samchain/econo-pairs-v1 huggingface dataset:
By curbing the strong upward pressure on the Swiss franc through extensive foreign exchange market interventions, and by providing financing for COVID-19 loans on favourable terms via our new SNB COVID-19 refinancing facility, we have made an important contribution to stabilising the Swiss economy in this once-in-a-century crisis. Nevertheless, we are still frequently confronted with demands that the SNB should do more. And what is meant by ‘more’ is above all increased distributions. I would therefore like to use my speech today to discuss the SNB’s profit distributions. Who owns the SNB’s profits and how are they generated? The profits generated by the SNB and the distributions it makes were the subject of discussion in Switzerland long before the coronavirus pandemic broke out. There was already heated debate on this more than 100 years ago, as the rules governing the distribution of profits were one of the most contentious issues in the run-up to the creation of the SNB. The cantonal banks had to cede the right to issue banknotes to the newly established central bank, and the cantons wanted compensation in return. The fundamental question of how the profits generated by the SNB were to be distributed already had to be addressed back then. The following principles were set: the profits should first be used to build up the SNB’s equity capital and pay a modest dividend to shareholders; and any remaining profit would go to the public sector, with at least two-thirds accruing to the cantons.

With a view to ensuring that the ratio between the desired level of equity capital and the currency reserves can be increased again somewhat, the SNB recently decided to adjust its rule on allocations to the provisions for the coming years. For the financial years through to 2025, the annual allocation to the provisions will be at least 10% of the preceding year’s provisions, compared with 8% per annum previously. A persistent erosion of the SNB’s equity base would undermine the credibility of our institution over the long term and would fuel doubts regarding our ability to act. 1 Ongoing allocations to the provisions are therefore essential for the SNB. The amount remaining after the allocation to provisions is referred to as the distributable profit. However, since a profit in any given year can be followed by a loss the next, the SNB does not pay out all of the distributable profit at once. Instead we seek to smooth the distributions to ensure that they are less dependent on variable annual results. This smoothing was introduced to facilitate better planning for the Confederation and the cantons. However, maintaining distributions at a steady level is also of pivotal importance for the SNB. The reason for this is an underlying asymmetry: the SNB can distribute profits, but it cannot reclaim any money if it makes a loss. If the SNB were to always distribute its profits in their 1  For more information on the importance of a central bank’s equity, cf. inter alia Jordan, Thomas J.
To supplement its guarantee schemes, the CGC, under its Business Advisory Service Entity programme, has identified and engaged a panel of consultants to assist the SMEs, particularly in drawing up business plans and other financial documents. Bank Negara Malaysia recognises the important complementary role of DFIs in the financial system and their developmental role in supporting the national socio-economic agenda. As such, Bank Negara Malaysia in its Financial Sector Masterplan (FSMP) has drawn out the roadmap on the development of the DFIs, with the objective of developing a group of DFIs that are able to perform their mandates in an effective and efficient manner at minimal cost to the Government. In order to achieve this objective, three broad development thrusts have been outlined for the DFIs, namely, strengthening of the regulatory and supervisory framework of the DFIs, capacity and capability building as well as institutional efficiency enhancement of DFIs. A total of eight recommendations have been formulated premised on these development thrusts. One of the significant milestones in the strategies to strengthen the DFIs is the enactment of the Development Financial Institutions Act 2002 (DFIA). The Act provides a comprehensive regulatory and supervisory framework for DFIs, with the primary objective of ensuring that the DFIs perform their mandated roles and that their activities are carried out prudently, effectively and efficiently. Bank Negara Malaysia was appointed as the single regulatory and supervisory body for DFIs under the Act.

Subject to the statutory rules applying, the responsibility for sound banking primarily rests with the banks themselves. BIS Review 124/1999  8
Building on the experience of currency crises, the IMF Guidelines for Foreign Exchange Reserve Management recognise that “official foreign exchange reserves are held in support of a range of objectives”, including to: •  “support and maintain confidence” in monetary and exchange rate policy, including the capacity to conduct foreign exchange interventions;  •  “limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed, and in doing so,  •  provide a level of confidence to markets that a country can meet its external obligations.”  Not so long ago, the required level of forex reserves was inferred from empirical rules of thumb such as the “three months of imports” rule. After the experience of the 1990s, when financial crises were triggered by a drying-up of capital inflows, the ability of economies relying on international borrowing to service their external debt became a central criterion. The “Greenspan-Guidotti” rule thus recommends that reserves should enable full coverage of total short-term external debt in order to be able to pay back that debt in event of sudden stops, i.e. if and when foreign lenders do not roll-over their loans. The empirical literature provides evidence that, today, the level of forex reserves in some emerging economies appears excessive with respect to the level inferred from both rules.

