samchain/econo-pairs-v1 huggingface dataset:
Indeed, banks that wish to be among the first to adopt the AMA must being collecting the required three years of data by the end of this year - but for practical reasons, this process should have begun already. Adopting a more risk-sensitive treatment of operational risk will require significant work on all our parts. What we learn about the factors driving operational failures, and how we can better measure and reduce our exposure to losses, means much more to all of us than simply a more favourable capital requirement. Instead, our efforts on operational risk, combined with advances on the credit and market risk fronts, will advance our understanding of the many risks banks face and improve our ability to navigate them successfully. For all of us, that offers the reward of a more stable banking system that is less susceptible to systemic risks and better able to ensure the circulation of credit to businesses and consumers alike. BIS Review 45/2003  5

[4] In short, key parts of the financial system froze. Liquidity dried up and price discovery was impaired. Given the exceptional nature of the shock, some of these developments may have been unsurprising. But the sharp increase in the yields of the safest global government bonds despite a flight to quality, and their marked dislocations from both interest rate swap rates and spline curves, suggest that more was going on (see slide 5). Dealer balance sheet constraints may have been one factor, especially in the United States. [5] While there are clear and undisputable benefits from having tighter leverage ratios and capital requirements, which should therefore not be watered down, the post-financial crisis architecture has made it more costly for dealers to warehouse large amounts of securities. [6] In the spring, however, the demand for liquidity was unusually high. The investment fund sector alone sold securities worth almost € billion, or 3% of their assets under management, in the first quarter of 2020 (see left chart slide 6). To some extent, this reflects the fast growth of the non-bank sector in previous years: as funds have increased in size, the extent of procyclical outflows in bad times has increased too. High-yield corporate bond funds, in particular, experienced significant cumulative outflows of more than 10% of their assets under management (see right chart slide 6). High asset valuations prior to the shock probably exacerbated the selling pressure. But evidence suggests that investment funds sold significantly more securities than those that endinvestors located in the euro area withdrew.
These include potential selection bias of the events chosen and the fact that event studies may not capture all the factors that influence how market prices respond to LSAP announcements. The first problem with event studies, of course, is the issue of how much new information is revealed by the actual policy announcement. I would argue that LSAPs were always a possibility, so the probability of their use never went from 0% to 100%, even for the first LSAP program. This suggests that event studies could lead to downwardly biased estimates of the impact of LSAPs. In fact, if the announcement indicated that the program was smaller than expected, then bond yields could rise on the program’s announcement. This scenario could occur even though the overall program—including its anticipation—was effective in reducing yields. This makes interpreting the direction of changes in bond yields on the day of an announcement difficult. The second problem with event studies is that there are always other things going on. When the Fed announces an LSAP program, long-term rates might drop because of the announcement, or because market participants were revising downward their views about the state of the economy and the economic outlook in light of the Fed’s actions. Or, conversely, long-term yields could conceivably even rise as market participants became more confident that the policy actions would be sufficient to push the economy toward the central bank’s goals of maximum sustainable employment and price stability.

If households and businesses believe that the Fed has run out of tools to provide monetary policy accommodation or is unwilling to use certain tools for that purpose, the risk of inflation expectations becoming unanchored to the downside would increase, which would make it even more difficult for the central bank to achieve its goals. For these reasons, LSAPs should be viewed as a viable tool in our arsenal to be used when the zero lower bound is a relevant policy concern. In terms of calibration, if LSAPs are not as powerful as some of the event studies imply, the answer is not to simply discard the tool, but instead to look for ways to enhance its efficacy and use it more aggressively. In this respect, I believe that LSAPs work best when they are openended. In such circumstances, the use of the tool is likely to be helpful in reducing tail risks and making the bad states of the world less likely rather than signaling to market participants a significant deterioration in the Federal Reserve’s outlook. LSAPs may also be a useful means of making forward guidance more credible.
Here we can see that while sovereign debts have increased considerably in the United States and the euro area in recent years, Sweden’s sovereign debt has decreased more or less continuously over the last 15 years. 4  BIS central bankers’ speeches  This indicates that the economic-policy framework in Sweden has worked well. The framework reflects the lessons we have learned from our own problems in the past, not least during the 1970 and 1980s, and we should build on this. The framework largely addresses three areas: fiscal policy, wage formation and monetary policy. The first area, fiscal policy, had to be changed following the crisis of the 1990s as the problems with Sweden’s public finances became acute. At the same time as austerity packages were implemented, great importance was attached to not ending up in the same situation again. The introduction of surplus targets, expenditure ceilings and the stipulation that municipalities should have balanced budgets also contributed to increased stability in public finances. A number of important reforms were also implemented that significantly improved the budget process. Figure 14 clearly shows the positive effects of all this on the budget. The second area is wage formation, which has also improved considerably since the mid1990s. The Industrial Agreement and the setting up of the National Mediation Office are two important factors behind this improvement. Nominal wage increases have been significantly lower over the last 15 years than in the 1980s.

