ignore. This includes issues of data privacy, discrimination or biases and also displacement of certain segments within society. In the digital age, higher order risks of cyber-attacks and operational disruptions are magnified in ways that we have yet to fully comprehend. Calling for a financial system that is relevant, safe and socially responsible These five megatrends and finance are deeply intertwined. While undoubtedly finance has helped to power the economic rise of ASEAN, its role in contributing to an increase in climate risk and inequality cannot be denied. Therefore, as we consider the future of finance, we need to contemplate not only how these megatrends may impact finance, but how finance itself can respond to and shape these trends in more positive ways moving forward. In my mind, this calls for a financial system that is relevant, safe and socially responsible. Finance must be relevant to the needs of the economy.

The provision of liquidity had the desired effect of reducing strains in markets, narrowing the dispersion of rates, and keeping the federal funds rate within the target range.5 Moving to more recent events, in March of this year the global spread of the pandemic led to a rapid and massive movement of funds around the world as investors sought to protect themselves from the highly uncertain and darkening economic outlook. These flows threatened to overwhelm the financial system and resulted in intense strain and disruption in short-term funding markets and markets for Treasury securities and agency mortgage-backed securities.6 Measures of market functioning deteriorated to levels near, or in some cases worse than, those we saw at the peak of the 2008 global financial crisis.7 In response to the extraordinary volatility and signs of market disruption caused by the pandemic, the Federal Reserve greatly expanded its repo operations and decisively and immediately began purchasing enormous quantities of U.S. Treasury securities and agency mortgage-backed securities. Our approach was to deliver a rapid and overwhelming response that would give assurance to market participants that liquidity would be there in the coming days and months. These actions, combined with the introduction of emergency lending facilities to provide liquidity to funding and credit markets, proved successful.
Central banks need to acquire a better understanding of how the banks manage their liquidity, how they select their sources of funding and the effects this has on their resilience to disturbances. The analysis of stability also needs to be supplemented with methods for stress tests, that is, ways of analysing the sensitivity of banks to shocks. Another area that will prove challenging for both stability analysis and risk management preparedness in the future is the ongoing integration in Europe and, more generally, banks’ tendency to set up cross-border establishments in many countries. I see great scope for close international cooperation on these issues, both in terms of developing methods for analysis and for other aspects of stability surveillance and crisis management. I would like to thank the Bank of Indonesia once again for devoting an international conference to these important topics. Thank you! 4  BIS Review 58/2003

Yet despite their attraction, no more than a handful of countries internationally have so far issued GDP-linked debt instruments. Contingent convertible (“CoCo”) bonds are a second, potentially useful, debt instrument. These have been popular recently among banks. For countries, they could be designed with a duration which is automatically extended if a country breaches certain pre-set stress conditions – for example, if it is the subject of an IMF lending programme (Brooke et al (2012)). This would then deliver some automatic alleviation of short-term liquidity pressures. So far, no country has issued such instruments. There has been somewhat greater progress towards the inclusion of contractual clauses which assist in the restructuring of sovereign debts once these become unsustainable. In particular, following the Asian crisis there was a push by the international community to include Collective Action Clauses (CACs) in international bond contracts. Yet as recent Argentine experience illustrates, this has not closed the book on sovereign debt restructuring problems. Existing CACs tend only to cover one particular class of bonds. This gives rise to a potential aggregation problem if other classes of bond vote against – or hold-out from – a restructuring agreement. “Aggregation” CACs include the option for bonds to be restructured on the basis of a single vote across all affected bonds. A recent IMF paper proposed that these clauses be included in foreign law bonds, a proposal which appears to have the support of the international community (IMF (2014)). Kazakhstan recently incorporated these clauses into its bond programme.
It is from there that he came to Ceylon as the consultant on the establishment of a central bank, still on release from the Federal Reserve System. After serving his term as Governor of the Central Bank, Exter did not return to the Federal Reserve System. Instead, in 1953, he joined the World Bank and was offered the position of the division chief for the Middle East. After a year with the World Bank, he came back to the Federal Reserve System as its Vice President on international operations at the Federal Reserve Bank of New York. His career at the Federal Reserve System ended in 1959 when he decided to join the First National City Bank which later became the Citibank. From 1960 to 1972, he was the Senior Vice President of the Citibank in charge of its relations with foreign central banks and governments. With a huge fortune made on the  BIS Review 20/2007  1  gold market by using his own expertise on the foresight of irresponsible central banking and its inevitable consequences, Exter took an early retirement in 1972 and went into private consultancy work. According to his own admission, the prospect for his fortune on gold dawned on him after a friendly debate he had in 1962 with his one time Harvard buddy and Nobel Laureate Paul Samuelson. In that debate on why the dollar was becoming weak and USA was losing gold, Exter gave his diagnosis which was based on his experience with the Federal Reserve System.

