samchain/econo-pairs-v1 huggingface dataset:
I am not going to talk today about what banks must do, which is a lot. I will merely give some examples of the tasks outstanding for the authorities. With regard to cleaning up balance sheets and levels of capital, the latest reform has been a very important step, but nothing in life is final. If the Spanish economy eventually recovers, it will have been more than enough, but if the economy deteriorates by more than expected, then capital will have to continue to be increased and improved if banks are to remain solid. Also, new instruments to increase credit to SMEs will have to continue to be tested. Some of these were discussed at a workshop held by the Banco de España in February in collaboration with the Spanish National Securities Market Commission (CNMV). At some point political decisions will need to be taken in this area. Another area of work is to continue to reduce the size of savings bank governing bodies in order to avoid any duplication when they have transferred their financial business to banks they have set up, which must be stock-exchange listed when above a certain size. A more substantial alternative would be a law requiring savings banks to cease holding significant stakes in credit institutions, within a reasonable period, and to invest as they see fit, perhaps obtaining higher returns, in order to continue to pursue their welfare aims.

In order to give appropriate consideration to financial stability aspects, we feel that the SNB should be involved in regulatory procedures at an early stage. In other words, in the conceptual phase. The authorities responsible for issuing financial market regulations should, therefore, be obliged to consult with the SNB early on in the process. Thirdly, the National Bank must have clearly defined decision-making powers with regard to regulations that either bear direct relation to monetary policy or to emergency liquidity assistance. I would like to take two current regulatory proposals to explain more clearly what I mean: the countercyclical capital buffer and the implementation of the TBTF regulations. The countercyclical capital buffer represents a capital requirement that can be adjusted over time. This buffer will be introduced within the framework of Basel III and has the important tasks of protecting the banking sector from the risks posed by excessive lending and of curbing the banking sector’s procyclical behaviour. In the event of excessive growth in lending, the capital requirement can be increased; then when growth in lending is weak, it can be lowered again or even reduced to zero. The countercyclical capital buffer thus has a direct impact on banks’ lending activities and can, as a result, strengthen or weaken the effect of the SNB’s monetary policy significantly. Therefore, whoever determines the level of this buffer also influences the effect of monetary policy.
In Sweden and Denmark, they are the underlying solution for most mobile payments. The result is faster and cheaper payments. A common solution for instant payments is a step forward for both users and banks. At the same time, banks should think in terms of further development. One ambition should be to  BIS central bankers’ speeches  1  eliminate the risk that arises between banks when the payee receives the funds before bank settlement occurs. International experience shows that this can be done in several ways. A long-term goal should be that payments occur in real time both between users and between banks. This will require adjustments to settlement systems. In the near term, it is also possible to use today’s infrastructure to make payments faster. I have noted that the banking industry is working towards increasing the number of daily net settlements from four to five, and more payments will be settled individually and immediately. Considerable work is underway under the aegis of Finance Norway and the new joint venture company Bits, which may lead to faster payments. Norges Bank, for its part, will explore whether possible adjustments to the bank settlement system could enhance payment efficiency. Norges Bank will do its utmost. We will seek a dialogue with the financial industry in order to find good solutions. Several aspects of mobile payments should be improved Mobile payments are becoming increasingly common. New features are the customer interface and additional services tailored to customers’ individual needs.

This is a price we have to pay to be able to exploit the benefits of the new technology. Existing payment solutions cannot be phased out until we are certain that they will be replaced by other solutions that satisfy customer needs and enjoy customer confidence. This is important in normal times, and not least in terms of crisis preparedness. That has a cost, but a situation where payments cannot be executed would entail a much greater cost to society. As such, there can be no compromise with regard to contingency requirements. Conclusion Norway has an efficient payment system. This is positive, but there is room for improvement. In some respects, other countries are now ahead of us, for example Denmark and Sweden, particularly in terms of instant payments. Payments should be faster than is the case today – both for end users and between banks. We must develop new infrastructure linked to instant payments and render payments faster through today’s infrastructure. Mobile payments can best be organised based on common underlying solutions. They should be cheaper and faster, and various apps must be able to communicate between banks and use the same shop payment terminal. Banks and the wider business sector do not have a choice in the long run. If the new solutions are to be viable over time, standards and common solutions for mobile payments must be developed. We may have started in this direction, but time is pressing. Common solutions and standards are not an obstacle to effective competition.
This, however, is only the “first sight” scenario. European unemployment is largely structural, meaning that although there is a demand for labor on the part of the firms, this demand is not necessarily matched by the supply on the labor market. Under these circumstances, the labor market could constitute a bottleneck for growth and lead to inflationary pressure. To prevent inflation from rising, the European Central Bank would have to further increase interest rates. Clearly, structural adjustments are of the essence in Europe. In the absence of flexibility, the unemployment rate cannot be lowered significantly and doubts exist about the actual room of maneuver of the monetary authorities. Expected growth for Switzerland, on the other hand, looks quite moderate by international standards. Thus, one might think that there is little danger of inflation and that the Swiss National Bank should further support the seemingly fragile economic upturn. A look at the labor market, however, shows another picture. Unemployment has fallen steadily since the summer of 1997 to a low rate of 2.3% only. Its recent increase to 2.6% is due to seasonal factors. Moreover, there are already clear signs of a shortage on the labor market. Stronger growth could thus fuel the well-known wage-price spiral. Under these circumstances, a further tightening of monetary policy is a realistic hypothesis. To make things even more difficult, there is a high degree of uncertainty concerning the development of labor productivity in both Europe and Switzerland.