CPI inflation still reflects the effects of the previous repo-rate increases on housing costs. Various measures of underlying inflation show that inflationary pressures are moderate (see Figure 21). As economic activity recovers, underlying inflation will gradually rise towards 2 per cent in the years ahead. Continued low repo rate will facilitate stable development Our forecast for the repo rate is that it will remain unchanged until sometime next year and that monetary policy will continue to be expansionary — the repo rate is low in an historical perspective (see Figure 22). This will contribute to a gradual normalisation of inflation. Apart from stabilising inflation, monetary policy also aims to stabilise the real economy. Stabilising the real economy means, in more concrete terms, stabilising resource utilisation, that is the deviation of production and employment from long-term levels. Resource utilisation can be measured in many ways, but our overall assessment is that it is somewhat below normal at present. An ongoing expansionary monetary policy may also help to normalise resource utilisation during the forecast period. As resource utilisation and inflationary pressures increase, the need for an expansionary monetary policy will decline. There will be a need to gradually raise the repo rate to bring inflation close to the target and to stabilise resource utilisation. As the situation is highly uncertain, however, things may develop in a different direction than we expect. We see two main risks at present.
The four ASEAN nations (Malaysia, Vietnam, Indonesia and Thailand) included in the ADBI study, allocated in the fiscal stimulus packages introduced during the crisis a total $ billion to infrastructure spending. Comparatively, the four nations’ estimated investment needs from 2010 to 2020 total $ billion, or an average of $ billion per year. 31. This gap between demand and supply needs to be met. Better infrastructure will enhance connectivity, reduce the cost of transactions, and help to grow markets. 32. While Asia’s infrastructure needs have traditionally been financed largely by government debt, Asian governments are increasingly recognising that their own balance sheets cannot support the required scale of infrastructure development. Thus, private sector participation is welcome in the region. 33. But public-private partnerships (“PPP”) in Asia face not insignificant risks. PPP policies are not always well-defined, regulatory and legal systems are sometimes weak, and there are varying restrictions on foreign ownership. 34. Robust legal frameworks and clear PPP policies need to be put in place. Singapore has been supporting such efforts in partnership with multilateral agencies such as the World Bank. 35. In 2009, we established the World Bank-Singapore Urban Hub to bring together Singapore’s public agencies, research institutes, and private sector players to share experiences with developing countries, especially in areas such as water and waste management, land use planning, and urban development. To expand the Urban Hub’s infrastructure finance advisory work, an Infrastructure Finance Centre of Excellence (IFCOE) was launched last year. 36.

