samchain/econo-pairs-v1 huggingface dataset:
Macroprudential instruments  I would now like to turn to our options for countering potentially damaging developments on the mortgage and real estate markets and for strengthening the resilience of the banking system. What options does the SNB have? In specific terms, our macroprudential instruments comprise communication, participation in national and international regulatory work, and the authority to propose the activation, adjustment or deactivation of the countercyclical capital buffer (CCyB). Communication has a significant role to play when it comes to counteracting market participants’ tendencies to underestimate systemic risks and thus to take excessive risks themselves. After all, it is often hard for individual market participants to assess systemic risks. It takes an aggregated view to be able to identify unsustainable developments. As the country’s central bank, we adopt such an aggregated view. This is why the Financial Stability Report, the key element in our macroprudential communication, plays an important role. In this report, published once a year, we provide a detailed assessment of the stability of the Swiss banking sector as a whole and also comment on current regulatory proposals. As important as communication is, it is generally not enough on its own to contain stability risks. A regulatory framework is also required. The SNB participates at various levels in the design of this framework, both at national and international level. At national level, the SNB cooperates with the federal government and with FINMA in securing appropriate regulatory framework conditions.

Through these successive waves, the world financial system found itself with almost every link in the credit chain – in the chain of trust – having been weakened or broken. That is evident in surveys of the public’s trust in industry: banking and finance are firmly rooted to the foot of the league table of trust, in the UK and internationally (Chart 6). That loss of trust is mirrored in aggregate bank lending in the UK, in particular to companies, where annual growth has fallen from a peak of 23% in March 2008 to around zero now (Chart 7). And this has in turn been reflected in the largest and most synchronous global economic slowdown since the Great Depression. Confidence and credit So how is trust, and thereby credit, to be restored? To date, the answer has been to rely on the one sector whose credit has not been seriously questioned – governments and central banks. There has been large-scale provision of government and central bank credit over the past two years in an attempt to ease pressures and shore up breaks in the private sector credit chain. These interventions have been unprecedented in size during peacetime. The total potentially on the table is in excess of $ trillion.7 That is roughly $ for every man, woman and child on the planet. Half of the world’s 20 largest banks have needed direct government support. Central bank balance sheets in the major financial centres, including in the UK, have more than doubled in size.
One example is real time information about customer behaviour taken from computing devices embedded in everyday objects, such as mobile phones, home appliances and cars – the so-called internet of things. Together with digital distribution of insurance, these changes bring huge opportunities. For example, better information may bring improved pricing, wider availability of insurance, more tailored and relevant products, enhanced fraud detection and better customer service. At the same time, they are raising new questions and risks. Many are ethical and conduct related. For example, when designing a pricing algorithm what characteristics and behaviours of people is it acceptable to include? How transparent do insurers need to be to their customers about these algorithms? Where is the boundary between collecting data on behaviour to improve pricing and unacceptable interference in privacy? Is it acceptable to charge a customer more because their behaviour suggests they might be willing to pay more? All these questions highlight the growing importance of managing model risk, including these ethical issues. The US Federal Reserve System and Office of the Comptroller of the Currency published the seminal guidance on model risk management in 2011.4 Although targeted at banks, most of it is also relevant to any organisation making extensive use of models. Its recommendations cover model development, implementation and use; independent model validation, comprising evaluation of conceptual soundness, ongoing monitoring and backtesting; and effective governance, policies and controls, including the importance of a comprehensive model inventory and good documentation.

