samchain/econo-pairs-v1 huggingface dataset:
Earlier this year, the Federal Reserve issued guidance for the largest firms that outlined five “capabilities” that should be at the top of the list of “to dos”: •  Collateral management: firms should have effective processes for managing, identifying and valuing collateral it receives;  •  Effective management information systems (MIS) around payment, clearing and settlement activities: firms should have a comprehensive understanding of obligations and exposures associated with payment, clearing and settlement activities;  •  Stronger analytics around funding: firms should have the ability to analyze funding sources, uses and risks of each material entity and critical operation, including under stress;  •  MIS by legal entity: firms should have demonstrated MIS capabilities for producing key data on a legal entity basis; and,  •  Arrangements for shared or outsourced services: firms should have robust arrangements in place for the continued provision of shared or outsourced services needed to maintain critical operations. While there are many other areas that supervisors/regulators and legislators need to continue to work on to make cross-border resolution a reality, these five areas are ones that we have highlighted for near-term focus by firms. Another important element to preventing the failure of a firm is ensuring that firms can respond to any weakness by having recovery plans that are implemented well before resolution becomes necessary.

Caleb M Fundanga: Framework of cooperation between the Bank of Zambia and the University of Zambia Opening remarks by Mr Caleb M Fundanga, Governor of the Bank of Zambia, at the signing ceremony of the Memorandum of Understanding between the Bank of Zambia and the University of Zambia, Lusaka, 30 June 2010. *  *  *  The Vice Chancellor, University of Zambia – Prof. Stephen Simukanga The Deputy Governor – Administration and University Council Chairperson – Dr Tukiya Kankasa-Mabula Distinguished Professors and Lecturers from UNZA Colleagues from the Bank Members of the Press Distinguished Ladies and Gentlemen; It gives me great delight, on behalf of the Bank of Zambia, to welcome you all to this important signing ceremony of the Memorandum of Understanding between the Bank of Zambia and the University of Zambia. The MoU that we are about to sign today provides a framework for the support to the Economics Department and Research activities in the Department. Ladies and Gentlemen; the Bank of Zambia continues to view the University of Zambia and the Copperbelt University as strategic partners in the economic development of Zambia. It is for this reason that the Bank has for several years now been involved in the support of various capacity building programmes at the two tertiary learning institutions.
It is not even certain that the measures directed at these systemically-important banks would focus on higher Core Tier 1 capital requirements, although this is likely. Decisions on these matters are not expected until the summer. However, if the major Swedish banks are considered to be among the banks concerned they should make provisions for further increases. It is not unreasonable to assume that their total capital requirement could end up somewhere between 9.5 and 12 per cent – at least. According to our own calculations practically all of the major Swedish banks currently have capital levels in this range. The minimum level for Core Tier 1 capital may of course be affected by the decision on the use of convertible debt instruments. At present, the discussion concerns whether this type of instrument could be used for the increase for systemically-important banks. However, this is still an open question. One method is to require, let us say, six per cent in coco bonds over and above the 12 per cent added up here. The total potentially available share capital would then be 18 per cent. In connection with this I would like to mention that the Basel Committee has already decided that this type of convertible instrument must be used for Tier 2 capital and that part of Tier 1 capital that does not consist of Core Tier 1 capital.

