samchain/econo-pairs-v1 huggingface dataset:
It also means making better use of the savings entrusted to insurers and pension funds, to ensure the long-term financing of the European economy. Which is why France supports an ambitious review of the regulation in the sector. These overall goals for mobilising savings are also why the European Commission’s 2015 project for a Capital Markets Union has garnered such a broad support. The Commission has already implemented a significant number of measures (revision of the Prospectus Directive, creation of European long-term venture capital funds – EuVECA and ELTIF), and discussions are well underway on other topics (pan-European personal pension 6/7  BIS central bankers' speeches  product or PEPP, plan for sustainable finance, plan for fintechs). It is clearly vital that the future European Commission, European Parliament and European Council all follow through on this action plan and complete the regulatory work. But financial integration also requires initiatives from economic and financial actors, who need to assimilate the regulatory framework and bring it to life: we cannot develop markets for green bonds, private debt and securitisation without the issuers, investors and arrangers that make them thrive. More importantly, a Capital Markets Union would be meaningless if, alongside the Banking Union and the Juncker Plan, it is not part of a longer-term project to create a Financing Union for Investment and Innovation. Financial integration is therefore essential for the euro area and must form a core part of all projects relating to the financing of European economies.

Denis Beau: Denis Beau: Monetary and financial challenges for the Euro area - what are our options? Speech by Mr Denis Beau, First Deputy Governor of the Bank of France, at the Faculty of Economics and Management, Strasbourg, 28 February 2019. * * * Ten years after the crisis, the ability of the global financial system, and especially the European financial sector, to withstand shocks appears to have been significantly reinforced. This reinforcement is the result of numerous changes which vary in nature: Banks now have more capital and its quality has been improved. Their transformation activities are better regulated and they have larger liquidity buffers. In Europe, the banking sector has also been made more resilient through major institutional reforms, especially the creation of the Single Supervisory Mechanism under the aegis of the ECB and the Single Resolution Mechanism. Outside the banking industry, the reforms steered by the G20 have enhanced the functioning of financial markets (particularly derivatives markets), improved the oversight and regulation of developments in non-bank financial intermediation (shadow banking), and put in place a framework for monitoring and safeguarding the stability of the financial system as a whole through the implementation of macroprudential policy. The crisis has also prompted changes in the way financial institutions operate. One of the most visible ones is that risk and compliance functions have now become an essential part of their organisations.
Mugur Isărescu: Nine lessons from the current financial crisis Speech by Dr Mugur Isărescu, Governor of the National Bank of Romania and Member of the Romanian Academy, during the session titled “What lessons can be learned from the current economic crisis?”, organised by the Economics, Legal and Sociology Department within the Romanian Academy, in co-operation with "Costin C. Kiritescu" National Institute of Economic Research and the ”ESEN Reflection Group” Romanian National Committee, Romanian Academy, Bucharest, 14 April 2009. *  *  *  Your Excellency, Mr. President of the Romanian Academy, Dear colleagues, Ladies and gentlemen, I have recently talked about the causes of the current financial crisis and the manner in which it affects the Romanian economy at Babeş Bolyai University in Cluj-Napoca and Transilvania University in Braşov. Let me just recall here that the current crisis on the US subprime mortgage market was only the trigger of the global financial crisis. Its root causes were both macroeconomic and microeconomic in nature. Plentiful liquidity was the catalyst for the merging of multiple microeconomic causes such as securitisation, financial deleveraging, rifts in the business model of rating agencies and excessive deregulation, which resulted in today's financial crisis. World economies are hit by this crisis to various extents, depending on the vulnerabilities of each and their exposure to toxic assets. The response to the crisis is contingent upon the fundamental principles we believe in, the available resources, the institutions and the instruments we can make use of.

