samchain/econo-pairs-v1 huggingface dataset:
The difficulty in harmonizing the regulatory treatment of cross-border OTCD activity is a good example of this. Parenthetically, I’d add that I am very pleased to see the breakthrough achieved between Europe and the U.S. this summer. Regardless of the cause, because of the slower pace, we are not yet close to a harmonized, robust OTCD system. Thus, we can’t ascertain whether we have achieved what we set out to achieve – that is, reducing the amount of risk in the system, making the infrastructure more secure, and increasing the flow of information so that regulators and others can develop a more coherent view of what is happening in the global financial system. I’m also worried that even when we have finished revamping the architecture and regulation of OTC derivatives activities, reform may not go far enough in a number of respects. First, I am concerned that trades may not be standardized to the fullest degree possible. A preliminary analysis undertaken by the Financial Stability Board that compares the costs of clearing and margin requirements of standardized trades versus bespoke trades suggests that the economics with respect to costs favors standardizing OTCD trades whenever possible. However, the wider spreads that might be earned on bespoke trades, because of their greater opacity, could swing the needle the other way, with the higher profits on bespoke trades more than offsetting their higher costs.

It is too soon to say yet, but we should be prepared to push harder for further standardization should the desired degree of standardization that we are striving for not materialize. 2  BIS central bankers’ speeches  I also worry that implementation of the Principles for Financial Market Infrastructures could falter over time. This could happen for several reasons. In particular, we should recognize that there is a tension between the profit motive of for-profit CCPs and full compliance with the PFMIs. Put simply, some CCPs will prefer to avoid the full costs of compliance. In other words, there will always be a risk of a race to the bottom, which we must continually push against. In this respect, the effort could also falter if countries were to fail to enact the relevant legislation and policies to put the PFMIs in practice. For the global system to be robust, the requirements for CCPs will need to be enforced across the different geographic regimes. I am also worried about fragmentation. In particular, I worry about the proliferation of TRs and CCPs geographically – in some cases in each of the major asset classes. In the case of CCPs, fragmentation would bring two costs. First, the netting benefits would be reduced and, second, the system would be more complex. In an ideal world, I would prefer very few, very robust CCPs, rather than a proliferation of many, less robust CCPs. But whether that is what we will get is unclear to me at this point.
We modernised the bank and the financial system during the 1980s, so that is one thing. Here at the ECB, I’ve overseen the creation of a macroprudential policy and financial stability department, which is state of the art. And I am proud of course of having participated actively in all of the policy decisions that happened since I came here in 2010, especially those that put a 7/8  BIS central bankers' speeches  stop to the existential crisis over the future of the euro. Is there any decision that the ECB took that in hindsight you regret? The rate hike in 2008 was an overreaction. There seemed to be some justification at the time for the increase in rates in 2011, though in hindsight it was clearly premature. That’s it, I already said it in the speech. Will you stay in Germany or are you going to go back to Portugal? I’m going back to Portugal. In June, I will be at the ECB conference in Sintra. Normally we invite former members of the Executive Board, so I hope they will continue to invite me. Particularly as I don’t intend to go and work for any private financial institution. I will do some postgraduate teaching in Madrid. I always hoped I would have the opportunity to be a free intellectual. In my career I never had that luxury. I always thought and dreamed about it, and I hope to have a sufficient number of years to satisfy that ambition.

