samchain/econo-pairs-v1 huggingface dataset:
Policymakers face difficult choices in managing problem bank restructurings, and there is a great need for creativity in devising solutions. Third, crisis situations cry out for solutions to be adopted quickly to stem further deterioration. At the same time, however, solutions adopted in the short term need to account for the long-term consequences for market efficiency, particularly with respect to moral hazard. The highest priority at the outset of a crisis is usually to restore confidence in the banking system. To this end, authorities in a number of countries have implemented guarantees of bank deposits or broader bank liabilities, in some cases both domestic and foreign, followed by concrete actions to make deposit insurance schemes more explicit and bolster the insurance fund. To minimize the moral hazard implications of such arrangements, however, it is critical that guarantees be established for a defined transitional period, and that supervision of financial institutions simultaneously be stepped up. Issues of moral hazard also need to be considered in authorities’ actions in cases of financial institution insolvency. Supervisors have adopted varying approaches to insolvent institutions, including mergers, purchases and assumptions, nationalization, and liquidation. While the authorities should have a general bias toward writing-off existing shareholders and removing management and directors of troubled institutions, such actions may need to be balanced against arguments that current owners and management may be best positioned to achieve an effective work-out.

First, the need for further convergence in real and nominal terms, second, the need to advance on the compliance with the Treaty in the field of central bank and other relevant legislation and, third, the need to strengthen the financial and banking sectors. In addition, I would like to finish my presentation by briefly recalling how the entry of new Member States into the euro area is likely to impact the monetary policy of the ECB. Advancing convergence in real and nominal terms Advancing real and nominal convergence with the euro area in a parallel manner should take top place on the agendas of accession countries' policy-makers. This means that the need to catch-up with the EU in terms of both the real economy structures and income levels and the need to advance disinflation should be pursued as a "dual track". Let me explain why I like to stress the need for this parallelism. Very often, higher inflation rates in accession countries have been partly explained by their need to catch-up with the real income and price levels prevailing in the euro area. This empirical phenomenon has been observed in many fast-growing economies and is often referred to as the BalassaSamuelson effect. Although the magnitude of this effect and, thus, its impact on inflation is difficult to quantify, most empirical studies for the accession countries have estimated it at around 1 to 3 percentage points of inflation. For monetary policy, this has a double meaning.
A number of actions have already been completed to enable the targets, currently being consulted on by the FSB, to be met.11 The importance of progress in this area was highlighted in the recent G7 Communique.12 The improvements we are making to RTGS, will help us to deliver key elements of the FSB roadmap. Key elements include the implementation of APIs, the capability to extend operating hours, synchronisation and our first key milestone of the implementation of the emerging global standard for financial messaging in payments ISO 20022. Future proofing the payments infrastructure Innovation is crucial to the future payments landscape. It is not a single act: it needs to be continuous. We are building a renewed RTGS service as a modular flexible platform so we can introduce new features in an agile flexible way with less cost and less risk, to enable us to respond more quickly to market changes and continued innovation in payment technologies. We 5/6  BIS central bankers' speeches  already plan further enhancements following the replacement of the new our core ledger in September 2023. This will include the ability to connect via multiple message networks, additional APIs, consideration of extended operating hours and synchronisation functionality. It will also include improved contingency functionality to enhance resilience. These ideas have been developed in conjunction with industry, and we will be consulting later this year to help to prioritise the enhancements. I encourage you to actively participate in this consultation and to help shape the next phase.

