samchain/econo-pairs-v1 huggingface dataset:
Accordingly, we expect to enhance the bank examination methodology to 19  focus on the efficiency, effectiveness  2014 with a view to further  and sustainability of individual banks and  strengthening the resilience of licensed  the banking sector, based on the Bank  banks. We have already issued Directions  Sustainability Risk Index (BSRI). on the Basel III Liquidity Coverage Ratio  Accordingly, amendments will be  in April 2015.  introduced to the existing risk-based supervision framework based on a mix of quantitative and qualitative indicators to enhance focus on sustainability and operational efficiency of banks. We will conduct the pilot run of the Risk Index on large banks during  We have just issued the Direction on Basel III Minimum Capital Requirements for implementation on a staggered basis, commencing 01 July 2017, and to be fully implemented by 01 January 2019 in line with the international timeline. the first quarter of 2017 and  With a view to creating a more resilient  subsequently, the index will be extended  banking sector, we expect banks to  to the other segments of the banking  maintain a stable funding profile. sector. Accordingly, we plan to introduce the  In 2018, the Risk Index will be incorporated to all examination reports and we intend to assign a supervisory rating, based on this index. By 2019, a comprehensive pre-risk assessment will be conducted for all banks and a riskbased examination plan will be formulated.

To sum up, supervision is something that must work based on a regime of verification, analysis and conclusion. It is important to highlight the intensity and deepness of government-owned banks supervision, which brought us the knowledge of their existing problems and the costs involved in their recovery. Significant restructuring has been carried out in federal banks, after deep and comprehensive general consolidated inspections done by the CB. The adjustments that were made aimed at making the government-owned financial institutions sounder, more efficient and more competitive, rendering them apt to meet the same requirements faced by the private financial system. The maintenance of this behavior will reveal the true costs of governmental programs and will avoid recursive expenditures, which could become skeletons (hidden liabilities) in the public accounts. The continuation of reforms is important in other areas of the CB. In the external area, the CB must aim at intensifying transparency and communication with the markets and investors, while seeking to increase flexibility and to simplify the regulations on foreign currency operations, within a process intended to increase the country’s participation in world trade and international financial markets. In the banking area, the restructuring of the Brazilian Payment System improved risk reallocation, and favored a higher efficiency of the system. This is due to the fact that the Central Bank no longer has any role in financing the institutions that did not have the necessary funds for their operations, reducing moral hazard.
The National Bank Act sets out this task and stipulates that the SNB is to ensure price stability and in so doing take due account of economic developments. To this end, the SNB has suitable and effective instruments to influence the interest rate level as well as the exchange rate, and thereby monetary conditions. The appropriateness of monetary conditions determines whether price stability can be ensured in the long term. However, why is a task of such economic significance as monetary policy delegated to an independent institution in the first place? Page 2/5  The most important reason is that governments generally have an incentive to use monetary policy for reasons other than price stability. For example, governments may have an interest in stimulating the economy before an election. Governments may want to finance public spending via the central bank’s banknote printing press. When monetary policy pursues such objectives, over time it inevitably leads to high inflation. An independent central bank, however, is not subject to the same incentives and is protected from the influences of government. It can – and must – therefore devote its full attention to the mandate of ensuring price stability. The independence of the central bank is thus based on the conviction that price stability is desirable for society as a whole and that it can only be ensured over the long term by a monetary policy that is protected from political influence. In many currency areas, independence is therefore tightly coupled with the mandate of price stability.

