samchain/econo-pairs-v1 huggingface dataset:
Switzerland refrains from actively intervening in the business models or organisational structures of the banks, and no distinction is drawn between desirable and undesirable banking practices. Our regulation focuses on the essentials, specifically on ensuring that banks can themselves absorb any losses resulting from the risks they take on, without destabilising other parts of the financial system or damaging the economy. Taking stock  What have we achieved with the measures that have been put in place? Is the Swiss banking system more resilient to crises today? Please allow me to give you our take on this. I will first look at those banks with a domestic focus before moving on to the big banks. Switzerland’s domestically focused banks were not at the centre of the financial crisis, and all in all the new regulations are also likely to have little effect on them; their liquidity and capital buffers are mostly well above the regulatory minimum requirements. The stress tests that the SNB regularly conducts to assess risks also show that the banking system is largely well capitalised. Notwithstanding this, the risk appetite of domestically focused banks has increased again in recent years, not least due to the low interest rate environment. There are also imbalances on  Page 6/8  the mortgage and real estate markets. It is therefore important that the domestically focused banks are aware of the risks they have assumed and ensure that they remain well capitalised in the future. And what about the two big banks?

This requires not only stronger financial intermediaries and better supervisors, but deeper and more liquid capital markets that provide greater access to capital for firms and greater freedom for households to borrow and to invest their savings. Certain features of today's emerging economies, notably the size of current account surpluses and the high levels of reserves, tend to be seen principally as sources of comfort against future crises. But you can also look at these phenomena as measures of the incompleteness of the institutional changes achieved in the monetary and financial arena, and as a sign of the persistent ambivalence in the emerging world about financial integration. The current account surpluses are, of course, the mirror image of the high rates of savings relative to investment. There are a range of factors that affect the flows of goods and services across international borders, but the sustained outflow of funds from some emerging economies witnessed in recent years may have as much to do with the limited intermediation capacity of the local financial systems as with the scarcity of profitable domestic investment opportunities. And in this sense you can read a large current account surplus as a sign of financial sector under development rather than of financial strength and maturity. The pattern of intervention in exchange markets and the scale of reserve accumulation provides a similar perspective on the challenges ahead. Policymakers in many emerging markets still reveal a substantial degree of reluctance to allow the exchange rate to adjust to market forces.
Durmuş Yilmaz: Financial security and stability Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the forum “Measuring and Fostering the Progress of Societies: The OECD World Forum on Statistics, Knowledge and Policy”, Istanbul, 28 June 2007. *  *  *  Dear guests, I would first like to welcome you all to Istanbul, the city where the two continents meet. And today it is so delightful to see that it is a meeting point for high level delegates from all the continents. In that regard, it is a great pleasure for me to be given the opportunity to share my views on financial stability and security with such a distinguished audience. Today, I would like to begin my speech by underlining the importance of financial stability, why and how we should keep an eye on the stability of the financial system, including the Turkish perspective. Finally, I will try to emphasize the interrelatedness between financial security and stability. Importance of financial stability… As a result of the liberalization and deregulation processes, financial markets became more integrated and underwent radical transformation, starting, in fact, with developed countries in the late 70’s and spreading to developing countries in the 80’s and 90’s. At the same period, capital movements were seen to have accelerated and reached to high levels. This, in turn, led to financial innovation and heavy use of sophisticated instruments.

