samchain/econo-pairs-v1 huggingface dataset:
A framework that takes some signals from market prices could be more forward looking, for example, recognising the market pricing of climate risks, rather than a backwards view of the risks of failure. However, any alternative framework may bring in new risks, potentially in being over risk-sensitive; or for example if provisions are linked to credit spreads, there may be incentives to value assets nearer the top end of the plausible range, understating the credit spread. While this is likely a smaller risk for traded corporate bonds, the shift to less liquid assets brings in greater scope for valuation uncertainty, which may also need to be factored into the FS. Conclusion  I have focussed today on risks inherent in the MA, in particular on risks from less liquid assets stemming from uncertainty about the credit rating, uncertainty around valuations, and uncertainty about the amount of MA benefit that should be taken as a credit to insurers’ balance sheets. These are all risks that insurers’ Boards and senior management need to be across and to understand the vulnerabilities in assumptions that have to be made. The MA is a significant benefit for firms, in bringing forward unrealised profits that are then available to be deployed to grow businesses, or to reward shareholders. However, an addition to the risk-free rate is appropriate for annuities where they are well matched, and the MA is a valuable source of resilience for annuity writers.

Jean-Pierre Roth: Prospects and limitations of Switzerland as a business location Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Annual General Meeting of the Swiss Marketing Association, Zurich, 24 October 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the economy and in politics, there is optimism in the air again. In addition to the favourable economic conditions, the performance of Swiss companies on the global markets has also been a driving force. Working from their Swiss business base, companies have taken advantage of the opportunities afforded by globalisation and are expanding all over the world. Ensuring price stability is the most important contribution a central bank can make to a business location and thus to the growth potential of a country. Significant progress has been made globally in this area in recent years. A number of factors suggest that increased competition has had an impact on this development in that it has changed the political environment for central banks. Competition has become stiffer in recent years, also in Switzerland. Not only market forces, but also economic policy reforms have played a role. There continues to be a need for action here, however.
(..) This had to do with the fact that the flexibility that could be obtained through monetary policy was more to the liking of leading economists in the 1930s and on up to the present day, than the stability and the long-termism that may result when one imposes constraints on oneself of the type Nicolai Rygg represented.”  36  The Bank must on occasion be deaf to contemporary criticism in order to safeguard long-term considerations. But there will be a trade-off: which short-term costs are we willing to bear to keep our long-term promises. 37  http://www.norges-bank.no/Upload/67282/Artikkel_Gjedrem_180408.pdf. BIS central bankers’ speeches  9  The then Governor of Norges Bank Erik Brofoss had both time and energy to concentrate on matters that interested him but which differed from the traditional interests of a central bank. Brofoss was, for example, keen to solve the housing shortage problem following the war. He had visited England and been inspired by the New Towns.38 He asked the Bank’s lawyers to draft a Norwegian statutory bill based on the British act of 1946. Norges Bank Governor Knut Getz Wold was even clearer about the Bank’s reduced role in monetary policy. In a speech in 1972, he stated the following: “Cartels and price agreements play an increasing role in the setting of prices. The social partners exercise decisive influence over wage developments.

The central bank does not manage real wages, the labour supply, employment or the level of unemployment in the long run. But, if price-stability is firmly anchored, the central bank can help to reduce short-term economic fluctuations. While central bank independence promotes price stability, researchers do not find a discernible connection between central bank independence and real economic variables such as GDP growth or unemployment (see Alesina, A. and L.H. Summers (1993), “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence”, Journal of Money, Credit and Banking, Vol. 25, No. 2., pp. 151–162). 27  The principle whereby the new state would have its own monetary system, separate from Sweden, was written into the November Constitution in the same year. Here the word “bank” is also used for the first time. In keeping with the emerging liberal thinking of the time, keeping the value of money secure was considered essential, a prerequisite for the liberty of the citizenry. 28  This journey time is for transport with a military escort. A post rider was able to make the journey considerably faster. Only after confidence in the new institution had been established – several generations later – was the Bank moved to Kristiania. Incidentally, the desire to compensate for the loss of the Bank was one of the reasons that Trondhjem was chosen as the location for another institution, the Norwegian Institute of Technology.
You saw from the slides I showed earlier that the general public on the whole has relatively good access to places where they can made cash withdrawals and the retail trade has good access to service points where they can leave their daily takings, but is it at the same time a well-known fact that several of the banks have cut back on their manual cash handling. The consequence is that a number of households, perhaps those in sparsely-populated areas in particular, have had a long way to travel to the nearest bank that handles cash. This is a problem that may increase with regard to the banknote and coin changeover. The Riksbank is therefore conducting a regular dialogue with the banks on how the changeover should be managed. The banks have said that they will help their customers to the extent that they need it and that they will contribute to a smooth changeover. We are assuming that the banks will take this responsibility, but we are at the same time monitoring developments, for instance, by making a survey of access to cash services in different parts of the country. The continued dialogue with the banks will show whether the Riksbank needs to take any further measures. Starting from 2015, we will carry out extensive information campaigns aimed at both market participants and the general public. The effects of more electronic payments The challenges regarding electronic payments are essentially very different.

