samchain/econo-pairs-v1 huggingface dataset:
Even with the best risk management, banks can be hit suddenly by unexpected events or developments. I am convinced that managements will continue to misjudge situations in the future. This is something we have to live with. The financial system therefore needs to be made more resilient to possible shocks. This means the buffers in the financial system have to be increased. Fine-tuning of the current regulations is necessary in many respects. However, in my view it is an insufficient response to the steadily increasing complexity of financial markets. It is therefore questionable whether the current regulatory approach, with its increasingly complex provisions that intervene at an ever deeper level in the daily business of banks, is the right one. The authorities are, by nature, always a step behind the latest developments. Even the most complex models will never be infallible. In the current crisis, the model-based form of risk measurement failed. The SNB therefore believes that two fundamental adjustments need to be made to the capital requirements for the Swiss big banks. First, the risk-weighted capital requirements for the Swiss big banks need to be tightened. One way of achieving this would be by using an appropriate multiplier to increase the capital requirements under Basel 2. Second, a limit on leverage – often referred to as “leverage ratio” – needs to be introduced for the big banks as a complement to the risk-weighted capital requirements.

The Swiss Federal Banking Commission (SFBC) – as the authority with responsibility for this area – is currently in the process of spelling out in detail what measures will be needed in the area of capital adequacy requirements. Careful planning will be particularly important with respect to implementation of the new measures. First of all, the current crisis has to be seen through. The appropriate measures then need to be introduced progressively over a number of years. In this project, the SFBC can count on the full support of the SNB, in the interests of securing a long-term strengthening of the Swiss financial system. 2  BIS Review 80/2008
The Basel Core Principles are part of the "Key Standards for Sound Financial Systems" laid down by the Financial Stability Board (FSB) that warrant priority implementation, depending  1/3  BIS - Central bankers' speeches  on country-specific circumstances. Moreover, implementation of these principles is generally assessed through the IMF/World Bank Financial Sector Assessment Programs (FSAP). Allow me now to make four general points on the topic of policy coordination in a globalised world, focusing again on the financial stability domain. First, I think it is helpful to take a step backwards to review the rationale for international cooperation and global standards when it comes to the financial and banking system. The history of banking crises has painfully illustrated that financial stability is a global public good, with the costs of systemic banking crises often exceeding 100% of a country's GDP. Yet, if each jurisdiction is left to itself when it comes to safeguarding financial stability, the cross-border spillovers of financial distress can result in individual jurisdictions "underinvesting" in financial stability. That is why global cooperation is needed. Another way to think about this is to build on Hélène Rey's seminal work on the monetary policy dilemma/trilemma, which has an analogy in the area of financial stability, as pointed out by Dirk Schoenmaker. In short, any two of global financial stability, financial integration or national financial policies can be achieved, but not all three at the same time.

The main message is that if we want to live in a world with an open global financial system, then safeguarding financial stability requires a set of minimum global standards. Failure on this count could result in regulatory fragmentation, regulatory arbitrage and an uneven playing field for internationally active banks. This philosophy is what drives the work of the Basel Committee, and it underpins a common set of shared values among our members. Thus, it came as no surprise that the Committee – including under Stefan Ingves' Chairmanship – was able to coalesce around the Basel III reforms, given the mutual interest in shoring up banks' resilience. Nor was it a surprise that our members committed to implementing the outstanding elements of Basel III fully and consistently, and as soon as possible. Here I take the opportunity to reiterate the importance for all member jurisdictions of pressing ahead with this commitment to implement all aspects of Basel III. Second, and with that premise established, I would argue that this need for global cooperation has only grown in importance over time. The Great Financial Crisis (GFC) highlighted the deep and opaque cross-border interconnections existing within the global banking system. Yet, while some of the channels of interconnectedness that fuelled the GFC have since subsided, we have also witnessed profound structural changes to the financial system over the past decade that raise fundamental financial stability questions.
For ten years, therefore, Iraq had two currencies: one issued by the official government and the other backed by no government at all. The Swiss dinar continued to circulate in the North, even though backed by no formal government, central bank, nor any law of legal tender. For a fiat currency this was an unusual situation. Whatever gave the Swiss dinar its value was not the promise of the official Iraqi government, or indeed any other government.13 Although there was little or no trade between North and South Iraq, both the Swiss and Saddam dinars were traded against the dollar. The implied Swiss to Saddam dinar cross-exchange rate from 1997 onwards is shown in Chart 3.14  Chart 3: Saddam/Swiss Dinar exchange rate, Jul 1997-Oct 2003 Saddam/Swiss Dinars (log scale) 400  200  100  50 Jul-97  Jul-98  Jul-99  Jul-00  Jul-01  Jul-02  Jul-03  Source: United Nations, Central Bank of Iraq  After 1993 the Swiss dinar deviated from parity and rose to around 300 Saddam dinars to the Swiss dinar by the time Saddam’s regime was deposed in 2003. The appreciation of the Swiss dinar is  13  At no stage did the Kurdish groups lay claim to the Swiss dinar as their currency - they had no control over it - as shown by the interview given to Gulf News on 30 January 2003 by the Kurdistan Regional Government Prime Minister Barzani who said, “We don’t have our own currency”.