R. G. Rajan (2005): “Has Financial Development made the World Riskier?”, in The Greenspan Era: Lessons for the Future, Jackson Hole conference proceedings. R. G. Rajan (2006): “Monetary Policy and Incentives”, speech given at the Bank of Spain conference on Central Banks in the 21st Century, 8 June 2006. C. M. Reinhart and K. S. Rogoff (2009), “The Aftermath of Financial Crises”, American Economic Review, 99 (2), 466-472. Taylor (2009), “The Financial Crisis and the Policy Responses: An Empirical Analysis of What went Wrong”, NBER Working Paper No 14631. 4  BIS Review 147/2009
CPI inflation rose to 2.1% in May, just above the MPC’s target and above where we thought it would be in the MPC’s May forecast. Goods prices were strong, while consumer food prices ticked down slightly, and the pattern for services prices was very mixed. For instance, hairdressing and personal grooming inflation was strong in particular, at an annual rate of 8%, and saw a 29 year high. Pent-up demand, essential need, or recreating the early 1990s David Beckham look, I leave that to others to judge. Further up the supply chain, food input prices were up, and producer input inflation was around a 10-year high. However these price rises are certainly not universal, and for balance I should note that we also learned last week that Victoria Beckham is reducing the average selling price of her dresses by almost 40%.footnote[1] 2/5  BIS central bankers' speeches  There are at least three reasons why the increase in inflation should be temporary. First, there are annual inflation base effects caused by very weak activity and prices last year which will not last beyond a year as a matter of arithmetic. But while they are present, they mechanically push up inflation. An illustration helps here. Let’s suppose that here in the UK, from May onwards, the consumer price level rises each month by an amount consistent with an annual rate of exactly 2% (i.e. at the inflation target).

Just suppose for a moment that, for the rest of this year, the level of average earnings is flat – what would be the peak rate of growth of the series? The answer would be 7% due to the sizeable base effect, and then it would fall back quickly, other things equal. Needless to say, 7% is a chunky growth rate for earnings, but on its own it would tell us nothing of real substance about the future. That is not where we should place most of our focus on the labour market. Our focus should be on whether, and how rapidly, people return to the labour force, and in what degree, a point I will come to in a moment. The risks to the outlook for inflation Let me now turn to what could cause things to turn out differently, and thus what we must watch very carefully. First, so far, we have seen a pick-up in import prices which has extended beyond energy prices, and we have observed these increases pass through into producer output prices, 3/5  BIS central bankers' speeches  and now into consumer prices, to some extent. In some cases these increases reflect prices returning to pre-Covid levels, and in part they also reflect bottlenecks in supply chains as we experience a rapid but uneven recovery. There are good reasons to interpret this as a temporary feature, but we must be on the lookout for the risk that these features are more sustained.
If exchange rate developments pose a significant threat to price stability in the euro area, all other things being equal, monetary policy will have to respond. Of course, all other factors that impart information on price developments will also be taken into account before an interest rate decision is taken. Monetary policy decisions and the outlook for price stability In December 1998 the Governing Council announced that the interest rate on the main refinancing operation would be 3%. In the first quarter of 1999 the Governing Council kept this rate unchanged. After an in-depth review of recent monetary, financial and economic developments, the Governing Council decided at its meeting on 8 April to set the interest rate for the ECB’s main refinancing operations at 2.5%. In addition, the interest rate on the marginal lending facility was lowered to 3.5% and the interest rate on the deposit facility to 1.5%. These rates were left unchanged at the meeting of the Governing Council last week. The decision to lower interest rates taken at the first meeting in April has to be seen in the context of the stability-oriented strategy. The decision has thus been taken from a forwardlooking perspective, focusing on the medium-term trends in inflation and the compatibility of these trends with the Eurosystem’s definition of price stability. By adhering to this strategy, the Eurosystem’s monetary policy contributes to creating the economic conditions which are essential to exploiting the considerable growth potential of the euro area and to reducing uncertainty about future economic developments.

Regarding economic activity in the euro area, data available for the first two months of 1999 do not yet reveal evidence of a rebound in economic growth. Labour market indicators show signs of a somewhat decelerating level of employment growth towards the end of 1998. Meanwhile, preliminary April figures from the European Commission on confidence indicators point towards some first signs of an improvement in industrial confidence. Recent price trends have been consistent with price stability. Inflation for the euro area as measured by the harmonised index of consumer prices (HICP) has been close to 1% since the fourth quarter of 1998. As has been emphasised on previous occasions, the current low inflation rates are to some extent the reflection of the large fall in energy prices during 1998. HICP data for March 1999 show an annual increase of 1%. The slight increase relative to January and February reflects the fact that goods prices are subject to some upward movement in the short term owing to the reversal in energy price trends expected by the Governing Council at the beginning of April. However, the effects of changes in energy prices on rates of HICP increase may only be of a temporary nature. More lasting effects on future consumer prices normally come from changes in the overall monetary and economic situation.
First, interest rates have been at all-time lows, with Bank Rate at near zero now for nearly four years. This has lowered the rate at which families, businesses, the government and banks can borrow. Second, the Bank’s programme of asset purchases has prevented what might have been a serious contraction of the money supply. An enormous amount of new money has been injected into the economy, now amounting to about 25% of annual GDP. This was crucial in avoiding a depression. And, in addition to these monetary policy measures, we introduced last summer, in conjunction with the Treasury, the Funding for Lending Scheme to provide cheap funding to banks for a period of four years to enable them to finance lending to UK households and businesses. The Scheme has already reduced banks’ funding costs: for example, major UK banks’ senior unsecured bond spreads have fallen by around 125 basis points. And the availability and price of credit for many borrowers has improved. But there remains spare capacity – certainly in the labour market. So should we do more to revive the patient? The short answer is yes – but the harder question is, what? In many countries, including the UK, fiscal policy is constrained by the size of government indebtedness, and monetary policy has come to be seen as the only game in town. Monetary stimulus is already very powerful. Markets expect policy rates to remain at exceptionally low levels for a considerable period of time.

