samchain/econo-pairs-v1 huggingface dataset:
Tackling the urgent issues To tackle the urgent issues stemming from the crisis, it was first essential for the three countries that were experiencing major difficulties to be able to continue funding themselves:  BIS central bankers’ speeches  3  the EU and the IFM stepped in to assist them. They did this via bilateral loans in the beginning, and then in the framework of a structure that borrowed on the markets backed by a guarantee from the euro area Member States: the European Financial Stability Facility (EFSF). This support was subject to strict conditionality to ensure that the sustainability of public finances was restored and the country in question regained its competitiveness. These countries therefore undertook to meet deficit reduction targets in order, ultimately, to be able to tap the markets directly for their funding needs. This support was always designed to be temporary and encourage sound fiscal policies. Central banks also played a decisive role throughout the crisis. First, they cut their key interest rates sharply after the crisis of 2008 in order to guarantee price stability and boost lending and activity. Furthermore, they provided financial institutions with liquidity to limit credit crunches. Since 2008, the Eurosystem, for example, has conducted fixed-rate tenders with full allotment against an extended range of eligible collateral.

Thomas Jordan: Real estate prices falling in the US, rising in Switzerland – implications for the SNB’s monetary policy Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Hochschule für Technik und Wirtschaft, Chur, 18 December 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Developments in the real estate market are important for monetary policy. Real estate markets can influence inflation and economic cycles, but also the stability of the financial system. Property bubbles can result in a massive misdirection of capital and thus give rise to lengthy and difficult adjustment processes. Therefore, the SNB closely monitors developments on the real estate markets both in Switzerland and abroad. The economic outlook is still clouded by undesirable developments on the US real estate market, notably in the period 2004-2006. Given the size of the United States and the broad international spread of investments in the US mortgage market, these distortions have had a serious impact on the world’s financial markets and on global economic development. For some years now, Switzerland too has been experiencing a construction boom and a relatively sharp rise in property prices in certain regions and in given market segments. Comparison of the Swiss and US real estate markets shows, however, that these markets differ in a number of key respects.
Now that I am already way out on a limb, I should emphasize that my remarks reflect my own views and not necessarily those of the Federal Open Market Committee or anyone else in the Federal Reserve System. As a starting point, it’s useful to travel back in time to the 1980s and 1990s, when inflation targeting was introduced. The problem at the time was high and variable inflation that contributed to macroeconomic instability and unmoored inflation expectations, which in turn fueled high and variable inflation. To break this vicious cycle, numerous central banks instituted inflation targeting, or variants thereof, with a focus on bringing inflation down to a low level and fostering the establishment of stable, well-anchored inflation expectations. This strategy worked extraordinarily well in the decade preceding the global financial crisis, as central banks were able to achieve remarkably low and stable inflation, leading to a positive feedback loop between low inflation and well-anchored inflation expectations. Today, we face an altogether different set of problems stemming from a very low neutral interest rate—that is, the short-term real interest rate consistent with an economy operating at its potential alongside low and stable inflation. Ironically, the problem we need to solve these days is the risk of inflation that is persistently too low, rather than too high. Today’s low neutral interest rates reflect the culmination of trends extending back 25 years.

You know people talk about, well, it’s hard to know where to operate in a gray area, I think a lot of the behavior was way over the line. When people are getting together in chat rooms trying to talk about how they can collude to rig a market, that’s not in the gray area. That’s way over the line. When people are consciously doing things to evade any money laundering rules and sanctions, that’s not in a gray area, that’s way over the line. So I feel that most of the things that have resulted in fines can be tied to things that are not in a gray area. They’re just way over the line. Now the question of whether the fines are excessive – I mean it’s hard to know how you take the behavior and then map it back onto the fine. I think the important thing, though, is to make the fines big enough so that the senior management of these institutions doesn’t just say, “Well, I can just write a check, accept the bad behavior, and move on." If the fines are substantial, then it actually gets some senior management’s attention, and I think that’s one of the reasons why banks are working harder on the issues of culture in their institutions. I’ve actually been very – you know, you asked me the question, is bank bad behavior over?
Andrew G Haldane: Drag and drop Speech by Mr Andrew G Haldane, Executive Director and Chief Economist of the Bank of England, at BizClub lunch, Rutland, 19 March 2015. * * * The views are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Gareth Anderson, Jeremy Franklin, Richard Harrison, Riccardo Masolo, Becky Maule, Roland Meeks and especially Tom Smith for their assistance in preparing the text. I would also like to thank Rebecca Burnham, Rupert de Vincent-Humphreys, Will Dison, Fernando Eguren Martin, David Elliott, Nicholas Fawcett, Bob Gilhooly, Jeremy Harrison, Simon Hayes, Chris Jackson, Phil King, Jenny Lam, David Miles, Francesca Monti, Liam Parker, Kate Reinold, Gareth Ramsey, Matt Roberts-Sklar, Magda Rutkowska, Ali Schomberg, Kate Stratford, Rahul Thakrar, Ryland Thomas, Dan Wales and Madeleine Warwick for their comments and contributions. In March 2009 the Bank of England cut official UK interest rates to 0.5%, their lowest-ever level. Financial markets did not expect this low level of interest rates to persist, with the first rise expected nine months later in December 2009. Yet six years on, official UK interest rates remain at 0.5%. The first rise in UK interest rates is still expected around a year hence (Chart 1). Like a bad flight, the take-off time for interest rates has been repeatedly put back. That pattern has been mirrored internationally. In March 2009 US policy rates were in a range of 0–0.25%, their lowest-ever level. Markets expected them to rise within a year.