Christian Noyer: Foreign reserve accumulation – some systemic implications Speech by Mr Christian Noyer, Governor of the Bank of France, at the Salzburg Global Seminar, Salzburg, 1 October 2007. *  *  *  The topic of foreign exchange reserves is a very old one, but it has gained new prominence for two obvious reasons: the level of such reserves has increased dramatically over the last decade; and the management of those reserves is increasingly diversified. Today, I would like to reflect on the implications of these changes for the international monetary and financial system. I will try and examine how they are linked to the persistence of global imbalances, their consequences on global capital allocation and asset prices, as well as their impact on structural change and economic governance in all countries, both emerging and developed. The level and nature of international reserves The facts World foreign exchange reserves have surged from USD 2 trillion in 2001 to an unprecedented USD 5 trillion in early 2007. Of this total, the share of emerging Asia has risen from USD 600 bn to more than 2 trillion, as a result of reserves having increased at a rate of USD 200 to 300 bn per year since 2003. In addition, reserve assets of oil-exporters boomed in 2005 and 2006 by more than USD 200 bn each year. The drivers In order to fully understand the nature of this protracted process of foreign asset accumulation, it is important to examine the various factors motivating it.
To overcome this problem, the Riksbank has begun a review of the regulations, together with the Swedish Financial Supervisory Authority. Conclusion In the current situation there are great expectations that the future will bring economic growth and good times. “The new economy” with a low inflation rate and high levels of employment and growth has gradually crossed the Atlantic to reach us. In such times of strong confidence in the future, consumption and indebtedness increase, while saving declines. We have seen this happen many times before. If the expectations are fulfilled, there is no problem. However, if the expectations race ahead of economic developments, asset prices and indebtedness can develop in a way that causes imbalances. If there is an economic downturn, households may find difficulty in meeting their payment obligations, which will lead to a rapid increase in saving, falling asset prices and a decline in demand. This is also something we have seen in other contexts. While this development could give cause for concern, it is important not to paint an excessively negative picture. As the Riksbank has pointed out earlier, a decline in the macroeconomic situation would probably lead to problems for individual households, but would hardly cause sufficient loan losses to threaten the banks’ stability. However, there is every reason to be vigilant with regard to continued developments, particularly from a price stability perspective. Continued rising asset prices and credit expansion could risk leading to overheating and thus rising inflation.

An increase in the repo rate would in this case contribute both to counteracting incipient inflation tendencies and to reducing the risk of financial imbalances, through a dampening effect on demand for credit and on asset prices. 5  BIS Review 50/2000
The increase in international arrivals at these two airports was mainly on account of continued marketing in the tourism sector. Livingstone posted 3,782 departures during the reviewed month compared to 3,424, while Mfuwe recorded 106 departures against 31 in January 2004. External sector developments •  Preliminary data indicate that the country’s trade deficit narrowed to minus US $ million in January 2004 from minus US $ million in December 2003, mainly due to a decrease in the value of imports. 2  Mining production figures reported with a one-month lag. 3  International arrivals are being used as a proxy for tourism. 4  Tourist peak period is March to July. 5  Lusaka, Ndola, Livingstone and Mfuwe. BIS Review 27/2004  3  •  Total merchandise imports declined by 15.1% to $ million in January 2004 from US $ million in December 2003. The fall in imports was mainly attributed to the decline in the imports of food items (40%), fertilisers (19%), chemicals (21%), plastic and rubber products (40%), iron and steel items (48.6%), nuclear reactors and equipment (31%), and electrical machinery and equipment (52%). •  On the other hand, merchandise exports increased by 4.1% to US $ million in January 2004 from US $ million in December 2003.