Here in Morocco, we have just completed our national strategy for financial inclusion, which will be discussed in the appropriate panel. As for regulation, we are now called to leave room for creativity and Fintech development, but at the same time, preserve and strengthen resilience of our financial systems, and protect consumers and enterprises, particularly smaller ones. To guarantee such a difficult equilibrium, risks shall be identified and classified, and the potential impacts of innovation and of the new financial activities shall be foreseen. Sometimes, central banks are required to resort to interim solutions in the absence of statutory powers, as is the case for crypto-assets. In fact, to deal with this issue, which arose in Morocco in 2017, we chose to approach it from the consumer protection angle to attract attention to the risks involved. Still, it should be made clear that we have not taken a final position on the issue. Moreover, as enterprises, we are also called to adapt ourselves to this digital transformation, starting with strengthening the capacity of our human resources in this field and reinforcing our infrastructures, mainly the information systems whose resilience to cyber criminality has become a daily concern. 9  In this regard, and as part of our 2019-2023 strategic plan, we conducted a thorough reflection in Bank Al-Maghrib and have just drawn up a roadmap for our own digital transformation.
The direction of its impact is clear, however, reducing risks to unemployment relative to the Bank’s August projections which assumed no successor scheme. The balance of these effects on jobs is unclear. Surveys of employment expectations among households and businesses are at low levels. For example, households’ expectations are consistent with a rise in unemployment to around 8 or 9%, at least a percentage point higher than the MPC’s August projections. This is another example of the wedge between public and policymaker expectations. It also means households and businesses would be positively surprised if the MPC’s projections were to materialise. The third of the unholy trinity of risks – Brexit – is in some ways the hardest of all to judge. It too, though, is a controllable risk, at least to some degree, by businesses and policymakers. Whatever the final outcome of the trade negotiations, it is clear the UK will be leaving the customs union with the EU at the end of the year. Doing so in a way that reduces operational frictions in trade, and hence costs for the economy, will require intensive preparatory work by the Government and businesses. Existing surveys suggest many firms still have a distance to travel before they are fully prepared for leaving the customs union with the EU, understandably so given the disruption caused by Covid.