Let me conclude my speech with the words of Ivy Baker Priest, former Treasurer of the United States between January 1953 and January 1961. "The world is round and the place which may seem like the end may also be only the beginning", Ms. Priest said. The idea of this quotation may appear as a truism but it is relevant for today's state of the financial system. It may prove to be the key lesson to learn from "today's" crisis unless it may have been the lesson that mankind thought it had already learned every time a crisis occurred. BIS Review 56/2009  5  References: 1. The High-Level Group on Financial Supervision in the EU report, chaired by Jacques de Larosière, Brussels, 25 February 2009. 2. London Summit – Leaders' Statement, 2 April 2009. 3. Jean-Claude Trichet, President of the ECB, Introductory remarks, Brussels, 30 March 2009 (Hearing before the Economic and Monetary Affairs Committee of the European Parliament). 4. Mugur Isărescu, Criza financiară internaţională şi provocări pentru politica monetară din România, Cluj-Napoca, 26 February 2009. 5. Mugur Isărescu, Criza financiar-bancară şi economică: strategii, programe şi măsuri anticriză. Implicaţiile şi perspectivele unei agende naţionale, Braşov, 6 March 2009. 6  BIS Review 56/2009
The issuance of risk warnings, in the context of safeguarding financial stability – where the analysis is centred on the downside risks and thus on highly improbable events – differs substantially from other types of analysis focused on a central, most probable, baseline scenario (such as the one supporting monetary policy). The translation of systemic risk assessments into proposals for concrete policy actions – of a prudential or supervisory nature – is also, to a large extent, new to the central banking community. 3. What went wrong? Confronted with the question of whether central banks and international bodies with financial stability competencies saw the financial crisis coming, it would be fair to answer “Yes, to some extent”.

Moreover, the supply of these assets is asymmetrically distributed between regions, with the US providing a large chunk of the total. Hence, there is a structural excess demand for dollar‐denominated securities, which sustains permanent capital inflows from emerging economies into the United States. This approach has deep implications. It shows why, for more than a decade now, capital has been continuously flowing “uphill”, i.e. from poor to rich countries, with current account surpluses in emerging economies reflected in growing deficits in the United States. It also helps to explain why asymmetries in financial development between countries generate both payment imbalances and asset bubbles. To the extent that the US financial system did not generate enough “pure” safe assets, this created an incentive for the financial sector to manufacture such assets through the securitization of lower quality loans, but at the cost of greatly increased (if hidden) financial fragility. This fragility became apparent when the whole architecture of securitization collapsed under the weight of excessive leverage and maturity transformation. The point here is that internal and external financial stability are two sides of the same coin. Domestic financial imperfections, on the one hand and distortions in international capital flows, on the other, interact with each other to create and amplify imbalances. Ultimately, financial instability is a product of this through this interaction. International financial linkages therefore can be a source of increased fragility for many national economies, including the largest ones. International financial stability: does it matter? International financial instability manifests itself through various channels.
We must now consolidate our progress to build a financial system that can deliver strong, sustainable and balanced growth for all economies: large or small; advanced or emerging; home to large financial institutions or host to them. Success would be a global financial system that maximises its full potential to ensure that: -  The payments infrastructure is efficient and reliable;  BIS central bankers’ speeches  1  -  Companies can access the working capital they need to operate;  -  Core markets function continuously to allow risks to be diversified and managed; and  -  Capital is allocated efficiently across the globe. -  Liquid savings are transformed into long-term loans;  Achieving these ends requires a financial system supported by three pillars: diversity, trust and openness. Building these pillars should be the focus of the future reform agenda. A diverse system, with market-based as well as bank-based finance, can best support a wide variety of investment from infrastructure to SMEs that is necessary to create the jobs our citizens deserve. A trusted system can retain its social licence to support the real economy in innovative and efficient ways. An open system can avoid the risk of Balkanised finance, which would reduce the efficiency with which savings are matched to investment and lead to a global misallocation of scarce capital. This is a daunting agenda and some might feel that, having apparently reached the finish line, the race has been extended.

The challenge that lies ahead of us is how to include this new objective in our policy making; whether inflation targeting and financial stability can be combined or whether a new regime altogether is needed. Various new radical approaches have been mentioned so far. However, I believe that we should not discard all the hard-learned lessons and the successes of the past. Stabilizing inflation should be something that central bankers may be proud of, something that we should cherish and continue to strive for. Incorporating financial stability objectives with the inflation targeting regime should be seen as an opportunity to understand economic developments and potential macro-financial risks, to achieve both these objectives and preserve long-run economic stability. I believe the course of the monetary policy will continue to be extensively discussed in the future, including our improved understanding of the role of asset prices and financial frictions. Under the current conditions, the largest central banks in developed countries have stretched central banking theory and practice beyond traditional activities. Their balance sheets have increased beyond imagination and, in some cases, include private assets; they have accepted a much broader role and have assumed more responsibility. This all new and untested type of central banking will have a strong impact not only on the nature of monetary policy and its interaction with other central bank objectives but also on the independence and credibility of the central bank itself.
Low interest rates, for example, can contribute to the build-up of financial imbalances via the so-called “risk-taking” channel.6 Simply put, very low interest rates may create incentives for banks to take on more risks. Recent research has provided empirical evidence compatible with such a notion. It has been documented,7 for example, how market based measures of bank’s risks as perceived by financial market participants tend to react positively to increases in interest rates, so that a lower interest rate leads investors to perceive banks as less risky. By the same token, several papers8 have shown that credit standards are correlated with the level of interest rates: lower interest rates, in particular, imply lower credit standards, including to customers who are perceived as representing a  6  See Borio and Zhu (2008). 7  See Altunbas et al. (2010). 8  See Jimenez et al., (2008), Ioannidou et al. (2008), and Ciccarelli et al. (2009). BIS central bankers’ speeches  5  higher credit risk. On the theoretical side, research done at the Banque de France9 has shown that, when the regulatory environment is not transparent, a decrease in the level of real interest rate increases banks’ risk-taking behavior. A time-honored principle of finance is that, ceteris paribus, the only way to increase the expected rate of return is to take more risk, and the result of such search for yield is therefore that banks will increase their risk exposure.

