samchain/econo-pairs-v1 huggingface dataset:
9  Bernanke (2010) shows that Fed policy rates do not seem excessively low given real-time FOMC forecasts. 10  See Del Negro and Otrok (2007), Jarocinski and Smets (2008), Edge, Kiley, and Laforte (2008), and Iacoviello and Neri (2008). 11  See Nyberg (2010) for similar arguments. BIS Review 16/2010  3  (although they could have ended the Great Moderation with a deep recession and deflation). 12 However, going beyond the Fed’s actual monetary policy, perhaps it is possible that the Fed’s emphasis on its readiness to relax monetary policy aggressively in the wake of a sharp fall in asset prices, as expressed by Greenspan (2002) for example, may have induced expectations of a floor under future asset prices and contributed to the asset-price boom, the so-called Greenspan put (Miller, Weller and Zhang, 2002). Arguably, this is more of a communication issue than one of actual policy, and less emphasis on the readiness to clean up after a sharp fall in asset prices might have been a preferable alternative. The International Monetary Fund (2009, Chapter 3) has investigated the role of monetary policy in causing financial crises. A large number of countries and financial crises were included in the sample.

Swedish participation should wait until these reforms had been implemented and unemployment had fallen. For similar reasons, the weak public finances might also heighten the risks associated with Swedish membership. In the ensuing debate, the stabilisation policy argument against EMU participation came to be called the insurance argument. By retaining a national monetary policy, Sweden could insure itself against the potentially major negative effects of a macroeconomic shock. At the same time, the report pointed out that participation in the monetary union could confer benefits from a more stable exchange rate. But the authors did not believe that such benefits would outweigh the advantages of retaining a national monetary policy. The Riksbank’s opinion The Riksbank did not agree with the report in every respect. The Governing Board considered, for instance, that it exaggerated the risks of an external shock hitting the Swedish economy alone. The Board noted that to a large extent the shocks in Sweden since the 1970s could be said to have been self-inflicted. The divergent cyclical pattern probably had to do with the direction of economic policy, where strong fiscal stimuli and repeated devaluations had generated high inflation and problems with costs. The Board also stated that the report exaggerated policy’s freedom of action in reality in an outsider position: it would not be possible for Sweden to implement a monetary policy that differed markedly from that in the monetary union.
As some of you here have experienced in person, the General Board usually has over 70 members seated around the table, most of them central bank governors or heads of national supervisory authorities. Such a crowd around a meeting table could have been a practical nightmare and an impediment to efficient decision-making. But so far it actually works. We have had candid and open discussions in this composition and we have been fully capable of taking decisions. As I touched upon earlier, we may not always unanimously agree on everything, not even after many iterations between the parties involved and at different levels. Such processes may indeed require a bit of patience, especially when a new process is being established. But in the end the arguments from all sides have been heard and when we need to make decisions in the General Board, ultimately we simply vote. Legally, the ESRB is an independent EU body tasked with macroprudential oversight of the EU financial system and the prevention and mitigation of systemic risk. It is chaired by the President of the ECB. The ESRB has no binding powers but has “soft tools”. To fulfill its mandate, the ESRB identifies, monitors and assesses potential systemic risks and, where appropriate, issues so called warnings, or recommendations to mitigate such risks according to the principle “comply or explain”. This principle simply says that either you do as recommended or you explain why you have chosen not to.

