samchain/econo-pairs-v1 huggingface dataset:
This also means that we must factor in risk. This applies to banks in their internal credit routines, and others with interests in banks – shareholders, lenders, bondholders and depositors. Market participants must understand that equity, subordinated loan capital and other claims on banks not covered by deposit guarantees may be lost. The financial industry must therefore be forward-looking. Buffers must be built up in periods of expansion when losses are low and profitability is high. The financial safety net must be reassessed if it is so favourable that banks and market participants are not encouraged to exercise market discipline. For example, deposit guarantees in Norway cover larger amounts than in many other countries. Despite the lessons that both the authorities and the financial industry have learned from financial crises, such crises may nevertheless occur in the future. Experience indicates that crises are often a result of inherent processes in the financial system. There is still reason to hope that the authorities through their policies and formulation of rules and the financial industry through its management of risk will reduce the frequency of financial crises. Thank you for your attention. 10  BIS Review 86/2001

Stefan Ingves: The international regulatory agenda – necessary but not enough Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank and Chairman of the Basel Committee on Banking Supervision, at the Affärs Världen Bank and Finans Outlook, Berns, Stockholm,19 March 2014. *  *  *  Regulations and regulatory frameworks for banks have been the subject of much discussion in recent years. As several of the regulatory frameworks drawn up after the crisis are now being introduced at the national level these discussions have also perhaps waxed rather than waned recently. New and amended frameworks are also the theme here today. The Basel Committee on Banking Supervision is, as many of you know, an international committee that produces global standards and regulations for banks. This summer, I will have been chairman of the Committee for three years. Perhaps the most important task facing the Committee when I took up the post of chairman was to finalise the Basel III regulatory framework, that is that part of the international reform agenda that followed in the wake of the financial crisis and that most closely relates to banks. Today, I would like to tell you about the work of the Basel Committee. Nowadays, most regulatory frameworks are designed and drawn up internationally and my idea is to try to give you an insight into the international regulatory work. I would also like to present my view of what the international regulations entail for the Swedish financial system.
In 2014 alone, $ billion was spent in share buyback, bringing the cumulative amount to $ billion since 2009. As we all know, share buyback may buoy share prices and boost earnings per-share in the short run, but will not improve a company’s productivity and competitiveness, nor create any new jobs. 13. Thirdly, with the US financial system awash with liquidity from QE and with feeble domestic demand, excess liquidity soon found its way to emerging market economies (EMEs), such as China, Brazil and Russia, in pursuit of higher returns. Between the outbreak  2  BIS central bankers’ speeches  of the global financial crisis and the peak in 2014, total inflows to EMEs were estimated to be some $ trillion, with roughly $ trillion of it destined for Asia. In the face of the massive inflows, EMEs experienced currency appreciation, an increase in money supply, an expansion of the credit bubble, overheating in the economy and asset markets, etc. 14. Fourthly, the tide will eventually turn. Currently, with a strong US dollar and the imminent normalisation of US interest rates, EMEs are confronted with capital outflows, currency depreciation, and sharp falls in energy and commodity prices. Their economies and asset markets are coming under varying degrees of downward pressure, which will adversely affect the US and other advanced economies. EMEs have grown much larger in the past decade or two. In particular, China’s GDP ballooned from $ trillion in 2000 to $ trillion in 2014.

