samchain/econo-pairs-v1 huggingface dataset:
Like beauty, its meaning lies in the eyes of the beholder. For some, “fair is foul” – the application of fair value principles risks exposing financial firms to the vagaries of markets, fog, filthy air and all. For others, ignoring the signals from financial market is itself foul and risks creating a financial landscape that is foggy and anything but fair. The fair value debate is generating electricity in the usually static-free professions of accountancy and regulation. Bankers fulminate at the mere mention. Among Heads of State in some of the biggest countries in the world, accounting standards for derivatives have generated levels of fear and consternation usually reserved for non-financial weapons of mass destruction. Against that backdrop, this paper attempts to shed a little light on this heated debate. Three phases of fair value So what lies at the heart of this debate? It is well-captured by Preston Delano, US Comptroller of the Currency: “…the soundness of the banking system depends upon the soundness of the country’s business and industrial enterprises, and should not be measured by the precarious yardstick of current market quotations which often reflect speculative and not true appraisals of intrinsic worth”. 1  1  Revision in Bank Examination Procedure and in the Investment Securities Regulation of the Comptroller of the Currency, Federal Reserve Bulletin, July, 1938, pages 563–564. BIS Review 28/2010  1  Delano was US Comptroller of the Currency in 1938. This provides a clue to the fact that the fair value debate is not a new one.

All the institutions involved in our payment system are devoting increasing resources to prevent cyberattacks, from banks and Norges Bank to our security authorities. However, we can never be completely certain that the system will be able to resist all possible attacks. We can lose money too. Ultimately, there may come a time when our systems have to be shut down for a period. We need to be prepared for a situation where the payment system – or parts of it – has to be shut down for a period. Contingency arrangements must provide protection against a wide range of incidents, not just cyberattacks. These arrangements primarily comprise a number of reserve solutions in our electronic systems. Our ultimate contingency and reserve solution is our banknotes and coins. This part of our contingency arrangements must be strengthened. On the advice of Norges Bank and Finanstilsynet (Financial Supervisory Authority of Norway), the Ministry of Finance recently circulated a consultation paper proposing a regulation to ensure the availability of cash in a contingency. What should the future form of money be? The role of banknotes and coins, which have been our central bank money since Norges Bank was founded a little more than 200 years ago, continues to diminish. Everyday payments are increasingly made using deposit money in bank accounts. New forms of payment are a new stage of this trend. This prompts the following question: what should the future form of money be?
The short-term interest rate in turn affects other interest rates, and thereby activity and prices in the economy. The Executive Board of the Riksbank decides on the repo rate at its monetary policy meetings. This shows the level at which the Riksbank wants the short-term interest rate to lie. The repo rate has a direct impact on other interest rates in the economy. I shall now describe how this works in practice and how it is reflected in the balance sheet. To counteract the deep recession the Riksbank has rapidly cut the repo rate to 0.25 per cent and announced that it will remain at this low level until next autumn (Figure 4). In normal circumstances the Riksbank can steer the short market rates without any tangible effect on its balance sheet. This is because the banks usually turn to one another directly to smooth deficits and surpluses in liquidity instead of turning to the Riksbank. They then pay an interest rate that is the same as the repo rate. The repo rate thus has a direct impact on the interbank rate and through this on short-term interest rates paid by companies and households.

