samchain/econo-pairs-v1 huggingface dataset:
Among the most effective instruments of macro-prudential supervision are the requirements for capital buffers to counter the creation of systemic imbalances, as well as capital buffers for systemic banks, which being large enough, may cause social costs beyond their individual dimension. Through this new capital composition, the macro-prudential instruments manage the systemic risk before it materializes, decreasing the probability of occurrence and, after its materialization, minimizing losses that are absorbed by the higher level 2/5  BIS central bankers' speeches  of capital. But still a lot of work remains to be done. It has long been recognized that a deeper financial integration also brings a better functioning of the European Union. Yet, financial integration showed to be shallow and reversible and, after the financial crisis, fragmentation increased against centralization and integration. The measures undertaken to reduce liquidity within each country improved the national financial stability, but neglected the effect on other countries. The banking union addressed these inadequacies by concentrating the national financial policies at the central level and aiming to fulfil two objectives: to ensure banks’ soundness and promote a deeper integration of the banking sector. The Single Supervisory Mechanism plays an important role in these objectives. A stronger and more uniform supervision enhances banks’ stability and provides them with a more coherent framework of policies on cross-border banking, producing benefits compared with the fragmented system of national supervision.

The Law ‘'On the recovery and resolution of banks in the Republic of Albania'’ entered into force 3/5  BIS central bankers' speeches  in July 2017, vesting the Bank of Albania with a new attribute, i.e. the Resolution Authority. This attribute completes the financial security mechanism of the banking sector, with the Bank of Albania responsible for regulating and supervising the banking sector, drafting macro-prudential policies, performing the function of the lender of last resort as well as the implementation of banks’ resolution. Together with the deposit insurance scheme provided by the Deposit Insurance Agency since 2002, the financial safety net framework in Albania is complete. For the purposes of this Law, the Resolution Fund was created with contributions from the banking sector. This Fund aims to reach ALL 6.3 billion within 2027. The implementation of the Albanian recovery and resolution Law consists in three important steps: The first step is the drafting of recovery plans by each bank operating in Albania, with reliable and concrete scenarios, as well as defining the indicators that signal the deterioration of the financial situation of a bank before it becomes irreversible. When drafting recovery plans, the bank should create credible options to withstand stress scenarios, constructing mechanisms that are part of the daily management of the banking business and that do not remain just part of a hypothetical plan.
In order to aid this development process, the Central Bank, on behalf of the government, will continue to tap commercial sources of relatively low cost funds from abroad as a source of development finance within the broader parameters of the Medium-Term Debt Management Strategy (MTDS). Management of the Employees’ Provident Fund As you all know, the Monetary Board of the Central Bank of Sri Lanka, as the safe custodian, is vested with all powers and responsibilities pertaining to management of the Employees’ Provident Fund (EPF). Being the largest superannuation fund in the country, the EPF passed a significant milestone during the year with total assets of the Fund surpassing Rs. 2.0 trillion. It has grown at a compounded average rate of around 13 per cent during last 5 years. Several measures were taken, in 2017, to improve the overall quality of the services provided to members by way of streamlining operational activities. This was achieved by accelerating the automation process for collecting member contributions, real-time updating of member  28  accounts and swift payment of refunds. Notable improvements were also made to services offered for employers in their submission of EPF returns via an electronic platform, while we also partnered with a few licensed commercial banks to offer their EPF paying customers the facility to remit their member contributions online.