Changes in the compensation instrument can also help – for example, remunerating in equity is better than in cash and remunerating in junior or convertible debt might be better than either.29  (d)  Taxation/Subsidies: Authors have suggested a variety of ways in which government could penalise short-duration holdings of securities, or incentivise longduration holdings, using tax and / or subsidy measures. These measures differ in detail, but the underlying principle is to link them to the duration of an investor’s holdings or the length or nature of a company’s investment.30  Some of these initiatives have been tried and tested in differing degrees, at different times and in different countries. They have not obviously arrested the short-termism trend. It might be time to increase the level of policy ambition if the telescope is to be corrected, the voting  26  Aspen Institute (2009), CFA (2006). 27  Duruigbo (2011). 28  Securities and Exchange Commission (2010), Aspen Institute (2009). 29  Haldane (2011). 30  Aspen Institute (op.cit. ), Poterba and Summers (1995). BIS central bankers’ speeches  13  machine socialised, the savage civilised. Public policy could help keep the plums in the pudding. Without intervention, the long could become shorter still. References Aspen Institute (2009), “Overcoming Short-termism: A Call for a More Responsible Approach to Investment and Business Management”, The Aspen Institute Business and Society Program, September 9. Barton, D (2011), “Capitalism for the Long Term”, Harvard Business Review, March.
No one can seriously argue that the financial reforms have, up to now, restricted the credit supply, and hence growth, in France. At the same time, it should be stressed that the French banking system – one of the most resilient in Europe and the world – has fulfilled its role in financing the economy. Beyond the French banking sector, the Financial Stability Board has also noted an improvement in the resilience of all financial institutions at global level, with no decline in the provision of financing to the real economy.13 I’d just like to say a few words on what seems to me to be a false debate. Although the recovery has indeed been slower in Europe than in other geographical regions, this cannot be attributed to overregulation. The scale of the euro area’s difficulties can in part be explained by the fall-out from the debt crisis which has affected its members since the start of the 2010s. In addition, certain more specifically European or French problems, such as the slowdown in productivity or the lack of sufficient structural reforms, are also limiting the acceleration in growth. Lastly, for the time being at least, the regulations have, on the whole, been applied at least to the same extent in the United States as in Europe. III. Five challenges for a balanced regulatory framework That said, I will be careful not to be utopian about these new regulations.

First, progress must continue on the “resolution” of central counterparties – their treatment in the event of difficulties –, as they have become systemically more important with compulsory centralised clearing for derivative instruments. Above all, we must ensure a balance between financing channels. All discussions on the shadow banking system must continue in order to take account of the risks that may have moved into this sector as a result of the ramping up of requirements in the regulated sector, and for banks and insurers in particular. It has been estimated that the segments that may pose financial stability risks represented a total of USD 34 trillion.14 The priority has now shifted from the solvency of banks, which has improved substantially, to the liquidity of the shadow banking sector, particularly funds and asset management companies that are exposed to the risks of sudden panic-driven runs. Lastly, progress is required on FinTechs and above all on the major digital platforms and businesses, which, if they carry out financial activities, will have to comply with similar regulations sooner or later. 3) The third challenge is evaluation. Evaluation is essential to the credibility of the financial reforms that have been adopted worldwide, and to this end, the G20 adopted a postimplementation evaluation framework this summer. This framework should allow us to determine whether the reforms have actually achieved their desired results, without any unexpected, adverse effects, and to make adjustments if this is not the case.
Such a promise is by its nature non-credible – you know you’re going to be tempted to break it – and is therefore likely to be ineffective unless there’s a mechanism for keeping you to it. (Even if that were possible elsewhere, I think the hurdle to  such commitments is higher in this country, given the MPC’s one-person, one-vote decisionmaking.) This helps to explain why, in practice, central banks have made such commitments only rarely, even when the most pressing problem was the threat of low inflation. There is obviously even less of a case for it today. Yet my impression has been that, even when central banks attempt to engage in more standard, conditional statements about future policy, they can be sometimes mistaken for firmer commitments than they really are. The potential cost is that forward interest rates, and monetary conditions more generally, become over-dependent on central bank communication and insufficiently sensitive to economic news. Clearly the central bank has an obligation to set out its view of the economic outlook, not least to explain the stance of policy today (as distinct from what might happen to it tomorrow). That’s because it takes time for policy to work and today’s decision can therefore only be taken in the light of some distribution of possible economic outcomes in the future (i.e. a forecast).