Chart 4: Tier 1 capital ratios to absorb trading book losses 12.00% 10.00%  11.02% 8.86% 8.73%  10.01% 8.94% 7.42%  8.00%  9.50%  7.56%  6.00%  Original Required  4.00% 2.00% 0.00% HSBC  RBS  Barclays  LBG  Sources: Published accounts, Capital IQ and Bank calculations (a) The red bars show the Tier 1 capital ratios that would have been required at end-2007 to fully absorb trading book write-downs and leave the bank with the Tier 1 capital ratio that was actually reported (blue bars). BIS central bankers’ speeches  13  Chart 5: Tier 1 capital ratios for “crisis” and “no crisis” banks 10.0% 9.0% 8.0% 7.0% 6.0% 'No crisis' banks 'Crisis' banks 8% threshold Lehman failure 15 Sep 08  5.0% 4.0% 3.0% 2.0% 1.0%  Nov 08  May 08  Nov 07  May 07  Nov 06  May 06  Nov 05  May 05  Nov 04  Nov 03  May 04  Nov 02  May 03  May 02  0.0%  Sources: Capital IQ and Bank calculations (a) “Crisis” banks are a set of major financial institutions which in autumn 2008 either failed, required government capital or were taken over in distressed circumstances. These are RBS, HBOS, Lloyds TSB, Bradford & Bingley, Alliance & Leicester, Citigroup, Washington Mutual, Wachovia, Merrill Lynch, Freddie Mac, Fannie Mae, Goldman Sachs, ING Group, Dexia and Commerzbank.
News conference  Berne, 14 December 2017 Fritz Zurbrügg  Introductory remarks by Fritz Zurbrügg  In my remarks today, I would like to address some of the developments currently taking place in the field of financial stability. I shall look at the big banks first before turning to the domestically focused banks. I will conclude with a few words on the new banknote series. Big banks  As Thomas Jordan has already noted, the international economic environment has continued to improve since the last news conference in June. Conditions on the financial markets have remained stable. Premia for bank credit default swaps, for instance, have barely changed since June. Premia have thus settled at lower levels again following the turbulence in 2016. Against this positive backdrop, both of Switzerland’s big banks remain on track to meet the requirements of the ‘too big to fail’ regulations with respect to resilience. This first pillar of the regulations covers requirements pertaining to the going-concern loss-absorbing capacity of systemically important banks. Both Credit Suisse and UBS already comply fully with the final 1, risk-weighted requirements. However, further improvement is needed with respect to the leverage ratio. Both of the big banks have also made progress on the second pillar of the regulations, ‘resolution’, which covers the orderly restructuring and wind-down of a bank that can no longer function as a going concern and is thus deemed to have become a gone concern.

•  Let me also acknowledge a number of Peter’s colleagues on the Committee through the critical period of 1986–88 when the Accord was settled. I am delighted that you were all able to join us today. •  Finally, I would especially like to welcome Paul Volcker to the symposium. Paul was instrumental within the G10 Governors in pushing for an international benchmark on bank capital. In particular, together with Robin Leigh-Pemberton of the Bank of England, he was critical in forging the agreement that produced the world’s first international standard for bank capital. Paul – I don’t think it is too much to say that a great deal of today’s global financial regulation was founded on your original vision. BIS central bankers’ speeches  1  As a scene-setter for this morning’s discussions, I would offer some thoughts on the key influences on the evolution of the Committee to date. The Basel Committee and its activities have changed almost beyond recognition since its establishment in 1974, or even since 1988 when the first Accord was agreed. I doubt whether the founding Governors really foresaw what the Committee would eventually become: not just an international standard setter, but also one that now conducts peer reviews of members’ compliance with their agreements. Indeed, if they had, I suspect that a few of them might have been against the Committee’s establishment in the first place! But times change, the financial sector has evolved, and the Committee has moved with the times.
I hope that our debate today will cast more light on these country differences. EU accession per se will probably have relatively little effect on the way monetary policies are conducted in the new member states. It may, however, create some challenges, for example by affecting inflation rates. Given that the harmonisation and integration processes in the economic field have been under way for a long time, I personally do not expect accession itself to be a pronounced shock. Nonetheless, there are still some remaining factors, such as the final steps in the harmonisation of indirect taxes, the introduction of EU customs policies and the adoption of the common agricultural policies, which may have a non-negligible one-off impact on inflation. It is certainly useful to debate this impact in terms of its likely size and the appropriate responses by the central banks. EU accession is also likely to influence the real convergence process in the medium run. In fact, it has been influencing it long before the accession date itself, through FDI inflows, declining risk premia, pressure for structural and legal reforms, and so on. Related to that, there have been many discussions on the potential trade-offs between the real and nominal convergence processes. It has been questioned whether the accession countries can simultaneously achieve low inflation, nominal exchange rate stability, consolidated public budgets and sufficiently fast economic growth.

