samchain/econo-pairs-v1 huggingface dataset:
The most significant requirements are expected to fall on the largest FBOs from advanced economies – some of which have also adopted tighter local requirements for foreign banks – and should contribute importantly to a safer and sounder U.S. and international financial system. Correspondent banking relationships have also received heightened attention in the context of serious violations of anti-money laundering and know-your-customer standards by some banks, and substantial fines. It is imperative to firmly deal with illegal, unsafe and unsound banking practices, including money laundering and transactions with U.S.-sanctioned countries. It is also important to be on the look-out for potential unintended consequences and externalities, such as widespread de-risking where correspondent bank access is shut off to compliant counter parties and to legal flows, economic costs are excessively increased, or flows migrate to avenues subject to less oversight or transparency. The scope, scale, and impact of de-risking need to be better understood. Dialogue between market participants and the official sector is ongoing, both multilaterally and bilaterally. Let me conclude. The U.S. economy and financial system have strengthened notably in recent years and in a mutually reinforcing way. U.S. monetary and regulatory policy both need to be tailored to domestic conditions. The Fed is also mindful of the international effects of its policies, given the central place of the U.S. in the global financial system, and the potential for spillbacks to the U.S. economy and financial system. Effective communication with market participants and policymakers is important.

We intend to maintain our policy of reinvesting the principal payments from maturing securities for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. Our policy of reinvesting is another instrument at our disposal. Regarding a change in interest rates, the ECB guaranteed that it will not take place until “through the summer of 2019". Does it mean until the end of next summer? At our last Governing Council meeting we said that we expect our key ECB interest rates to remain at their present levels at least through the summer of 2019. In any case, they will stay at their present levels for as long as necessary to ensure that the evolution of inflation remains aligned with our current expectations of a sustained adjustment path. Our enhanced forward guidance signals that we will remain patient in determining the timing of the first rate rise. The path of very short-term interest rates that is implicit in the term structure of money market interest rates is compatible with our intention of being patient. 2/4  BIS central bankers' speeches  Negative interest rates are one of the most controversial points within the ECB’s current monetary policy framework. Particularly for the banks. What do you have to say to them? You have to look at the whole package of measures that we have implemented.
Each will have tended to boost bank risk appetite above its socially optimal level. While satisfying the short-term demands of shareholders and managers, this structure has left many others short-changed. These distortions make a case for policy intervention. These interventions are best directed at incentives themselves. Otherwise risk-taking is likely to be simply displaced, rather than curbed, by reform efforts. (a) Higher equity capital Perhaps the most obvious means of tackling equity-led incentive problems would be simply to augment banks’ equity base. This would act on at least three of the underlying incentive frictions (Hellwig (2010), Admati et al (2010)). It would put more skin in the game for equityholders, thereby reducing their incentives to extract option value. It would reduce leverage directly, thereby reducing banks’ capacity to risk-up. And it would increase banks’ capacity to absorb loss, thereby reducing the probability of official intervention. Over the past few years, regulatory reform internationally has responded to those messages. Under so-called Basel III, the minimum equity capital ratio will quintuple over the next decade, rising from 2% to close to 10% of banks’ risk-weighted assets for the largest global banks. That is a material shift. The policy question is whether, while necessary, it is likely to prove sufficient. There is a genuine debate underway here. It is long overdue. For the better part of thirty years, the international regulatory community stuck, limpet-like, to a target bank capital ratio  10  BIS central bankers’ speeches  of 8%. That had no scientific basis whatsoever (Goodhart (2011)).