The krona was put under strong pressure by investors who expected Sweden to devalue again soon and, in November 1992, the Riksbank was forced to give up its defence of the fixed exchange rate. New policy with emphasis on long-term anchors The consequences of the crisis emphasised, with all desired clarity, that the type of policy Sweden had pursued for a number of decades had reached the end of the road and needed to be fundamentally reshaped. Instead of defending a fixed exchange rate, the task of monetary policy from now on would be to keep inflation low and stable. For its part, fiscal policy would focus considerably more than previously on keeping public finances in good condition so as to maintain market confidence. Gradually, the new order was confirmed through changes in the fiscal and monetary policy frameworks. The price stability target, which, in practice, had been introduced in 1993 in the form of an inflation target, was written into law in 1999, at the same time as monetary policy decisions were delegated to an independent Executive Board. In fiscal policy, the budget process was changed so that it would be easier to gain control over expenditure developments, while public net lending would, on average, show a surplus. The purpose of the latter was, of course, largely to bring the rampant government debt under control and to restore confidence in public finances.
Ida Wolden Bache: Norges Bank's management of the Government Pension Fund Global Introductory statement by Ms Ida Wolden Bache, Governor of Norges Bank (Central Bank of Norway), at the hearing of the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 18 April 2023. *** Thank you for the invitation and for the opportunity to talk about Norges Bank's management of the Government Pension Fund Global. 2022 saw substantial movements in global financial markets. Interest rates rose, and both equity and bond markets gave negative returns. The fund's return last year was equivalent to a drop in value of NOK 1 637 billion. In absolute terms, this is the weakest return in the fund's history. With such a large fund and an equity allocation of 70 percent, we need to be prepared for substantial fluctuations in returns The objective for Norges Bank's management of the fund is the highest possible longterm return within the constraints set by the Ministry of Finance. The Ministry has defined a benchmark index for the fund, and we manage the fund close to this index. Over time, the return on the fund has been higher than the return on the benchmark index. The Executive Board is satisfied with this. The excess return in 2022 was equivalent to NOK 117 billion. The Executive Board has overriding responsibility for Norges Bank's management of the fund. We adopted a new strategy for the management of the fund towards the end of 2022.

There are also other dissimilarities between the functioning of our respective economies and between our institutional frameworks which may shed some light on the differences between our monetary policy regimes:  11  BIS Review 105/2000  •  Denmark has a long history of a fixed exchange rate which inspires credibility;  •  Denmark’s membership of ERM II provides exchange rate policy with an institutional anchor;  •  Denmark has more stable terms of trade than Norway. Moreover, there is strong and well-deserved confidence in the ability of fiscal policy to stabilise economic growth in Denmark. The most substantial changes in the Norwegian terms of trade are due to fluctuating oil prices. Variations in Denmark’s terms of trade are negligible. In this sense the Norwegian economy has more in common with countries like New Zealand and Australia, which are also large exporters of commodities. A substantial change in the terms of trade  BIS Review 105/2000  12  translates into considerable changes in these countries’ earnings and balance of payments. Over the years this has resulted in sizeable exchange rate fluctuations. The exchange rate is a buffer against changes in the terms of trade. While a country like Denmark has maintained a stable exchange rate, commodity-producing countries typically experience fluctuations in the exchange rate in tandem with changes in the terms of trade. In New Zealand, Australia and many other countries monetary policy is oriented directly towards price stability, and these countries permit short-term fluctuations in the exchange rate.
Norman T L Chan: How can Hong Kong consolidate its position as Asia’s premier wealth and asset management hub Welcoming remarks and keynote speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Treasury Markets Summit 2013, Hong Kong, 6 September 2013. *  *  *  Good morning, Ladies and Gentlemen, 1. It is very nice of the Treasury Markets Association (TMA) to invite me to speak at this year’s Summit. It should not come as a surprise to you if I choose to talk about the “soft powers of Hong Kong” again today. I have no doubt that financial centres aspiring to win the privileged position of IFC (international financial centre) all have very good hard infrastructure, such as airport, roads, telecommunications, IT etc. But what really differentiates a winner from the rest is its clear edge in the “financial market infrastructure” or the “soft powers”. Today I would like to talk about two key building blocks in the arena of “soft powers” competition: “platform building” and “reaching out”. Tribute to TMA 2. The aim of “platform building” is quite simple. An IFC must ensure that it has the appropriate legal, regulatory, tax and policy framework for the financial services to develop and prosper. Competition is not just about how good you are or have been, but more about whether you are better than your competitors or not.

The current global crisis, however, exposes another important dimension of systemic risk where interactions within the financial system, as opposed to interactions between the financial system and the macroeconomy, have played a critical role in amplifying the losses. As we know, back in 2007, losses associated with the subprime mortgage market were initially estimated to be in the order of $ 50 billion. Thereafter, the dynamic of the interactions within the financial system, driven by risk management practices of banks, the response to the funding liquidity constraint by market participants, and heightened concern about counterparty risk, resulted in a protracted period of market distress, the drying up of liquidity, and set the stage for a spiral of losses. As it turns out, writedowns and losses worldwide have grown enormously. And to an appreciable extent, this amplification of losses is related partly to the interactions and the feedbacks within the financial system. Therefore, compared to the “time-dimension” of risk associated with procyclicality through which credit risk is a major propagation channel, the current crisis shows that the dynamic of the interactions within the financial system can also be very damaging, particularly in the financial system that is large and complex. In the current crisis, the forces at work were the positive feedback loops and the interactions amongst them. The interactions operated through the propagation channels of joint exposures to common risk drivers and network linkages between the financial institutions. In general, the feedbacks within the financial system can be both positive (i.e. selfreinforcing) or negative (i.e. dampening).