samchain/econo-pairs-v1 huggingface dataset:
This point is particularly important because the Commission Bancaire's decision on whether to authorise the use of certain approaches may hinge on meeting these requirements, which, moreover, tie in with those in the new IFRS. It should be underlined that the Commission Bancaire carries out these activities in close cooperation with other European oversight authorities as a member of the Committee of European Banking Supervisors (CEBS) whose objective is to achieve closer convergence of supervisors' regulations and practices. In this regard, CEBS has set up operational networks, known as supervisory colleges, for major cross-border banks. Composed of the home-country and host-country supervisors of Europe's largest banking groups, these networks make it possible to find pragmatic solutions to the main problems encountered when implementing Basel II. Likewise, convergence of supervisory practices must be also materialised by the filing of the first accounting and prudential reports in FINREP and COREP formats, respectively, which form a common framework for Europe. ** * Let me say in conclusion that over the past year the French banking system has demonstrated its ability to develop new activities and thus find the fresh sources of growth needed to diversity its revenues. But these positive results are not without certain vulnerabilities, given that margins are slim and some complex financings are exposed to both operational risk and model risk. It is therefore necessary to ensure that banks’ balance sheets remain robust. To achieve this, naturally, pricing structures must correspond to actual risk exposure, and risk management techniques must be strengthened.

For the UK in particular, the move to a going concern regime represents a fundamental departure from the current set-up, in which a firm is required to calculate financial requirements under the assumption that, following a stress, it writes no new business and instead “runs off” its existing business over time. Solvency II looks at the insurance industry through a different lens and views insurers as “going concerns”, such that it is assumed that insurers will continue to operate after a stress. To achieve this, Solvency II introduces the concept of the “risk margin” which is intended to capture the cost of transferring a set of liabilities from one insurer to another. The risk margin is a fundamentally new component of our regulatory framework and we will ensure that firms meet it. 1. This is a source of some tension at the moment, because the construction of the risk margin is such that, in particular for life business, it becomes much larger when risk-free rates fall. So the current environment of low rates means that the risk margin is large – and when and if rates rise, it will become smaller. Reasonable people can debate whether or not it is sensible for this element of provisions to be so sensitive to risk-free rates, and it may be that once we are into a Solvency II world some firms will choose to hedge this exposure.
And it should be recognised that the direct exposure of the UK economy to China is relatively modest and that the recent tightening of financial conditions comes on the heels of a prolonged period of sustained improvement. Moreover, realisation of some of a downside risk previously identified by the MPC, if it persists, has to be weighed against ongoing domestic strength, underpinned by credible policy regimes and an increasingly robust financial system. In this regard, developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert. Indeed, as I said recently, the prospect of sustained momentum in the UK economy and the gradual firming of underling inflationary pressures will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year. To be clear, that opinion doesn’t prejudge any particular decision. But it does indicate that recent events do not yet, to my mind, merit changing the MPC’s strategy for returning inflation to target – a strategy that already reflects the balance of two large gross effects: namely domestic strength on the one hand and disinflationary forces from the combination of the exchange rate and global weakness on the other.

Growth among trading partners seems on the whole to be approximately as expected in the June Inflation Report, but the risk of more sluggish developments has increased, according to the IMF and the OECD. High oil prices may result in somewhat higher inflation abroad than previously projected. The objectives of bringing inflation back to the target of 2.5 per cent and anchoring inflation expectations imply a continued low interest rate. On the other hand, there are expectations that high output growth will persist. The objective of stabilising developments in output may, in isolation, imply a higher interest rate. Inflation is gradually picking up. High capacity utilisation may generate a continued sharp rise in property prices and household borrowing. This could be a source of instability in demand and output in the somewhat longer run. The Executive Board’s assessment in the June Inflation Report was that the interest rate may gradually – in small, not too frequent steps – be brought up towards a more normal level if economic developments are approximately as projected in the Report. Such an interest rate path was considered to provide a reasonable balance between the objective of stabilising inflation at target and the objective of stabilising growth in output and employment. It was the Executive Board’s assessment that the sight deposit rate should lie in the interval 1¾ - 2¾ per cent in the period up to the publication of the next Inflation Report on 2 November.
It is now my pleasure to introduce Nancy Lee of Interise, Marlene Orozco from SLEI, and Claire Kramer from the New York Fed. 2/2  BIS central bankers' speeches