Such doubts can ultimately lead to an expectation of higher inflation and therefore complicate monetary policy. Seen from the perspective of regulatory policy, demands for the SNB to directly finance government tasks are therefore to be clearly rejected. The SNB’s monetary policy must not be driven by profit or loss. These are just by-products of our monetary policy. Our mandate is to conduct a monetary policy that ensures price stability in the medium and long term while taking due account of economic developments. Price stability is the most important contribution the SNB can make to our country. The SNB will therefore continue to advocate a framework for monetary policy based on the principles of regulatory policy. Page 4/5  The challenge of ensuring price stability Ladies and gentlemen, the current global situation highlights the importance of central banks’ focus on price stability. The monetary policy environment has changed considerably due to the pandemic and the war in Ukraine. After years of expansionary monetary policy aimed at preventing inflation from falling too low, the central banks of many countries are today faced with the challenge of fighting inflation that is too high. I will therefore close by saying a few words about the SNB’s current monetary policy. Inflation in Switzerland is lower than abroad. However, in this country, too, it has still increased much more than was generally expected. At 3.5%, it is at its highest level since the 1990s.
Andrew Haldane: The contribution of the financial sector – miracle or mirage? Speech by Mr Andrew Haldane, Executive Director, Financial Stability, of the Bank of England, at the Future of Finance conference, London, 14 July 2010. This text is taken from a co-authored chapter by Andrew Haldane, Simon Brennan and Vasileios Madouros in “The Future of Finance: The LSE Report” published today by The London School of Economics. *  *  *  We would like to thank Stephen Burgess, Melissa Davey, Rob Elder, Perry Francis, Jen Han, Sam Knott, Nick Oulton, Peter Richardson, Jeremy Rowe, Chris Shadforth, Sally Srinivasan and Iain de Weymarn for comments and discussion on earlier drafts, and Alexander Haywood and Laura Wightman for research assistance. The views expressed are those of the authors and not necessarily those of the Bank of England. 1. Introduction  The financial crisis of the past three years has, on any measure, been extremely costly. As in past financial crises, public sector debt seems set to double relative to national income in a number of countries (Reinhart and Rogoff (2009)). And measures of foregone output, now and in the future, put the net present value cost of the crisis at anywhere between one and five times annual world GDP (Haldane (2010)). Either way, the scars from the current crisis seem likely to be felt for a generation. It is against this backdrop that an intense debate is underway internationally about reform of finance (Goodhart (2010)).

A better arbiter of market power may be measures of market contestability, in particular the potential for barriers to entry to and exit from the market. Entry and exit rates from banking have, historically, tended to be very modest by comparison with the non-financial sector and other parts of the financial sector, such as hedge funds. For banks operating in many markets and offering a range of services, aggregate returns may offer a misleading guide to the degree of market contestability. Looking separately at the different activities financial firms undertake provides a potentially clearer indication of the drivers of performance and the structural factors determining them. In this respect, JP Morgan Chase provides an interesting case study. JP Morgan Chase is a large universal bank offering a full package of banking services to customers, retail and wholesale. Its published accounts also provide a fairly detailed decomposition of the returns to these different activities. Chart 36 looks at the returns on equity at JP Morgan Chase, broken down by business line and over time. These estimates are based on the firm’s economic capital model. So provided this model adequately captures risk, these estimates ought to risk-adjust returns across the different business lines, allocating greater amounts of capital to riskier activities. (a)  “Low risk/low return” business activities  Consider first some of the activities generally perceived to be low-risk/low return – asset management and treasury and securities services and retail financial services.
However, suppose that, for some reason, the appropriate and effective instruments to ensure financial stability are not available, for instance, because of serious problems with the regulatory and supervisory framework that cannot be remedied in the short run. In such a second-best situation, if there is a threat to financial stability, one may argue that, to the extent that policy rates do have an impact on financial stability, that impact should be taken into consideration when choosing the policy-rate path to best stabilise inflation and resource utilisation. Such considerations could result in a lower or higher policy-rate path than otherwise, in order to trade off less effective stabilisation of inflation and resource utilisation for more financial stability 5. However, so far all of the evidence indicates that in normal times  5  Such considerations could include evidence of the “risk-taking channel” as in Borio and Zhu (2008). Adrian and Shin (forthcoming) and Adrian and Shin (2010) argue, in a model with such a risk-taking channel, that short interest-rate movements may have considerable effects on the leverage of securities broker-dealers in the market-based financial sector outside the commercial-banking sector. If we assume that the risk of a financial crisis increases as this leverage increases, and that policy rates affect leverage, then policy rates would affect the risk of a financial crisis (Woodford 2010b). However, new regulation is likely to limit excess leverage and limit the magnitude of these affects.