In particular, getting the financial system to play its proper role is critical. So let me turn to my second reflection on the role of financial services. Many causes have been cited for the current financial crisis – excessive leverage, complexity and risk-taking incentivised by inappropriate compensation systems; pro-cyclical regulatory requirements and inappropriate cost of capital; the flawed originate-to-distribute model in credit origination that worsened the principal-agent problem; the role of rating agencies; and the use of instruments such as CDS and CDOs that were supposed to distribute risks more broadly but ended up concealing and concentrating risks instead. The list goes on. Each of these plays a role but if we are to identify a common factor across these various causes it is this: that finance has become detached from economic realities. As we look to develop our financial system, we have to bear in mind that the basic role of finance is to allocate scarce capital to its most productive use. We earn a return only if the capital is deployed to eventually produce goods and services that are valued by the market. When the nexus between the mobilization of capital and the productive use of capital is broken, the returns cannot be sustained – the bubble must eventually burst, with painful consequences. In this crisis, both conventional and Islamic financial markets have been affected, but the restrictions on the use of leverage and speculation has put Islamic Finance in a better stead.
Timothy F Geithner: Credit markets innovations and their implications Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 2007 Credit Markets Symposium hosted by the Federal Reserve Bank of Richmond, Charlotte, North Carolina, 23 March 2007. *  *  *  I am grateful to Jeff Lacker for including me in this conference, and my compliments to him and the Richmond Fed for bringing together an excellent group to discuss the implications of recent innovations in credit markets. The past few years have seen remarkable changes in credit markets, and this is a good time to take stock of what we know about those developments and their implications. The latest wave of credit market innovations has elicited some concerns about their implications for the stability of the financial system, concerns similar to those associated with earlier periods of rapid change in financial markets. Will the most recent credit market innovations amplify credit cycles, contributing to "excessive" lending in times of relative stability, and then magnify the contraction in credit that follows? Will they introduce greater volatility in financial markets? Will they create greater risk of systemic financial crisis? These concerns have been heightened in some quarters by the problems currently being experienced in the subprime mortgage sector. It will take some time before the full implications are understood and the full impact can be assessed.

BIS Review 29/2007  3  We cannot turn back the clock on innovation or reverse the increase in complexity around risk management. We do not have the capacity to monitor or control concentrations of leverage or risk outside the banking system. We cannot identify the likely sources of future stress to the system, and act preemptively to diffuse them. The most productive focus of policy attention has to be on improving the shock absorbers in the core of the financial system, in terms of capital and liquidity relative to risk and the robustness of the infrastructure. These issues are the principal focus of day-to-day supervision and market oversight in the major financial centers around the world. The Federal Reserve is actively involved in a range of efforts, working closely with the primary supervisors of the major global financial institutions and the critical parts of the financial infrastructure, to encourage further progress. In this context, we are working to put in place a stronger regulatory capital regime and to strengthen the capacity of firms to absorb losses in stress conditions. We are encouraging more sophisticated and more conservative management of credit exposures in over-the-counter derivatives and structured financial products, as well as of exposures to hedge funds. And we are encouraging a range of efforts to modernize the operational infrastructure that underpins the over-the-counter derivatives markets, and to improve the capacity of market participants to manage a major default.
Import coverage by exports ratio averaged 44.5%, or up 9 percentage points from the same quarter of the previous year. During the period under analysis, exports in value continued their upward 2  BIS central bankers’ speeches  trend having started since 2010 Q1 and expanded by 45.4% y-o-y. However, following a speeded-up growth over the first two months of the year, our export growth rates were significantly mitigated in March. During the same period, imports grew by 15.9% y-o-y. The division of imports according to their final use highlights the rapid growth of imports of intermediate and capital goods. The outlook of these trends may be associated with expanded current account and trade deficits in the country. The Bank of Albania is very attentive to this development, since it significantly conditions the external balances of Albanian economy and the foreign exchange market. Monetary expansion during 2011 Q1 was in line with economic agents’ money demand, marking a steady year-over-year growth of roughly 11%. The 6.2% y-o-y growth of real money supply remained close to historical lows. Moderate growth rates of M3 aggregate and other monetary indicators are in line with so-far assessments of existence of contained monetary inflation pressures. This trend is also supported by developments of currency outside banks. This indicator continued to fall y-o-y, and together with the shift of deposit structure to longer maturity terms, it indicates economic agents’ lower preference for liquidity.

