samchain/econo-pairs-v1 huggingface dataset:
Moreover, I have regularly given the exact facts and figures concerning our banks’ exposures 4  BIS central bankers’ speeches  and their ability to deal with extreme scenarios. But once this mechanism is set in train, it is hard to stop it. A little over two weeks ago, a European summit offered even more far-reaching solutions to calm the crisis: the EFSF’s capacity was doubled, banks’ capital is to be bolstered more rapidly than planned and Greece’s creditors have accepted a 50% debt writedowns (compared with the 21% agreed on 21 July). I firmly believe that these are the right solutions. With this debt relief and the loans offered by the EFSF, Greece can achieve debt sustainability. I am sure that it will manage to do so if the agreements are fully implemented and if it meets its commitments in the areas of tax collection, structural reforms and privatisation. These efforts are obviously painful and require public support, but they are the only way for Greece to get back on its feet. Dealing with the underlying problems In addition to tackling the urgent issues stemming from the successive crises, it has been absolutely necessary for each country to implement all the efforts needed to restore them to a sound fiscal path. From my point of view, all countries have taken their responsibilities to do so. Their credibility is now at stake and they must be committed to bringing their public finances back into balance as soon as possible.

It is important to realise that this constitutes major progress, in particular from the point of view of European integration. No one would have imagined that this would have been possible a few years ago. However, it was not enough to contain the crisis. As of last August, against the backdrop of expectations of slower growth, financial market tensions increased again. A vicious circle developed between the risk of a Greek default, uncertainties surrounding the debt of other euro area countries and their banking sectors. In other words, as sovereign debt had previously been considered a risk-free asset, banks purchased massive amounts of government bonds. This was especially the case in Europe due to the interdependence of the economies and the free movement of capital. For instance, German and French banks have a relatively large exposure to Greek, Italian and Spanish debt. The fear of a credit default by these countries therefore constitutes a risk of very heavy losses for banks. Since this would ultimately affect the public finances of the States if it materialised, it in turn increases concerns about the fiscal soundness of these countries, creating a vicious circle. So you can see that much of this mechanism is not entirely rational. Only the Greek debt situation is truly critical, while all the other countries have solemnly undertaken to repay their debts in full and they are in a position to do so.
Second, the fact that the degree of  1  This number refers to the change in the high-employment budget deficit for fiscal year 2013 as estimated by the CBO in March. 2  BIS central bankers’ speeches  restraint lessens next fiscal year could understate the actual impact on the economy because the full impact of some of this year’s cuts may not yet have been fully felt. For example, consider university research spending that depends, in part, on federal grants. As the grant budget falls under sequestration, this will eventually squeeze university budgets over time and likely lead to additional belt-tightening. Next, let’s take a deeper look at how the major sectors of the private economy that might play a role in the strengthening story are doing currently: consumption, housing, business investment and trade. When we’re done, I think you’ll agree that there still are some reasons for caution. Turning first to consumer spending, such spending has remained fairly subdued outside of interest rate-sensitive consumer durables. In July, for example, real personal consumption expenditures were flat, and it is unlikely that third quarter consumption growth will be much above a 2 percent annual rate. Moreover, the drivers of consumer spending do not look particularly supportive. In particular, real disposable income growth has grown at less than a 1 percent annual pace since March. Furthermore, the recent data do not yet clearly indicate a firming in the income growth rate, or the two important components of labor income growth – hours and compensation.