Dimitar Radev: The Bulgarian banking sector and the challenges in 2020 Publication by Mr Dimitar Radev, Governor of the Bulgarian National Bank, in the Quarterly Bulletin of the Association of Banks in Bulgaria, issue 60, January 2020. * * * The banking sector in Bulgaria ended 2019 with very good overall indicators and positive trends – high capital adequacy and liquidity, credit activity, improving asset quality and the historically highest annual profit of the sector. The asset quality review and the stress test conducted by the European Central Bank confirmed the resilience of the sector overall. The banking sector in Bulgaria will be strategically impacted by the developments in the process of accession to ERM II and the Banking Union, part of which was the assessment of six Bulgarian banks undertaken by the ECB. The final stage of this process is to unfold in the coming months. The fulfillment of the commitments assumed by Bulgaria, including strengthening the capital of two Bulgarian banks, will be followed by relevant external assessment. Following the set path, Bulgaria is drawing near to achieving a fundamentally new level of EU integration – membership in euro area institutions. This will bring about significant change in terms of banking supervision and bank resolution activities. The very onset of the process of establishing close cooperation of the Bulgarian National Bank with the ECB has already expanded the scope and enhanced the intensity of the two institutions’ joint work.
Regulations will affect the interest rates that firms and households meet and this is something that the central bank needs to take into consideration when setting the policy rate – in much the same way as monetary policy has to take into account changes in interest-rate spreads due to changes in financial conditions. Regulation vs. policy rate Even if regulation and supervision are the first lines of defence, I do believe that the policy rate can also be used to counteract the build-up of imbalances in financial markets. When  BIS central bankers’ speeches  3  facing an excessive and rapid increase in property prices and credit volumes, central banks should “lean against the wind”, that is keep interest rates higher than would otherwise be the case. This is by no means in contradiction with monetary policy’s goal of stabilising inflation and the real economy. The reason is that by “leaning against the wind”, the development in property prices and credit volumes becomes more balanced, and then the real economy and inflation become more stable as well. However, there are complications involved when trying to integrate this thinking into the conventional forecasting framework. It is, for example, not entirely easy to incorporate the risks that may be associated with the rapid increase of property prices and credit volumes into the normal work of forecasting and analysis. At present, efforts are being made to better include financial variables in the central banks’ forecasting models.

–  We must review our framework for extending ELA;  –  Our analysis needs to focus more than before on liquidity developments in major cross-border bank groups. Where such groups exist, the home country of the parent bank is vulnerable to threats to financial stability in other countries, both where the funding markets are located and those where the group has subsidiaries or branches. For Sweden, this situation is accentuated since our banking system is four times larger than our GDP, and since our major banking groups depend on  6  BIS central bankers’ speeches  funding in international markets to a high degree. The financial stability analysis will have to expand to identify threats early on and to deal with them. We must be alert to potential contagion between unsustainable monetary and fiscal policies in other countries and their potential repercussions on the stability of our own country’s financial groups. –  The crisis showed the need for clear roles and mandates for the authorities involved in crisis management, in particular for resolving problem banks. The Riksbank, the Financial Supervisory Authority, the National Debt Office and the Ministry of Finance had frequent contacts throughout the crisis and coordinated their actions. That said, the division of responsibilities is not clear in all situations and the Riksbank has asked Parliament to clarify the legislation on this and a number of other crisisrelated issues. Matching goals with tools The Riksbank has a fairly well-developed structure for macro-prudential analysis.
This forces the Riksbank systematically to consider whether there are any transitory factors that ought to be disregarded when deciding the repo rate. It also facilitates a correct evaluation of monetary policy. One risk with this arrangement is perhaps that the discussion may sometimes become rather technical and focused on details. Should or should not the index we use include a given tax change that alters inflation by one tenth of a percentage point? Continuous minor revisions of our target variable are also liable to make us less intelligible, which may ultimately render monetary policy more difficult to scrutinise. So we evidently face a difficult choice. Since the clarification, we have chosen so far to start from UND1X, which unlike the CPI excludes house mortgage interest expenditure and price effects of indirect taxes and subsidies. In addition, we present a more detailed picture of how we view certain price movements that could be regarded as transitory, for instance the recent oil price rise. There are those who argue that the Riksbank ought to disregard downward price effects from structural factors. Examples are effects on the price level from various deregulations and the increasingly strong international competition. Reasons for doing so are difficult to find. What matters is not whether a price movement is “structural” but whether it affects the path of inflation more fundamentally, that is, as a part of the inflation process. If it does, it ought to be taken into account when policy is formulated, regardless of whether its effect is downwards or upwards.