There are still plenty of reasons to be cheerful: •  Growth is running at an annual rate of over 3%, above its historical trend and at the top of the G7 league table. Growth in the UK will probably exceed global growth this year, for the first time in over a decade. According to outside and MPC forecasts, UK growth is expected to remain at or above trend for the next few years. •  Recent revisions to GDP suggest that the UK experienced both a shallower recession, and a somewhat stronger recovery, than previously believed. As a result, the level of GDP reached its pre-crisis peak in the middle of last year, three quarters sooner than earlier estimates suggested. •  UK growth is reasonably well-balanced between consumption and investment, although net trade continues to disappoint. Business investment is growing at double-digit rates and has contributed fully a third to economy-wide growth since its trough. According to the MPC’s forecasts, investment will continue to grow at double-digit rates in the period ahead. •  Consumer price inflation, at 1.2%, has fallen below the Bank of England’s 2% inflation target, reducing the squeeze on households’ real disposable incomes. According to financial markets, inflation is expected to return and stay close to target over the medium term. •  Borrowing costs remain at exceptionally low levels. Secured borrowing costs for households and large companies are in the range 3%–6%, around 3 percentage points lower than in 2007. Measures of credit conditions have continued to ease.
Ravi Menon: Money at a crossroads - public or private digital money? Summary of panel remarks (virtual) by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the IMF Seminar on Money at a Crossroads, 18 April 2022. * * *  Summary of remarks by Ravi Menon A crypto asset or token is about digitally representing anything we regard as having value, putting encryption around it on a distributed ledger, where the ownership of the asset can be ascertained and verified, and it can be transferred securely. In Singapore and in MAS, we are excited about the potential to build a crypto or tokenised economy. Cryptocurrencies, about which there is so much excitement, is just one sliver of the crypto ecosystem or economy comprising a variety of tokenised assets. Cryptocurrencies are crypto assets which perform a payments function and try to mimic money. Private cryptocurrency is unlikely to perform the functions of money because its value is unstable and it is not backed by the central bank or the government. Stablecoins are pegged to a fiat currency and therefore derives stability, but it is not clear that all stablecoins, which purport to have a backing, are indeed backed adequately. Without such backing, it is hard to imagine how they will fulfil the function of money. Stablecoins will become a more prominent feature as long as their backing is strong. They could potentially challenge the currencies of some smaller emerging market economies.

If they are used widely, they could lead to currency substitution and the potential loss of money sovereignty in these countries. With respect to Central Bank Digital Currencies (CBDCs), MAS makes a careful distinction between wholesale CBDCs and retail CBDCs. Both are digital currencies issued by the central bank. For wholesale CBDCs, MAS sees a variety of potential use cases. They can be used in the interbank system on a decentralised ledger to facilitate cross-border payments and transactions. MAS has conducted successful experiments with the industry and other central banks on wholesale CBDCs. This is an interesting development to watch. Most of the impactful use cases are going to be in wholesale CBDCs for, for example, cross-border payments, and cross-border trade finance. For retail CBDCs, MAS is keeping an open mind. We want to make sure we have the technology, governance, and policy structures to launch a retail CBDC, if necessary. But there does not seem to be a compelling case for it yet, given that today’s digital payment system is already effective and efficient in transferring money. The regulatory approach that MAS has taken towards crypto assets or tokens distinguishes the different types of such tokens. If a crypto token is being offered as a security with an expectation of a return, it is regulated under the Securities and Futures Act. If a digital token is being offered as a payment instrument, it is regulated under the Payment Services Act where the focus is on anti-money laundering and technology risk management, and increasingly, customer protection.
Over the years, taxation of the value of owner-occupied housing in Norway has gradually been reduced. The tax benefit for owner-occupied dwellings, introduced in 1882, was abolished in 2005. The tax allowance for debt interest, however, was retained. This system subsidises household borrowing, it subsidises owning rather than renting a dwelling, it leads to higher house prices than would otherwise have been the case and to overinvestment in housing capital. Households inflate their balance sheets and housing capital in order to take advantage of the tax benefit. Taxation of housing in line with other forms of capital implies taxation of the value of owning a dwelling, the rent saved and the rise in the value of the dwelling. Housing taxation reform can contribute to curbing the house price fluctuations that successive generations seem to be exposed to. 4. Conclusion  Developments in recent months indicate that the financial crisis in Norway will not turn into a crisis in the real economy. There has been no recurrence of the solvency crisis in the banking sector twenty years ago. The Norwegian economy has nonetheless been exposed to major shocks. Oil prices and prices for other important export goods rose sharply through the upturn. The liquidity crisis hit the banking sector as growth started to slow. The impact on unemployment has not been pronounced and inflation has remained low and fairly stable throughout. We can safely say that fiscal and monetary policy have been fairly effective so far.