Allow me to thank you once again for the work and devotion you exhibited over the course of this year. I strongly believe that the truthfulness and objectivity in reporting economic and financial news will continue to accompany you in fulfilling your duty in the coming year. I reaffirm that the Bank of Albania will continue be a transparent institution, ready to provide opinions and assessments as necessary in all public debates related to the performance of our economy and financial markets. A certificate of this commitment and achievement of the Bank of Albania in the communication with the public is the ranking first of the Bank of Albania among all the banks of Central, Eastern and South-eastern countries, for very active pubic communication, 1/2  BIS central bankers' speeches  in the last report: “Focus on the European Economic Integration” for the second quarter of 2021, published by the National Bank of Austria. Dear guests, The Bank of Albania continues to focus scrupulously on financial education and research considering it a crucial pillar of its activity. They are seen as the foundations for increasing the social-economic development and welfare of the citizens of Albania. From this point of view, I kindly invite you to share together a special moment of this meeting: the traditional ceremony for the Governor’s Award for the Best Diploma. The Bank of Albania for this 15th year ceremony in a raw has selected and valued three scientific works amid all the presented researches by students graduated in Albanian and abroad.
11  Congress granted this authority to the Federal Reserve in the Financial Services Regulatory Relief Act of 2006, with an October 2011 effective date, but accelerated its implementation to October 2008 as part of the legislative response to the financial crisis. A similar tool is critical in the implementation regime of most advanced economy central banks. 12  The FOMC also considered an arrangement under which depository institutions could pledge funds held in a segregated account at the Federal Reserve as collateral in borrowing transactions with private creditors. This approach aimed to reduce credit-related barriers to depository institutions’ borrowing funds in money markets and thereby intensify competition among borrowers. The FOMC decided that these accounts involved operational, regulatory, and policy issues that would have been difficult to resolve in a timely fashion, and it shelved further work. See the minutes to the FOMC’s December 2014 meeting. 13  This approach was discussed in detail in the FOMC’s June 2011 Exit Strategy Principles. 14  The Federal Reserve continues to test its Term Deposit Facility (TDF). In late 2014 and early 2015, the Federal Reserve conducted rounds of testing of the TDF that on two occasions resulted in cumulative take-up of more than $ billion. These operations reportedly had no significant impact on conditions in money markets, suggesting that TDF operations would have to be significantly larger to put upward pressure on rates. 15  This approach has been used heavily, for example, by central banks that have large foreign exchange reserves.