Year 2004 was characterized by the achievement of fiscal objectives in terms of budget expenditures and budget deficit, and also by a more uniform allocation of fiscal expenditures. Government demand for loans has been distinguished by a rising level during the second semester, however remaining within the projected levels. Also, the annual rate of the change of current budget expenditures was stable. The implementation of a prudential fiscal policy has provided the appropriate conditions to better control inflation rate. During the second half of 2004, the Bank of Albania monetary policy has kept an easing tendency, aiming above all at reducing the borrowing cost in the economy. Bank of Albania has twice cut the core interest rate, in July and November, by 0.25 percentage points. These cuts have brought the core interest rate to the lowest historical rate, by 5.25 percent. The banking system was characterized by an accelerated lending activity to the economy during 2004. The credit balance increased by LEK 9.2 billion during June-November 2004, being 51 percent higher than the balance growth in the first semester of the year. Lending to the economy is given an everincreasing importance in the assets structure of the banking system, constituting a considerable source of the demand for monetary assets. The credit/deposit ratio increases on a continuous basis, an indication that positively introduces the function of the intermediation role of the banking system in supporting the economic development.
In addition, there is the development of Islamic indices, information repositories and consultancy services. In the areas of human capital development there is a proliferation of programmes and certifications that focus on Islamic finance. Malaysia is committed in this pursuit and has put in place a comprehensive talent infrastructure in Islamic finance with the aim of meeting the increased demand for practitioners by the global Islamic finance industry. Dedicated institutions of learning such as the International Centre for Education in Islamic Finance (INCEIF) and the Islamic Banking and Finance Institute (IBFIM) have been established to focus on education in Islamic finance. Increased international connectivity and Islamic finance Despite the continued strains experienced in the economy and the international financial system, it is important to recognise the fundamental long-term global transformation that is taking place. In this recent decade, the concurrent rise of the emerging economies is resulting in a fundamental realignment in the global landscape. This transformation is characterised by the shifting balance of global economic strength to the emerging economies, with its significant implications on the global economic and financial flows. The international financial landscape will also be inevitably transformed with the distribution of financial centres becoming more dispersed. Increasingly, new centres of financial activities will likely to emerge. In addition, financial system inter-linkages – particularly among the emerging economies – will deepen, supported by the increased global trade and investment that is already taking place.

I would briefly like to develop these two points. The past two decades have been characterised, on the one hand, by an increasing integration at the global level of goods, services and capital markets and, on the other, by a reduction in inflation that has stabilised at low levels. Given the coexistence of these two phenomena, a number of observers have concluded that there appears to be a causal link. Where exactly do we stand today? BIS Review 28/2008  1  For over ten years, with the growing integration of our economies in the past few decades, powerful forces, throughout the world, have been acting to enhance price stability. Each year, the arrival of tens of millions of people on the world market increases global production capacity, in particular for tradable goods. For monetary policy in developed countries, this process is equivalent to a sequence of positive supply shocks that take the form of a spontaneous decline in the import prices of manufactured goods. All other things being equal, this terms-of-trade gain allows for a lower inflation rate for a given capacity utilisation rate. More fundamentally, and although things seem to be less straightforward in this area, it is possible that the increasing openness of our economies may have structurally changed the wage and cost formation process in a manner that favours price stability. Heightened competition triggered by imports reduces the market power of firms at the national level. However, other more indirect effects are also detectable.
Prior to the recent reforms, all submissions were immediately made public. The aim of the LIBOR-setting process has been to create a set of reference rates that would be credible and would generate robust measures of bank funding costs across a wide range of market conditions. The credibility was based on the borrowing experience from the submitting banks represented through their submitters – those individuals responsible for actually submitting an answer each day to the administrator. The potential conflicts of interest between the submitters and traders within the bank were typically handled through internal policies such as the presence of information barriers that were intended to prevent sensitive information from flowing between the traders and LIBOR submitters. The robustness to market conditions would be maintained even in periods of market stress or a lack of transactions by the reliance on the hypothetical question instead of the use of actual transaction data. That is, even if during stressed times when trading became sporadic in a particular currency-maturity pair, all submitters could still answer the question even if their bank did not happen to engage in any trades on that particular day in that particular pairing. This ensured a large sample size even during stressed market conditions. The trimming of the sample helped to minimize the influence of any outlier submission, but also limited the ability for any one submitting bank to influence the posted rate. 3  See McConnell, “Systemic Operational Risk: The LIBOR Manipulation Scandal.” Journal of Operational Risk, 8(3):59–99.