The Russian invasion of Ukraine has exacerbated some of these factors, amplifying the challenges that the world economy, and therefore the economic and monetary authorities, will now have to contend with. But beyond the impact on the global economic outlook, the war has struck the largest blow to the international economic order since the Second World War. This dramatic event has thrown into relief the need to reinvigorate and bolster the foundations of multilateralism, which are the set of rules and values that we have established to ensure peace and prosperity. But we should also view this as a chance to give fresh impetus to international cooperation, which has contributed so much to global progress in recent decades. Such impetus means strengthening the international institutions, many of  1  which date back to the mid-20th century, so that they can respond more effectively to the new crises, such as the global financial crisis and the pandemic crisis, which are more global in nature than the typically regional crises of past decades. International institutions should equip themselves, in their respective field of competence, with the appropriate tools to prevent and respond to systemic crises. In addition, the global nature of processes such as the green transition and digitalisation means these institutions must adapt in readiness to deal with these challenges and help attain the goals and fulfil the commitments we have set ourselves in these areas.
5  Details of the Desk’s approach were described in an operating statement released by the Federal Reserve Bank of New York: Operating Policy Statement, August 10, 2010. BIS Review 128/2010  3  between 2 and 10 years, but with some purchases also occurring outside this segment. The average duration of the securities purchased is expected to be just over 5 years, although the exact realized outcome will depend on the offers that we receive in our operations. Under this approach, the purchases will remove a considerable amount of duration from the market relative to what the market would have held without reinvestments by the Federal Reserve. The reinvestment strategy, of course, also involves a reallocation of our portfolio from agency debt and MBS into Treasury securities. The FOMC’s decision to reallocate was based on a variety of factors. However, one crucial consideration was whether purchasing Treasury securities would have an effect on longer-term interest rates comparable with that of purchasing MBS. My view was that the effects would be similar, because purchasing longerterm Treasury securities removes as much duration risk from the market as purchasing current-coupon MBS. 6 The two approaches differ, however, in that purchasing MBS also removes prepayment risk from the market. If the market were to begin having trouble digesting that prepayment risk, the spread between MBS rates and Treasury yields could widen. A significant widening of MBS spreads to Treasuries, whether due to this or other factors, could affect policymakers’ decisions about which assets to purchase.

Ravi Menon: Strengthening trust in finance Opening address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Symposium on Asian Banking and Finance, Singapore, 3 June 2019. * * * Dr Mary Daly, President and CEO, the Federal Reserve Bank of San Francisco, guests, colleagues, ladies and gentlemen, good morning. Welcome to Singapore for the Symposium on Asian Banking and Finance, jointly organised by the Federal Reserve Bank of San Francisco and the Monetary Authority of Singapore. This year marks the twelfth edition of the Symposium. This Symposium has carved a name for itself as a high-quality platform for industry captains, distinguished academics, and senior policy-makers to exchange views on global finance. And it stands out for bringing a strong dose of Asian voices while retaining the global relevance of the issues. The theme for this year’s Symposium is “Banking for the Common Good”. Why did we choose this topic? More than ten years have passed since the global financial crisis. We have seen a spate of regulatory reforms over the last decade – unprecedented in scope and scale but necessary. Implementation is not quite complete but the global financial system is generally safer and stronger today, with more capital and liquidity, less leverage and risk. But it is not enough that finance is merely safer today. Just doing no harm is not enough. Finance needs to be a positive force for good.
One of the standard assumptions behind the forecast is an unchanged exchange rate from the forecasting day, and it should be borne in mind that it did not take into account the interest rate cut which was announced on February 10. The impact of the cut will be a marginally higher rate of inflation than was assumed in the forecast. It should also be mentioned that Monetary Bulletin contains an announcement about pending changes to rules on required reserves aimed at harmonising the operating conditions of Icelandic credit institutions with those of comparable institutions in EMU. To be implemented in phases this year, the new rules involve a considerable reduction in the credit institutions’ required reserve from the present levels, thus entailing some easing of the monetary stance. Broadly speaking, the Central Bank’s assessment and forecasts entail a fairly moderate rate of economic growth this year, unemployment of around 3½% this year (excluding the effects of new government measures in this area) but falling somewhat next year, a minor current account deficit this year and next year – in particular caused by imports connected with the construction programmes in east Iceland – and a very moderate rate of inflation. Thus it can be said that the outlook is for good macroeconomic balance. As I mentioned earlier, Monetary Bulletin includes an in-depth assessment by the Bank of the proposed power-intensive industrial projects in east Iceland and conceivable economic policy responses to them.