The  BIS Review 30/2009  1  combined effect now is a painful deleveraging process that drives down asset prices, shrinks balance sheets, and feeds straight into the real economy in the form of credit contraction. Adverse feedback loops between the financial system and real economy have become entrenched. The Eurozone, which accounts for the second largest share of global GDP, has deep financial linkages with the US. Through these linkages, financial stresses were transmitted across the Atlantic rapidly. Many banks in Europe, as well as other financial institutions such as insurance companies and asset managers had large exposures to US assets. Many were over-leveraged and dependent on benign conditions for liquidity to continue flowing. So they got sucked into this vortex. We have a similar story of credit evaporating and strains being felt in the real economy. Over in Japan, recovery from a decade of economic growth stagnation has been derailed by the collapse of external demand with serious knock-on effects on domestic activity. Japan’s capacity to support the growth of other advanced and emerging economies is now diminished. So a global recession is now upon us. The three economic giants – the US, Europe and Japan – together accounted for just over 50% of global GDP in 2007. All three cylinders are sputtering. The impact has already been felt worldwide. How long and how deep this recession will be is still an unknown, though many economists are predicting a long L-shaped trajectory.
However, as shown in Chart 5, the average homeowner still is substantially more leveraged than before the crisis and has lower net worth. One significant problem is the trajectory of home prices. Homeowners have lost more than $ billion in home equity since the housing market turned. For homeowners with mortgage debt, about one-quarter of these homeowners have mortgage debt that exceeds the value of their homes. The loss of home equity is a serious problem in itself of course, but it has been exacerbated by the fact that many households have found it very difficult to refinance to take advantage of lower mortgage rates. Without a substantial improvement in the ability to refinance, the outlook for real estate prices, and in income prospects, it seems likely that many of the households that ended up with too much debt after house prices fell 30 percent from their peak may need to deleverage further. This implies that for the household balance to fall and provide an impetus to growth, those households with low debts will have to spend more of their income. In many ways these households are in a similar situation to large corporations: their balance sheets contain substantial liquid assets. They are undertaking precautionary saving as a response to greater uncertainty about the economic outlook and their long-term prospects. In more normal times, lowering short-term interest rates would induce households and businesses to spend more or invest more in less liquid long-term assets as the real return on their liquid short-term assets fell.