More information can be found in Regulation D.  4  BIS central bankers’ speeches  short-term rates like GC repo have tended to be more variable and have, more than in the past, fluctuated with sometimes unpredictable spreads to federal funds. These periodic episodes of weaker linkages suggest that although the IOER rate effectively influences the marginal unsecured funding rate for eligible depository institutions, it may not be representative of, and may currently lie above, the marginal cost of funds more broadly across money markets, for example, secured financing costs faced by repo market participants. This weakening of the relationship between short-term interest rates represents a reduction in the precision with which the Desk is able to control them over the very short term. It’s difficult to know, though, whether the shift in dynamics across money markets we’re seeing is permanent or temporary. While some of the changes could be indicative of an increasing desire by market participants to focus on collateralized rather than uncollateralized markets, it could also reflect more transitory factors related to an elevated level of reserves that leaves banks with no need to borrow funds given the abundance of deposits. Of course, it’s also difficult to know with certainty how money market rate relationships will respond when the FOMC eventually begins to remove policy accommodation in an environment with a high volume of reserve balances.
Large exchange rate movements have at times been a source of instability. In Norway, the household, banking and corporate sectors as a whole take on currency risk to a limited extent. Furthermore, government finances are solid, and fiscal policy is not affected to any great extent by short-term exchange rate movements. This allows the exchange rate to play an important role in absorbing shocks to the economy. We have thus been able to reap the benefits of an efficient international capital market without having to deal with its challenges. 1/3  BIS central bankers' speeches  At the same time, in a world of high capital mobility and extensive trade, monetary policy’s room for manoeuvre is constrained by the exchange rate channel. In a small open economy with a floating exchange rate, the domestic interest rate can differ from interest rates abroad. However, an interest rate differential that becomes too wide can lead to considerable exchange rate volatility, which will in turn feed through to inflation, output and employment. Thus, the domestic interest rate cannot be set without regard to the level of external interest rates. The room for manoeuvre in monetary policy is further constrained in periods when external interest rates are close to or below zero. Although the financial crisis in 2008 had a marked impact on Norway, our economy was affected to a lesser extent than most other advanced economies. There are a number of reasons for this. The Norwegian economy was in an upturn when the crisis hit.

There was a lack of confidence that the expansionary trend could continue without generating higher inflation. Inflation expectations moved up--more and more people began to count on rising inflation. All this was manifested in, for example, rising long-term interest rates, a weak exchange rate, rising producer prices and accelerating wage increases. The Riksbank therefore tightened interest rate policy, beginning in August 1994. The restrictive turn was criticised in some quarters because inflation had not yet started to accelerate. But our intention was precisely that. If monetary policy measures are taken in time, the inflationary process can be checked before it has taken off. Once inflation has got going, more pronounced monetary policy measures are needed for a return to low inflation. Vigorous efforts have also been made over these years to tackle the central government financial deficit. With its six-monthly control stations, the convergence programme enables people to keep an eye on the political system’s determination to complete the consolidation of the budget and fulfil the goal of balance in 1998. Government representatives have also expressed an ambition to achieve a surplus after that. With the improvement in central government finance, confidence in economic policy grew appreciably and inflation expectations fell back notably in the autumn of 1995 and during 1996. This in turn is a fundamental prerequisite for lastingly stable growth. During 1996 the Riksbank was in a position to reduce the repo rate by degrees to the lowest level for more than thirty years.
In particular, the Bank of England agrees that more of the vanilla OTC markets should be cleared via central counterparty clearing houses. LCH led the way globally in opening up central counterparty services to interest-rate swaps, breaking a mis-think that somehow CCPs could clear only exchanged-traded instruments. And recently it has made the welcome announcement that non-dealers will be able to access such central clearing, at least indirectly via “clearing members”, as for exchange-traded contracts. Central clearing can help to provide transparency and consistency in valuations and haircuts. It can help to promote greater standardisation in terms. It makes haircuts more visible to the market as a whole, and to the authorities, who as overseers of the system should be prepared to form a view when haircuts are too low – and the associated market leverage is too high – for system stability to be assured. The role of the authorities is important. It is absolutely vital that management maintain the integrity and soundness of the key clearing houses as they expand their range. 2 As overseers of the payments systems embedded in clearing houses, the Bank will work with the FSA and our international counterparts on this. It is often said that dealers resist such initiatives, as it can squeeze their margins.