The pace of food price inflation and capital inflows into Asia will moderate compared to the last two years. Much of the recent food price increases reflect the impact of supply disruptions, and these are largely expected to be of a temporary nature. Capital inflows are also unlikely to persist at the volumes seen in the last two years, as monetary policy settings in the advanced economies are normalised. 16. More importantly, policymakers in most Asian economies are not behind the curve, or at least not anymore. Central banks in ASEAN are deeply cognisant of underlying inflation risks. They have either hiked interest rates or allowed the exchange rates to appreciate over time or done both. Malaysia and Thailand have raised policy rates by four and six times respectively since early 2010. Key ASEAN countries are also relying more on exchange rate appreciation to dampen import price pressures. 2  BIS central bankers’ speeches  17. In Singapore, MAS preemptively tightened exchange rate policy as early as April 2010. Subsequently, exchange rate policy was tightened in October 2010 and again in April this year. Allowing the Singapore dollar to strengthen has had a dampening effect on inflation in Singapore, which would otherwise have been much higher. Headline inflation has probably peaked in Singapore and is expected to average 3 to 4 per cent this year. Core inflation – which excludes private transport and accommodation costs – is expected to be 2 to 3 per cent this year. 18.
The aim of these purchases is to improve the functioning of the monetary policy transmission mechanism, which is still adversely affected by the financial market segmentation induced by the crisis. Progress in the internal process of adjustment The turnaround in the Spanish economy would not have been possible had the internal process of adjustment not been sustained and deepened. Thus, in 2013, there was progress in correcting the imbalances in terms of competitiveness, fiscal consolidation, private-sector debt and financial system reform. I shall briefly discuss each of these developments. Competitiveness and correction of the external imbalance The continuity of the ongoing moderation in labour costs and prices allowed further gains in competitiveness to be built up during 2013. On the indicators available, based on unit labour costs, the gap opened up since Spain joined the euro area is expected to have closed. The internal devaluation process is exerting a favourable effect on our foreign trade. The year ended with our first current-account surplus since 1997. That said, our continuing excessive dependence on imported energy and the persistent deficit on the incomes balance, owing to our high external debt, stood in the way of an even bigger improvement. Fiscal consolidation Turning to public finances, once the extraordinary effects of the aid to financial institutions is excluded, the year 2013 closed with a deficit of 6.6% of GDP, 0.1 pp above the objective set, in a macroeconomic environment marked by cyclical weakness and by higher interest payments.

Five years since the countries in this region emerged from the financial crisis we have seen financial stability restored and the financial systems significantly strengthened. Despite the more challenging environment in the more recent period, the financial systems in this region have demonstrated resilience. While this is a positive development, challenges remain. In view of the increasingly more difficult environment these efforts to strengthen the financial systems need to continue. Today, I would like to focus my remarks on the background against which these efforts are being undertaken. In particular, I will focus on the emerging changes that are taking place in our region that are likely to be important in sustaining the growth prospects for this region. In the context of these changes, I will touch on the important role that the banking sector has in contributing to the growth and development process. Ladies and gentlemen, The region is highly integrated with the world economy in terms of the high volume of trade and investment flows between the region and the rest of the world. While this has contributed significantly to the strong growth in the region, it has also brought with it increased vulnerabilities arising from shifts in demand and reversals in investment flows. Indeed, developments in the advanced economies arising from the bursting of the technology bubble, the unprecedented declines in the stock markets, uncertainties arising from international geopolitical tensions all had implications on this region.
Norman T L Chan: New round of countercyclical prudential measures for property mortgage lending Address by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, to the media, Hong Kong, 14 September 2012. *  *  *  1. I am going to announce a new round of countercyclical prudential measures for property mortgage lending. 2. Since the introduction of the fourth round of tightening measures for property mortgage loans by the Hong Kong Monetary Authority (HKMA) in June 2011, the local property market quieted down somewhat – but for just about seven months. The property market began to heat up again in February 2012, with significant increase both in transaction volume and prices. Cumulative growth in property prices was as much as 13% compared with the beginning of this year. 3. The evolution of the property market cycle in Hong Kong is affected by many factors, including the external environment. With the third round of quantitative easing announced by the US Federal Reserve last night, there can be more capital inflows through the US banking system into the emerging markets. Moreover, Europe has earned some respite from its debt crisis following the announcement by the European Central Bank of its bond-buying programme and related judgment by Germany’s Constitutional Court. So the sentiment in financial markets is likely to stay calmer for a while. Against this background, the risk brought by the continued heating up of the Hong Kong property market on the banking sector will rise again.