But these possibilities are very little used, as there are other alternatives that are more advantageous for the banks. 4  BIS Review 160/2009  Something that has attracted relatively great attention internationally is the fact that the low repo rate and the application of an interest rate corridor of plus/minus 50 basis points for the Riksbank's standing facility means that the Riksbank in principle applies a negative interest rate for deposits in the Riksbank. In practice, this is of little significance, as only a very small part of the banks’ liquidity surplus is invested in the standing deposit facility. Instead, the banks invest most of their liquidity surplus at a positive interest rate in the daily fine-tuning transactions or the weekly Riksbank Certificates. Initially, the banks invested the majority of their large surpluses in autumn 2008 in the Riksbank as “fine-tuning”. As a result of the crisis the banks had a substantial need of immediate access to liquidity. More recently they have invested most of their surplus in the weekly Riksbank Certificates, which is a sign that market conditions have improved (Figure 5). Figure 5 Riksbank Certificates and fine-tuning SEK billion 400  400 Riksbank Certificates  350  350  Fine-tuning  300  300  250  250  200  200  150  150  100  100  50  50  0 Jul-08  0 Oct-08  Jan-09  Apr-09  Jul-09  Oct-09  Source: The Riksbank.
Zeti Akhtar Aziz: Growth and development of the world economy Welcoming remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the official opening of the World Bank Group Knowledge and Research Hub in Malaysia, Sasana Kijang, Kuala Lumpur, 28 March 2016. *  *  *  It is my great honour to welcome the distinguished Senior leadership of the World Bank Group, Dr Axel van Trotsenburg, Vice President of Development Finance; and Dr Kaushik Basu, Chief Economist and Senior Vice President, to the Master Lecture on 'Shared Prosperity' by Dr Kaushik Basu. The Lecture is held in conjunction with the Official Opening of the World Bank Group Knowledge and Research Hub in Sasana Kijang later this afternoon. As we meet today, the global economy is confronted with an immensely challenging environment. A slower than anticipated growth in several major economies, the sharp decline in commodity and energy prices, the significant shifts in global liquidity, and the heightened geopolitical tensions are having far reaching and widespread implications. Going forward, the challenge for both the advanced and emerging economies is to lift growth trajectories and search for sustainable growth factors that can rebuild economic fundamentals, address structural vulnerabilities and forge new sources of growth. Key is the "sustainability" and strengthening of the growth and development of the world economy. An important aspect in this process is that economic growth and development, no matter how stellar, will begin to fade when inequality sets in and when income disparities widen.

This is perhaps a rather dry topic and I feel sure that there are many more interesting and challenging aspects of derivatives which will be discussed during these two days of seminars related to the Derivatives Expo. 2  Record of discussion of the Exchange Fund Advisory Committee Sub-committee on Currency Board Operations on 5 November 1999, reproduced in HKMA Quarterly Bulletin, February 2000. BIS Review 91/2001  3
8 And yet, the G20 lacks the legitimacy that historically has been associated with a truly multilateral framework. Its ambitious economic cooperation should be anchored in a multilateral institution. The IMF is the logical choice. The G20 includes only the countries that established it. Membership seems to have been somewhat arbitrarily determined and not solely on the basis of relative size or importance in the global economy. The G20 formally founded the Financial Stability Board (FSB) 9 and sets its agenda. Membership is at the discretion of the G20. The G20 agrees on the activities of and changes in the IMF and more or less dictates decisions to the rest of the membership. The FSB agrees on standards for financial sector activity, which the rest of the world is expected to adopt, without having been consulted or given the opportunity to voice an opinion in the preparatory phase. A strong institution like the IMF must be at the center of multilateral economic and financial cooperation. Virtually all the countries of the world participate and are represented in the IMF. To be able to continue to play an effective role, the IMF needs to enjoy confidence and trust, and to be seen as having a legitimate structure of governance. Last but not least, the IMF needs to be financially strong, to have at its disposal financial resources commensurate with its tasks, including the ability to provide prompt and significant financial support when needed.

