samchain/econo-pairs-v1 huggingface dataset:
Inflation would likely have been negative this year were it not for our measures. And according to the staff assessment, in the absence of our measures, it would be at least half of a percentage point lower next year and between 1/4 and 1/3 of a percentage point lower in 2017. So in assessing how to respond to the risks to price stability, the question we faced was not whether our tools worked – indeed, they are probably the dominant force spurring the recovery we see today. It was whether, in light of the evolution of those risks, the calibration of our policy was still sufficient. This is the question that the Governing Council addressed yesterday. On the real side of the economy, our assessment was that the recovery is ongoing and the economy remains resilient to volatility in the global economy. Domestic demand is replacing foreign demand as the engine of growth, and our outlook for the coming years is broadly unchanged. On the nominal side, however, we perceived that the downside risks to the inflation outlook had increased, especially given continued declines in oil prices and a large output gap. Without further monetary policy action, the date when inflation returns to our objective would once more have been pushed back. The Governing Council therefore decided that, to secure the path of inflation back towards 2%, the calibration of our existing monetary policy measures needed to be adjusted.

Since the summer of last year we have cut our policy rates into negative territory, launched a credit easing package and begun purchasing private and public sector securities under the asset purchase programme (APP). A large body of evidence has accrued in that time that our instruments are powerful. And that evidence has allowed us to refine further our understanding of the amount of stimulus required to bring inflation back to 2% without undue delay. For example, since we launched our credit easing package in June 2014, composite lending rates for firms have declined by more than 80 basis points for the euro area as a whole, and by between 110-140 basis points in stressed economies. That is a formidable pass-through. ECB staff estimates suggest that we would have needed to reduce the standard policy rates by around 100 basis points in June 2014 to achieve a similar effect on bank lending rates. Improving financing conditions have also fed into improving macroeconomic conditions. According to Eurosystem staff assessments, our measures will add almost 1% to GDP between 2015 and 2017. And we are seeing an effect even on smaller firms that are typically harder for monetary policy to reach. In our most recent survey on smaller firms in the euro area, for instance, we saw for the first time since 2009 that the net percentage of small firms registering an improvement in business activity has turned positive, for all size sub-groups. Crucially, our measures are also gradually feeding through into inflation.
Philipp Hildebrand: Current state of the financial system in Switzerland Introductory remarks by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 20 June 2009. *  *  *  Introduction This time last year we reported that the overall market environment had calmed somewhat. However, we also stressed that it was too early to sound the all-clear, and that there was considerable uncertainty about the future development of the crisis. Our concerns at that time proved more than well-founded. Indeed, the actual events outstripped our expectations. If I may, I will start with my conclusion: the state of the Swiss and international financial system is – and remains – vulnerable overall. Consequently, we are still maintaining close contact with the big banks and with Swiss and foreign authorities, and are monitoring further developments with great attention. In addition we are continuing our intensive efforts at national and international level to improve the regulatory framework. Given the scale of the crisis, the Swiss National Bank (SNB) is convinced that although the measures taken so far in this area are heading in the right direction, some of them do not yet go far enough. I will therefore begin by briefly assessing the situation of the financial system, and then present the issues to which the SNB attaches medium to long-term priority with regard to reform of the banking sector operating environment. In the short term, however, the main focus is on overcoming the crisis.

