samchain/econo-pairs-v1 huggingface dataset:
In particular it pinpointed the need to inform participants about systemic risk and establish risk management and settlement guarantees in the systems, set clear rules on their activities, draw up a contingency plan and increase system transparency. A great deal of work needed to be done and the Central Bank, in collaboration with financial institutions, has firmly underlined that Iceland’s systems should be brought up to international standards. Initially it was decided that the main emphasis would be on developing a netting system for payments below the limits set for the real-time gross settlement system. It was also decided that once work on that system was well under way, further development of the real-time gross settlement system would be addressed. Another necessary issue to consider was the securities settlement system, following the payment system reforms. Operation of the netting system is in the hands of Fjölgreiðslumiðlun hf., which is jointly owned by the commercial banks, payment card companies and the Central Bank. The system handles netting of  BIS Review 18/2003  3  accumulated payment orders lower than 25 m.kr. Work has been in progress on a thorough upgrading of the system and has now largely been completed. Towards the end of 2002 a plan was drawn up for the collateral security amounts in the system and participants made this available to the Central Bank on January 1 this year. Operation of the Central Bank’s RTGS system started in 2000. It handles final settlement of individual payment orders of 25 m.kr.

or above as soon as the deposit in the payer’s account allows this to be done. The system thereby transfers payment orders, which are above the minimum needed to qualify for the RTGS system, directly to or from participants’ current accounts with the Central Bank. The RTGS system has a triple function. Firstly, the Central Bank uses the system for the implementation of its monetary policy; secondly, it is used in transactions by credit institutions with the Central Bank; and thirdly, it is used for gross settlements between credit institutions. The security and functionality of this system are thereby preconditions for enabling the Central Bank to achieve its objectives for both price and financial stability. Consequently, operation of the RTGS system has been assigned to the Central Bank, a familiar arrangement from many other countries. The Bank’s duty is to strengthen the security, efficiency and independence of the system. At the end of 2002 agreements were made with all system participants specifying payment authorisations and collateral security for settlements. This represented a major step towards bringing arrangements for the credit institutions’ transactions with the Central Bank into harmony with best international practices. Automatic Central Bank guarantees for settlements in the RTGS system are thus a thing of the past. Work is still in progress on developing the system. This year it is expected that the rules governing it will be revised, its independence be enhanced, collateral security amounts for settlements be reviewed, handling times be shortened and settlement limits be lowered.
Several of these participants noted that their firms were engaging consultants or other procedures to expand the number of scenarios for inclusion in their Y2K contingency planning. In New York, we will be using our Y2K forum next month to discuss contingency planning with a diverse set of market participants. These local market participants will provide helpful insights for the Joint Year 2000 Council. Clearly, more work is needed on contingency planning for Y2K, especially at the international level. Once we get beyond the early fall of this year, I believe that these efforts will begin to receive much greater focus and attention, and -- together with testing -- will dominate our discussions of Y2K during 1999. Closing Remarks In closing, I would like to thank the Committee for the opportunity to appear and submit a statement on this important issue. I hope that the efforts of the Joint Year 2000 Council will help to make a difference in improving the state of Y2K preparations in the international financial community. Realistically, however, I believe that it is important to understand the limits of what financial market supervisors can accomplish, either individually or collectively. Only firms themselves have the ability to address the Year 2000 problems that exist within their own organizations. Only firms working together can assure that local markets will function normally. Supervisors and regulators cannot guarantee that disruptions will not occur. Given the sheer number of organizations that are potentially at risk, it is inevitable that Y2K-related disruptions will occur.