As policymakers, we need to take in how far-reaching those ripples are going to be. Monetary Policy The adjustments to monetary policy we made this year were designed to balance maintaining a strong U.S. economy with slowing global growth, and provide insurance against ongoing and potential future risks. And that’s what they’ve done. The economy is in a good place, and monetary policy is as well. My forecast is for moderate GDP growth, the labor market remaining strong, and inflation moving back to our symmetric 2 percent target. Of course, things can change. Data dependency remains our motto, and if there were a material change to this outlook, we would adjust monetary 3/4  BIS central bankers' speeches  policy in support of our goals of maximum employment and price stability. Conclusion I’ll conclude with this. John Donne’s words are perhaps more relevant in 2019 than they were in 1624. No man is an island, and no economy can insulate itself—for better or worse—from the fortunes of its neighbors. At the same time, all economies are having a common experience as a result of longer-term structural changes. Shifts in demographics and productivity growth point clearly in the direction of low neutral interest rates and slowing growth. We’re seeing the reality of these changes in the form of sluggish inflation and interest rates much lower than in previous decades. Central banks and policymakers around the world need to prepare for economies that are more connected than ever before. I’ll now take your questions.
A reasonable approach would be to adjust the MREL requirement – in both its lossabsorbing and recapitalisation components – so that it takes into consideration at least three factors. First, a balanced assessment of the volume of losses banks will foreseeably post at the time of going into resolution; second, the ensuing change in the level of capital required of banks that have undergone a resolution process, owing to changes in the size of the balance sheet and in its risk profile; and, lastly, the very resolution strategy of the bank in question. 7/10  Concerning the first point, the volume of MREL required to absorb the bank’s losses might be adjusted downwards if it is taken into account that, generally, banks are declared to be in resolution when they fail to meet the regulatory requirements and, therefore, before depleting – due to losses – all the capital they hold. Secondly, the restructuring required in a resolution typically involves an appreciable reduction in the size and in the latent risk of the bank’s balance sheet. It is therefore reasonable to think that regulatory capital subsequent to resolution should be lower than that required beforehand. Thirdly, the bail-in tool (loss absorption and recapitalisation through the conversion of debt into capital) is only one of the resolution strategies of banks.

While educated young people are moving abroad, I invite you to consider investments in technology, not only for the automation of processes, but also as an opportunity to prevent the impoverishment of the labour market, thus contributing to setting up conditions for keeping the qualified labour force in this market, which is also part of the elite clientele of the banking market. In conclusion, let me assure you that the Bank of Albania provides the maximum support and attention to all your proposals, not only in capacity of the regulatory authority, but also, as a loyal, supportive and serious partner, aiming at achieving the common objective, that is a developed market which offers attractive possibilities for investors, for financial stability and a fair competition which respect the consumer’s rights. Our decision-making will be transparent and all our initiatives will be guided by a spirit of cooperation with the banking sector, aiming at ensuring highest efficiency. Thank you for your attention! 3/3  BIS central bankers' speeches
During my years at the IMF, I have seen this pattern repeat itself – and it is not a pretty sight. In Europe, we face a particular and somewhat peculiar cooperation problem. This is sometimes described as the trilemma of banking supervision. A trilemma is similar to a tradeoff, and means that you want to pursue three objectives but you can only achieve two of them. One needs to be given up. The three objectives in this context include, first of all, effective banking supervision and crisis management, secondly, national sovereignty of supervision and crisis management; and, finally, an integrated European market and all the benefits coming from more competition. In the EU, we have chosen the latter two – economic integration and national sovereignty of supervision and crisis management. This national sovereignty is manifested in what is known as the home country principle, meaning that the supervisory authority in the country where a bank is domiciled takes complete responsibility for the supervision of its branches abroad. This home country principle is combined with economic integration and allowing banks to establish operations across Europe. In choosing these two objectives, the third objective – effective supervision and crisis management – has been forsaken. This is clearly manifested in Europe’s current approach towards supervising banks and managing crises. Economic integration and the EU’s pursuit of a single market for financial services have meant that some banks have expanded beyond the means of their home countries.

So, for those countries that have not already done so, it is high time to consider introducing new laws that enable a more effective handling of troubled banks. In order to facilitate the handling of failing cross-border banks, we must also ensure that the crisis management framework is sufficiently harmonised across jurisdictions. By the time the next financial crisis hits us – which it will, sooner or later – such a framework will, hopefully, allow us to cooperate better and to act swiftly and with economic savvy. And that will be necessary to make crisis management less messy, less time-consuming and less costly. 8  BIS Review 50/2010