The right prescription now is a programme that complements monetary stimulus with measures to promote the necessary long-run rebalancing of the economy, enabling us to return eventually to more normal levels of interest rates. Only then can we return to a sustainable growth path. We must not be inactive, but we must be selective in order to be effective. What are those other policies? They come under three headings: restoring confidence in our banks, reforms to raise the future potential supply of our economy, and changes in the world economy and exchange rates. Much has already been done to fix the banking system in this country. And there has been a real improvement in the position of UK banks. Capital ratios have risen, leverage has fallen, liquidity has improved, and bank funding costs have fallen sharply, especially since the announcement of the Funding for Lending Scheme last summer and an improvement in market sentiment towards the euro area. Banks are now overflowing with liquidity, largely as a result of the enormous increase in central bank reserves held by commercial banks. Yet there remains anxiety in markets about the resilience of UK banks. That is affecting the terms on which banks can obtain funding and so their ability to lend to the rest of the economy. Some argue that UK banks’ capital ratios compare favourably with many of their continental counterparts. They do, and we should welcome that. But there is only one simple test of whether UK banks now have sufficient capital.
Let me start with an important one, the so-called “liquidity narrative 1” which sets up in order to knock down, and attributes to regulators, the view that the financial crisis (indeed crises more generally) was caused by a lack of liquidity rather than solvency in the banking system, and this blinded people, notably regulators, to the real cause of the problem, namely solvency and capital. Whatever happened in the past, it is most certainly not true today. Loss of liquidity is much more the symptom than the cause of crises, and while symptoms have to be observed, and some actions taken to minimise their effects, I am in no doubt that the cause is usually either an actual solvency problem or critically rising expectations that there will be such a problem in the future. If you spend time in the PRA, you would quickly learn that capital is front and centre in what we do as supervisors. Why is that so? Banks are different from other financial firms because they provide deposit contracts to their customers. A deposit is a very particular form of debt contract. For all of us the essential feature of a deposit contract is simple – we put our money (our asset) on deposit at a bank, and we expect all of it back, with whatever rate of return is agreed, and we expect to have access to it in line with the terms of the contract. Let’s contrast that with non-deposit debt (bonds) and equity contracts.

In aggregate terms we have not diverged, and if anything our recent proposals put the level a little higher than that suggested, for instance, by the Independent Commission on Banking, but not by enough to make a big point of it. It is true that within that aggregate we have introduced a new element in the form of incentives to protect the stability of the financial system. We have followed through wherever possible on the principle that larger and more complex banks should have higher capital buffers because they pose a greater risk to the stability of the financial system. Consistent with that principle, we have created a tiered system of increasing capital requirements but left the topmost tier unpopulated. This empty tier is not a product of a craven fear of putting a bank there, but rather to create a disincentive to further complexity. So, we don’t see this element of the design as contradicting its goal. We could argue about the merits of small changes in the capital standard, but that is not in my view a worthwhile exercise. What is more notable is the divide between this view of strengthening banks’ loss absorbency and the alternative view that the answer lies in a radical restructuring of the banking system to require banks to have loss absorbency which would be a substantial part (say 20% to 30%) of their total balance sheet 2.
We will benefit from more rapid growth in the rest of the world, but at the same time we need to be more attentive to addressing a range of challenges that could ultimately damage the prospect for future growth in living standards here at home. I want to talk about challenges we face in four areas: •  sustaining support for global economic integration,  •  the role of public policy in education and other areas that are critical to our capacity to adapt to change,  •  regulation and the role of the market, and  •  macroeconomic policy. Let me start with openness. The pressures that have come with globalization and technological change have led many to suggest that we should become less open as a country, that we should slow the pace of integration, or that we should provide greater insulation or protection from competition for selective parts of the U.S. economy. Moving in this direction would, I believe, be a fundamental mistake. More than ever before our fortunes are linked to those of the global economy. If anything, we need to become more open, not less; more open to trade in goods and services, but also to investment, to people and to ideas.