Global Year 2000 Round Table BIS Review 56/1998  -3-  Recognizing the global nature of the issues surrounding the Y2K problem, each of the Sponsoring Organizations undertook initiatives in 1997 to raise awareness, enhance disclosure, and prompt appropriate action within the financial industry. Their decision last fall to organize a Global Year 2000 Round Table was motivated by a growing sense of the seriousness of the Y2K challenges posed in many countries and of the potentially severe consequences for financial markets that fail to meet these challenges. The Global Year 2000 Round Table was held at the Bank for International Settlements on April 8, 1998. It was attended by more than 200 senior executives from 52 countries, representing a variety of private and public organizations in the financial, information technology, telecommunications, and business communities around the world.2 The discussions at the Round Table confirmed that the Y2K issue must be a top priority for directors and senior management, and that the public and private sectors should increase efforts to share information. The importance of thorough testing, both internally and with counterparties, was emphasized as the most effective way to ensure that Y2K problems are minimized. Round Table participants identified the need to continue the widening and strengthening of external testing programs in many countries.
That is all the more important as the boundaries between ‘buy-side’ and ‘sell-side’ activities become increasingly blurred.   Fourth, from the end of 2019, when the Senior Managers Regime comes into force in the UK for FCA-regulated asset managers, behaving in accordance with a recognised market Code will help Senior Managers demonstrate they are observing ‘proper standards of market conduct’ – a key requirement of the regime9. That is a significant positive benefit to signing up to the Code – and to ensure firms are able to take full advantage of that, the Global Code has been submitted to the FCA for formal recognition; and    Fifth, signing up to the Code gives buy-side firms a stronger voice in the ongoing development of the Code and the FX market as a whole: a vital part of ensuring the Code is fit for purpose, future-proofed, and reflective of the needs of the whole market. Explanation (4): Concern about the cost of signing up and implementing the Code – “this is just one of many things we are being asked to comply with. We act for 1000s of different investors, with multiple expectations and mandates. Our regulatory team is overwhelmed.” We understand that buy-side firms face many competing challenges, and have taken steps to help with implementation. I have already mentioned the proportionality principle that lies at the heart of the Code, and the steps that the new GFXC buy-side groups will be taking to help improve understanding and promulgate best practice for implementation.

Why the buy-side should buy into the FX Global Code  Remarks given by Andrew Hauser, Executive Director, Markets At London FX Hive Live 6 December 2018  I am very grateful to Frederick Ladbury, Ed Kent, David Edmunds, Grigoria Christodoulou, Rohan Churm, David Clark and David Puth for their help with, or input to, these remarks. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Introduction Thank you very much for the invitation to speak with you today. Much of your agenda is rightly focused on the future: on how to exploit new technology; how to trade with new platforms and market participants; and how to meet ever more demanding customer needs. That relentless push to innovate is one of the great strengths of the global FX markets, and it is a privilege to be part of that conversation. Against that backdrop, my own remarks – on getting the buy-side signed up to the FX Global Code – might seem a little backward looking. I hope to convince you otherwise. At a time when FX markets are evolving rapidly, there has never been a more important time for investors active in those markets – all of you – to be shaping, and adopting, the norms, conventions and standards embodied in the Code. You are a vital part of the market, and play a crucial role in maintaining market discipline.
Debate on the difference of behavior between the Eurosystem and the Fed. •  Less aggressive interest rate cuts in the euro area than in the US after 2001 and prolonged period of stable policy rates between 2003 and 2005 raised the question: is the Eurosystem “too passive”? •  Activism and gradualism refer to the number and magnitude of changes in the policy rate over a given period. •  Research recently conducted on the basis of an estimated model for the euro area and the US over the last two decades has yielded three findings: 2 -  the monetary policy strategies pursued by the Eurosystem and the Fed do exhibit some differences;  -  the degree of interest rate smoothing, taken as an indicator of monetary policy gradualism, is quite similar in the euro area and the US;  -  the differences in patterns can be ascribed to differences in size and nature of shocks. Most of the differences are due to demand shocks, which were larger in the United States. 1  A. Blinder (1998)  2  Motto and Rostagno (2005) and Sahuc and Smets (2006)  2  BIS Review 63/2006  Monetary policy and asset prices. •  Caution is also an answer to the following question: should monetary policy systematically react to perceived asset prices misalignments?

Dimitar Bogov: Around a decade after the crisis - heading to the new global cycle and monetary policy normalization Opening speech by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the 7th Annual Research Conference: Around a Decade after the Crisis: Heading to the New Global Cycle and Monetary Policy Normalization, Ohrid, 12 April 2018. * * *  Honorable Governors, Your Excellences, Dear representatives of central banks, Ladies and gentlemen Let me welcome you all to our 7th Annual Research Conference this year in the beautiful city of Ohrid. Considering the current global surrounding, this year’s conference “Around a Decade after the Crisis: Heading to the New Global Cycle and Monetary Policy Normalization” addresses a relatively long period since the onset of the global crisis and the need to face new challenges. At this point, the questions to ask ourselves and to discuss during the conference would be: how strong and sustainable is the ongoing global recovery, what are the reasons behind the subdued inflation, what should be the pace of monetary policy normalization, are the banks now more resilient, are we better prepared to prevent the risks? Maybe they are simple questions, however, like in many other cases in real life and a real economic framework, there are no simple answers. The current global economic recovery is broadly spread across different regions in the world and associated with positive economic sentiment indicators.
But none of this changes the fact that we must lift the controls as soon as it is safe to do so, both because of the economic cost of retaining them and because of Iceland’s international obligations. In my speech a year ago, I said that this was one of the most complex tasks facing the Icelandic authorities at the time. That has not changed. A prerequisite for success is that we base our efforts on the best possible analysis of the problem and the potential solutions to it. Until now, the controls have been viewed as providing shelter during the  BIS central bankers’ speeches  3  resolution of the balance of payments problems caused by the collapse of the financial system. If all non-residents’ potentially volatile claims on residents were paid in a short period of time, Iceland would pay down foreign debt much more rapidly than is desirable. If worse comes to worst, the deleveraging could amount to roughly half Iceland’s GDP in relatively few years. Under such circumstances, the króna would depreciate significantly, at least over a considerable period of time, the banks’ liquidity would be weakened, and public sector finances would do likewise. Domestic and foreign Treasury financing would be much more difficult and expensive to come by. But is this analysis correct? Is Iceland faced with a balance of payments and refinancing problem rather than a debt sustainability problem?