I’ll conclude by emphasizing two of the next steps that I think are most essential for the successful reform of LIBOR. First, the definition of LIBOR should be broadened so that it more accurately reflects the observed funding patterns of large banks and puts the rate on a broader, more stable base of observable transactions. The LIBOR administrator is actively considering ways to do this while remaining true to the spirit of LIBOR and how it is used in financial contracts. Accomplishing this will make markets that need a reference rate that embodies bank credit risk more robust and resilient and will strengthen the financial system. Second, we still face the problem that the reference rate for a large stock of derivatives contracts is based on a relatively small, underlying cash market. This means there still is a powerful incentive for individuals to attempt to manipulate the rate for their own gains. One promising solution, outlined in Governor Powell’s recent speech on reference rates, is to work with market participants to find an alternative reference rate that is based on a deeper underlying cash market and that meets the needs of all market participants. Of course, any rate that serves as a critical financial benchmark must meet the principles for good governance and production outlined by IOSCO.
13 While monetary and financial stability policies are often seen as the fulcrum of central banks, they do not fully define their responsibilities. A survey by the Bank of International Settlements identified a further 16 responsibilities undertaken by at least some central banks (BIS, 2009). 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  accompaniment to increased central bank responsibilities and autonomy. With increased delegated powers came increased societal responsibilities to explain how those powers were being discharged. This shift in transparency practices took time. In 1981, Karl Brunner was still speaking about the “mystique” of central banking. 14  In the early 1990s, “mystique” was still the one-word advice offered by one prominent  central bank governor (Paul Volcker) to another (Mervyn King). 15  For most of their history, opacity has been  deeply ingrained in central banks’ psyche. And for much the greater part of its history, the Bank of England was at the forefront of that opacity agenda. For its first three centuries, the Bank appears to have kept its public utterances to a minimum. It was effectively mute. The prevailing ethos was well-captured by the job description provided to the official who became, in effect, the Bank’s first press officer: “keep the Bank out of the press and the press out of the Bank”. 16  The Bank was good to its word. During the period 1920 to 1945, the Bank’s communications strategy was far from expansive.

4  BIS central bankers’ speeches  BIS central bankers’ speeches  5  6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  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  18  BIS central bankers’ speeches  BIS central bankers’ speeches  19  20  BIS central bankers’ speeches  BIS central bankers’ speeches  21
However, Figure 4 shows that the difference between these rates and the Riksbank's policy rate does not appear to have been affected by the asset purchases.14 Government bond purchases thus appear to have pushed down the interest rate on government bonds to a certain limit. However, there are no signs that this caused households and companies to encounter lower interest rates. It is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel.15  13 The market is dominated by so-called FRN-bonds, where the coupon follows STIBOR 3 months. 14 Erikson and Vestin (2021) show a similar figure. Some larger companies also finance themselves through the  bond market. However, when the Riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies' total borrowing (see the Riksbank, 2014). Moreover, it is common for companies' bond loans to have variable interest rates. As turnover in the market is small, it is difficult to follow price developments. Nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. 15 However, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something I will return to in a moment. However, this was not the purpose of the Riksbank's purchases. 7 [30]  Figure 4. Lending rates have followed the policy rate Per cent  Note.