The Fund must enhance its surveillance activities and its advice must be acted upon to a greater extent. However, this probably requires changes in the IMF’s governance structure. Countries that are now gaining in economic strength are seeking greater influence, and the IMF must also improve its reputation in these countries. We have to ensure that the Fund has sufficient resources to grant loans to member countries that are particularly hard hit by the financial crisis. The financial resources of the IMF are being discussed at the G20 summit in London. The IMF aims to double its lending capacity and has called on member countries to provide the necessary funding. Several countries have responded positively, among them Norway. The Government has offered to make available a contribution of up to NOK 30 billion to the IMF, subject to approval by the Storting. The US has asked for the NAB 3 to be increased substantially. Even a special one-time allocation of SDRs 4 to strengthen global liquidity may be considered. The Government Pension Fund – Global Let me now turn to the Government Pension Fund – Global. International capital markets have been a boon to Norway. We drew on borrowing opportunities abroad when the petroleum industry was being built up. We did the same in order to expand welfare schemes and to finance the countercyclical policy of the mid-1970s and the early 1990s. National oil and gas resources are now converted into equities and bonds abroad in the Government Pension Fund – Global.
In the context of policymaking, the national programs, which have been supported by the international institutions and backed by the structural reforms, have brought about rule-based policy implementations. A major development in this regard has been the re-definition of the role of the public sector in the economy. The combination of the structural reforms and the prudent macroeconomic policies has also triggered efforts to reduce the size of the public sector in the economy. In the last five years, the private sector has been the engine of the economy and the main contributor of the high growth rates. The Public Fiscal Management and Control Law, the Public Procurement Law and the multi-year budgetary framework have been put into practice in order to enhance the fiscal policy and the incomes policy of the public sector. Hence, this structure has created a reliable base for the tight fiscal policy involved high primary surplus targets that have been achieved and maintained since 2003. The Banking Sector Reform, the FDI Investment Law, and the Law on The Protection of Intellectual and Industrial Property Rights are on the list of structural reforms that have produced macroeconomic and financial stability and increased the resilience of the economy against external shocks. Now, the Turkish economy is not one that is crisis prone. Distinguished guests, The good governance not only defines the rules of the game but also initiates and determines the structure of institutions.

In conclusion, the exchange of views and experiences is an important step to develop a coherent overall sense of economic identity. With this note, I would like to thank Bilkent University once again and wish a successful conference. Thank you. 11  4  Speech by Issing, O. (2004). “EMU and Economic Governance”. BIS Review 35/2007
It is important they provide, as they have so far, economy-wide insurance to support businesses and households during these troubled times. That has been the approach of the MPC so far and it will continue to be its approach if new risks arise. At the same time, it is important the unexpectedly positive progress the economy has made so far this year is not overlooked. The economy has recovered further and faster, and has shown far-greater robustness and resilience, than anyone expected. This positive news has received less attention than it deserves, both on its own terms and because of what it may tell us about the economy’s resilience to future shocks. My concern at present is that good news on the economy is being crowded-out by fears about the future. This is human nature at times of stress. But it can also make for an overly-pessimistic popular narrative, which fosters fear, fatalism and excess caution. This is unhealthy in itself but, if left unaddressed, also risks becoming self-fulfilling. I have a Rooseveltian fear of fear itself. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  If the economy were sat on a psychiatrist’s sofa, the diagnosis would not be especially difficult. A propensity to dismiss good news and dwell on bad? To catastrophize about the future? The sense of events being beyond our control? These are the psychological symptoms of anxiety. And collective anxiety is as contagious, and could be as damaging to our well-being, as this terrible disease.