The Central Bank will examine additional scenarios for possible developments in the balance of payments in coming years, and developments in market access in coming months will have a significant effect on the outlook. In spite of this proviso and the necessity of not presenting unrealistically pessimistic scenarios that could undermine confidence needlessly, this scenario does not go so far, and we must determine what we can do to prevent such an outcome. Economic policy and the structural reforms must ensure that Iceland’s competitive position does not deteriorate more than can be expected following a normal rise in the real exchange rate from historically low levels, given that we will have a current account surplus while we are working our way through the bulk of the debt. It is most important that public sector finances be well in surplus during this period and that attempts be made to ensure a higher level of national saving than prevailed in Iceland before the crisis. Furthermore, it is clear that the scope to use the current account surplus to release non-residents’ ISK assets will be extremely limited in coming years. How likely is it, then, that we can lift the capital controls in the next few years? Obviously, it would be much easier if new capital inflows were forthcoming, either through new foreign borrowing or through foreign direct investment. In addition, it is clear that no decisive steps can be taken to lift the controls before a suitable solution is found to the settlement of the failed banks’ estates.
From that vantage point, I will make four remarks: 1. Revenues for the twelve biggest European banks have grown, in aggregate, by 8.6% in 2010 (as compared, to 2.5% for the main US banks). As a result, European banks’ Core Tier 1 ratios stood at between 8.5% and 15.3% at the end of 2010 (corresponding numbers for US banks are between 8.4% and 13.3%). Our “universal banking model”, based on a diversity of activities and sources of income is proving its resilience. 2. Obviously there is a circular causality between government debt and the banking sector. Spreads on public debt naturally act as floors for the funding costs of banks. And, conversely, doubts about banks solvency create expectations of public support and deterioration in public finances. This gives rise to multiple equilibria where sudden shifts in confidence can be self fulfilling and create difficulties which, previously, did not exist. This process has been at work in a number of cases in the Euro area during the last year. 3. The main purpose of the stress tests is to break that circularity. Our first european tests encompassed 81 banks vs only 19 for the US. The basic exercise was sound and taken as such by analysts when it was published. Somehow clumsily, however, a few banks were added at the last moment, with only limited investigation, and these are precisely the banks which proved problematic afterwards, which undermined the credibility of the whole exercise. That mistake won’t be repeated. 4.

Real convergence is occurring between various parts of the zone and I think this process will continue and support growth in the future, contrary to over simplistic descriptions. One overlooked fact is the very fast productivity catch up in the periphery of the euro area. Between 2000 and 2008, cumulative labor productivity growth in Greece, as measured by the output per employee, was 14,7%, and 10,2% in Ireland. Both significantly outpaced Germany (6,1%). This is exactly what you would expect in an integrated economic and monetary area and this process should continue in the future, provided that appropriate policies are implemented. Economic convergence will therefore boost growth and support the return to debt sustainability. Now, looking at nominal evolutions, a very different picture emerges. During the same period nominal wages grew by a total of 42% in Ireland and 52% in Greece vs only 7,4 % in Germany. The nature of the challenge, therefore, is clear. There has to be a regime change in the way nominal wages and prices are set in some parts of the euro area. As Central Bankers, we have been making that argument for years. One benefit of the crisis has been that this message is now fully accepted by Governments and public opinions. Strong reforms are currently being pushed in labor markets legislation as well as wage determination in the public sector in many countries. I’ll end up with a few words about the banking sector. I have the privilege to be both a Central Banker and a supervisor.
The expansionary monetary policy contributed to the very high level of growth in the world in the period 2004–2007. GDP growth was between 4.5 and 5 per cent per year. Such a long period with such rapid growth around the world had not occurred since the early 1970s (see Figure 3). BIS central bankers’ speeches  1  The high level of global growth led in turn to a substantial increase in the price of oil between 2004 and 2008 and to rising inflation in many countries towards the end of the period. The similarities to the years preceding the oil-price shocks of the 1970 are striking. In these years too, monetary policy was expansionary, GDP growth was high and oil prices were increasing. The price of crude oil increased rapidly in 1973 and 1979, which led to higher inflation (see Figure 4). It was, however, not just an expansionary monetary policy that caused the credit expansion and housing price bubble in the United States. There were a number of other causes, for example the new financial products that spread risks from the banks to investors who did not understand the risks. The aim of housing policy in the United States had also long been to increase home ownership by providing support from the semi-nationalised mortgage companies Fannie Mae and Freddie Mac. There were also several other problems, for example the fact that regulation and supervision of the financial markets were too weak. In Europe, the common currency was introduced in 1999.