And this seems to have fed anxiety, among firms and their employees, about the challenges in coping with these forces. These changes have taken place in the context of a longer-term increase in income inequality in the United States. Incomes have grown more rapidly for the richer and better educated than for those at lower points of the income scale. BIS Review 84/2007  1  These changes have, in turn, contributed to some erosion in the strength of the political center in the United States on a range of economic policy issues. Surveys suggest diminished support for global trade. And there is more divisiveness on a range of issues such as tax policy and the appropriate role for government in the regulation of economic activity. Over the last half century and more, the U.S. economy has enjoyed some substantial and important relative advantages. Among the most important of these are the quality of our best universities; our openness to change; the incentives provided for innovation; the strength of property rights; the depth and liquidity of our world-class financial markets; and a record of stability in macroeconomic policy. These relative strengths of the U.S. economy remain significant and substantial. But the rest of the world is getting better at establishing the important conditions for dynamism and innovation. These improvements are not a reflection of U.S. weakness, nor are they themselves a threat to U.S. competitiveness.
Andrew G Haldane: Growing, fast and slow Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at the University of East Anglia, Norwich, 17 February 2015. *  *  *  The views are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Sandra Batten, Rebecca Burnham, Edward Hall, Nicholas Fawcett, Jeremy Franklin, Lukasz Rachel, Scott Simmons, Thomas Smith, Rhiannon Sowerbutts, Ryland Thomas, Greg Thwaites and Martin Weale for their comments and contributions. I am also grateful to Gregory Clark for making available the historical data from his book, A Farewell to Alms. Tonight, I want to discuss economic growth. This may sound like standard fare. In the media, economists spend much of their time discussing growth and its statistical counterpart, Gross Domestic Product or GDP. At least for some, this focus is misplaced. For example, it is increasingly well-recognised that GDP is a partial, and often imperfect, measure of societal well-being. 1 As Einstein said, not all that can be counted counts. But even if it is not all that counts, sustained economic growth remains the single most important determinant of rising societal living standards. To bring that point to life, consider two economies – China and Italy. As recently as 1990, the aggregate annual income of these two economies was roughly equal. 2 Now let’s run these economies forward, with China growing at more than 10% per year, Italy by less than 1% per year.

Moreover, by helping to spread market and credit risks more widely, they may increase the resilience of large banks. 2  Unlike regulated investment funds, HLIs can use leverage without any restrictions; in other words, they can borrow to increase the capital available for investment. If a HLI had capital of USD 1 and borrowed a further USD 1, it could invest a total of USD 2. In this example, leverage would be 1. In other words, leverage is the ratio of debt to equity capital. 3  McCarthy, 2006. 4  Financial Stability Forum, 2007. 5  De Nederlandsche Bank, 2007, table 1. 2  BIS Review 74/2007  HLIs have proved to be quite robust to stock market drops. In stress situations in the last decade, the HLI industry incurred less losses than stock indices. The exception was the Russian crisis in 1998 with the collapse of LTCM. 3. Are HLIs a threat to financial stability? In this section I analyse first, whether HLIs represent a direct risk to financial stability and second, whether there are transmission channels through which HLIs could indirectly weaken either systemically important banks or the banking sector as a whole. As already mentioned, the size of the HLI industry is comparatively small, from both an individual and an aggregate point of view. Moreover, the HLI industry is highly segmented and there is a broad range of different investment strategies.