Indeed, anxiety can itself generate perceptions that events are beyond your control, contributing to fatalism about the future and excess levels of caution.7 Yet the risks facing individuals, businesses and the economy at present are, at least to some degree, within our control, collectively if not individually. All of these risks can be mitigated, if not eliminated entirely, by the actions of individuals, businesses and policymakers. 7  See Grupe and Nitschke (2013). 10  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  10  One safeguard against these risks comes from our individual actions when we socialise, shop and work. A further, collective, source of insurance comes from public policy – public health policy, fiscal policy and monetary policy. Extra-ordinary action has been taken on all three fronts during the Covid crisis to contain risks to the public, businesses and the economy. As importantly, it has been made clear that further action would be taken on all three fronts where risks to re-escalate. Taking the three largest risks in turn, on public health there has been a worrying rise in Covid cases across the UK recently. In response, a sequence of local lockdown measures have been put in place and last week these were accompanied by some tightening of national restrictions. While it is too early to judge what economic impact these measures will have, they are likely to restrain economic activity and slow growth. At the same time, it is important to put the likely impact of these measures in proportion.
I would like to thank faculty, students, and administrative staff for their success in carrying out our activities at close to normal levels while keeping everyone safe. The world has witnessed many historical changes since 1987, when CEMFI was created by the Banco de España, starting with the fall of the Berlin Wall in 1989. It has also seen important events such as the introduction of the euro and the emergence of China as an economic superpower, as well as two huge shocks such as the Global Financial Crisis that broke in 2007 and the current COVID-19 crisis. You could say that the speed of history has accelerated. To succeed in this challenging and rapidly changing world, it is essential to focus on the single most important factor for long-term growth: namely, investment in human capital. This is why it is crucial to have academic institutions that are international leaders in their field of expertise, that can produce groundbreaking research and that are able to attract talent from any part of the world. This is precisely what CEMFI has done in the area of economics and finance, and this is why the Banco de España is so proud to have contributed to its creation and development. An independent assessment of the quality of CEMFI is contained in the recent evaluation report by three distinguished economists, Marianne Bertrand and Raghuram Rajan, of the University of Chicago, and Nobel laureate Jean Tirole, of the Toulouse School of Economics.

The report starts with the following bold statement: “CEMFI is a remarkable adventure, both on the research front and in terms of educational achievements. A relatively recent introduction in the landscape of European higher education in economics, CEMFI has succeeded in establishing itself as one of the premier research centers and postgraduate schools (in Europe).” A number of factors have contributed to this success. First, I tend to think CEMFI has 1/2  BIS central bankers' speeches  benefitted from the long-term stability that the institutional support of the Banco de España has given it. Second, it has a very good working relationship with the university system, through the agreement with Universidad Internacional Menéndez Pelayo, which provides the official recognition of the Master’s and PhD degrees. At the same time, it is not burdened by some of the constraints, that make it difficult in Continental Europe to organise graduate studies comparable to those of the best US universities. Third, CEMFI has developed over the years norms of behaviour and a collective culture in respect of the admission of students, the hiring and promotion of faculty, and the responsibility and commitment to the institution that are key ingredients for achieving excellence in training and research. Finally, CEMFI has been fortunate to count on an outstanding leadership that has steered its development over the years. Besides the Master’s and PhD programs, and the important contribution of faculty to frontier research, CEMFI provides other valuable services.
Conclusion It is important for the Riksbank to analyse the housing market and household indebtedness, not least because they can have an impact on our ability to perform our tasks relating to price stability and financial stability. Our expansionary monetary policy aims to maintain confidence in the inflation target. Today I have pointed out that international monetary policy establishes a framework for Swedish monetary policy. Inflation is now moving in the right direction. However, one precondition for the success of our monetary policy strategy from a longerterm perspective is that we take measures elsewhere to reduce risks linked to the housing market and household indebtedness. Developments are definitely moving in the wrong direction! There are several potential risks for the real economy, financial stability and price stability, which are connected to household indebtedness and the housing market. I have attempted to shed some light on several of them today. The Swedish housing market could be likened to a “blind spot” in terms of economic policy. In its latest statement on Sweden’s economy, the IMF described the situation on the Swedish housing market as self-inflicted. 23 It is essentially each individual bank’s responsibility to ensure sound long-term credit lending. This is a central principle in a market-based system, and something which we should not forget in the debate about the housing market and household indebtedness. However, the authorities are responsible for taking action if developments threaten macroeconomic and financial stability. Sweden is lagging behind in this regard.