National authorities have – or could be given – sufficient power to act. When environmental pollution crosses national borders, containing the negative externalities becomes more difficult, since the national authorities only have national mandates. Then some kind of supra-national organisation or some form of cross-border agreement may be required. Similarly, in the financial area, as long as the externalities are limited to one nation, the domestic authorities can – at least potentially – be used to internalise the problems. Thus, when banks start becoming important in several countries, there will be a mismatch between the potential problems and the roles of financial supervisors and regulators. In the prevailing regulatory structures there are very few arrangements for supervision and crisis management designed for managing externalities with cross-border impact. Given that the financial markets get more and more integrated the lack of adequate cross-border regulatory structures creates a number of challenges. Challenges One challenge is that the interdependence between different countries increases. Problems in the banking system in one country are more likely to spill over to the other countries where the bank or group is active. The cross-border contagion effects are likely to be larger as banks are actively involved in several countries. This can be illustrated by one of the largest banks in my country, Nordea. It has substantial activities in four of the Nordic countries, and is also a significant part of the financial system in all these countries. Any serious problem in Nordea will therefore most likely affect all four countries.
What the central banks of the world can do in this situation is to continue to pursue their policy consistently to avoid contributing to greater uncertainty and increasing pessimism. If participants in the financial markets of a few years ago could be said to show a strong willingness to take risks and perhaps a sometimes exaggerated optimism, there are today tendencies in the opposite direction, particularly if one looks at the headlines in the media or listens to market participants. The central banks can balance this by maintaining credibility in price stability and by safeguarding the functioning of the payment system. The Riksbank strives to conduct a clear, credible monetary policy that is generally accepted by both the Swedish people and participants in the financial markets. We have therefore specified an explicit target for the annual inflation rate and explained that we normally try to keep to a simple rule-of-thumb; if the forecasts of inflation one to two years ahead exceed the inflation target we raise the interest rate and vice versa if the forecasts show inflation below target level. This clear intellectual framework makes it easier to influence expectations in society of monetary policy and to evaluate the policy afterwards. Both we ourselves and external analysts can take a stand on whether the policy appears sensible, whether the forecasts we make are reasonable, and whether we follow the principles we have declared that we follow.

The focus of my discussion will be on the latter part of this period. This is because developments in 2000-2001 were illustrated very clearly in last year's assessment. Price rise and monetary policy 2001 The fact that inflation was over the target level during the second half of 2001 and first half of 2002 was largely due to supply shocks similar to those we are experiencing now. Food prices rose considerably as a result of mad cow disease, foot-and-mouth disease and higher prices for fruit and vegetables resulting from poor harvests. There was also a rise in electricity prices. The Riksbank's  BIS Review 15/2003  3  assessment was then, as it is now, that these price rises were essentially temporary and inflation would soon fall again. This proved to be the case and in this sense the upturn in inflation 2001 did not comprise a serious monetary policy problem. However, the inflation rate rose even after adjustments were made for food and energy prices; there appears to have been a rising trend in various measures of underlying inflation from early 1999 to early 2002. It has since been shown that the Riksbank and other forecasters overestimated GDP growth and underestimated inflation when we made our forecasts for 2002 during 2000 and 2001. Perhaps we were a little too optimistic with regard to the economy's capacity to grow without inflation accelerating.
To put it simply, we usually put the brakes on when economic activity is rising and we accelerate when it is falling. Inflation targeting should thereby often be able to contribute to smoothing the business cycle. It is also possible that it can reduce fluctuations in unemployment. However, it is not reasonable to believe that the fluctuations in economic activity can be eliminated entirely. It is therefore seriously misleading to make the Riksbank responsible for the difference between actual unemployment and what could potentially have been attained if it had been possible to abolish fluctuations in economic activity. What we can hope for is a slightly more stable development, which we appear to have attained over the past ten years, although it is too early to draw any completely certain conclusions. The policy is flexible Another question which arises in the discussion now and then is how mechanical or how flexible the policy should be and how it should then be assessed. The Riksbank currently conducts what is known as flexible inflation targeting. We are definitely not what my British colleague Mervyn King would call “inflation nutters”. The focus lies not merely on stabilising inflation under any circumstances; as long as there is fundamental confidence in the policy, that we will have low inflation in line with our target, we also take into account other factors. In January 1999 we published a clarification of our policy.

Compared with other countries it is perhaps above all the changes in fiscal policy that have made Sweden stand out, in spite of the fact that the limits in the fiscal policy framework have been stretched somewhat in recent years –  1/7  inflation targeting is, after all, now conducted in some twenty countries around the world and there also are other reasons than inflation targeting that have contributed to lower price increases globally. The comparatively sound central government finances have been a great strength for our country over the past ten years. In the years ahead demands will rise even further if we are to meet the challenges posed by an ageing population. More surprising, in a positive sense, has perhaps been wage formation. It is not that long ago since Swedish wage formation used to be highlighted in economic circles as a warning to other countries. But with the odd exception wage formation in Sweden since the mid-1990s has worked well from a macroeconomic perspective. I think the fact that the Swedish Trade Union Confederation has said that “the Riksbank is a wage-earner’s best friend” clearly shows that something has happened. Real wages have grown positively in negotiations that have set out from stable inflation expectations (Figure 4). That is not to say that wage formation and the way the labour market functions are perfect. The future is likely to involve even greater requirements for a more productivity-based local or individual wage formation.
Cash transport robberies – a social problem The large number of robberies of cash transports in Sweden comprises a major problem for all of us – each of us is affected in some way by cash management in our society. Developments have become even more troubled over the past years, as we have unfortunately seen an escalation in the violence used during the robberies and attempted robberies, through the use of explosives and heavy weapons. I regard these recent developments with great concern and hope that this forum will enable us to improve the security of cash transports and cash management in general. The number of robberies of cash transports doubled from the already high figure of 30-40 robberies a year to 70-80 robberies a year in 1998 and 1999 and has since then remained at this very high level. Statistics from the European Security Transport Association, ESTA, show that Sweden holds a scarcely honourable third place with regard to the number of cash transport robberies in relation to the population. We had a total of 224 cash transport robberies between 1998 and 2004, while the corresponding figure for Denmark was 93, for Norway 42 and for Finland only 4. Equally alarming is the fact that Sweden accounts for one tenth of the total capital losses in cash transport robberies in Europe; if one takes into account the size of the population, we were the country that lost the second highest amount of money, after Ireland.