The aim is that the banks must reduce the differences in maturities between their assets and liabilities and their dependence on shortterm market funding. To achieve this, the banks must match their funding and lending to a greater extent than they do today. Assets with short maturities can have short-term funding while long-term illiquid assets, such as mortgages, will need more long-term and stable funding. All funding with a remaining maturity of more than one year will be counted as stable funding. This is a sound and important feature of the new Basel regulations. And it will probably affect the Swedish banks’ business models. Currently, none of the four major Swedish banks meet the structural liquidity measurement requirements (Net Stable Funding Ratio). This is mainly because they largely fund their lending through short-term market funding. The banks will need to think again here. In addition, a number of the Swedish banks do not meet the shortterm measurement (Liquidity Coverage Ratio) either. These banks must, before the LCR is introduced, either strengthen their liquidity buffers, for example by buying government bonds, or reduce their short-term net outflow. A weakness of the new standards is, however, that they do not contain any specific rules for matching maturities per currency. This is something Swedish authorities should look at more closely. Two thirds of Swedish banks’ market funding is in foreign currency. A certain proportion of this is converted via the swap markets to SEK and then lent.
Given the disappointing fiscal developments in some countries and the challenges which have emerged to the EU fiscal framework, we welcome the moves to correct or prevent excessive deficits, i.e. the implementation of excessive deficit procedures in the case of Germany and Portugal and the early warning issued to France. Countries with remaining imbalances are urged to prepare sufficiently ambitious consolidation plans for their forthcoming stability programmes. Emphasis should be placed on a growth-oriented consolidation policy that strengthens the productive forces of the economy. The Governing Council considers the recent Commission communication to be a good starting point for rebuilding confidence in the budgetary framework. As already reflected in the Statement on the Stability and Growth Pact of 24 October 2002, we fully support the Commission's main objective, namely to improve the implementation of the Pact within the existing framework of rules. Finally, I should like to stress again that there is still an urgent need to implement decisively the structural reform agenda. We note with some concern the slow progress in many euro area countries and call on governments to take determined action. The medium-term impact of these reforms on the economic growth potential of the euro area is likely to be substantial. A prompt implementation of structural reforms in the labour, product and financial markets is particularly important at this juncture since it would contribute to strengthening confidence in the euro area, thereby also supporting economic activity in the short term. We are now at your disposal for questions. 2  BIS Review 72/2002

Instances of “follow-the-leader” behaviour occur not just in bullish stockmarkets but also in the currency market when many countries with different conditions are lumped together in a general assessment. Market players must assess each country separately. Central bank interventions under certain circumstances are uncommon with a flexible exchange rate regime but they do occur. I cannot exclude the possibility of the Riksbank intervening again if this were to be called for. Growth in the industrialised countries may thus be affected by the real economic crisis which has hit the emerging markets and resulted in a sharp fall in output there. The magnitude of such an effect will be highly dependent on confidence - confidence among households and firms so that they are prone to consume and invest, confidence among banks so that they are prone to provide credit. The Riksbank’s appraisal In the Riksbank’s most recent Inflation Report we counted on an OECD area growth rate of around 2 per cent in the years ahead. It should be borne in mind that this figure represented the latest in a series of downward revisions over the past twelve months. Since the publication of the September Report, our assessment of tendencies in the rest of the world has not changed. Considering the mechanisms to which I have just referred, however, it is not surprising that our Report highlighted the risks associated with the external situation. This situation is unusually difficult to evaluate and has to be followed closely.
Last year’s anti-pandemic restrictions led to a drastic shrinkage of demand in most sectors. Businesses suspended operations and purchases of raw materials and components. People did not buy tickets or holidays because of travel bans. When restrictions started to ease, demand was quick to recover. It was helped by loose monetary policies pursued by all central banks — to the effect that loans were increasingly affordable — and fiscal stimulus. However, a rebound in demand came with a change in its structure. For example, it spurred demand for telecommunications equipment as many people needed fast internet to work 1/4  BIS central bankers' speeches  remotely. Supply, that is production, cannot quickly adjust to these changes. In these conditions, demand exceeds potential output and triggers an inevitable rise in prices. This true of many sectors. Some central banks hold the view that this is a temporary situation and no monetary policy response is needed. Those are the central banks of countries where inflation was very low for many years. Their case is utterly different. We had also enjoyed low inflation, which only had lasted four years. But the current rate of inflation is double our target, and food inflation has unfortunately increased to double-digits. Importantly, in this short period of close-to-target inflation, people’s perception of it remained unchanged. Domestic inflation expectations — that is the way people perceive current inflation and what to expect in the future — is a reflection of peoples experience with the long years of high inflation.