Our monetary policy strategy is based on using a highly expansionary monetary policy to safeguard confidence in the inflation target, which has provided a nominal anchor for the Swedish economy for over 20 years. However, we are well aware that the low interest rate level increases the risk of problems arising on the housing market later on and that measures need to be taken elsewhere to make our strategy successful in the longer term. Consequently, when we discuss possible measures for the housing market and household indebtedness, this is a matter of risk management: of adopting measures today to prevent the risk of unfavourable events later on. When it comes to the exact design of measures, to some extent it is, therefore, a matter of subjective opinions and not an exact science. The mandate for macroprudential policy in Sweden must be clarified Macroprudential policy is the policy area which has come to dominate the international discussion about reducing risks linked to household indebtedness. 12 Several targeted tools are offered within macroprudential policy which could be used for this purpose. For example, requirements could be placed on banks’ equity by introducing countercyclical capital buffers and risk-weight floors on mortgages, and limits could be placed on how much households can borrow by way of loan-to-value limits and an amortisation requirement. It is therefore obviously very concerning that the previously adopted macroprudential policy framework in Sweden has encountered legal problems.
I would like to thank you for your attention, and hand over to my colleague Dewet Moser. He will be discussing the challenges for monetary policy implementation in turbulent times. 4  Figures refer to the World Sovereign Bond Index from Bank of America Merrill Lynch. The index contains over 2,000 government bonds with residual maturities of at least one year and minimum requirements on the size of individual issues. 5  The G7 nominal interest rate is derived from the nominal GDP-weighted yields on ten-year government bonds of the following countries: the US, Japan, Germany, the UK, France, Italy and Canada. BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13

7 It now appears that capacity utilisation in the Norwegian economy may return to a normal level in one and a half to two years – and with a somewhat lower unemployment rate than today. A different path can be met with an interest rate response. Our understanding of the fiscal rule is that the government budget for 2012 or at the latest for 2013 should be planned with a view to bringing down petroleum revenue spending to 4 per cent of the size of the wealth fund. This does not seem demanding compared with the situation in the years between 1994 and 1996. The tightening at that time started directly after the economy had turned and while unemployment was still high. Should policy now be tightened to the same extent that history in retrospect indicates was the case at that time, 4 per cent would be reached in the course of one year. 7  See for example the National Budget for 2010, box 3.1, p. 53. BIS Review 15/2010  15  It must, however, be added that in real time the tightening was not planned to be that strong. After the tax reform, government revenues from the corporate sector were higher than expected. 8 But even measures on a par with those planned at that time would now rapidly bring down petroleum revenue spending.
Money is being created by the banking system by using some sort of seed money called reserve money and produced by the Central Bank in its day to day operations. So all monetary policy measures adopted by the Central Bank take two different forms: at first, curtailing the production of its own reserve money and, then, checking the production of total money by banks. But, the monetary policy is expected to operate by forcing the entire economy to cut down its excess demand for goods and services. This objective would be attained by making money more scarce and raising its costs to a higher level. Both these strategies would force the economy to make a very painful adjustment, by sacrificing the currently enjoying pleasures. This was eloquently described by a former President of US Federal Reserve, William McChesney Martin Jr., as withdrawing the punch bowl when the dancing gets going at its highest. Naturally, everyone on the dance floor would be disappointed by this seemingly cruel act, but the central bank does it for a good cause, just like a physician administering a bitter medicine to a dying patient to cure him. The role of the banks and the private sector So, the monetary policy measures taken by the Central Bank are all painful. It requires the economy to make a very painful adjustment, but that adjustment should be made for the benefit of every one.

But not only that. The banks should also hold buffers over and above the minimum requirements. One such buffer is what is known as the capital conservation buffer. The further a bank is from meeting the capital conservation buffer requirement, the more limited its capacity to pay dividends to shareholders. The reason is that one wants to prevent the banks from showering its owners with riches in the good times, and then being caught unprepared when the economic climate changes. If one adds this buffer, the requirements for common equity Tier 1 capital is 7 per cent. Moreover, national authorities will have the opportunity to force the banks to build up extra buffers during economic upturns, so that they can more easily weather difficulties when there are downturns. The Swedish banks already comply with the capital requirements stipulated in the new Basel regulations. And this is an important condition for them to be able to fund themselves on the markets. 4  BIS Review 159/2010  Liquidity regulations increase resilience when funding is difficult But even if a bank is well-equipped in terms of capital, it can nevertheless come unstuck if it does not have sufficient liquidity buffers. And this is what happened to many banks during the crisis. To ensure the banks are better-equipped, the Basel Committee has agreed on introducing requirements regarding the banks’ liquidity management. These are entirely new regulations – there have previously not been any regulations in this field at all.