Despite the series of shocks from the foreign and domestic environment which the Macedonian economy has faced in recent years, we maintain the average inflation rate at the level of 1.5%, which is very close to the average inflation of the Euro area countries and confirms the adequacy of the monetary setup in this period. The nominal exchange rate of the denar against the euro has been maintained at a stable level, contributing to stable expectations and maintaining the confidence of economic agents. We have maintained the foreign reserves at a comfortable level by guarantying currency stability and dealing with shocks. The banking system is set on a completely market basis, with the presence of renowned international banking groups – stable, liquid and capitalized. Our permanent investment in observing the international standards in the banking regulation and the modern supervisory standards has made a great contribution. 1/2  BIS central bankers' speeches  No central banking institution can be set on firm grounds without dedicated and responsible people who have a vision, follow the direction of the modern central banks and at the same time work very hard to follow that path. In recent years, we have been continuously investing in the human capital. The support that we receive from international financial institutions, along with our dedication enables us to have a high quality core of professionals.
Demand for goods could be satisfied at the same time, without the balance of payments showing large structural deficits. In the mid-1970s, productivity growth declined and it has since then been considerably lower than during the good years earlier and from 1974 to 1994, the growth in labour productivity remained at an average of 1.4%. At the same time, the economy was characterised by high inflation. The low productivity growth was reflected by a drastic decline in the gross investment in relation to GDP in the mid-1970s. A smaller part of the national disposable income was invested to build up the capital stock (see diagram 1 and 2). Net investment measures the addition to the capital stock. It fell on average from an average of 16% of disposable national income during the 1950s and 1960s to just over 5% at the beginning of the 1980s. During this period, we also continually borrowed abroad to meet demand. Since 1995, productivity and the investment ratio in Sweden have increased again, although the improvement is modest and starts from a low level. In the USA, the picture of growth in labour productivity has in rough outline displayed the same pattern over time as the Swedish with one important difference. The improvement of labour productivity since 1995 has been larger in the USA than in Sweden in contrast to the earlier twenty-year period when labour productivity increased by about as much in both countries.

This agreement thereby affects some 20% of the labour force and includes rules that reduce the risk of periods without agreements and rules that reduce the risk of conflicts breaking out. In the state sector, adaptation of pay bargaining has been facilitated by the frame budget process, which entails that wage development in the export industry shall set the level for state wage costs. With the intention of facilitating wage formation compatible with economic balance, the Government introduced a bill in December last year that included proposals to create a new agency, the Mediation Institute. The bill includes measures that aim to reduce the risk of conflict breaking out and are to come into effect if contractual solutions are not reached in some other way. In conclusion The state of the Swedish economy is better than for a very long time. Inflation expectations have stabilised around the target and economic policy is focused on continued consolidation of public finances. The prerequisites for the Riksbank to conduct monetary policy so that it contributes to stabilising growth around its long-term path are thereby improved. 5  BIS Review 20/2000  However, this does not mean that challenges are lacking with regard to striking the right balances in monetary policy. I have discussed some of these. One is the assessment of productivity growth and the potential growth in the next few years. There are still no signs that we will see a productivity growth such as in the USA.
In the context of pricing, consumer/investor protection, distribution, dispute handling and resolution, the interests of the financial firms or intermediaries must not take precedence over those of the consumers or investors. This is a difficult mission to accomplish as it requires not only a robust and yet user-friendly regulatory regime, but also a corresponding change in the culture, values, mind-set and behaviour of the financial firms and their staff. As hard as it seems, I strongly believe that we cannot afford not to accomplish this mission. We must try harder and harder until we have got it right. I simply cannot envisage how a financial centre can thrive and sustain its competitiveness over time if it cannot build a credible reputation for treating customers and investors fairly. Conclusion 23. Ladies and gentlemen, with quality products credibility of fair treatment, trust of customers will follow naturally. Customers who use Hong Kong for their financial needs would feel safe because they know, and trust, that their moneys and wealth are in good hands and that their interests are being looked after. If you earn the trust of the customers, you have won their loyalty as well. With the reputation and words of mouth, more customers would wish to use Hong Kong as the hub for their financial transactions. However, the regulators and the Government cannot do it alone. The private sector, the industry and the practitioners must also own this mission and, most importantly, join hands with the public sector to do it together.

Put differently, our work is motivated by protecting banks from climate change, and not by changing the climate itself, where other measures outside the toolkit of regulators and supervisors are needed. Although, of course, achieving our goal will in turn contribute towards meeting broader objectives related to climate change, such as the COP 21 Paris Agreement. And the mechanism is well known, as banks adequately manage, mitigate and disclose climate related-financial risks as part of their day-to-day business operations, we should expect a natural evolution in the composition of their balance sheets that, in turn, will reflect our path towards a low-carbon world. 1/6  In other words, if we succeed in incorporating these risks into the decisions of the financial sector, this will translate into a change in relative prices of financial instruments. And, in turn, that will help to internalise those consequences originating from both transition and physical risks. And this will be a powerful and much-needed complement to the use of the fiscal and environmental instruments that are needed to fight against climate change. Within this approach, it´s very important to recognise that there are several crucial limitations in our current capacity to measure these risks. In particular, there are few sufficiently deep and harmonised databases to analyse and understand transition and physical risks. Data granularity is particularly important given the high heterogeneity of the potential impacts. And we lack as well sufficient historical depth.
These loans are considered low risk under Basel II. The reduction in the required level of capital may be substantial for the banks using IRB approaches for credit risk, though transitional arrangements provide for a gradual reduction. With solid results in banks, a good financial situation for borrowers and a well functioning financial infrastructure, there appears to be little risk of a crisis in Norway’s financial system in the next few years. However, the long period of strong debt growth and asset price inflation may be a source of subsequent instability in the economy and in banks’ losses and results. During an upturn such as the current one, it is therefore important to show vigilance and provide a cushion for weaker cyclical conditions and higher interest rates. Within the framework of Basel II, banks that shift to internal risk models based on historical losses for measuring capital requirements should take into account that loan losses have been unusually low in recent years. Banks are vying for market shares. Competition is fostering more cost-effective banks, better and more flexible borrowing terms and a broader product range. This is to the benefit of customers. At the same time, it is important that banks price risk correctly. This enhances capital efficiency and promotes financial stability. Thank you for your attention. 6  BIS Review 106/2006  William A Ryback: Macro prudential policy – a new name for some old ways of thinking?