On that assumption, around two-thirds of the net job losses from the Covid crisis have already occurred, with a further 500,000 losses expected in the remainder of the year. That unemployment projection, while necessarily very uncertain, flowed from an assumption that UK output would be around 7% below pre-Covid levels by year-end. With an Okun coefficient of around 0.6, that translated into a rise of unemployment of 3-3.5 percentage points. In the August projections, this took unemployment from its pre-Covid level of 4% to around 7-7.5% at its year-end peak. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Since then, there have been three significant pieces of news about the jobs outlook. First, output has continued to recover faster than expected. By the end of Q3, output is now expected to be only around 3-4% below its pre-Covid level. Other things equal, this lowers risks to the MPC’s unemployment projections. Second, acting in the opposite direction, there are downside risks to this output projection as we move into the fourth quarter due to the new lockdown measures and any future measures. The third piece of significant news is the announcement of the Government’s new JSS last week, which provides wage subsidies to workers returning on reduced hours for a six month period. With details still to be finalised, it is too early to reach quantitative conclusions on the impact of the JSS.
Under the Risk Based Supervisory Framework, corporate governance and risk management has always been an integral part of Bank Negara’s supervisory assessment of insurance institutions. To form a supervisory view of an institution, Bank Negara evaluates how an institution manages the inherent risks within its significant areas of activity. The Bank also assesses the quality of the oversight and control functions and tests the resilience of the institutions to different risks under stress conditions. Therefore, it is critical for an insurance company’s internal policies and control mechanisms to be effective in shaping the desired risk profile. This risk profile should commensurate with the level of capital and capabilities of the company. The Bank also initiated, in 2008, the Financial Institutions Directors’ Education (FIDE) program to promote good corporate governance and risk management practices. Feedback  BIS Review 76/2010  3  from the directors who attended the program revealed a deeper appreciation of the importance of sound corporate governance and active engagement of the Board in risk management and strategic issues. We have also observed that the practices of financial institutions in Malaysia showed evidence of strengthened risk governance culture. In particular, we observed higher commitment by Board members, strengthened authority of the Chief Risk Officer (CRO), and more comprehensive oversight of risks. It is important to recognize that risk management should not be a “black-box” discussion that is confined to high level management. Risk management should be an enterprise-wide process involving all levels of business functions.

The essence of Basel II is not just the set of rules and formulas to calculate regulatory capital, these are necessary and very important but, in my view, the heart of  6  BIS Review 12/2004  Basel II is the incentives for banks and risk management professionals to advance risk management and the recognition of this progress. Studying and understanding the drivers of credit, market, and operational risk, and probing the relationships between them, will help all of us to get a better sense of the risks and rewards we face today, and how well we are prepared to navigate changes in the landscape of opportunity and challenge tomorrow. Improving our understanding of risk, and strengthening our ability to manage it, offers the promise not just of better administered banks, but more importantly the promise of a more stable financial system one that is better able to serve as a source of credit and sustainable growth for businesses and consumers alike. Thank you again for welcoming me to this conference, and I offer my best wishes for an enjoyable and educational event. BIS Review 12/2004  7
This means that the value of the work performed decreased, as did the scope for higher real wages. Table 1. Capital intensity and productivity growth Industry  Business sector  Capital/ employee  Productivity  Capital/ employee  Productivity  1963-70  8.3%  7.6%  6.5%  5.3%  1970-80  6.3%  3.4%  6.2%  3.2%  1980-86  2.8%  3.2%  3.0%  2.0%  Source: Own calculations  The previous diagram also shows that the level of capital formation in relation to our total resources that we had during the 1960s has not returned but that the fluctuations have been larger after the mid 1970s. On average we have remained at approximately one-third of the level of resources that we previously had allocated to new capital. One difference is that saving has increased, but not investment. This means that we are exporting capital. Despite a continuation of relatively low capital formation, the weak trend seen in total Swedish labour productivity in recent years was broken during the first half of the 1990s when productivity growth increased. But it was other factors than capital formation that contributed to this. Among other things, the economic crisis at the beginning of the 1990s led to substantial rationalisation measures and the winding up of low-productivity operations, which resulted in increased productivity growth but also high unemployment. During the same period, there was also a shift in Swedish economic policy in order to create conditions for more sustainable long-term economic growth.

2  BIS central bankers’ speeches  We are committed to jointly resolving any outstanding issues, if any, for the purpose of advancing Islamic finance activities in both countries. We hope significant deals could be initiated following today’s event to facilitate cross-border flow of funds between both countries and regions, with the Malaysian delegation ready to share their experiences and expertise in this area. For example, Malaysian players can partner with the UK players to structure a syndicated Islamic financing facility or joint lead-arrange a sukuk issuance for any of the identified UK regeneration projects. Both London and Kuala Lumpur can succeed and prosper as leading global financial centres in Islamic finance. We are open to challenges and new ideas and look forward to working together with TheCityUK through a strengthened partnership to achieve these objectives in the years to come. A UK-Malaysia Working Group may provide that strategic platform to holding continuous dialogues for this purpose. With this, I wish the Forum an engaging and fruitful discussion. Thank you  BIS central bankers’ speeches  3