As shown in Chart 3, there was also a clear build-up of financial vulnerability in Norway prior to the financial crisis.   The rise in both house prices and debt in Norway was on a par with countries that were much harder hit by the crisis.   In addition, Norwegian banks had also increasingly financed strong lending growth over a long period with market funding, of which a considerable share was shortterm funding. The Norwegian banking sector became increasingly dependent on well functioning international money and capital markets, enabling banks to roll over their funding. Nonetheless, the liquidity crisis never developed into a solvency crisis in Norway. Perhaps financial sector operators had learned from the previous banking crisis and engaged in more responsible banking during the upturn. Furthermore, they were subject to stricter banking regulation in some areas. But other factors also played a role.   Macroeconomic developments after the outbreak of the financial crisis were more favourable in Norway than in other countries. The decline in output and the rise in unemployment were far more limited. Because of particular features of the industry structure in Norway, it took time for the full impact of the international downturn to reach our economy. In the meantime, an expansionary monetary and fiscal policy had begun to take effect. Against the background of relatively favourable macroeconomic conditions, the vulnerability related to a high household debt burden and elevated house prices never translated into higher losses for banks.
2  All speeches are available online at www.bankofengland.co.uk/speeches  2  In effect the benefits of deep and liquid markets – ease of price discovery, minimisation of basis risk, tight bid/offer spreads – have outweighed the fact that Libor may not be a perfect match to users’ underlying needs. Whilst users of Libor clearly benefit from this concentration of liquidity, the flipside is that it makes the adoption of alternatives to Libor a very challenging task. These network effects are reinforced by market convention, accounting practices, and the frictional costs of changing firms’ systems and risk models. And use of Libor is perpetuated by the need to hedge and manage legacy positions. Overall, there is substantial inertia in the use of Libor. The case for change The financial system’s Libor dependency matters for two reasons. First, as I have argued, in many applications users would be better served by a near risk-free rate: the bank credit component of Libor is in these cases neither necessary nor appropriate. Derivatives markets in particular could be more effective if there were liquidity in alternative reference rates. The prospect of improved market effectiveness might not, on its own, justify change. A second factor adds powerful impetus to the case for change. As the Governor emphasised, the truth is that the term deposit markets which underpin Libor fixings are no longer a liquid source of bank funding. Even a reformed Libor will need to rely on expert judgement to supplement transactional data. That is not a desirable state of affairs.