All in all, beyond sometimes serious tensions and incidents, French banks are now reaping the benefits of the major advances in productivity and innovation they have made over the last two decades. Public policy during the crisis Recent weeks have seen a marked change in public policy. Having previously been geared exclusively to providing liquidity to financial intermediaries, public intervention is now also aiming to support banks’ financing and own funds. This is a significant shift. Needless to say, restoring liquidity remains a pressing priority. Inter-bank markets have recently shown modest signs of improvements. Yet, there is still some way to go. To this end, central banks have mobilized considerable ammunition. A process underway for over a year has culminated in the central banks having adjusted their operational frameworks in various areas. The maturity and currency of their facilities have been expanded. The range of eligible counterparties has been broadened. The tender procedures have been modified with a view to ensure unlimited amounts of central bank money. The list of collateral for refinancing has been widened. Enhanced international coordination between the monetary authorities is ensuring that their actions are part of a consistent overall strategy. These measures are highly exceptional. As such, they should greatly contribute to restoring confidence and a smooth functioning of money markets. Governments have moved aggressively to support banks' solvency and resilience. Since the Paris Declaration by euro area member-countries, Europe, under the leadership of France, is acting according to what I consider a sound and consistent action plan.
In the case of the Federal Reserve, the pre-crisis framework worked well at targeting the federal funds rate and we have high confidence that a similar system could work again in the future. But can we do better?4 In light of recent experience and changes, are there more effective, transparent, or flexible implementation frameworks that would give policymakers capacity to better steer the economy in the direction they need to satisfy their mandate? Recent experience suggests that the Federal Reserve’s new tools – interest on reserves and term deposits5 – as well as its application of old tools towards new purposes – fixed-rate reverse repos and large-scale outright security purchases – can be very helpful, but we can probably still learn more about how best to employ them. We can benefit collectively from studying the impact of differences in the implementation of similar tools across central banks.6  3  An extended effort to evaluate potential long-run monetary policy implementation frameworks was announced in the July 2015 FOMC meeting minutes. 4  For example, some have suggested that the Federal Reserve could target a repo rate, rather than the federal funds rate (see Bernanke, or Gagnon and Sack). Targeting a repo rate could have some benefits, but may entail a number of complications, so more work would be necessary to evaluate the potential consequences of such a change.

This prudence is well captured in the FOMC’s Policy Normalization Principles and Plans, released in September 2014, which note that, in the long run, the Fed’s balance sheet should be no larger than necessary for the effective and efficient implementation of monetary policy and should consist primarily of Treasury securities.24 We also need to make sure that the impulse of monetary policy is transmitted effectively to the real economy. Given the growing importance of nonbanks in many money markets, especially in the U.S. dollar markets, we should think about the counterparties with whom we interact. Would expanding the types of counterparties that we do business with increase the effectiveness of monetary policy? What are the costs and benefits of interacting with counterparties beyond our traditional set? Any long-run monetary policy implementation framework should be assessed relative to goals. That assessment may be informed by recent experience. For example, a framework should allow us to achieve an appropriate degree of control over short-term rates, both in normal times and during periods of financial distress. It should also be as robust as possible to potential structural changes in the financial system. The framework should enhance our ability to achieve macroeconomic objectives at very low or even negative interest rates. Further, it might be important to consider the framework’s ability to address liquidity strains in money markets and to support overall financial stability.