The banks have also increased their capital levels over the past few years. As a result, the financial system in Norway is now more resilient to shocks. An accountable and credible macroprudential policy must be based on an understanding of how systemic risk arises. The academic research on macroprudential policy issues is growing, but is still at an early stage. Some conclusions seem, however, to be robust. Many studies single out rapid credit growth in particular as a symptom of rising systemic risk. This is in line with the recommendations from the Basel Committee and the EU, which state that decisions on the countercyclical capital buffer should be based on the credit gap. Chart: Basis for advice on the countercyclical capital buffer: key indicators In preparing its advice on the buffer decision, Norges Bank adds three other variables as key indicators. The three variables are, as shown in the chart: house prices, commercial property prices and banks’ wholesale funding ratio. Together, the four indicators contain a considerable amount of information about how cyclical systemic risk evolves. Chart: Early warning models for financial crises A number of studies have indicated that credit growth, real estate prices and banks’ wholesale funding ratio show a systematic pattern ahead of financial crises. At Norges Bank, we have examined data from 16 OECD countries to see whether such a systematic pattern exists. 2 We have developed empirical models for estimating the probability of a crisis.
Firstly, households and the economy as a whole need functioning financial services. Secondly, all experience shows that the consequences of a financial crisis are very costly for households, employees, taxpayers and bank customers. As citizens of a modern society, we thus have a right to expect that the authorities will do their best to prevent and manage financial crises. In turn, the authorities need tools and a clear responsibility structure to prevent crises, as far as is possible. It is equally important that there be efficient tools to manage crises if they break out anyway. Sweden cannot afford to go through another crisis like that in the 1990s. Neither can the world afford a new 2008. This is why it is so important that we constantly strive to ensure that new financial crises do not break out. This is in the interests of every citizen.

(2012): “Are American Homeowners Locked into Their Houses? The Impact of Housing Market Conditions on State-to-State Migration”, Working Paper No. 12-1, Federal Reserve Bank of Boston  10  BIS central bankers’ speeches
Public interventions have been massive to contain the scale of the turmoil but in return have implied a cost and led to a transfer of risk out of the banking sector onto the public sector balance sheet. For instance, interventions from European governments amounted to about 1800 billion EUR or 14% of the European GDP. 13. Let me also underline that – like in many previous financial crisis such as the Latin American ones – financial markets ignoring the long term risks of their investments helped accommodate unsustainable financing requirements of many countries. A major assumption underpinning our fiscal governance frameworks in Europe has been that markets would impose discipline earlier on. Experience reveals that this has not been the case: the market discipline was imposed, far too late. 14. All this emphasizes that sound fiscal frameworks are essential to sound financial regulatory frameworks. Indeed, no longer will be raised the question of the importance of the Stability and Growth Pact and the role it plays in anchoring market confidence. 15. Let me add how fiscal problems in Europe have been addressed. First, the Greek adjustment package, relying on IMF financing and conditionality plus bilateral loans has been decided. Beyond Greece, the European Financial Stabilization Facility provided the Euro area with massive resources to fight contagion risk within the area. Elsewhere in Europe, governments have embarked into sizeable fiscal consolidation efforts and in many cases have frontloaded their efforts. 16.

However, the adverse second-round effects felt in the Macedonian economy were far weaker than those registered in the other countries in the region, although the Macedonian economy is more open than the other economies in South East Europe (with the exception of Bulgaria). The average decrease in GDP in SEE countries was nearly 2%. At the same time, the pace of economic recovery in the post-crisis period is faster than the average for the region. Thus, in the period 2010 – 2013, the cumulative increase in the economic activity is close to 8 percentage points, which is nearly 3 percentage points more compared to the average cumulative growth for the region. In fact, Macedonia is one of the few countries in the SEE region, which has already exceeded the pre-crisis maximum economic activity. Therefore, quite logical is the question: what are the factors that provided a relatively good response to the crisis and a relatively solid economic recovery of the domestic economy, amid an anemic global setting? And more importantly, whether these factors will continue to be the engine of growth in the medium term, determining the future prospects of the economy? Domestic factors are also very important. Sound macroeconomic policies in the pre-crisis period prevented major imbalances in the economy and left room for conducting countercyclical policies in the wake of the crisis relieving its effects (which was not the case with the other countries in the region).