The ESRB also has a formal role in the CRR/CRD, among other things through opining on some national macroprudential measures. A macroprudential framework extending beyond the banking sector But the ESRB’s macroprudential mandate extends beyond the banking sector, and not every spot on the map over the financial system is as well-known and covered from a macroprudential viewpoint as the EU banks in the remit of the CRR/CRD. The financial landscape is constantly evolving and subsequently the potential sources of systemic risks. One aspect reflecting this is that the share of credit provided by other financial institutions than banks has grown over the past few years. Hence, after making the macroprudential framework for the EU banking sector operational, targeting the parts of the map where we find the non-bank financial institutions, and working on how to provide a holistic view regarding all parts of the financial system, is a natural and important next step. The ESRB recently published a strategy paper on macroprudential policy “beyond banking”, which complements the guidance already provided on the policy framework for the banking sector. That strategy paper is meant to provide a point of reference as we now move on to further enhance the macroprudential policy strategy, regulatory data and instruments for addressing risks in non-bank financial sectors. I should mention that other work related to non-bank financial institutions has also been conducted, where the recently published annual ESRB Shadow Banking Monitor will hopefully provide important insights.
Goh Chok Tong: Riding the Asian tide Speech Mr Goh Chok Tong, Senior Minister and Chairman of the Monetary Authority of Singapore, at the Nomura Singapore Seminar, Tokyo, 8 November 2005. *  *  *  Dr Junichi Ujiie, President of Nomura Securities Ladies and Gentlemen 1. Nowadays, it is popular to focus on the awesome transformation of China and its implications when discussing Asia. But doing so risks missing the dramatic changes in another key player - India. My theme is simple: the renaissance of China and India is changing Asia. Other countries in Asia, and in fact the world, will have to remake themselves to seize the opportunities generated by their rise. 2. I expect China and India to power Asia's growth over the next few decades. China's GDP today is one-seventh that of the US. But Goldman Sachs has predicted that China could overtake the US to become the world's largest economy by 2041. Goldman Sachs has also predicted that India's economy, currently about one-seventh of Japan's, could be larger than Japan's by 2032. Never before in history have we witnessed the simultaneous rise of two gigantic countries, which together make up more than one third of mankind. 3. China and India are altering global patterns of trade, investment, production and travel. Because of their sheer size, the earth shakes as the Chinese dragon and the Indian elephant move. 4. What do we do in the face of these developments?

The winning team develops skills – in analysis, presentations and teamwork – that will help them in their future studies and careers in the knowledge economy. BIS Review 18/2010  5  The New York Fed is also supporting the Office of the Commissioner of Financial Institutions in its two-week expo, where last year 20,000 people saw presentations and received financial counseling. We have also had a productive relationship with our good friends at the Puerto Rico Bankers Association. Each year during “Community Reinvestment Act Week,” our staff highlights new ideas and products especially suited to the Puerto Rican market. For example, this November we held a forum for Puerto Rican and U.S. Virgin Islands financial institutions, state and local governments, and nonprofit organizations to introduce “Bank On,” a financial product proven to attract under-banked people into the financial mainstream. Since then, several local banks have formed a group to explore how to best implement it here. Another example of collaboration is our work with the Bankers Association and local universities. During the fall, we held a “Financial Awareness Video Contest” for college students. This pilot project explores building peer-to-peer financial awareness among young adults by having contestants create a 90-second video. We look forward to hosting the first place winners during their trip to New York in the spring.
Experience has taught us that the price of shares and other assets is an important part of the dynamics of economic growth. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an Argus eye on the development of the stock market and reflect on how the financial system functions. Another reason is the oversight of financial stability. Today, I would like to confine my brief remarks to some aspects that have to do with the fact that shares now weigh considerably more heavily in household portfolios than was the case thirty years ago. What are the implications of this trend? Increased interest in stock market investment In recent decades the financial system in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks’ traditional lending and deposit operations. The general public’s heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households’ financial assets in many countries.

That is something that we may review next year in line with the process of deregulation already referred to. In the meantime, this need not be a barrier to setting up virtual banks, either by converting existing local franchises or, in the case of an overseas bank, by setting up a branch in Hong Kong. As proof of this, we are currently considering two applications to set up virtual banks, and assuming that they can meet our authorisation requirements, I hope that these can be in operation quite soon. One of the main tests that these applicants will have to satisfy is that they have adequate security to prevent unauthorised access to their systems and to protect customer information. Weak internet security puts the financial position and the reputation of the bank at risk, and concerns about security are the major barrier to more widespread customer acceptance of e-banking. It is essential therefore that the banks get this right. We have tried to help by issuing guidelines to the banks on various aspects of security, including the need for senior management to commission periodic independent assessments of the security aspects of their e-banking services. We have recently provided further guidance on how such assessments should be conducted and the areas they should cover. However, we also need to be in a position to conduct meaningful on-site examinations of our own.
This adjustment also involved the creation of the strategic- and technological-risk Department. Technology. A technological observatory was created intended to act as catalyst for enhancing knowledge and adopting important innovations for the CBC’s fulfillment of its functions. The main objectives of the observatory are: (i) to agree on common principles and contribute, inside the CBC, to the coordination of the treatment of disruptive technologies, (ii) create networks with the external community to enhance know-how and identify opportunities and threats, and (iii) agree on the pillars of innovation to promote and contribute to knowledge in those areas. The pillars of interest that have been defined include: digital currencies of central banks, cryptoassets and financial stability, development of digital payments and technology of distributed records and their applications, technology and data management, cybersecurity and risks for the financial system, among other issues. Employer of excellence. We have been working on strengthening the organizational culture and improving the value proposition for our staff in order to achieve effectiveness in attracting and retaining employees and developing their careers. To strengthen the internal career, we are developing an exercise to improve job description and assessment. Hand in hand with the strategic initiatives just defined, the CBC has continued with its projects linked to the fulfillment of its permanent functions.