Thomas C Baxter, Jr: Reflections on the new compliance landscape Remarks by Mr Thomas C Baxter, Jr, Executive Vice President and General Counsel of the Federal Reserve Bank of New York, at “The New Compliance Landscape: Increasing Roles – Increasing Risks” Conference, New York City, 23 July 2014. *  *  *  The views expressed are the views of the author and do not necessarily reflect the views of the Federal Reserve Bank of New York, or any component of the Federal Reserve System. Let me begin by thanking the Risk Management Association, PWC, Debevoise & Plimpton, and my friend Paul Lee for inviting me to participate in this conference. Of course, I need to give what sometimes sounds like a Miranda warning – my remarks are personal, and do not represent an official position of the Federal Reserve Bank of New York, or any part of the Federal Reserve System. There is nothing I will say that can be used against them. I am going to address three specific compliance problems: economic sanctions, tax evasion, and foreign corrupt practices. I will use these three compliance problems to illustrate a larger point about organizational culture. If organizational values do not support the rules that organizations use to guide the behavior of employees, and worse, if organizational values actually conflict with those rules, the organization is headed for troubled territory. In my remaining time, I will elaborate on this fundamental point. Let me start with economic sanctions.
One way of overcoming this is for the prudential regulator to make a firm raise the required equity capital once the deficit is identified. Another way might be for banks to issue so-called hightrigger contingent capital instruments (CoCos), ie bonds that convert into equity if a bank’s capital ratio falls below a prescribed but reasonably high level. In steady state, for a bank with a minimum equity ratio of 10%, that trigger might be, say, 8%: sufficiently below the required level for the insurance provided by these CoCos not to be prohibitively expensive, but sufficiently high that the bonds would convert to equity while the bank was still able to fund itself in the market.8 The second, and in some ways bigger, issue relates to the problem of a debt-overhang.9 Suppose, due to a marked deterioration in the macroeconomic environment, a bank’s equity base, even after the conversion of high-trigger CoCos, is revealed to be too thin to cover the risks in the business. Debt spreads rise and, in consequence, the value of bonds in issue falls. An injection of fresh equity would increase the value of the business, by reducing the probability of bankruptcy. But since bond-holders ultimately pay the bankruptcy costs, they and other creditors would be the main beneficiaries of recapitalisation: there would be a transfer of resources from equity holders to bond holders. Shareholders in a poorly capitalised firm have an incentive, therefore, to keep their hands in their pockets and gamble that the economy, and with it their bank, improves.

Overall, this underlines the importance of transparency – from banks and from the macroprudential policymaker. Conclusions: The implications of reform for the shape of finance Cyclical fluctuations in credit conditions and macroprudential interventions to influence them will not play out in an unchanged financial system. In fact, it would be surprising if the  8  BIS central bankers’ speeches  market’s own response to the crisis and the regulatory reforms did not drive structural changes in the credit system. The shape of some can perhaps be discerned. Too-Big-To-Fail effectively subsidised longer-term bond finance for banks. Combined with lax liquidity regulation, this probably left the sector as a whole with larger and longer-maturity asset portfolios than otherwise. A few decades ago we used to talk about government crowding out the private sector from the capital markets. Well, the bloated balance sheets of TBTF firms essentially crowded out other long-term investors from parts of the credit markets. Unlevered sources of funds struggled to compete with the banks, but instead held lots of bank paper, thinking it risk free. Competitors to the banks had to lever up: fragile shadow banks were one result. Actions to remove the subsidy from banking will, amongst other things, create conditions in which the relative role of unlevered capital market investors can grow. Some of that might come through securitisation, although a mature and resilient market in ABS of loans to SMEs might well require initiatives to produce rich data sets on credit histories.
Moreover, any such subordination would imply that the objective of the Internal Market is superior to the objective of Economic and Monetary Union. This is not the case; these are equal and complementary objectives of the European Union. Moreover, as the ECJ made clear in the Pringle case, “[…] each institution of the Union is to act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them.”5 And third, there is a limitation: Article 22 cannot confer general regulatory competences on the ECB – it can only adjust the ECB’s monetary policy toolkit by clarifying that the competence for clearing and payments covers derivatives. The Treaty drafters made the ECB’s objectives and tasks very clear. As the European Court of Justice said, a measure falls under the responsibility of the ECB when it is intended to pursue an objective such as the consistency of monetary policy or the proper transmission of monetary policy. This objective, in turn, contributes to the primary monetary policy objective of maintaining price stability6. The reason why monetary policy needs to cover CCPs’ liquidity is that derivatives clearing has become a cornerstone of the financial system. We must not forget that ECB measures must also comply with the principle of proportionality. This means that any ECB actions in the field of clearing will have to be appropriate for attaining monetary policy objectives and cannot go beyond what is necessary to achieve those objectives.