Sustained employment gains, which are also benefiting from past structural reforms, and still relatively low oil prices provide additional support for households’ real disposable income and thus for private consumption. In addition, the fiscal stance in the euro area is expected to be mildly expansionary in 2016 and to turn broadly neutral in 2017 and 2018. At the same time, headwinds to the economic recovery in the euro area include the outcome of the UK referendum and other geopolitical uncertainties, subdued growth prospects in emerging markets, the necessary balance sheet adjustments in a number of sectors and a  BIS central bankers’ speeches  1  sluggish pace of implementation of structural reforms. Against this background, the risks to the euro area growth outlook remain tilted to the downside. According to Eurostat, euro area annual HICP inflation in June 2016 was 0.1%, up from 0.1% in May, mainly reflecting higher energy and services price inflation. Looking ahead, on the basis of current futures prices for oil, inflation rates are likely to remain very low in the next few months before starting to pick up later in 2016, in large part owing to base effects in the annual rate of change of energy prices. Supported by our monetary policy measures and the expected economic recovery, inflation rates should increase further in 2017 and 2018. Turning to the monetary analysis, broad money (M3) continued to increase at a robust pace in May 2016, with its annual rate of growth standing at 4.9%, after 4.6% in April.
Even if we supplied the correct aggregate quantity of reserve balances, individual depository institutions with a deficiency of reserves had to find and trade with depository institutions with reserve surpluses. A purchase of fed funds therefore represented the marginal source of funding for a bank, and the fed funds rate paid by the bank was the marginal cost of bank funding. The Desk’s daily fine-tuning operations represented a marginal adjustment to the aggregate supply of reserves, mostly in response to the exogenous impact of changes in other balance sheet items, such as Federal Reserve notes and the level of the U.S. Treasury’s account balance at the Fed, which altered the level of aggregate reserves in the banking system. In the five years prior to the crisis, this system functioned with an average of $ billion in reserve balances and about $ billion in excess reserves. Although aspects of this approach evolved over time, this general method for implementing monetary policy was employed by the Desk for decades, and the Desk’s ability to reliably achieve the FOMC’s policy directive was judged quite favorably by market participants. In fact, with increased transparency around the FOMC’s fed funds target (which the Committee began to officially announce in the mid-1990s) and with high confidence in the Desk’s ability to hit that target, markets often adjusted to announced changes in the FOMC’s target policy rate without the need for the Desk to conduct operations to effect the change.

Svein Gjedrem: Business cycles and monetary policy Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), for Norges Bank’s regional network, arranged by the Centre for Economic Research at NTNU – Norwegian University of Science and Technology in Trondheim, Fosen, 3 May 2006. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 26 April, Inflation Report 1/06 and on previous speeches. The  Charts in pdf-format can be found on the Norges Bank’s website. *  *  *  Introduction Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. This is also the most important contribution monetary policy can make to sound economic developments in the long term. Low and stable inflation provides the economy with a nominal anchor. This contributes to predictability for agents who make decisions about saving and investment today, although the result depends on economic developments ahead. In its conduct of monetary policy, Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. Flexible inflation targeting builds a bridge between the long-term objective of monetary policy, which is to keep inflation on target and provide an anchor for inflation expectations, and the more short-term objective of stability in the real economy.
International financial market liquidity and the króna exchange rate Liquidity index  The króna exchange rate and bank stock prices  Index, January 2005 = 100  Index, January 2005 = 100  2  120  1  110  Index, January 2005 = 100  250  120 110  200 100  0  90 ‐1  100 90  150  80 ‐2 70 ‐3  80 100  70  60  60 50  ‐4  50 40  ‐5 2004  2005  2006  2007  2008  50 40  0 2004  2005  2006  2007  2008  Financial market liquidity (left axis)  Real stock prices for financial institutes (left axis)  Effective exchange rate (right axis)  Effective exchange rate (right axis)  The liquidity index shows the number of standard deviations from the mean (exponential moving average) from a simple average of nine liquidity measures,  Source: Bank of England, Central Bank of Iceland. Source: EcoWin Reuters, Central Bank of Iceland. As so often occurs in great tragedies, the two stories converged in a grand finale in early October 2008, when nearly nine-tenths of Iceland’s banking system collapsed when its three large cross-border banks – Glitnir, Landsbanki, and Kaupthing – were taken into special resolution regimes on the basis of the emergency legislation that had just been passed by Parliament.

2  BIS Review 55/2007  Who should take the blame for inflation? It is ironical that practically everyone in the society should take blame for a continuously high inflation in an economy. This is because everyone, even in a very little measure, would have contributed to facilitate inflation to raise its ugly head. It happens when people of a country believe that they can have a higher standard of living without working harder or producing more. Inflation in the long run is directly related to the amount of money which people would have for buying goods and services. When that quantity of money is in far excess of the quantity of goods and services, the general price level has to move up in order to facilitate the required volume of transactions. Hence, the magic solution for keeping inflation in check has been the production of money exactly in line with the production of goods and services in the economy. Any violation of this golden rule, for whatever the justifiable reason, would pave the way for the long run inflation to peep into the system. In this context, the Central Bank has an inalienable responsibility to take all the measures necessary to curb long term inflation. The role of the Central Bank The Central Bank takes monetary policy measures to keep the total volume of money in line with the total production and the volume of transactions in the economy.
Recently, as prices have risen so much, it has become increasingly common for households to use the lower loan-to-value ratio to take out new loans on their housing. The new loan can then be used for further consumption, which stimulates activity in the economy. Correspondingly, falling property prices can contribute to subduing demand in the economy. If property prices were to fall heavily during an economic downturn, this could also lead to large loan losses for the banks and further aggravate the slowdown. The property market can be divided into two markets; a market for commercial property and a market for single-family dwellings and tenant-owned apartments. Today I intend to discuss both markets, but I shall begin with the commercial property market. After that I will talk about why housing prices have risen so much in recent years. Finally, I will talk about my views on future price developments. Commercial property The commercial property market has a direct bearing on financial stability. This is because property companies are the banks' largest individual borrowers. Around 20 per cent of the four major Swedish bank’s lending to the general public is to companies managing commercial properties, for instance, office premises or retail premises. The value of these properties is often pledged as collateral for the loans. When commercial property prices fell at the beginning of the 1990s, several property companies experienced problems paying their loan costs, which caused major losses for the banks.