If the central bank feels obliged to “pre-announce” a policy path in advance this could compromise its ability to stabilise demand and inflation  Results from a simulation of a small macroeconomic model under alternative assumptions about monetary policy and the average distance to the lower bound. Macroeconomic volatility is measured using a simple “loss function” that weights the variance of inflation and the output gap. The y-axis shows the square root of the loss function, scaled to 1 for the case of commitment policy with an average distance to the lower bound of 5pp. Sources: See Appendix for further details. Conclusion It would be nice if interest rates were more predictable. In fact, it would be nice if everything was more predictable. But many things, including stuff that might otherwise disturb inflation over the medium term, are not. And because it’s the job of monetary policy to respond to such things, interest rates are also unpredictable. There are particular circumstances in which committing more unambiguously to a future path of interest rates can be an advantage. If there’s a risk of deflation but the policy rate is stuck at the lower bound, and QE is for some reason thought to be ineffective, a declaration that policy will remain accommodative, even in the event of more inflationary pressure in the future, can in principle stimulate demand today. But even when such a commitment is believed, the effects are probably smaller than simple economic models tend to assume.
Fortunately, Argentina proved to be the only country where price indices using the new scraping technology  BIS central bankers’ speeches  5  situation in Norway in the 1950s, when the government subsidised some goods in the index to avoid automatic wage increases.22 The monetary system has also become more intricate along another dimension. Today, cash accounts for only 5 percent of the money supply. Payments are primarily made using deposit money, which involves electronic signals created by the banks themselves, via cards, mobile phones or online payments.23 Millions of transactions between individuals, companies and banks take place every day. These payments are settled at Norges Bank four times daily by transferring money between banks’ accounts in Norges Bank. Norges Bank does not regulate the issuance of deposit money directly. By setting the interest rate on banks’ sight deposits with Norges Bank and by securing settlements between the banks, the central bank is nevertheless the fundament of a vast and complex payment system.24 The central bank/Norges Bank History has shown that monarchs are not always to be trusted to safeguard the monetary system.25 An institutional solution is to delegate the task of issuing money to a central bank and shield it from the authorities’ temptation to focus on short-term interests.26  were systematically on a much higher level than the official inflation figures. Thus, it appears that in today’s open societies, it is difficult to conceal true developments.

I would like to speak about the role institutions can play in the economic advancement of a nation and use the central bank as an example.1 My co-speakers will view the issue from different perspectives and the ensuing debate will bring forth yet further aspects.2 Good institutions provide sound frameworks that increase confidence and promote economic progress. This is so in relation to minor, everyday situations as well as to major life choices. At the fishmonger’s, the Norwegian Metrology Service ensures that you pay for the actual weight of your cod fillet. When you buy a home, clarity about ownership and encumbrances is ensured by the land register.3 The Norwegian Industrial Property Office grants patents so that entrepreneurs can make profits on their innovations. In the absence of such institutions, each of us would have had to spend more time on taking precautions and fewer investments would have been profitable.4  1  Among the many who have shed light on the role of institutions from this perspective is Douglass C. North, a 1993 Nobel laureate in economics together with Robert W. Vogel. In his work, he refers to institutions as: “Institutions are the rules of the game of a society and in consequence provide the framework of incentives that shape economic, political, and social organization. Institutions are composed of formal rules (laws, constitutions, rules), informal constraints (conventions, codes of conduct, norms of behaviour), and the effectiveness of their enforcement.
In the years leading up to the start of the crisis there was a dearth of prudential supervision, but I am quite prepared to acknowledge that there have been periods where the opposite has been true. My point here is that I don’t think the system of integrated regulation demonstrated the ability to deliver a stable equilibrium of conduct and prudential supervision. Third, there was something of an inbuilt tendency within integrated regulation to play down the active debate of issues where conduct and prudential regulators found themselves with potentially conflicting objectives. There are several important reasons why reform of financial regulation will in my view be an important step forward. It starts with establishing very clear public policy objectives for financial regulation to which we, as the regulators, are fully committed. For both banks and insurance companies, the PRA will have the objective of promoting the safety and soundness of firms. Consistent with this objective, it will focus on the potential harm that firms can cause to the stability of the financial system in the UK. We define a stable financial system as one that is resilient in providing the critical financial services that the economy needs. And this supply of services is a necessary condition for a healthy and  2  BIS central bankers’ speeches  successful economy, as demonstrated by the costs imposed by the financial crisis on the public and society at large.