Moreover, a higher interest rate aimed at influencing the housing market would not eliminate the source of repeated credit cycles. There is a risk of a bubble in both the housing and the foreign exchange market when credit growth is high, as observed in Iceland and Hungary and perhaps even New Zealand in the years prior to the financial crisis. Interest rates were high in national currencies, but households and enterprises chose to borrow in low-interestrate currencies. 9 There was probably a sentiment of euphoria in the Norwegian housing market in 2006 and 2007, but the boom was financed by loans in NOK and not foreign currency. Should we seek to avert bubbles in the housing market even when medium-term inflation prospects are moderate? On this point, it is our judgement that a distinction must be made between giving greater weight to credit growth and house price inflation in the reaction function and defining house price inflation as an independent monetary policy objective. Socalled “leaning against the wind” would not require adjustments to Norges Bank’s approach, bearing in mind our reaction function which already gives weight to asset price movements and credit growth. 10  6  See for example Bernanke, Gertler and Gilchrist: “The Financial Accelerator and the Flight to Quality”, The Review of Economics and Statistics, 78(1), 1996, pp. 1-15. See also Nina Langbraaten (2001): “Formuespriser – konsekvenser for pengepolitikken? (Asset prices – consequences for monetary policy? )”, Penger og Kreditt No 4.
Yet they did not spend much time working out how to handle a firm’s failure in the event of prophylactic supervision proving insufficient. That was a major problem in the very conception of prudential regulation and supervision, going back decades. In future in the UK, a core role of supervisors will be to work backwards from what would happen at the point of failure. A bank’s resolvability and the likely consequences for the system if it failed will be incorporated into the Prudential Regulation Authority’s planned risk-assessment framework, which will replace ARROW as Hector Sants has explained. Recovery and Resolution Plans – or “living wills” – will be required to ensure that failure does not lead to avoidable disorder. In pursuing this, the supervisors will need to work closely with the team in the Bank who operate the UK’s Special Resolution Regime. That should be helped enormously by the planned new Proactive Intervention Framework or PIF, a major reform involving each firm being “Staged” for internal purposes by the prudential supervisors. My personal expectation is that it would be an odd world if there weren’t quite a few firms at Stage 2 even in a more benign economic and financial environment. And as a bank’s PIF ranking rises, the Resolution team will progressively become more engaged with it. The details of this need to be worked on by Hector and me with our teams, but it will be a big change from the past.

A central element of the new Social Contract for banking is that firms must be fit to fail in an orderly way. Working backwards from that ultimate objective will necessarily change the dialogue between banks and their supervisors. Microprudential and macroprudential This is consistent with the government’s plan that the statutory objective of banking supervision should be recast in terms of firms being sufficiently safe and sound to ensure the stability of the system. That is a profound change. Supervisors will need to focus on the big issues. Analysing bank balance sheets and businesses. Applying judgment. To my mind a great bank supervisor is forensic; is capable of substituting their judgment for those of management; but is wise enough to do so only where necessary; and has the personality to conduct the regulatory relationship without unnecessary conflict. BIS central bankers’ speeches  3  In another return to the distant past, the supervisor cannot treat firms as islands. They are part of a system. So, at the very least, supervisors will need to look laterally across peer groups of firms for oddities, and stress test firms’ resilience against short-term and longer-fuse threats from the environment. They will, therefore, need to draw on market intelligence on industry trends from the Bank’s Markets area; insights from the operators and overseers of the clearing, settlement and payment systems; and analysis from the finance and monetary researchers in the Bank.
William C Dudley: Improving financial institution supervision – examining and addressing regulatory capture Testimony by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Senate Committee on Banking, Housing, and Urban Affairs Financial Institutions and Consumer Protection Subcommittee, Washington DC, 21 November 2014. * I. *  *  Introduction  Chairman Brown, Ranking Member Toomey, and members of the Subcommittee, thank you for this opportunity to testify on the effectiveness of financial institution supervision and the issue of regulatory capture. In 2008 and 2009 our country faced its worst financial crisis since the Great Depression. I mention those years as a touchstone for my remarks today. Despite the passage of time and an economy that is steadily improving, the financial crisis is hardly something that happened in the remote past. For the too many people who are still unemployed or underemployed, or who otherwise continue to struggle financially, it is living history. While the causes of the crisis remain subject to debate, it is undeniable that banking supervisors could have done better in their prudential oversight of the financial system. This conclusion raises two fundamental questions: •  First, how can we improve the stability of the financial system? In other words, how can we make the financial system more resilient and productive? •  Second, how can we improve our supervision of financial institutions? The Federal Reserve is working diligently to improve both stability and supervision. The two concepts are linked.