To some extent there have been a number of signs of more subdued growth in the rest of the world, above all in the United States. Moreover, new statistics suggest that Swedish households are not quite as optimistic as before. Somewhat weaker car sales may be an indication of more subdued demand for durables. Asset prices also seem to be in a calmer phase. All of this may point to some slowdown in the development of demand. But is it enough? It is still a matter of forward indicators and we have not yet seen any clear outcome in the statistics. Neither does there seem to be any notable fall-off in labour demand. The number of new job vacancies continues to be comparatively high, at least to date. In the absence of a sufficient slowdown in demand, an adjustment to the long-term growth path will need to be achieved with interest rate increases by the Riksbank. It seems to me that it is deliberations of this type that the Riksbank will face at the coming monetary policy meetings. Consideration will also have to be paid, of course, to the inflation risks associated with the high price of oil and the high dollar rate. These were some of the risks we highlighted in the October Inflation Report. This type of discussion about the direction of stabilisation policy basically deals with how, after some favourable years in the late 1990s, we should act so that growth and employment in the Swedish economy can be sustainably high and stable.
Inflationary pressures are also expected to be low in the period ahead despite the fact that the international economic upswing appears to have taken firm root in more or less all regions except the euro area. The international upswing is bolstering the Swedish recovery and during the next three years the Riksbank expects growth to average just over 2 ½ per cent a year. The relatively strong rate of growth means that the economy will approach full resource utilisation in spring 2006, according to our forecasts in the Inflation Report. At the monetary policy meeting on 31 March a majority of the Riksbank’ Executive Board decided to lower the key interest rate by a half percentage point. My assessment of the situation was somewhat different, which led me to enter a reservation. In my opinion there were three principal reasons to limit the rate cut to 0.25 percentage points. Firstly, the general economic upswing in both Sweden and abroad will result in mounting inflationary pressures. Secondly, the expansionary economic policy in several parts of the world gives reason for caution. Asset prices, the willingness to take risks, and commodity prices have risen steeply in the past year. The third reason was that property prices risk rising further and with that households’ indebtedness. In my opinion, encouraging a further increase in indebtedness through a rate cut of 0.5 percentage points could lead to problems once rates rise.

The private sector should establish medium and long-term strategies, prepare more transparent balance sheets, give importance to modern risk management principles and pay attention to research and development activities in line with corporate governance. The public sector should assume a supervisory and regulatory role within the scope of the principles of good governance and work towards creating an atmosphere in which the unregistered economic activities and unfair competition are eliminated and thus the private sector can compete in international markets as equal partners. It is also worth to note that the sequence and prioritisation of reforms are also important. That is to say, one should bear in mind that achieving the best practice on governance in this dynamic economic environment requires a carefully planned long-term reform process. Finally, I would like once more to remind you that the prerequisite of reaping the benefits of good governance is to maintain macroeconomic stability. That’s why, in every step that we will take in the future, we have to be sure to avoid jeopardizing the macroeconomic stability that we have achieved so far. Distinguished guests, Good governance principles serve as a blueprint for decision makers both at the economy-wide and firm specific levels to cope with the changing economic environment and the uncertainty that comes with it. As of today, Turkey is in a position to focus on structural and micro reforms and to improve its own governance structure in line with the European Union membership perspective.
Thus, we have made progress with regard to improving statistics; research; compliance with EU integration criteria, strengthening 1/8  BIS central bankers' speeches  the governance; and in many other aspects. Lastly, I would like to underline that the Bank of Albania has fulfilled all the recommendations left by the Assembly. The Annual Report presents in greater detail the activity of the Bank of Albania in 2018, across all the dimensions of its activity. I will present first an overview of the activity of the Supervisory Council, the decision-making body, which also monitors the activity of the Bank of Albania. I will then continue to present the activity of the Bank of Albania, in accordance with the main domains of its activity. ***  Activity of the Supervisory Council The Supervisory Council exercises its powers in accordance with the provisions of the organic law and the procedures established in the internal regulation on its organisation and functioning. In 2018, the Supervisory Council met 15 times and approved 76 decisions, of which 55 were acts approved for the first time and 21 were amendments to existing acts. These decisions affect the activity of the Bank of Albania across the board.

This will contribute to the elevation of our job market as a whole and pave the way for an industry that will thrive. Much could happen in the next five years. Technology, the environment, the economic and political landscape could change greatly. Thus, we must plan well. The financial sector will transform regardless but with proper planning and execution, we stand a chance to influence and 3/4  BIS central bankers' speeches  improve the outcomes. Financial market development will be a journey within this framework which requires effort and collaboration by both regulators and financial market participants. The spirit of teamwork and cooperation which has been developed over the years has paved the way for successful endeavours and should be nurtured further, through the sharing of information and feedback for the greater good of market development. Hence, let us take this dinner as an opportunity to strengthen our camaraderie, so we can also better achieve this common goal together. With that, I thank you and wish you an enjoyable night. 4/4  BIS central bankers' speeches
Supporting the economy by offering financing under the best possible conditions  The last point I would like to make is also crucial for economic recovery: it concerns lending to the economy. The downward trend that has been observed for some time is primarily due to a fall in demand. But we must of course ensure that the offer of financing remains sufficiently broad so that SMEs and MTEs, who rarely have access to market financing, can weather the current difficult economic period without encountering additional difficulties. In particular cash facilities must remain sufficiently available and the conditions under which they are offered should not be systematically tightened. In fact, our quarterly survey of several thousand SMEs show a regular contraction of the rate at which SMEs’ requests for cash facilities are fully granted. In the last quarter of 2012, this rate was only slightly higher than 50%. The same is true, although to a lesser extent, for mid-tier enterprises (MTEs). I therefore enjoin you, in general terms, to avoid reducing lending to the economy, which would aggravate the situation of companies and make the necessary economic recovery more difficult. * * * Ladies and gentlemen, I have no doubt that you are ready to meet these challenges – particularly as you are already substantially prepared for them.