Absorption is not only an issue at country level, linked to the traditional capacity to allocate the EU funds received, mostly by regional public sector entities. In this case, there is an added dimension. It should be taken into account that all countries are going to implement, over similar time frames, projects in specific, highly specialised areas, largely relating to digitalisation and preparing for and mitigating climate change. This could lead to countries (and different levels of government within countries) competing for suppliers with sufficient technological capacity to carry out the projects, and to some capitalisation of the European funds by technology firms outside the EU, which would, in part, limit their positive domestic effects. In this context, coordination between countries and levels of government within each country can give the projects to be implemented greater economic stimulus and coherence, harnessing economies of scale and spillover effects between regions. 6  See I. Kataryniuk, V. Mora-Bajén and J. J. Pérez (2020), EU deepening and sovereign debt spreads: how relevant is the “political space”? Occasional Paper, Banco de España, forthcoming. 7  See P. García-Perea, A. Millaruelo, V. Mora-Bajén and M. Sánchez Carretero (2020), “The 2020 European Semester and the specific recommendations for Spain”, Economic Notes, Economic Bulletin, Banco de España (forthcoming). 7  The second source of uncertainty concerns the schedule for project implementation.
While Puerto Rico has a number of features that make it a potentially  2  The debt figures reported for the U.S. mainland states refer to debt held by the public and exclude debt held by government agencies. Most Puerto Rico debt is held by the public. 4  BIS central bankers’ speeches  strong economy, economic growth on the Island has been weak for almost a decade. To restore growth and raise living standards, it is critically important for policymakers to expand efforts to marshal the Island’s considerable strengths – a bilingual and well-educated adult population, an open economy occupying a central position in the Caribbean, a wide experience as a host to multinational corporations, and close ties to the U.S. mainland economy. While the challenges to restoring growth are clearly complex, I want to highlight some key areas where policies to support efficiency and growth might be strengthened. First, barriers to job creation and active participation in the labor market should be reduced. The current structure of labor market incentives could be examined to ensure that firms do not face significant hurdles in creating jobs and workers are not discouraged from entering the labor force. Second, policymakers should continue their efforts to create a more dynamic business environment, including the elimination of unnecessary costs of setting up and operating a business, particularly with respect to energy costs. Third, economic development efforts should consider a more proactive approach to utilizing the Island’s educated workforce and well-established higher education system.

I suggest that:   the draw-down rate assumed in the Basel 3 Liquidity Coverage Ratio should be higher for committed lines to financial companies than for lines to non-financial companies. That is, banks should hold more liquid assets against such exposures. Without a policy of that kind, there will be a strong incentive for maturity-transformation to be undertaken off bank balance sheets but with an umbilical cord back to the banking system. It should apply not only to vehicles used for securitisation but more generally. Money funds Money funds do not use committed lines of credit from banks. Claims on money funds have, in effect, become monetary assets in the hands of savers. In parts of the world, especially the US, they are treated like current accounts. Given the restrictions on their asset holdings, they resemble narrow banks, in mutual-fund clothing. But for a normal mutual fund, as an open-ended investment vehicle, the value of investments in it fluctuates with the value of the vehicle’s asset portfolio. By contrast, most money funds hold themselves out as offering par under any circumstances; when they “break the buck”, they must unwind. Their investors run at that prospect; and so the funds themselves are flighty investors. Compared to most types of shadow banking, money funds do not borrow – in the usual sense. But by promising par, they are in effect incurring debt-like obligations. And they can be exposed to leverage.