Broadly speaking, this operational philosophy is guided by the need to steer the short-term interest rates in the interbank market close to the key interest rate set by the monetary authority. As such, it serves better to keeping the short-term horizon of the interest rates’ curve under check, making the conduct of monetary policy more transparent and providing clearer signals for the economic activity. Steering our operations to the stability of interbank market interest rates will serve to a more relaxed functioning of the interbank market and lowering of risk premiums. In addition, this operational target is well-framed in our mediumterm steering and commitment to adopting the inflation targeting regime, making up an important link of its successful adoption. Concluding my theoretical discussion of this change, I would like to underline that our longterm commitment to keeping our foreign reserve at optimal levels to cope with the shocks Albania may be faced with remains an unquestionable objective of our monetary policy. In an institutional aspect, I would like to note that such a move does not only attest to the level of maturity of our interbank market. It also crowns our constant efforts in achieving its utmost efficient management. In this context, the Bank of Albania has made utmost efforts to develop liquidity forecast models, to dampen the impact of fiscal flows into the money markets and to develop optimal procedures and modalities of interbank market interventions.
However, looking ahead, some of these factors will foreseeably lose steam, owing partly to the effects of the appreciation of the euro, in nominal effective terms, and to dearer oil. These effects will give rise to a considerable reduction in the Spanish economy’s net lending vis-à-vis the rest of the world, which is nevertheless expected to remain positive over the coming years. With regard to the labour market, 2.3 million jobs have been generated since 2013. These developments, along with the reduction in the labour force as a result of population ageing, have enabled the unemployment level to be reduced most significantly. The unemployment rate thus stands below 15%, 12 pp down on its 2013 high (see Chart 10), although still far off the level observed in the euro area on average (slightly above 8%). Most recently, the robustness of employment has eased in line with developments in activity, making for continuing and very low growth in productivity, as has been the case since the start of the recovery. 5/14  Strong job creation has been accompanied by a modest increase in wage compensation in the past four years. Chiefly contributing to this has been the high degree of slack in the labour market which dates back to the start of the current pick-up, and the expectations of very low inflation rates during these years.

One sign that the effort mattered appeared as the commercial real estate market heated up later in the 1990s and lending terms started to loosen. Deal flow came to a near-standstill as the controls established in the early 1990s kicked in. The market only resumed when underwriting standards retraced their way back to higher ground. So, as we benchmark progress in the recovery of financial institutions from the recent financial crisis, one area stands out. The early 1990s supervisory program comprised strengthening capital and liquidity, identifying problem exposures and placing them in workout, and developing a new business plan – there is one area where more progress will need to be made. The international community of supervisors has done a great deal to address the need for more and better quality capital through new capital standards. The identification and workout of troubled assets has made significant progress, which we can observe in the recovery of markets for some troubled assets. But global financial firms are still working on the new business plan. From the financial press, it’s clear that many large financial companies have been rethinking their strategies, often along the lines of increasing the focus on nonfinancial businesses and households and reducing the focus on expanding capital markets businesses. But I believe we are more at the beginning than toward the end of that process of reconsideration.
51  All speeches are available online at www.bankofengland.co.uk/speeches  51  Chart 20: Average 2007 risk weights, leverage and capital ratios of major EU, US and Canadian banks(a)(b) Tier 1 / Assets  European Union US  70  Canada  60 50 40 30 20 10 0 0%  20%  40%  60%  80%  100%  RWA / Assets  Sources: Bloomberg, FDIC, annual reports. (a) Data as of end-2007. Sample includes Bank of America, Barclays, BMO, BNP Paribas, BONY, CIBC, Citigroup, Crédit Agricole, Credit Suisse, Deutsche Bank, HBOS, HSBC, JPM, Lloyds, NBC, RBC, RBS, Santander, Scotiabank, Société Générale, State Street, TD, UBS, UniCredit, Wachovia, Wells Fargo. (b) Canadian and US banks’ balance sheet size is adjusted for IFRS. Chart 21: Estimated increase in the liquidity component of corporate bond spreads under different levels of initial redemptions (taken from Baranova et al (2017))  52  All speeches are available online at www.bankofengland.co.uk/speeches  52  Chart 22: Usage of key macroprudential tools since 2010 Instances of use  40 35 30 25 20 15 10 5 0  2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SCR  CCyB  Liquidity  Lending standards  Sources: National central bank websites, IMF, European Commission Shim et al 2013, ESRB and MDB. Note: This chart documents the use of the CCyB, sectoral capital requirements (SCR), liquidity-based tools, and lending standards (including loan to income and loan to value ratio limits) over the period 2007-2017.