The economic purposes of these contracts include hedging or gaining exposure to: outright interest rate risk, basis risk, cross currency risk, and interest rate volatility. Banks, pension funds, insurers and hedge funds are all heavy users of Libor derivatives. Libor is also important for the real economy in the UK, with more than £ of SME and corporate loans, around £ of Floating Rate Notes and £ of structured debt referenced to sterling Libor. Libor’s role here is typically to provide a transparent and widely accepted reference point for the floating interest payments on loans. The dominance of Libor might be taken as evidence of the overwhelming need for Libor-linked financial contracts. However I do not believe this is the case. A large part of the reason Libor is so widely used is due to what economists call network effects. Using Libor is attractive because Libor instruments are liquid. This is self-reinforcing – liquidity drives use of Libor, which drives liquidity. In many cases the use of other benchmarks would be preferable for users. For example, most users of interest rate swaps are seeking to hedge the general level of interest rates, not bank credit risk. For this, near risk-free rates would be more appropriate. However, liquidity for long-dated sterling swaps is firmly rooted in contracts referencing six-month sterling Libor, and individual participants cannot change this.
The fan charts are useful because they contain information relevant to the likely distribution of Bank Rate. To explain its current policy setting, and to provide  BIS Review 36/2010  9  information on the likely path of policy, the MPC needs to communicate its judgement of the outlook as a whole. Most other central banks also try to illustrate uncertainty around their projections, albeit in slightly different ways. The European Central Bank, for example, presents its forecasts as a range defined as twice the mean absolute forecast error over the past [Slide 7]. The Federal Reserve produces projections that show the range of individual [most likely] forecasts – as viewed by each Federal Reserve Bank President and Governor. This is shown by the spread of the whiskers [Slide 8]. They also produce a measure of “central tendency” which truncates that distribution by excluding the three highest and three lowest forecasts, here represented by the boxes. This representation of the differences of view within the Federal Reserve is very different from a probability distribution of future outcomes. In our experience, communication of the uncertainty about future inflation is important in explaining monetary policy. The Swedish Riksbank adopts a similar approach to ours and use fan charts as their key tool for communicating views on the outlook. [Slide 9]. Looking back, we can see how our communication strategy has evolved in the light of experience over the past 17 years.

After an earthquake, demand for earthquake insurance at first increases and then declines, while the probability of the next large earthquake may grow over time. 7 So-called “Depression babies” seem to take less financial risk than other generations. 8 Such an effect may explain why the fear of financial crises declines over time as memories of the last crisis fade. (ii)  Decisions under uncertainty have been shown to be sensitive to the way questions are presented. People understand probabilities better if they are expressed in terms of natural frequencies (1 in 10,000) rather than percentages (0.01%). This is one symptom of a wider confusion over probabilistic concepts. Research by Gerd Gigerenzer and others shows that doctors, for example, are often misled by information presented in the form of probabilities rather than sample frequencies. The statement that a diagnostic test has a 5% probability of a false positive is misinterpreted more often than the statement that 5 patients out of every hundred taking the test will show a false positive. 9 And this is compounded by the fact that many forecasts are not of the kind where reference back to a sample frequency is informative. Forecasts made today of the weather or the inflation rate at some date in the future are unique; they are not the outcomes of a repeated experiment. Decisions about saving for future pension provision, for example, are difficult to make the subject of experimentation, although we can learn from the experience of others.
Jean-Claude Trichet: ECB press conference – introductory statement Introductory statement by Mr Jean-Claude Trichet, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 9 June 2011. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting, which was also attended by Commissioner Rehn. Based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged. The information that has become available since our meeting on 5 May 2011 confirms continued upward pressure on overall inflation, mainly owing to energy and commodity prices. The underlying pace of monetary expansion is gradually recovering. Monetary liquidity remains ample, with the potential to accommodate price pressures in the euro area. Furthermore, the most recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. Overall, our monetary policy stance remains accommodative, lending support to economic activity. On balance, risks to the outlook for price stability are on the upside. Accordingly, strong vigilance is warranted. On the basis of our assessment, we will act in a firm and timely manner. We will do all that is needed to prevent recent price developments giving rise to broad-based inflationary pressures.

Looking ahead, inflation rates are likely to stay clearly above 2% over the coming months. Upward pressure on inflation, mainly from energy and commodity prices, is also discernible in the earlier stages of the production process. It remains of paramount importance that the rise in HICP inflation does not translate into second-round effects in price and wage-setting behaviour and lead to broad-based inflationary pressures. Inflation expectations must remain firmly anchored in line with the Governing Council’s aim of maintaining inflation rates below, but close to, 2% over the medium term. The June 2011 Eurosystem staff macroeconomic projections for the euro area foresee annual HICP inflation in a range between 2.5% and 2.7% for 2011 and between 1.1% and 2.3% for 2012. In comparison with the March 2011 ECB staff macroeconomic projections, the range for HICP inflation in 2011 has been revised upwards, largely reflecting higher energy prices. The projection range for 2012 has narrowed somewhat. It is appropriate to recall that the staff projections are conditional on a number of purely technical assumptions, including oil prices, interest rates and exchange rates. In particular, it is assumed that oil prices will decline somewhat and that short-term interest rates will rise, in accordance with market expectations. Overall the projections embody the view that the recent high rates of inflation do not lead to broader-based inflationary pressure in the euro area. Risks to the medium-term outlook for price developments remain on the upside. They relate, in particular, to higher than assumed increases in energy prices.