We have responded in several ways. For example, we have paid greater supervisory attention to corporate governance. We significantly increased the depth and frequency of interaction between senior supervisors from the Federal Reserve and directors and executives at banks. This supplements our ongoing assessment of management’s oversight of risk. Our review entails a critical analysis not only of firm policies, procedures and limits, but also of the quality of the risk reports escalated to senior management, the capabilities of the firm’s risk monitoring program, and the adequacy of control functions. We have also increased our enforcement activity for violations of law or unsafe or unsound conduct. Since 2009 the Federal Reserve has taken 36 public enforcement actions against institutions supervised by the New York Fed, which included $ billion in fines. On top of this, five firms supervised by the New York Fed paid $ billion into a qualified settlement fund for mortgage borrowers, and the same five institutions were required to provide over $ billion in other foreclosure prevention assistance. These statistics do not include nonpublic enforcement actions, including restrictions on the further growth of banks that do not have satisfactory risk management regimes. And, earlier this year, we assisted in consigning the concept of “too big to jail” to history when Credit Suisse and BNP Paribas pleaded guilty to criminal charges.
This was fueled in part by concern that the counterparty claims on failed institutions would be frozen and unable to be realized quickly. Not only did some core firms have inadequate capital and liquidity, they also faced conflicting incentives as to how to manage their capital resources. For example, many firms that came under stress were slow to cut their dividends or to raise new capital because of fears that such actions would signal their underlying weakness. Obviously, the failure to conserve capital made these institutions weaker rather than stronger. The crisis also underscored severe deficiencies in the international dimension of the regulatory environment. Financial institutions, flows and activities are global, but the vast majority of regulation and information sharing is contained within national boundaries. Where resolution regimes existed, they generally existed only for banking entities and were not set up to handle the orderly resolution of a large internationally active bank holding company or non-bank financial firm. This cross-border problem persists to this day. The interconnectedness of the financial system also caused shocks to spread quickly. For example, the failure of Lehman Brothers led to losses at the Reserve Fund, which precipitated a widespread money market mutual fund panic. It also led to actions by U.K. bankruptcy authorities that had the effect of freezing the assets owned by hedge fund and other clients of the firm and this encouraged such investors to pull assets from other institutions perceived to be weak.

A more lax regulatory regime is likely to expose that country’s taxpayers to huge tail risks. 6  BIS central bankers’ speeches  A third challenge is the sequencing of reforms. For example, many jurisdictions are focusing on banking reforms, but have not yet applied the same intensity to shadow banking activities. If regulatory requirements for banks are increased significantly, the risk of stimulating the growth of the non-regulated shadow banking sector also increases. This suggests that the regulatory oversight effort has to be broadly applied so we just don’t trade one problem – for example, undercapitalized large banks – for another – a shrunken regulated banking sector and an enlarged, unregulated non-banking sector. So what needs to be done? In short, plenty. Although we have made some progress in making the global financial system safer and more secure, there is much more to do. Several examples illustrate the range of issues that are still outstanding. First, we do need to adopt an additional capital requirement on large global systemically important financial institutions. We need this to reduce the risk of failure of such institutions to very low levels because we do not yet have the tools in place to resolve these institutions on a cross-border basis in a non-disruptive manner. We also need to do this because such institutions – by being perceived to be too big to fail – obtain a funding advantage, which higher capital charges can help offset.