Chart 13 plots a measure of the leverage ratio for the UK and US banking systems over a long historical sweep,10 while Chart 14 plots a simple measure of the liquidity ratio for UK banks over the past half-century (see also Jordà et al (2017)). Both solvency and liquidity ratios have exhibited a long, downwards drift. Between the end of the  10  Chart 13 is not directly comparable with Chart 5 because it is based on a different definition of leverage and sample of banks. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  19th century and the troughs prior to the financial crisis, leverage ratios fell by around three quarters in the US and the UK. Liquid asset ratios among UK banks underwent an even larger fall in less than half the time. Given the scale of these falls, even with the regulatory reforms of the past decade, levels of capital and liquidity in the banking system are at levels significantly below those 100 and 50 years ago, respectively. On the face of it, this gives grounds for questioning whether even these revamped regulatory standards are sufficient to withstand likely future shocks. We should, however, probably be cautious about jumping too quickly to that conclusion. Over the past century, there has been significant change in the structure of the financial system, including in the structure, scale and scope of financial regulation and the safety net. Those changes could mean that simple, historical comparisons of regulatory standards are misleading.
Although the authorities must have the final say, the views of industry and the general public will enrich the process and prevent the regulation becoming a theoretical concept, which does not reflect the way business is conducted in practice. Modern supervision Modern regulation must be accompanied by modern forms of supervision. You may remember me saying that the Swedish supervisors during and just after the deregulation did not have adequate knowledge of how to evaluate credit risks in our banks. But they fulfilled their given mandates, which focussed on checking the formalities – that bank operations were adequately recorded and reported; that legal requirements had been duly fulfilled; and that the required documentation was in place. Modern supervision is risk-based. Given today’s size and complexity of banking operations it would be impossible to give equal emphasis to all banks and to all operations and risks; the supervisor has to prioritize. This is done on several levels. Priority is given to supervising large banks and banks which pose high risks to the society, even if they are small. For each individual bank, priority is given to check the material risks, which often are different from one bank to the next. Today, the focus of supervision is much more on the substance and less on the formalities of a bank’s business.

This implies reviewing the scope and content of certain regulations to ensure that the regulatory framework is favourable to innovation and neutral with respect to technologies, but also guarantees an appropriate and homogeneous treatment of risks throughout the financial system according to the “same activity, same risk, same rules” principle. (e.g. non-bank financial players, technology service providers, issuers and managers of crypto asset trading platforms) Thank you for your attention. 2/2  BIS central bankers' speeches
Conform to institutional commitments, the Bank of Albania has regularly contributed to reporting according to respective chapters of the acquis communautaire, reflecting the progress achieved on the approximation of Albanian regulatory framework to EU legislation and attainment of European standards. With regard to Bank of Albania’s activity, the EC in its Progress Report of October for Albania, inter alia, commented positively that the monetary policy has successfully helped in keeping inflation stable and the banking sector remains well-capitalised and liquid. Implementation of the EU-funded Twinning Project of the Bank of Albania with the Bank of Italy in partnership with the Bank of France started in 2011. This project, which covers the major part of Bank of Albania’s activities, will help in enhancing institutional capacities, approximating the regulatory framework and work practices of the Bank of Albania to those of the EU and ECB, as well as promoting the development of financial market and instruments at home.   Promoting payment system  Fulfilling its legal responsibility for a smooth functioning of payment systems, in 2011, the Bank of Albania actively worked to strengthen the payment systems oversight, improve the technology infrastructure and develop new payment products in Albania. Both main payment systems, AIPS (for settling large-value payments) and AECH (for settling and clearing small-value payments) operated with full efficiency, reflecting the stability of the systems.

The investment strategy should be robust both under normal market conditions and in periods of abnormal, turbulent market conditions. Twelve years have now elapsed since the initial capital transfer to the Government Pension Fund – Global, which was then called the Government Petroleum Fund, and the Fund has grown and developed faster than envisaged. The Fund’s future is still substantially longer than its short history. A large and growing fund such as the Government Pension Fund – Global cannot adapt its asset positions to the momentary picture, but rather the contrary. It is important that the strategy remains firmly in place through turbulent periods. Moreover, we must expect that the shocks to which financial markets will be exposed over the next decades will be different from those we know from history and our own experience of recent decades. History will nevertheless be our most important strategy assessment tool. We know the past better than the future. If the Fund’s strategy is viewed from a historical perspective, for example the Great Depression of the 1930s and the oil crisis and stagflation of the early 1970s, analyses show that in the short run the Fund can survive large losses, but that that the value is recouped in the course of three to five years. Part of the Pension Fund’s strategy is to rebalance the portfolio by shifting into assets that show the strongest fall in value, that is the assets where the crisis is most severe, but that historically have featured the highest long-term return potential.
The impact has been identified and quantified; the bailout of Continental Illinois in 1984 artificially reduced the funding costs of all other banks that were considered ‘too big to fail’ by  4  2  The ‘Lifeboat’ was a Control Committee of the Bank of England and the English and Scottish clearing banks, consisting of senior representatives of each under the chairmanship of the Deputy Governor of the Bank, which first met on 28th December 1973. BIS central bankers’ speeches  more than a quarter of a percentage point (32bps).5 And while fluctuating over time, these ‘implicit subsidies’ remained sizable throughout most of the 1990s and 2000s. And indeed, expectations of bailouts were generally right. Very few banks were allowed to go into insolvency in the global financial crisis. Lehman was very much the exception that proved the rule. The impact of Lehman’s failure revealed that things had not moved on since Continental Illinois; the official machinery in most jurisdictions was completely unable to handle the failure of a large – or in the UK case even a medium-sized – banks in a way that did not pose risks to the financial system. So in most cases banks were bailed out. The risks of contagion, loss of confidence in the system and disruption to the provision of banking to the economy were simply too great. But the costs had grown since the Continental Illinois episode of the 1980s.