The size of the imbalances and the persistence of the forces supporting them probably mean that we will be living for a prolonged period of time with the tensions that could come with the need for adjustment. The risks associated with this adjustment process may be magnified by changes in the household balance sheet in the United States. The average household in the United States today has a higher level of debt to income and is somewhat more exposed to interest rate risk than in the past. The sustained rise in housing prices and the scale of borrowing against housing assets raises the possibility that a rise in risk premia could have a greater impact on household spending that would have been true in the past. The adjustment process is also complicated by the fact that the rest of the world does not appear likely, even over the medium term, to be in a position to provide a sufficiently strong offsetting source of demand growth to compensate for the necessary slowing in U.S. domestic demand. Policy actions to promote structural reform in the labor, product and financial markets could potentially change this, but the policy changes required are politically difficult, and their effects on net savings over time might be offset by demographic and other forces working the other direction. A number of observers have suggested that we can live comfortably with these imbalances for a long time, with very little risk to the U.S. and world economy.
In addition, the expansion of the euro’s international role would be a useful means of consolidating our economic sovereignty. The euro is 20 years old and it is our success: it ranks second in the international monetary system, but it still needs to increase its importance at the global level. The dollar remains a key pillar of America’s global power, and China is taking a greater interest in the internationalisation of the renminbi. The other major threat to Europe’s sovereignty is technological. Of the large digital corporations – the GAFA and other bigtechs – whose power equals that of sovereign states, none is European. And Europe is seriously lagging behind in investment: in 2015, the euro area’s stock of information and communication technology (ICT) capital amounted to 7.6% of GDP compared with 10.9% in the United States. v Yet Europe has the advantage of having a single market: you can see what happens without it with Brexit and the cost of a “no deal” for the British economy. But we need to be more bold. By taking full advantage of the size effect: there are still too many implicit borders and too much  Page 4 of 10  fragmentation. By using the power of standardisation, notably to direct innovation, as illustrated by the GDPR and data where Europe is taking the lead. By daring to implement an industrial policy with public-private partnerships, as in artificial intelligence and batteries.

And lastly, by mobilising our financial resources: Europe has the largest pool of private savings in the world, with more than EUR 300 billion of excess savings invested outside the region each year, but our venture capital market, and more broadly our equity financing market, are underdeveloped compared with the United States. In the financial sector, the bigtechs have the potential to cause a genuine “Big Bang”: they have a strong brand image, a global client base and privileged access to new technologies. Of course, financial regulation needs to remain neutral vis-à-vis technology: the principle of “same activity, same rules” needs to be applied to maintain a level playing field for all players. But we need to increase international cooperation in four key areas of the regulation of digital finance: (i) cyber-security; (ii) data protection; (iii) preserving competition in the face of the risk of ultra-dominant networks and private monopolies; and (iv) fair cross-border taxation. Facebook’s Libra is a prime example of a case where cooperation is imperative. The G7 under the French presidency underlined the challenge this poses for sovereignty, and wants to address some “serious regulatory and systemic concerns” vi before such projects can be implemented. II. Boldly seizing the opportunity of a social, environmental and multilateral model. I now come to my provocation, or rather what should be our boldness. To this uncertain, troubled, disruptive, and uncooperative world, does Europe have nothing to offer?
Thus, price stability is the main objective of monetary policy in all of these countries and has in fact become the recognized single target for monetary policy in numerous countries. The reason for this emphasis on price stability is that it creates the best conditions for balanced growth and increased welfare. The Icelandic financial market has developed very rapidly over the last ten to fifteen years. It is a small market by definition, but has nevertheless the same institutional set-up as larger industrial countries. Aside from the Central Bank, these include commercial banks, savings banks, securities companies, various investment funds, insurance companies, large and important pension funds and last but not least a stock exchange - linked with the other Nordic exchanges - where the shares of 60 to 70 Icelandic companies are listed and traded on regular basis. Supervision of the activities of all of these institutions is in the hands of a unified financial supervisory authority that has broadly the same legal powers and follows the same methods and standards as supervisory agencies in other European countries. Important rationalisation has taken place in the Icelandic financial system. Until a few years ago, two of the main commercial banks were fully government owned and so were a host of so-called investment credit funds. The funds were unified in a single institution, which was subsequently privatised.

In that respect, I might mention, since we are in Stockholm and since I have drawn some parallel with the other Nordic Countries, that the Swedish krona fell in broadly similar proportions over a period of time after the exchange rate was floated in late 1992. The depreciation of the Icelandic króna fed into domestic prices and inflation picked up significantly. Late last year, the exchange rate had clearly overshot sharply on the downside. Then expectations turned around again. It was clear, among other things, that the economy was cooling down and that the current account deficit was shrinking fast. Optimism also arose once prospects improved that the inflation spike, which followed the exchange rate depreciation, would subside quickly again. The króna began to appreciate and has by now regained an important part of its earlier value. Inflation has subsided sharply again this year and expectations are that the inflation target of 2½ percent will be achieved before the end of the year. The large current account deficit recorded in the year 2000 also began to shrink rapidly, it fell by more than half in the year 2001 and the outlook is for approximate balance this year. These developments demonstrate the resilience and adaptability of the Icelandic economy; moving from a very large current account deficit to virtual balance in the course of two years and reducing inflation from bordering on a two-digit rate to 2½ percent within one year.
The development of a single global code for the FX market is a significant effort, but developing a code is not enough. Codes of conduct and associated best practices are an important complement to regulation. They can support the integrity and function of the market by underpinning the smooth operation of the market and instill confidence that participants will treat each other fairly. But this is not possible, or sufficient, if best practices do not evolve as the market evolves, if they are not implemented effectively, or if they are not adhered to by market participants actively engaged in the market. Development of dynamic best practices is critical, as is the market’s adherence. Recent headlines and events paint a picture of an FX market that does not always serve the public well. But you all have an opportunity to change this picture – to support the work to strengthen the market. I encourage you all to make the most of this opportunity. As Guy Debelle noted in his speech in February, the failure to act on the FXBG recommendations may prompt authorities to conclude that further regulation is the only way to strengthen the integrity of the market. 15 Similarly, the Governor of the Bank of England, Mark Carney, emphasized in his recent Mansion House speech that a failure to establish effective common standards that are adhered to would likely result in more restrictive regulation. 16 Consider this message reiterated here today as well.