Initially, the impact of the crisis seemed to be concentrated in the US and a handful of European banks in Germany, the UK and Switzerland which had pursued particularly risky strategies. The euro area as a whole did not see a marked reduction in credit growth. Meanwhile the emerging economies of Asia continued to boom. With wages and prices rising, many of the people I met in India and China at the start of the year rather welcomed the prospect of a fall in Western demand as a means of taking a little of the heat out of their own economies. But despite different starting points and policies, we have now seen bank failures in many countries in Europe and acute pressures develop everywhere. And the US, Japan, the euro area and the UK have all entered recession. This summer has also brought a slowdown in growth in the Far East and other emerging economies which is likely to test political as well as economic regimes. The challenge for policy It was clear last autumn that the financial crisis was leading to a squeeze on credit and lowering the prospects for growth and inflation in the UK. That was why the MPC, which had been raising rates as late as July, cut Bank Rate in December last year and followed with two more reductions in February and April. While the euro area started with lower rates and initially seemed less affected than the UK by a credit crunch, expected increases in rates were delayed.
A priority will be given to those projects that will contribute to the well-being of future generations. We are interested in the development of green finance instruments. However, it is also vital to assess the actual risk level for investors. We are well aware of the fact that a lot of Russian companies are highly carbon-intensive. Therefore, it is necessary to assess their risks taking into account, among other factors, the introduction of carbon taxes in the European Union and other countries. Global investors are already altering their strategies. Moreover, banks themselves need to factor in climate risks in their operations. This is a serious challenge to the economy, the financial system, and the regulator. We should learn how to adequately assess not the risks that have been accumulated before. We are differentiating risk assessment in regulation relying on actual data showing how these risks materialised. We should assess future risks and model these future risks, building these stress scenarios. In our opinion, we may not blindly lower the requirements for these green instruments, but we should develop an approach helping an investor understand that a particular project is really a green one and assess the level of its sustainability and risks that may arise, as well as how they differ from those inherent in socalled non-green projects. This is an issue to be addressed in the course of our joint work. We have already made a certain progress towards better information transparency.

Under a Single Point of Entry strategy, resolution actions will be taken in a single legal entity that is basically the parent company of the group, which will have to hold sufficient external TLAC. Additionally, a certain amount of loss-absorbing capacity should be pre-positioned in all material subsidiaries. This would ensure that losses are up-streamed to the resolution entity, thus avoiding putting the material subsidiary into resolution. By contrast, under a Multiple Point of Entry strategy, the application of resolution tools to different parts of the group is allowed under the assumption of limited interconnections between them. Therefore, in this model, loss-absorption capacity is primarily located in each resolution entity (subsidiaries and the parent company). This is the resolution model chosen by the global Spanish banks as it is a better fit with their business model. As I said, one of the most complex issues in the design of the TLAC standard was to find the correct balance between taking into account the particularities of each resolution strategy and ensuring consistent treatment between them. In this respect, the Bank of Spain welcomes the inclusion of certain elements that go in the correct direction towards achieving regulatory consistency between resolution strategies. Let me stress, when mentioning  BIS central bankers’ speeches  3  consistency, that it is important that different jurisdictions also strive to achieve this objective when introducing the TLAC standard into their regulations. Crisis Management Groups (CMGs) will also play a crucial role in ensuring consistency.
Our efforts should therefore be focused on jump-starting investment. However, and this was really the crux of my argument, we will only manage to stimulate investment if structural, fiscal and monetary policies mutually reinforce each other. 4  BIS central bankers’ speeches

Timothy F Geithner: Further investments to strengthen the financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Economic Club of Washington, Washington, 9 February 2005. *  *  *  Good evening. I am honored to be here. It’s good to be back in Washington and to have a chance to talk with such a distinguished group. Much of our nation’s financial history and the history of our central bank is a story of contest for influence and over ideas between political leaders in Washington and the financial center of New York. I think it is important that ideas shuttle back and forth between our cities, and I am pleased to have a chance to share a few tonight. My overall argument this evening is this. We face a delicate balance between genuinely positive near-term economic conditions, and some fundamental challenges. If we are to increase the likelihood of continued strong growth in living standards, we should use this time of relative prosperity to address the imbalances that hang over our economy. Even with good policy choices, and with considerable luck, these imbalances will take time to unwind. During this time we face some risk of a more volatile and less benign overall financial environment. This makes it important that we continue to invest in making our financial system stronger and more resilient. Markets now reflect a fairly positive view about overall economic prospects.
Small open economies in particular have always needed to keep their currencies relevant domestically to preserve monetary autonomy. The benefits of an independent monetary policy have to be weighed against the efficiency gains from adopting a more widely used currency. Pegging to the US Dollar, the Euro or even a Synthetic Hegemonic Currency is one thing; losing monetary sovereignty to a currency that is the liability of a private entity is another. To sum up, money must ultimately be trusted if it is to fulfil its function in the economy. As public institutions which have built up credibility over time, central banks are best placed to safeguard the trust that underpins sound money and safe payments. This trust is not just about money that is safe, but also about a monetary system that is dynamic and purposeful. As Mark has emphasised, it must continually improve how it serves the people who depend on it daily. The key question on the future of money is this: what is the appropriate division of labour between the public and private sector? There is a continuum that spans, at one extreme, a completely centralised system where there is only central bank money, and at the other extreme a decentralised system where there are only private monies in circulation. Each country will have to choose different positions along the continuum, given its own cultural norms, social compact, and institutional structures.