Although they are second in the risk-bearing queue, debt-holders as well as equity-holders would be expected to shoulder, and hence price, this balance sheet risk. This could be done either by raising its cost or by restricting its quantity. Either way, debt would then serve as a restraining device on riskhungry, rent-seeking shareholders. In theory, this debtor discipline mechanism ought to work like a dream. Under the assumptions of Modigliani and Miller (1963) (MM), the pricing of risk by debt-holders ought to neutralise fully any effect of increased leverage on the value of the firm. Provided  12  Anglo-Continental Guano Works v Bell (Surveyor of Taxes) (1894) 3 TC 239. 13  Farmer (Surveyor of Taxes) v Scottish North American Trust, Ltd (1912), AC 118. 14  For example, the introduction of a separate corporate tax schedule in the UK in 1965 led for a time to the double taxation of equity. 15  These investors account for perhaps half of the US equity market and two-thirds of the UK equity market. 6  BIS central bankers’ speeches  shareholders maximise firm value, and the world behaves according to MM, debtor discipline ought to defuse completely incentives to gear-up. Figure 3 illustrates the point diagrammatically, showing payoffs to debt and equity. They are a mirror-image. The downside risk avoided by equity is assumed by debt and vice-versa for upside returns. In principle, then, combining debt and equity would lead to offsetting payoffs, neutralising risk-taking incentives.
To make clearer in the regulation even the inclusion of yearend profit in the regulatory capital only after confirmation from the certified public accountant and by approval from the Audit Committee. It is proposed: to take into consideration both observations and submit a draft-decision for changing the regulation. Regulation “on capital adequacy” Observations: Classification of countries where reference is made to OECD member countries is a bit confused and another time, a list of 29 members is presented, while collateral in cash is not taken into consideration as a deductive element in the calculation of weighted risk assets. Concept of mortgaged credits that are weighted by 50 percent is very restrained and subject of confusion. It is proposed: to take into consideration the observations and submit a draft-decision for changing the regulation. Regulation “on market risk” It is proposed: to review it in the framework of new recommendations of Basel II. Focusing again on the problem of banking supervision I would like to underline that we, Bank of Albania as a supervisory institution, are determined to have at a possible maximum level a simple and easy supervision for being implemented, associated with a significant improvement of the on-site inspection. We shall intend that expectation and prevention power of our supervision gains new dimension. To this end we are in a process of finalising the negotiations with European partner institutions for launching a twinning project for the further consolidation of supervisory capacities of the Bank of Albania.

With the new Act, the SNB specifically bears the responsibility of overseeing the systemically important payment and securities settlement systems. The operators of such systems will in future have to meet certain minimum requirements, which will also include requirements with regard to information security. Secure and reliable information and communications structures are an essential precondition for the smooth functioning of the financial system. In the context of its mandate, the SNB limits itself to systems-relevant aspects in these areas. Systems-irrelevant problems concerning individual banks or payment systems, by contrast, are explicitly not a part of its mandate. This is based on the conviction that the problems in the financial system must be solved by the market itself whenever possible. BIS Review 32/2004  1
Do you believe Greece can manage without restructuring its debt, and how likely is it able to do without one? Let me first point out that I am saddened by the fact that this public discussion and market speculation is taking place because it is quite damaging to the euro area overall. As you know the Greek government at the moment is implementing a tough but appropriate programme of reform for the Greek economy. This programme was evaluated by the IMF and the European Commission, in liaison with the ECB. This evaluation has determined that the debt-deficit dynamics of Greece are indeed sustainable, as long as the programme is being successfully implemented. With this in mind, I am puzzled by the continuing questioning of the sustainability of the Greek debt. In my mind, restructuring of the Greek debt is not necessary as long as Greece continues to implement the programme that is in place. But more importantly, I believe that a restructuring of the Greek debt would be unwise. Under the circumstances, restructuring would be quite damaging to the Greek economy. In addition I believe it would be quite damaging to the euro area overall because of the possibility of contagion effects. Since restructuring is both undesirable and unnecessary I believe that it is not helpful for officials in the EU to keep bringing it up. Q. Even though officials continue saying that restructuring is undesirable, this does not appear to have convinced the markets.

By contrast, in some other member states in the euro area there have been explicit calculations about how much additional capital would need to be infused into banking systems in order to meet those requirements. This is testament to the very strong capital position of our banking system. Regarding steps to limit exposure by any of our banks to any sovereign holdings in the euro area, as part of the supervisory process of the Central Bank of Cyprus we demand that all of our banks have good risk management systems in place. Of course, we do not control the specific decisions on portfolio holdings of banks. Whenever we determine that there is undue concentration of risks then we demand that additional capital be held in order to account for these risks. This way we manage risks to the system. Q. Do you agree with an assessment recently made by Cypriot officials and the finance minister to be precise, that his hands are actually tied in terms of future ratings of the Republic if rating agencies continue to make a linkage between the economic fortunes of Greece and the economic fortunes of Cyprus, and do you think that this linkage is appropriate? In my view, all authorities must live up to their responsibilities. What we are experiencing in Cyprus over the past many months is a very unfortunate cycle of downgrades of the sovereign.
The estimates incorporated the price increases associated with Russia's invasion of Ukraine, with the knowledge we then had of how the conflict would unfold and its implications. While at the time inflation already appeared to be a global problem, it has since worsened, due to a protracted war, the spread of problems in international supply chains and transportation costs, and the effects of China's weak real estate sector and its zero Covid policy. On top of all this, there was further persistence in a context of significant inflationary surprises and heightened inflation expectations. Thus, we come to the end of the year with a sum of new shocks that were installed in our economy, which already exhibited important imbalances that needed to be corrected. During this period, financial markets have shown high volatility. At home, we have had to face it while immersed in a context of high uncertainty, which peaked in July. In that period, the local exchange market experienced important tensions in its price formation process, particularly in exchange rate derivatives. This led us to announce a foreign exchange intervention aimed at reducing the probability of significant distortions in the operation of other segments of the financial market. This year has not been easy, nor were the previous ones. In this challenging period, the Bank has continued to make progress in various areas.