Term deposits are likewise similar to IOR; TDF offers a somewhat higher rate to banks that are willing to lock up their funds for a time. 22  The FOMC’s decision to use a target range for the federal funds rate, instead of a point target as was used prior to December 2008, further supported the use of this operating framework. The FOMC’s use of a range supports this framework by underscoring the fact that variation of the effective rate within that range is expected and is consistent with the level of interest rate control it desires. 23  Frost, Logan, Martin, McCabe, Natalucci, and Remache, “Overnight RRP Operations as a Monetary Policy Tool: Some Design Considerations,” February 2015. 24  It seems particularly appropriate to pay close attention to the integration of money markets in light of the increase in bank and dealer balance sheet costs that has ensued from post-crisis changes in financial regulations and other factors. 25  See Chair Yellen’s September 17, 2014, press conference. “To begin normalization, the Committee will raise its target range for the federal funds rate. The Committee expects that the effective federal funds rate may vary within the target range, and could even move outside of that range on occasion, but such movements should have no material effect on financial conditions or the broader economy.”  26  See the September 2014 Policy Normalization Principles and Plans.
Thankfully, all this is now also being worked on internationally in the Financial Stability Board. A second and obvious policy inference that one could draw from Shleifer’s paper, and one I want to spend a little more time on this evening, is that it is absolutely vital that (regulatory) capital requirements for banks more or less truly capture their risks. Two thoughts on that, of rather different kinds. First, it was very obviously a false step when, in Basel 2, the international-standard setters tried to follow the techniques and calibrations of private sector risk managers rather than engaging with the externalities that warrant State intervention in this area in the first place. Second, more particularly and more concretely, this underlines the vital importance of the current Basel work to review fundamentally the capital requirements for banks’ trading books. In short, Basel has recognised that the amount of capital a bank should hold against a liquid trading position often has good reason to be smaller than needed for a hold-to-maturity portfolio, ie where the bank can shed its exposure. But it failed utterly to recognise that since such books are marked-to-market (or model) and since the boundary conditions for solvency derive partly from accounting measures of asset values, it is vital that banks hold capital against the risk of violent swings in liquidity premia. Yet that is exactly what torpedoed a fair fraction of the largest banks and dealers in the world through their (levered) holdings of leveraged loans and super senior tranches of CDOs.

But before coming to the associated international policy debates about the biggest and most complex firms, I want to go back to incentives. Because whatever the merits of the riskmyopia argument I have been reviewing, we absolutely must not build a system that relies on dismissing the incentives argument. While I doubt that many bankers deliberately – that is to say, consciously – took outsized risks that crashed the system because they believed they would be bailed out, I do believe that their behaviour will have been profoundly affected by their cost of debt being too low because asset managers believed they would not lose money. Asset managers held beliefs about the policy world that fatally diluted their incentive, as creditors, to monitor and discipline banks (this is the Too Big To Fail problem). That brings me to the policy debate on resolution. Those of us promoting enhanced resolution regimes, who include Adair by the way, do so for two reasons. First, no one can guarantee that losses will not exceed equity cushions in the future and when that happens if the losses do not fall on bondholders – via resolution or the much more disruptive liquidation – they will end up falling on taxpayers. And second, exposing bondholders to risk has the potential to harness market discipline – or, as I have put it, to bring capitalism back into the heart of capitalism.
Other developed commodity exporters – Norway, New Zealand, and Australia – have been much more successful at achieving price stability than Iceland has. Reform of the fisheries management system and technological developments in the fishing sector, together with increased diversification, have made the economy less vulnerable to the vicissitudes of nature.3 I doubt the structure of the economy is a major factor here, but it could be possible to enhance diversity by, for example, facilitating foreign investment in new sectors. 4. Given that performance has been poor throughout a very long period over which various exchange rate regimes have been in place, it is natural to consider the currency itself and the small size of the currency area. Iceland is unique as regards both the size of its currency area and the volatility of private consumption, even when its small size is taken into account. It appears obvious that fluctuation in private consumption is driven primarily by exchange rate volatility, as Chart 1 shows. It is difficult to reduce fluctuations in private consumption unless exchange rate volatility is reduced. Although it can be argued from a theoretical standpoint that a floating currency should be a shock absorber, recent research suggests that fluctuations in the exchange rate may actually be a source of shock, at least in very small economies.

Arnór Sighvatsson: Iceland’s future monetary and exchange rate regime Speech by Mr Arnór Sighvatsson, Deputy Governor of the Central Bank of Iceland, at a meeting of the Icelandic Federation of Labour, Reykjavík, 10 January 2012. *  *  *  Ladies and gentlemen: In the wake of severe financial and monetary instability, it is appropriate for the Icelandic authorities to conduct a comprehensive review of Iceland’s exchange rate and monetary policy regime. The re-assessment must be based on an accurate diagnosis. The authorities should not only review the experience of recent years, but also grapple with the fundamental questions of why Iceland’s monetary policy track record has been so dismal, over nearly a century, that the Icelandic króna has depreciated by 99.95% against the Danish krone since the two currencies were uncoupled in 1920. Monetary policy generally faces two conflicting roles of the currency exchange rate: to be an anchor of monetary policy, on the one hand, and a tool for adjustment, on the other. During the Icelandic króna’s lifetime as an independent currency, exchange rate policy has moved along the axis between fixing and floating, but without managing to stop the virtually uninterrupted erosion of the króna’s purchasing power except for short periods of time. There could be four potential types of explanations for Iceland’s poor performance in the field of monetary policy, and corresponding types of measures for improving the performance: 1. First of all, the source of the problem might be the implementation of monetary policy or its framework.