The relations and cooperation of the CBRT in the international scene go well beyond our bilateral dialogue with your esteemed Bank and cover also the financial level (swap agreements signed with certain countries), as well as the educational level (the establishment of an international central banking research facility and regional training centre, the İstanbul School of Central Banking). BIS central bankers’ speeches  1  I would like to thank the Bundesbank for opening a Representative Office in İstanbul, for signing the MoU agreement and for all the support and assistance you have provided us in diverse fields and at various platforms. Closing my remarks, I would like to welcome my friend and colleague, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank, and thank him for his tremendous efforts in bringing this project to life. Now let us celebrate our achievements. Thank you for your attention. 2  BIS central bankers’ speeches
Having never previously been this low, it is inevitably uncertain how the economy will respond when interest rates do begin to rise. Various surveys have sought to shed light on how UK homeowners may fare. For example, the Bank’s NMG survey from 2012 found that a one percentage point rise in interest rates could result in almost half a million households with a mortgage needing to take corrective measures. This rises to a million households for a two percentage point rise. A more timely guide may come from recent US experience. In the middle of last year, longterm US interest rates rose by around one percentage point on the expectation of a tapering in US monetary policy – the so-called “taper tantrum”. This had a striking impact on the US housing market, with housing sales 7% lower than a year ago and residential investment falling in each of the last few quarters. This raises the possibility of borrowers reacting more sharply to rate rises now than in the past. Hence the enigma. Tackling uncertainty Although it is a touch depressing that our knowledge of the economy is this imperfect, the Bank is making a renewed investment in research and data which will, over time, hopefully help to reduce these uncertainties. Back in 1987, Michael Fish famously failed to forewarn about an incoming storm, which then caused havoc in parts of Southern England. The finger of blame was pointed squarely at the UK Meteorological Office.

The way you will monitor and communicate information to the public is very important. In this context, I would like to underline that the Bank of Albania shall be very open to assist. To this aim, we have recently made the Bank communication office functional, thereby meeting one of short-term FSAP recommendations. I avail myself to this occasion to stress that our immediate plans are to provide a more contemporary communication approach, in particular in the context of preparing and launching educational and training packages, targeting different interest groups. From the moment we were acknowledged to FSAP recommendations, our institution started listing them by priority and by institutional right. As also monitored by you, we broadly discussed in the Forum organized in the first days of December the issue of establishing a Monetary Policy Committee. With regard to banking market developments, the Bank of Albania sticks to its engagements to augmenting the opportunities of commercial banks in the securities market. In more concrete terms, starting from September the Bank of Albania charged a fee for the operations carried out in its windows, and in early December the two-level securities register was placed into function. Pursuant to FSAP recommendation and with a view to enhancing daily liquidity management, the intra-credit regulatory basis was amended. The new bill “On Banks in the Republic of Albania” is complete and ready to be presented to banks for discussion.
BIS central bankers’ speeches  3  Banks play a key role in the payments system and channel credit from savers to investors. If the flow of credit dries up, problems will rapidly spread through the entire economy, as witnessed during the latest financial crisis. This is why the authorities ultimately intervene in support of failing banks. This happened during the Christiania crash – and it has occurred many times since then, both in Norway and other countries. It may be necessary to provide support to banks in distress, but it comes with a major drawback: Banks will expect support also in the future. The phenomenon is called moral hazard. Although this is not about morals, but about incentives. The banks’ creditors are induced to charge low interest rates on loans to banks. This leads to underpricing of risk, which may in turn lead to excessive risk-taking in the banking sector. The problem must be solved down to its roots. No bank should be promised life eternal. A new regulatory framework for the recovery and resolution of banks is underway. All banks must have a plan for orderly resolution. It must be possible to allocate banks’ losses to both owners and creditors, while core banking services continue. For a market to function properly, there must be scope for new entrants and for the closure of loss-making companies. This also applies to financial markets. The banking sector is characterised by large entities and complex products. Banking regulation is also complex and rich in detail.

When China became a member of the World Trade Organization in 2001, its foreign trade was 30 percent of that of the US. The Chinese economy has since grown at an unprecedented pace. In 2013, China overtook the US as the world’s largest trading nation. Ample labour supply and low cost levels have given China and the other emerging economies of Asia strong competitive advantages in international markets. BIS central bankers’ speeches  1  The global flow of credit over the past 15 years has taken an untraditional direction – from relatively poor countries with strong economic growth to more prosperous, mature economies experiencing lower growth. For a long period, this shift contributed to substantial imbalances in the global economy. Ample supply of credit in western economies pushed down borrowing rates. Facing competition from Asia, it became relatively less profitable for firms in the west to invest in new productive capacity in their home countries. Instead, cheap credit was widely used to finance consumption and housing, particularly in the US and Europe. Banks and financial institutions were, in practice, free to fuel credit growth. In retrospect, it is clear that a vast amount of capital was squandered. Many businesses and a number of countries are struggling with high debt levels. Governments that ran economies on cheap credit are now paying a high price in the form of austerity measures and unemployment. In parts of Europe, unfinished infrastructure and empty buildings are not uncommon sights.