17  Figure 15 MPR corridor (*) (quarterly average, percent)  13 12 11 10 9 8 7 6 5 4 3 2 1 0  Dec.22 corridor FTS EES Sep,22 corridor MPR  24.IV  24.III  24.II  24.I  23.IV  23.III  23.II  23.I  22.IV  22.III  22.II  22.I  21.IV  21.III  21.II  21.I  Forward  (*) The corridor is built by following the methodology described in Box V.1 in March 2020 MP Report and Box V.3 in March 2022 MP Report. For dtails, see methodological note (figure II.1 in chapter II of December 2022 MP Report). Source: Central Bank of Chile. Table 1 Domestic scenario  2021  2022 (f) Sep.22 MP Dec.22 MP Report Report  2023 (f) Sep.22 MP Dec.22 MP Report Report  2024 (f) Sep.22 MP Dec.22 MP Report Report  (annual change, percent) GDP Demanda interna Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Private consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal GFCF (% of GDP)  11.7 21.6 18.0 17.6 18.2 20.3 -1.5 31.3 -6.6 18.8 24.0  1.75-2.25 1.2 0.9 -3.3 2.2 1.4 1.3 -1.4 -6.3 18.9 23.5  (f) Forecast. Source: Central Bank of Chile.
Investors who thought they had purchased safe AAA-rated assets found that these assets were very vulnerable to a housing bust and that the ratings were unreliable predictors of the risk of loss. The poor performance of these securities, in turn, made investors much less willing to invest in structured-finance products more generally. Secondary market liquidity evaporated, which exacerbated the difficulty in valuing the securities. This made the market even less attractive, causing risk premia to widen further, which only worsened the valuation problems. As this process unfolded, the result was a virtual shutdown of the securitization market for residential mortgage assets not backed by the federal government directly (Ginnie Mae) or implicitly (Fannie Mae and Freddie Mac). The subprime and the Alt-A mortgage markets,  BIS Review 28/2009  1  which relied heavily on the securitization process dried up. Of course, this just reinforced the downward pressure on housing prices, which, in turn, led to increased delinquencies and foreclosures. This deterioration undermined the value of the securities further. It was a vicious feedback loop in action. The poor performance of highly-rated mortgage securities caused investors to begin to shun securitizations more generally. The shutdown of the securitization markets led to significant pressure on bank balance sheets. Banks could no longer securitize non-conforming mortgages or the collateralized loan obligations associated with leveraged buyouts and other private equity activity that they had financed. Moreover, bank backstop liquidity lines were triggered as SIVs and conduits could no longer issue asset-backed commercial paper.

Table 1 Main international scenario assumptions (yearly averages) 2009  2010 (f) Jun.10  2011 (f)  Sep.10  Jun.10  2012 (f)  Sep.10  Sep.10  World GDP at PPP (annual change, %)  -0,6  4,3  4,3  4,0  3,8  4,7  World GDP at market exchange rate (annual change, %)  -2,0  3,2  3,3  3,0  2,9  3,9  Trading partners' GDP (annual change, %)  -0,2  4,4  4,4  3,7  3,5  4,6  WTI oil price $  62  77  77  80  79  82  LME copper price $  234  300  320  270  290  290  Terms of trade (annual change, %)  4,1  14,3  15,0  -7,2  -4,3  0,5  External prices, in $ (annual change, %)  -6,2  3,4  4,6  3,3  2,3  4,7  (f) Forecast Source: Central Bank of Chile.
There is thus a need for decision-makers to put their uncertainty in a concrete form and the uncertainty should decline if the risks are identifiable and quantified. It is really only possible to quantify them with the aid of models. A decline in demand on the housing market and a fall in housing prices could – through negative effects on household wealth – have clearly negative effects on consumption. This subdues growth and employment and pushes down inflation. If one believes that the risk of such a scenario is affected by the level of the repo  8  See “Picking the Brains of MPC Members”, Mikael Apel, Carl Andreas Claussen and Petra Lennartsdotter, Sveriges Riksbank Working Paper Series No. 237, January 2010. 6  BIS Review 65/2010  rate, one must take this into account in the monetary policy decision. But the risk of a low repo rate increasing the probability of such a scenario must thus be weighed against the positive effects on employment it will lead to during the forecast period. The clearer we can be about how we assess these different risks – and take them into account in a systematic manner – the easier it will be for those outside the Riksbank to understand how the repo rate decision is affected by various factors. I cannot say exactly how probable it is that house prices will fall in Sweden. The only thing I can say today is that the rapid increase in lending to households creates certain risks.