The appropriate monetary policy response to this scenario depends largely on the magnitude and relative persistence of these shocks and their impact on inflation expectations. In any case, the Chilean economy has an economic policy framework that allows it to absorb external shocks and reduce their negative effects, particularly a flexible exchange rate and a monetary policy regime that, being based on a two-year inflation target, can act countercyclically. In the current external picture, those economies perceived as having weaker macroeconomic fundamentals may undergo abrupt changes in the financial conditions they face. The recent experience of Argentina and Turkey are good examples of this. In particular, the currencies of these countries have lost more than a third of their value in the last month and a half. Both economies share high inflation, monetary policy making with less credible targets, in a still highly dollarized economy and a fragile external position, resulting from a high currentaccount deficit and limited reserves. One Argentina-specific vulnerability is its high fiscal deficit at 6% of GDP in 2017, which is difficult to contain with a public debt denominated in dollars that exceeds 30% of GDP and whose service becomes complex in the current circumstances. Turkey, for its part, became highly dependent on external financing to sustain growth above its potential for several years. By 2019, the overall Turkish economy’s needs are estimated to approach 30% of GDP. 6  In Chile, the biggest reaction has come from the nominal exchange rate, while long-term interest rates have not been affected.
In this connection, it should be noted that a large part of the adjustment in banks’ earnings in the first half of this year is due to the provisions made in advance for credit impairment  6  that has still not materialised, but will do so in the coming quarters. Specifically, Spanish banks have set aside almost double the amount of provisions they recorded in the same period of last year. This has significantly reduced their profitability, but it has also raised their capacity to absorb credit impairment, something that is particularly highly valued by investors in these circumstances. The message I wish to convey is that banks should persist with this early recognition policy, as it will subsequently facilitate their ability to continue to perform their function of providing financing to the economy. In short, especially if the crisis proves to be prolonged, banks must ensure proper and timely recognition of effective impairment of the quality of their credit exposures through compliance with supervisory guidelines. Global banking regulation  Fourth, I would like to reflect on global banking regulation. As I mentioned earlier, the Basel reforms phased in over the last decade have attempted to incorporate into regulation the lessons learned during the global financial crisis. The first phase of the Basel reforms began in 2010 and was completed through a second wave of changes published in 2017. The initial phase was aimed at raising the level and improving the quality of banks’ microprudential regulatory capital.

EU Member States should also make swift progress towards an agreement to create a common European procedure for the administrative winding-up of credit institutions. This procedure would benefit from the instruments developed for the resolution of credit institutions, aiming to maximise the realisable value of the financial assets that make up the bulk of banks’ balance sheets. In Spain, recent experience has shown how inefficient the existing insolvency proceedings for credit institutions are in terms both of timelines and recovery in value. It would, therefore, be desirable for progress to be made in determining an administrative mechanism for winding up credit institutions that maximises the preservation of value and reduces both the timelines and the costs of the existing insolvency proceedings. Conclusion To sum up, our duty, as economic and supervisory authorities, is to continue our close monitoring of financial institutions and markets, to ensure that they continue to provide the necessary flow of credit to the economy, and of financial stability risks stemming from this crisis. We must continue to adopt measures to mitigate those risks and, naturally, stand ready to provide an appropriate European response should such risks materialise. Thank you for your attention. 10
While other measures, including the new PEPP, must exercise great flexibility in targeting the more temporary, and even unpredictable, consequences of the crisis itself, it is only by using and combining them all that we can properly cover the entire court. Our “baseline game” instruments Prior to the crisis, a very accommodative monetary policy stance was already needed and to ensure its implementation we had what I often called a quartet of – from hereon in – “quasiconventional” instruments. First, in September 2019, we amended our use of negative rates with a tiering system to mitigate their adverse impacts on bank intermediation. I see no reason to change these rates now. Meanwhile, asset purchases, in operation since mid-2014, reached a total of EUR 2,800 billion in April 2020 and will continue at a monthly average pace of more than EUR 30 billion. Let’s be clear: the PSPP for sovereign bonds is and continues to be, following the Karlsruhe judgement, a powerful tool in terms of volume for maintaining an accommodative monetary policy and containing the medium and long-term risk-free rate. Consequently, the principle of proportionality is ensured by its very predictability and strict compliance with country capital allocation keys and issuer limits. We reinforced the supply of liquidity through Targeted Longer-Term Refinancing Operations (TLTROs), and expanded the range of eligible collateral.