All households who have previously paid more than SEK 4,500 a year in property tax will have lower monthly costs, according to this proposal. If households choose to use the sum they save on the abolished tax to take out larger loans, it is possible that this will lead to a slightly faster increase in prices than would otherwise have been the case. If the increased opportunities to borrow were to have a full impact on house prices, the reform could push up prices by around five per cent. The price increases would probably be highest in the parts of Sweden with the higher taxation values, where they have previously paid a relatively higher tax rate. However, there are a number of factors that imply that this calculation probably overestimates the effect on prices. Firstly, the Government has been indicating for some time that it intended to lower property tax. It is therefore possible that house prices have already been affected to some extent by the decision. Secondly, the price increases could be counteracted by the higher capital gains tax. Thirdly, if households believe that the property tax will in some way be increased in the future, it is not certain that they will be prepared to increase their borrowing. As I said, it is not easy to measure the overall effects of the changed taxes. This is a subject which I believe we will have reason to discuss further in the future.
François Villeroy de Galhau: Recovery and resolution of CCPs Opening speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Policy conference “Recovery and resolution of CCPs”, Paris, 24 June 2016. *  *  *  I will not comment now on the results of the British referendum. Be only assured that we are mobilised and determined. France has already quite a long history with CCPs. La Caisse de liquidation, based in Le Havre, was the first to provide, in 1882, an insurance against counterparty risk on commodities markets. This history explains why we have a longstanding role as CCP overseer; it gives us also a special interest and commitment to contribute to this policy issue, on which I would like to share a few thoughts. Considering the growing importance for financial markets and financial stability of CCPs, it is our collective responsibility shared among the financial industry and regulators- to maintain a robust network of CCPs. As we strongly believe in the key role of CCPs we must ensure that they never become the next “too big to fail” institutions. The growing importance of CCPs is linked to regulatory changes, but not only. It is also linked to financial disintermediation and changes in the behaviour of market participants, which in both cases are most welcome evolutions. Regulatory changes and the Pittsburgh agenda have been obviously major factors contributing to the systemic importance of CCPs. However, the clearing obligation for OTC derivatives is not the end of the story.

Finally, let me say a last few words to introduce the precise topic of this conference. As you know, regulations require CCPs to consider all extreme but plausible scenarios in their daily risk management. However, we cannot ignore tail risk. The remote possibility that CCP resources would be exhausted in a crisis must be dealt with appropriately. This is why we need robust recovery and resolution arrangements for CCPs, to preserve financial stability in all circumstances. Before I leave you to discuss this complex issue, I would like to offer a few thoughts: –  The cornerstone principle of resolution is always financial stability: this should be achieved through the continuity of CCP services when possible, but not at the expense of the financial survival of CCP members and clients. –  The permanent cost of such a regime should be assessed carefully in order to preserve incentives in favor of central clearing. CCPs already have properly sized financial resources and a sound business model that must be preserved. –  Resolution arrangements should balance predictability for CCP participants and flexibility for the resolution authorities, whose task to preserve financial stability in the most extreme circumstances should not be hampered. –  And lastly, cooperation between authorities and consistency at the international level are key to ensure efficient resolution planning and resolution actions, and to avoid regulatory loopholes and arbitrage. This conference is indeed illustrative of the spirit for further international cooperation in this field. Thank you for your attention.