The latter is driven by, among other things, shrinking numbers of labour migrants coming to Russia for seasonal work. What is our concern? First, the lower a person’s income, the greater the share of food in their consumer basket. That means inflation hits such consumers in the first place. If we tolerate high inflation now, the least protected groups will suffer. Second, inflation expectations are accelerated by rising prices for food products that people buy every day: I have mentioned their effect. More so, last year’s loose monetary policy drove a reduction in deposit rates, making savings unprofitable. This year, a tougher monetary policy has pushed up interest rates, and deposits have been gradually growing again. We have raised the key rate several times this year to 7.5%. We have been raising the key rate gradually as we needed to make sure that tightening policy does not hinder economic growth and that inflation growth was really not a short-term episode, but that unfortunately, inflationary pressure is increasingly persistent. On this subject, I would like to raise the question of who wins and who loses from high and low interest rates. In general, this is a key point to understand the nature of monetary policy and key rate changes. High interest rates and low inflation benefit depositors, bond holders and those whose core income is fixed wages, pensions and social benefits.
Singapore’s financial system has, by and large, weathered the crisis well. However, we must not be complacent and we need to prepare ourselves to respond to any future challenges. There are three areas which MAS has been working on and which we will continue to focus on in the coming year: first, sustaining macroeconomic stability in the postcrisis period; second, strengthening the financial system; and third, maintaining the growth of Singapore’s financial services sector. Sustaining macroeconomic stability in the post-crisis period 4. The strong pace of growth seen in the first half of this year is not expected to be sustained. Growth is likely to have peaked at the middle of this year, and will moderate to a more sustainable rate, as external demand slows after the post-crisis bounce from stimulus measures and inventory effects wane worldwide. For 2010 as a whole, the Singapore economy is expected to expand by 13 to 15%. 5. After two quarters in negative territory, headline inflation turned positive in Q1 this year and reached 3.1% in Q2. For the rest of the year, headline CPI inflation is expected to rise, reflecting higher car and commodity prices on a year-ago basis. However, the outlook for underlying price pressures remains largely unchanged from MAS’ monetary policy review in April. Despite stronger-than-expected GDP growth, the pass-through of domestic business costs to retail prices due to tightening factor markets is expected to be moderate, alongside the slowing in the economy.

On the contrary, inflation has now been so low for so long that I am concerned that it risks becoming a problem in itself, as inflation expectations are adjusted to a lower level. For these reasons, I have considered a further cut in the repo rate to be justified. But a majority of Executive Board members have assessed that this is not justified, because an even lower repo rate is thought to increase household debt, which is in turn assumed to increase their vulnerability and thus the risk of shocks leading to a deep recession. It is, of course, important to consider how concerned one should be over household indebtedness, not just the Executive Board of the Riksbank, but the Government and the Riksdag (the Swedish parliament), as well as the banks that lend money to Swedish households and Finansinspektionen (the Swedish Financial Supervisory Authority), which supervises these banks. My own opinion is that the high housing prices probably mainly reflect a shortage of housing and are thus not to be regarded as a price bubble. However, if the supply and demand situation changes, this could very well lead to falls in house prices in some situations. And even if such price falls are justified, they can entail problems for macroeconomic developments.
Institutions should thus make allowances for less favourable future scenarios of access to these international markets than those seen in recent years. The expansion of activity during 2005 was not restricted, however, to credit extended; banks also offered a wider range of non-typical banking products, such as insurance, and mutual and pension funds. Likewise, activities pursued abroad contributed to making bank balance sheets more dynamic. In this respect, the geographical composition of Spanish deposit institutions' financial assets abroad changed considerably last year. While Latin America continues to hold a relevant position, the European Union has become notably more prominent, and now accounts for the highest proportion of assets. In 2005 Spanish deposit institutions’ results, the first line of defence against potential difficulties, posted sizeable growth rates, confirming the sound position seen in previous years. It should not be forgotten, however, that a greater degree of dispersion and volatility is to be expected further to the application of the new accounting principles introduced by Banco de España Circular 4/2004. In any event, the considerable increase in business volume, the greater leverage of credit institutions and the drive to contain operating cost increases have allowed high profitability ratios to be maintained, despite the moderation of the financial margins. The clearest expression of this was the return on equity; once again in 2005, its spread over long-term public debt continued to widen.