BIS central bankers’ speeches  3  interdealer and dealer-to-client – into a market with much broader access. Moreover, as new trading platforms have come online, the profile of FX market participants, and thus the way FX is traded, has changed. New participants, such as retail and smaller institutions – that are often engaged in high-frequency or high-speed trading – could begin executing on their home or office computers, or could connect their trading algorithms directly to the platforms. The expansion of both the universe of market participants and the infrastructure to support execution has brought many positive benefits to the market and global economy, but we should also be mindful of potential costs that might arise. In particular, it is important to consider the implications for the overall integrity of the market, which, as I noted earlier, relies on the ability of market participants to confidently and effectively transact at prices that reflect available market information. Technology has helped ease entry to the market, but the capital investments needed to keep up have also increased. Indeed, operating in fractions of milliseconds has become an important component toward achieving faster execution. Will this hinder the entrance of new participants in the future, particularly those who may not have the extensive resources required to keep up? In addition, while many market participants note the positive influence that technological changes have had on market functioning, including narrower bid-ask spreads. 7 it is unclear how these changes may affect the broader price discovery process or liquidity of markets overall.
•  Solvency II will raise requirements on capital adequacy and risk management for European insurance companies, and shape the development of risk-based capital frameworks for insurers in other jurisdictions. •  New capital markets regulation will transform the over-the-counter (OTC) derivatives trading business, with mandatory reporting, central clearing, and margin requirements for non-centrally-cleared contracts. •  Additional capital charges and closer supervisory intensity will be applied on the so-called G-SIBs, or global systemically important banks, as part of efforts to address the “too-big-to-fail” problem. Some regulatory initiatives will impinge directly on the structure of financial institutions. Many jurisdictions are pushing for local incorporation of institutions, especially if they are systemically important. In America and Europe, regulators are reviewing various proposals for separating or insulating retail banking from riskier activities. Third, the centre of gravity of financial activity is shifting towards Asia. •  The IMF forecasts that, in the next five years, emerging Asia will grow by about 7% per annum, nearly three times faster than the 2.5% forecast for the advanced economies. BIS central bankers’ speeches  1  The financing needs of companies and individuals in Asia will grow in tandem. Infrastructure investment needs alone will amount to a staggering 8 trillion US Dollars over the next decade. There is opportunity to mobilise Asia’s large pool of savings to meet these financing needs. But this transmission is not working as well as it should, because financial markets in Asia are still under-developed and fragmented.

•  Final details of the regulatory capital framework will be announced by June this year. Diverse ecosystem The second pillar: Singapore has a diverse financial ecosystem. The various parts of the financial sector not only serve important functions in their own right, but are mutually reinforcing. •  The World Economic Forum has ranked Singapore 2nd worldwide for financial market development – a testament to the depth and breadth of Singapore’s financial sector. A full-fledged financial centre Singapore provides a broad and integrated suite of financial services. We are an important regional funding centre. •  The Asian Dollar Market, with its total asset size of more than 1 trillion US dollars, has played a key role in serving the financing and treasury needs of individuals, corporates, and institutions in Singapore and the region. We are the premier asset management centre in Asia, acting as gateway to the world for Asian investors and for the world to tap Asian investments. •  Assets under management by Singapore-based managers have more than quadrupled over the last decade to reach 1 trillion US dollars in 2011. We are the leading insurance centre in Asia. •  Singapore plays host to about 190 insurance institutions meeting the protection needs of the economy and society across the region. •  The industry has built up expertise in complex and specialist risks – including marine, energy, aviation and credit and political risks. We have one of the most developed bond markets in Asia.