The UK’s sterling Real-Time Gross Settlement (RTGS) system is being developed to accommodate the euro, so that from the beginning of 1999 euro wholesale payments may be made in a safe, efficient and cost-effective way as sterling payments can now, even though the UK will not be a participant in the monetary union at the outset. That development remains on schedule, and it is encouraging that the UK system (CHAPS) has had expressions of interest recently from a number of overseas banks wishing to join. 23. The UK euro system -- CHAPS euro -- will allow payments to be made both between parties within the UK and cross-border from and to the UK through its link to TARGET. Using the knowledge and expertise we have acquired through developing and operating by far the largest RTGS system in Europe -- with average daily volumes of some 70,000 payments, worth some £ bn -- we are contributing a great deal to the technical development of TARGET. Because it extends the benefits of RTGS systems, in reducing the risk in payments, for the first time cross-border, it is a project we wholeheartedly support. 24. But we also want to see TARGET as efficient and effective as possible, so that it becomes the payment system of first choice for banks, in order to maximise its benefits in reducing systemic risk. We have to recognise that TARGET will be competing with alternative euro payments mechanisms, including correspondent banking and the European Banking Association’s net end-of-day settlement systems.
T1  T2  T3  T4  2004  Banking system financing  7.2  4.2  3.6  5.0  20.0  - Bank of Albania  1.9  1.9  1.9  1.9  7.5  - Commercial banks  5.3  2.3  1.7  3.1  12.5  The Bank of Albania financing is assumed to be the same throughout the four trimesters, providing thus the financing performance from commercial banks according to the demand forecasted by the government. However, the allocation of the Bank of Albania financing may undergo potential changes depending on the liquidity performance of the banking system from one trimester to the other. 3.2.3  Credit to the economy  The business needs for borrowing to support their businesses have been growing in these recent years. The same tendency is expected for 2004, too. Credit to the economy for the next year is forecasted to increase by Lek 16.5 billion. Compared to the credit balance increase in 2003, this one is nearly Lek 3.6 billion, or 28 percent higher. The credit to the economy forecast is based on its performance during the last nine months. Albeit the high-level of liquidity during this year, the credit balance increase was lower than in the previous years. In the next year, the credit balance increase in Lek is expected to keep the same rates, marking an annual increase of Lek 2 billion in absolute value.

Judging from the monetary indicators of these recent years, we notice that Lek supply (M2 growth) in the internal market has been declining due to the lack of government’s privatization incomes, which the Bank of Albania converted in Lek by injecting liquidity in the market. The reduced Lek supplies, together with its increased demand (due to the high interests rates of financial assets in Lek during 2003), have been exercising pressures on the Lek appreciation during 2003. 1  4  Foreign sector forecasts belong to June 2003. BIS Review 8/2004  3. Main suppositions of the monetary program of the Bank of Albania for 2004  In designing the monetary program for 2004 particular attention was given to the Bank of Albania’s target, that is keeping up the annual inflation rate within the limits of 2-4 percent. In hitting this target, the monetary program aims the control of money supply growth so that the level of real monetary assets responds to the real needs of the economy for a 6 percent economic growth. The economy demand forecast does still rely on the quasi-constant velocity forecast of money circulation. This forecast, judging from the nominal GDP level, is the bridging gap between inflation and money supply growth (intermediate objective). The monetary program guarantees the observance of quantitative objectives set by the Bank of Albania, the level of NDA and NIR of the Bank of Albania within the limits and the control of government’s domestic borrowing at the level of 2.7 of the GDP.