That all shows how important it is for the economy to have flexible price- and wagesetting mechanisms. And there is a general need to reinforce the capacity of the productive system to compete, through improvements in specialisation, efficiency and higher productivity gains. As earlier indicated, the growing mismatch between household and corporate expenditure and income last year has been accompanied by fresh increases in these sectors' debt. What has proven conducive to this has been the maintenance of financial conditions which have continued to be markedly loose for the situation of strong demand pressure in the economy. This growth in household and corporate liabilities is naturally bearing on the financial position and burden of both sectors. The financial pressure borne by households has, however, been alleviated by the increase in their net wealth, sustained by the growth of stock market prices and, above all, of house prices. In the case of companies, the notable increase in profits has strengthened the sector's capacity to withstand the increase in their financial commitments. Accordingly, the financial position of both sectors, considered overall, remains sound and does not therefore pose a serious obstacle to the continuity of the economic upturn currently in train. The foregoing should not, however, conceal the evident fact that the expansion of domestic spending, particularly in the case of households, will not be able to base itself for much longer on growth in debt at rates such as those currently seen.
As the balance sheet increases in size, the potential costs increase in terms of market functioning, risks to financial stability, and the path of future remittances to the U.S. Treasury. Second, there is a limit on how far the expectations channel can be exploited. As I discussed earlier, since the current FOMC cannot bind future FOMCs and the economic outlook is highly uncertain, it isn’t reasonable to expect that policies that affect expectations many years in the future will have a powerful impact today. I believe that the effectiveness of the expectations channel decays as the length of the horizon extends. Third, monetary policy is only one leg of the stool necessary to generate a vibrant and sustained economic expansion. In particular, as noted earlier, the health of the financial system is critical. For without it, the monetary transmission channels will be impaired and monetary policy will be less effective in influencing the cost and availability of credit. Similarly, it is critical that fiscal policy be set appropriately. This means the short-term impulse needs to be properly calibrated to the current set of economic circumstances (not  9  With respect to borrowing costs, this is particularly true in real terms. BIS central bankers’ speeches  7  too much restraint) and the long-run budget trajectory needs to credible and consistent with fiscal sustainability. Finally, removing structural impediments that hinder growth and economic rebalancing are also important.

Only if a central bank does what it promises to do will expectations be solidly anchored. Of course, this does not mean mechanically following a set policy trajectory regardless of how the outlook changes, but it does mean that the stance of policy over time must evolve in ways consistent with the criteria established in the guidance. It is important to communicate how policy will respond to changing economic circumstances over time. This is particularly important when the outlook changes, because expectations about how policy will respond can be an important self-stabilizing element of monetary policy. In this regard, a framework that ties the use of policy tools explicitly to economic outcomes has many advantages. Good public communication is also important. For example, press conferences offer an opportunity to ground the policy actions and stance in a framework that is explicit about how the central bank plans to achieve its mandated objectives. Asset purchases are an effective tool Credibility requires taking action in the present as well as providing guidance for the future, and we are fortunate to have learned that asset purchases can indeed be an effective tool to support growth, employment and inflation expectations at the zero bound. While I believe that managing expectations is crucial, I am somewhat skeptical of the view that forward guidance on the policy rate alone is sufficient in these circumstances. This is particularly the case when guidance extends out several years in the future.
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London, London, 16 June 2010. *  *  *  My Lord Mayor, Mr Chancellor, My Lords, Ladies and Gentlemen, May I join the Lord Mayor in welcoming you, Chancellor, to your first Mansion House Dinner? You have set a rapid pace in your first month in office, not least in your announcements this evening. In previous years I have sometimes set this gathering a quiz question. Tonight I want to reverse the process by providing the answer and asking you for the question. The answer is 23, and later I shall ask you – to what question is 23 the answer? Over the past year, there has been no slackening in the pace of economic and political upheaval. The financial crisis that began in 2007 is not yet over. Much of the recent market volatility reflects concerns about the ability of governments to service their own debt and provide assistance where necessary to weakened banking systems, especially in the euro area. Such risks have the potential to derail recovery and we cannot ignore them. At home we face the challenge of ensuring recovery while rebalancing the economy, reducing the fiscal deficit, and reshaping the structure and regulation of our banking system. In playing its part to meet this challenge, the Bank of England has two priorities.

The Bank of England cannot effectively perform its role as lender of last resort without first-hand knowledge of the health of the banks to which it might provide support. In peacetime, regulation can be conducted outside the central bank. But in a crisis, decisions must be made quickly and decisively and the central bank, working with government which is always responsible for any use of public money, needs to be in charge. That was one of our painful lessons. In approaching our new responsibilities we shall build on the real improvements to its regime of prudential regulation made over the past three years by FSA. But the Bank will bring its own central banking culture. The focus of regulation needs to be on maintaining stability of the banking system as a whole. We shall be looking not just at those aspects of a bank that make it look unsafe in comparison with other institutions, but even more so at whether there are common features that threaten the stability of the system, such as the dangerously high leverage prior to 2007. We shall aim to avoid an overly legalistic culture with its associated compliance-driven style of regulation. That is an important reason for the separation of consumer protection and market conduct from prudential regulation. We will need to exercise discretion when setting capital and liquidity ratios for individual banks. And to do that properly will require changes to the current legislation and rule book. We must reverse the seemingly inexorable trend towards more regulation and more regulators.