Ravi Menon: Decentralised finance and the future of money Panel remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Andrew Crockett Memorial Lecture by Mark Carney, via Video Conference, 28 June 2021. * * * Thank you for the opportunity to engage on Mark Carney’s deeply thoughtful lecture. Mark has given us a powerful rendition of the transformation taking place that will “re-wire” our monetary and financial systems. Centrifugal forces are driving financial functions away from the traditional core. These forces are not just affecting money, but all aspects of the monetary system. Mark also reminds us that, amid this transformation, money has to be anchored on “values of trust, resilience, dynamism, solidarity and sustainability”. I cannot agree more. I’d like to focus on: the decentralisation of finance across the three ‘I’s of the monetary stack — intermediaries, infrastructure, and instruments; and how central banks and regulators can potentially shape this decentralisation in a way that upholds the critical values of money that Mark has highlighted. Let me begin with Intermediaries, at the top of the monetary stack. The delivery of retail financial services is being decentralised. This is happening in two ways. First, finance by non-financial players. There is now a much broader range of non-traditional – and often unregulated intermediaries in the retail finance space. This is not just BigTechs, but also FinTechs and smaller technology firms. These players provide payments, lending, savings and investments as complements to their core digital service.
There are also indirect linkages between macro and financial stability through the main instruments used to achieve them. The main tool used by most central banks to achieve macro stability is the management of a short term reference interest rate. Movements of this benchmark rate not only directly affect the consumption/saving decisions of firms and households, but also have consequences for all asset prices (e.g. equities, bonds, exchange rates, housing), the cost and availability of credit, and the willingness of investors to take risks. For instance, in a stable context, persistently low interest rates may generate incentives for investors whose income depends on absolute returns (such as hedge fund managers and insurance companies) to invest in more risky assets. It may also make it more profitable to engage in carry trades and create currency or maturity mismatches. On the unintended side, the success in achieving macro stability may change the perception of agents about the riskiness of the environment and lead them to take more risky bets in the expectation that good times will continue indefinitely (or at least until the bet pays off). Also, the way to deal with bubbles in monetary policy in the US, applying the so-called Greenspanput (Blinder and Reis, 2005), may have increased the chance of bubble formation (De Gregorio, 2011).

Since then the picture has been revised again, and now the economic downturn around the end of 2004/beginning of 2005 appears much milder than was indicated by the statistics at that time. Today we have a new description of history to base our own assessments on. This type of statistical measuring problem was one of the things that made Francesco Giavazzi and Frederic Mishkin advice against having targets for production or employment in their evaluation of Swedish monetary policy. I agree with them. The best we can do is to balance monetary policy so that the economy follows what is roughly considered to be a long-term favourable path. This balance should of course be within the scope of our inflation target. The current situation and monetary policy considerations This seems like a good point to move on to talk about the Riksbank’s current views on inflation prospects. The economy has grown rapidly in recent years. Over the coming years we are expecting growth in the economy to slow down and approach a growth rate that is more sustainable in the long term. One reason is that our assessment is that international economic activity will slow down; another is that the productivity increases will slow down. Over the coming year, GDP growth nevertheless looks to be relatively high. Employment will rise and households will increase their consumption at a rapid rate. We are assuming that employment will continue to rise during the forecast period, albeit at a slower rate. This will lead to unemployment falling.