BIS Review 23/2006  1  In the new global economy, the public sector must be active and innovative, and it must support its citizens and business community. By way of illustration, the National Bank of Poland, as part of its statutory tasks and in cooperation with its partners in the financial sector, has created a modern payment infrastructure for large-amount (the SORBNET system operated by NBP) and retail (the ELIXIR system operated by the National Clearing House — KIR S.A.) payment systems, thus ensuring provision of safe and efficient services related to settlement of both types of zloty payments. The scope of services for the banking sector was expanded in 2005 to include two new types of payment systems for settlement of eurodenominated (domestic and cross-border) transactions, namely: the SORBNET-EURO system, processing mainly large-amount (interbank and customer) payments, and the EuroELIXIR system, which provides cheaper and more rapid settlement of retail payments in euro. The SORBNET-EURO system facilitates transfers of payments to the TARGET system, thus ensuring real-time processing of cross-border payments between banks in Poland and those in the EU Member States. Apart from Poland, only three EU Member States outside the euro area (i.e. Denmark, Sweden and Great Britain) have introduced similar changes to the domestic payment system and ensured a link to the pan-European infrastructure. No other new EU Member State has implemented such changes to-date. The ELIXIR system, operated by KIR S.A., is one of the state-of-the-art payment systems in the European Union.
Jaime Caruana: What next for Basel? Remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the Seventh Annual Supervision Conference of the British Bankers Association, London, 9 October 2003. *  *  *  Introduction  Mr. Mullen, distinguished guests, and members of the British Bankers Association, it is an honour for me to address you this morning as the new chairman of the Basel Committee on Banking Supervision. This conference, the seventh to date, encourages a healthy exchange of ideas between bankers and supervisors on ways to promote safety and soundness in the banking sector. Today’s agenda offers a timely focus on the development of regulatory policy on several levels – on a national level through the mission of the Financial Services Authority, on a European level through the directives of the European Union, and, of course, on a global level through the standards adopted by the Basel Committee. It seems appropriate to think about banking and supervision on national, regional and global levels. Enhancements in telecommunications, continued expansion in trading relationships, and the increasing interdependence of markets make it difficult to view banking on a purely local or even domestic level. Bankers are no strangers to the global economy, having underwritten letters of credit to exporters and merchants almost since the first trading vessels plied the rivers and seas. However, it seems fair to say that the pace of globalisation and innovation has accelerated dramatically in recent years.

How much lower would unemployment have been with a more expansionary monetary policy? Let us assume that inflation would have been 1 percentage point higher and thus been closer to the target now. According to an empirical estimation using Swedish data, a 1 percentage point higher inflation rate leads to around 1.3 percentage points lower unemployment, corresponding to around 65,000 fewer unemployed.27 This could perhaps give rise to 4 per cent higher housing prices, according to the results from Claussen, Jonsson and Lagerwall (2011).28 Would this have increased the risks in household debt so much that it would nevertheless be better to have 65,000 more unemployed?29 Not as far as I can see. Positive with an open debate As I have discussed, much of the debate conducted has been based on the differences in opinion regarding whether household debt entails risks to financial stability and the macro economy, whether monetary policy is a suitable means for influencing household debt and whether it is worth holding back inflation and keeping unemployment up to reduce the risks of indebtedness. As according to extensive research in the field, monetary policy has little effect on household debt but large, negative consequences in the form of low inflation and high unemployment and there are more effective means that are already used, I draw the conclusion that monetary policy should not be used to try to influence debt.