On 14 April, the Banco de España approved the strategies and timeframes submitted by these 13 institutions. Two of them were the subsidiaries of foreign banks that are being recapitalised by their parents. A further two Spanish banks opted to reinforce their capital by tapping the market. Of the remaining institutions, namely nine savings banks or groups of savings banks. four opted as a primary alternative to increase their capital resorting to the markets, and, as a second option, resorting to the FROB. Another savings bank decided to participate in an integration process with a better capitalised institution. Finally, the remaining four savings banks that had to increase their capital to meet the new requirements chose the FROB as their primary option. The institutions opting to tap the markets, whether through IPOs or through private investors taking a stake in their capital, are currently immersed in the process associated with this strategy. In the case of savings banks that have resorted to the FROB to recapitalise, the business and recapitalisation plans are being analysed, and the valuation of these institutions by independent experts is under way. Accordingly, the entire process is moving ahead as scheduled in the legislation, which stipulates that the new requirements shall be met by 30 September this year, although institutions opting for private investment may apply for a three-month extension, extendible to six months in the case of market listings.
I hope that the Financial Stability Board Working Group on the Crisis Management Principles will not hesitate to report back to the FSB, and through it to alert G20 Ministers, if implementation is or looks to be stalling – whether because it is meeting with resistance from the authorities or the industry, or blockages in national laws and practices. 8  BIS Review 83/2009  Concluding comment This crisis has reminded a generation of some old truths. Banks can fail. But they matter enormously to our economies, and so the authorities cannot afford to stand back and allow disorderly systemic failure. Going forward, we cannot have a regime where the upside for risk-taking goes to shareholders and management, but the downside falls to the general taxpayer. All three elements of the Social Contract for banking need to be reformed. Better regulation and supervision, including a macroprudential element. Better arrangements for liquidity insurance, which the Bank has tried to introduce alongside our international peers. And, my main topic today, a new regime for resolving bank distress. In particular, banks must structure and run themselves to permit orderly wind down. And they must invest to provide the authorities with the information they need to do so. This will not be easy. And it will not be cheap. Together with higher capital and liquidity requirements – lower leverage and reduced maturity transformations – over time it may well mean a lower headline return on equity for some banks.

So far as I can see, nothing much was done, internationally. We now have another chance. A new round of work is now underway in the BCBS to identify impediments or complications arising from national insolvency laws, resolution regimes, or supervisory practices. I would be amazed if that group does not identify some material issues, for the reasons I have discussed. If so, they should not be dismissed by the Top Brass, left to worry only middle-ranking technocrats, as seems to have happened nearly twenty years ago. Perhaps most important, in April, the Financial Stability Forum (now renamed the Financial Stability Board) issued Principles for Cross-Border Co-operation on Crisis Management. But what really matters is that they were endorsed by the G20 Heads of Government at their subsequent Summit. Which means that there is political endorsement for national authorities to dilute their narrow attachment to local interests, recognising that in globalised markets their interests will often best be served through co-operative solutions. Either that, or the structure of international banking may have to change. Given the starting point, the Principles are demanding. For each of the most important global banks, the aim is that home and host authorities (regulators and central banks) should work together to identify obstacles to effective management of crises. To that end, home authorities are charged with ensuring that firms are capable of supplying the information needed to manage a crisis.