Taking into consideration even the impossibility of the European Central Bank to serve as liquidity provider to our countries, I would deem that the spaces available to us in the framework of current legal and regulatory aspect have already been exhausted (from the liquidity viewpoint). Otherwise, I would say we have reached a critical point, below which no space for action is left. Let me emphasise that now that the crisis highlighted many “vulnerabilities” of this rapid catching up, the analysis should go beyond just accepting it as valid. This becomes necessary if we take into consideration the designing of a different economic growth model. In this context, I am more and more convinced that the global crisis was a development that advanced in time the need for inevitable steering of many imbalances that our economies accumulated over the last 10-15 years. 2  BIS Review 146/2009
The same can be said of the banking system, since if we undertake sufficiently extensive reform, we will be able to reasonably negotiate the current crisis; otherwise, banks would have to ultimately focus on the battle against bad debts and on the difficulties in obtaining external funding, and the authorities would have to focus on restructuring the banks that have deteriorated to the point of being clearly inviable. However, if we take advantage of this historic moment and carry out far-reaching labour reform, we will face a more positive scenario in which Spanish firms could promptly raise their competitiveness in the difficult (for these purposes) environment of a monetary union. Spain would enter a scenario in which increased productivity would provide a significant boost to its best firms. This would be particularly positive for SMEs, which find it most difficult to take advantage of the flexibility mechanisms offered by the current institutional framework, and they would benefit enormously from the implementation of a more flexible and simpler system. Meanwhile, budgetary consolidation could be achieved without swingeing cuts in expenditure and the banking system would be in a position to support this new growth phase. It would thus be a mistake to opt for small-scale labour reform, as if we could even afford to tackle this reform slowly, in various phases over various years. This would have been possible 5 or 10 or 15 years ago, when the last expansion phase started and the need for labour reform was not pressing.

Miguel Fernández Ordóñez: The real economy and the financial system – the importance of reforms Speech by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, at the meeting on the reform of the Spanish financial system, organised by Expansión and KPMG, Madrid, 23 February 2010. *  *  *  Firstly, I should like to thank Expansión for their kind invitation to speak today in this forum, where matters of great importance for the future of the Spanish economy and financial sector will be discussed. The latest available figures suggest we are leaving the worst of the crisis behind. On the international front, despite some isolated bouts of tension, financial market behaviour continues to improve, the main developed economic areas have resumed positive growth and the pace of expansion in the emerging economies has stepped up. Against this background, and although doubts remain over the consistency of the recovery, the growth projections of the main analysts and international agencies have been revised upwards. In Spain, too, the latest indicators suggest the sharpest phase of the decline in output is behind us. And, while with some delay compared with most of the developed economies, the outlook is for the start of a gradual growth phase during this year, based on a continuing positive contribution by external demand.
In this case, waiting for the passive runoff of the additional assets alone may not be a viable interest rate implementation strategy. Depending on the details of the operating framework and money market structure, other tools might be needed – at least for some time – to control overnight interest rates above the zero bound while the size of the balance sheet remains elevated. What we learn about these tools through the period of normalization could prove useful when we think about our long-run framework. Central bankers around the world have been innovative in developing tools to address recent challenges and to prepare to normalize their operations, and overall, the set of implementation options at our disposal may be much broader than we thought before the crisis. So let’s fully explore the operational issues underlying these options. A deeper understanding will help inform the choices policymakers need to make in order to meet their goals. Now seems like a particularly good time to start such an effort, for several reasons. First, we need to digest the lessons from the recent crisis with respect to monetary policy implementation and money market functioning, and it is best to do so while the experience is still fresh in our minds.

To give you an idea, prior to the crisis, a few tens of billions of excess reserve balances was considered a large supply for a floor system.17 Today, the Federal Reserve, in addition to currency and capital, has around $ trillion of liabilities outstanding, most of which are in the form of excess reserves held in the banking system. We have also seen changes in markets since the crisis and expanded the set of our counterparties for certain operations in ways that were not contemplated in our prior work. These developments have implications for determining the appropriate level of reserves in a future framework. Looking ahead As Ulrich Bindseil noted in his excellent book, even if one thinks that implementation details aren’t ultimately very important to the transmission of monetary policy, they may well have implications for important aspects of the financial markets, such as the cost effectiveness of banks’ liquidity management, bank business and funding models, and financial stability.18 So these considerations should influence the type of questions we ask ourselves when it comes to improving the operating frameworks of central banks. We should, of course, consider the traditional parts of an operating framework, for example, possible interest rate targets and the mechanisms used to achieve the target. But recent experience strongly suggests that we need to consider options beyond just a classic interest rate targeting regime that’s based on a scarcity of reserve balances.