I feared that we were facing a period of stagflation; that is high inflation and low growth, similar to the period that followed the oilprice increases of the 1970s. In such a situation we must, under the terms of our mandate, give priority to keeping inflation down close to the inflation target. However, the financial crisis radically changed the preconditions for monetary policy. 7  Taylor, J.B., (1993). Discretion versus policy rules in practice. Carnegie-Rochester Conference Series on Public Policy 39 (1993) 195–214. Amsterdam: North-Holland. The Taylor rule has the following simple form and describes the monetary policy conducted in the United States in the period 1987–1992 well: r = p + 0.5y + 0.5(p-2) + 2 where r = the policy rate, p = inflation over the last 12 months in per cent and y = the GDP gap in per cent. In the formula, it is assumed that the inflation target is 2 per cent and that the real policy rate in the long term is 2 per cent. 8  The HICP is a harmonized index for consumer prices that, among other things, is used in the EU for comparisons between the member states. Mortgage rates are excluded when calculating the HICP. 9  Minutes of the monetary policy meetings held on 29 March 2007, 3 May 2007 and 18 December 2007. 4  BIS central bankers’ speeches  Monetary policy worked well during the financial crisis My second thesis is that monetary policy worked well during the financial crisis.
Prices for government bonds, particularly German and US bonds, rose last year, but yields are now very low and will provide little protection when inflation eventually picks up again. Household housing wealth also fell substantially in real value from summer 2007 to end-2008. The same probably applies to the value of infrastructure investments. The return generated by Norges Bank’s investment management in 2008 was 3.4 per cent lower than the benchmark portfolio against which we are measured. This is considerably weaker than might have been expected in the light of our investment strategy, which relies on a large number of small, independent positions. In the period since 1998, the Fund has recorded a cumulative annual excess return of 0.04 percentage point lower than the return on the benchmark portfolio defined by the Ministry of Finance. Norges Bank’s aim is to generate added value through our investment choices. After many years of high performance, the Fund is now right back where it started. The Fund’s underperformance and the fall in overall return can largely be attributed to the financial crisis. Assessment of the results of our active choices should, in our opinion, also take into account the long-term perspective on which the Fund’s investment strategy is based. Norges Bank’s investment results since 1998 are different for the two asset classes, equities and fixed income instruments. Although active equity management generated negative results in 2008, these were well within the limits predicted by our risk models for any one year.

This virtually eliminates the possibility of one person holding a double role as both general manager and as chair of the Executive Board. The executive director’s investment mandate sets rules for the Fund’s choice of investments and risk limits for NBIM’s investment management. The financial crisis revealed that the risk measures used previously, and which were based on what was regarded as best international practice, were inadequate. The Executive Board has therefore also set supplementary risk limits, for example for the size of the percentage deviation between the actual portfolio and the benchmark portfolio, the degree of leveraging and liquidity requirements for the Fund’s investments. The mandate is also intended to ensure that active  BIS Review 53/2009  1  risk positions are taken in a balanced manner and to avoid active strategies with a considerably skewed outcome set. NBIM’s monthly and quarterly reports to the Executive Board are to reflect the guidelines in the investment mandate. The results for 2008 were influenced by the global financial crisis. The total return on the Fund was a negative 23 per cent, the weakest in the Fund’s history. There was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. The real rate of return after costs has been one per cent since 1998. International stock exchanges lost more of their value in 2008 than in any other single year in recent history. Absolute results, especially with regard to equities, were highly abnormal.