Today, I would like to give my views on the challenges that lie ahead this year. I believe that the four main challenges are to: •  Adapt to an environment that is still changing rapidly;  •  Resolutely pursue efforts to strengthen the resilience of the financial system by preparing for and implementing new regulations;  •  Further improve the competitiveness of the Paris financial centre;  •  Continue to support the economy by ensuring the best possible financing conditions. 1. A rapidly changing legislative and regulatory environment  First, your working environment will continue to evolve rapidly, in terms of both international financial regulation and France’s legislative framework. 1.1  A few words on the draft banking reform law in France  The financial crisis highlighted some major shortcomings of international banking and financial sector regulation as well as the inadequacy of the tools at the supervisory authorities’ disposal to reduce and address risks. The draft banking reform law reflects the commitment of the President of the French Republic to separate activities that are useful for the financing of the economy from speculative activities, which will either be ring-fenced or banned. This law sets out to enhance the protection of deposits and the security of market activities while – and I believe that this is also particularly important – striving to ensure that you are still able to offer a broad range of financial services that allow economic agents to hedge risk, borrow or invest.
Individual borrowers may be keen to stretch themselves financially to buy a bigger house, expecting their earnings to grow or house prices to rise. And individual lenders may be happy to provide a larger loan to receive more income. But should a recession hit, not only will we see defaults, but overstretched borrowers will reduce their spending as they struggle to pay their mortgages. And this reduction would ultimately spillover to the rest of the economy, making the downturn worse. Macro-prudential policy takes these spillovers into account. By ensuring borrowers in aggregate are not overstretching themselves and financial institutions in general are lending responsibly, macro-prudential regulators can ensure that the whole system is more resilient to shocks. 3 2/7  BIS central bankers' speeches  2. Markets are not necessarily efficient or complete3. Market prices may not reflect the real value of assets4, not every market is perfectly liquid and risks may not be as welldispersed as they might seem. These imperfections can lead to two types of risk to financial stability: cyclical and structural. Cyclical risks arise because financial conditions can suddenly reverse.5 The simplest example is of financial institutions taking on too much risk in booms, in the expectation that the assets they purchase will always be in demand. When the cycle turns, asset prices can fall rapidly, leaving institutions with losses. This is why we have countercyclical tools – to ensure the system can build up resilience in good times, and use it in bad times.

The Global  Financial Crisis led to a loss of economic activity equivalent to around £ per person in the UK, based on the net present value of the shortfall in income since 2007 compared to its pre-2007 trend(Brazier 2019). 2 For  example, Acemoglu and Zilibotti (1997), Arestis and Demetriades (1997), and Beck and Levine (2004) provide evidence that the financial sector has a positive role on economic growth. 3 The ‘efficient market hypothesis’ was popularised by Fama (1970). Complete markets were theorised by Arrow  and Debreu (1954). 4 For example, markets could be inefficient due to information asymmetries, transaction costs, market  psychology, sticky prices, monopolistic competition, or credit constraints. 5 Drehmann et al. (2012) and Lang et al. (2020) highlight the importance of cyclical risk for financial stability. 6 Glasserman and Young (2015) and Acemoglu et al. (2015) discuss the risk of contagion in the financial system. 7 Woods (2022) discusses alternative approaches to buffer usability. 8 6/7  BIS central bankers' speeches  8 See Bank of England (2021). 9 See Chatterjee (2022) for a comparison of the UK financial conditions index for the GFC and Covid. 10 Lloyd et al. (2021) shows that foreign shocks are a key driver of domestic macroeconomic tail risks. Bluwstein et  al. (2020) also show that global factors can predict financial crises. 11 See Czech et al. (2021). 12 Bank of England (2021) provides more details on vulnerabilities associated with market-based finance and  liquidity mismatch in open-ended funds, in particular.