The Swiss notes traded at above the parity because of the risk that holders of the 10,000 note would find that they had a forgery and could not exchange it at the central bank. Second, before the capture of Saddam Hussein there was inevitably some uncertainty about the prospects of the new regime and the new currency that it issued. The circulation of Swiss dinars in Kurdish controlled Iraq during the 1990s was a market solution to the problem of devising a medium of exchange in the absence of a government with the power to issue currency. Changes in the relative price of Swiss and Saddam dinars show that the value of money depends on beliefs about the probability of survival of the institutions that define the state itself. V.  Case Study 3: Monetary policy in Japan and the zero bound on interest rates  My third case study shows that institutional arrangements need to be consonant with the underlying economics, or failure will result. Recent experience in Japan has led to the rebirth of interest in monetary policy when official interest rates are constrained by the zero lower bound. Official shortterm interest rates in Japan have been approximately zero since the beginning of 1999. Of particular interest in this context is the question of how responsibilities should be divided between the central bank, on the one hand, and the finance ministry, on the other. Guy Debelle and Stanley Fischer (1994) introduced the distinction between instrument and goal independence of central banks.
Let me now focus my remarks on four major implications of the changing global financial regulatory landscape for Islamic finance – first, particularly in financial systems in which Islamic finance is being developed alongside the conventional financial sector in a dual system environment, (which is the case for most IFSB member countries), there will be a need to ensure that the reforms are undertaken in parallel. The concern is that there would be insufficient attention given for Islamic finance and consequently, the tendency for broad-  2  BIS Review 64/2010  brush application of regulatory measures intended for conventional finance on Islamic finance. In developing the appropriate regulatory framework for Islamic finance, it is not uncommon to leverage on the established wisdoms of prudential regulation for conventional finance to achieve regulatory efficiency particularly in a dual system environment. Whilst it may be envisaged that it is not necessary to reinvent the wheel, it should not override the importance of addressing the specificities of Islamic finance where necessary. Such a prudential regulatory design that takes into account the unique mix of risks associated with Shariahcompliant instruments would enhance the effectiveness of the regulatory outcomes intended for Islamic finance. Although there is already a broad international consensus on the prudential areas that need to be enhanced, different regulatory parameters may be necessary to address the specific risks and unique characteristics of Islamic finance.

At its most basic level, the government exists to provide services that otherwise cannot be carried out by private market – things like infrastructure, law enforcement, or national defense. Public policy may also pursue social welfare objectives in accordance with its citizen’s wills, for example to promote income equality or access to health care and education. Finally, but no less important, public policy must provide a stable environment for the nation to prosper, and avoid being the cause of malaise itself. Based on these basic tenets, the present challenges for Thai policymakers are twofold. Public policy must first aid the private sector in overcoming structural bottlenecks and lift the economy’s potential growth by addressing areas where market has failed. Secondly, the policymakers must restore and maintain macroeconomic policy credence, and lay a stronger foundation for the economy to grow on a sustained basis. Let me take each of these in turn. 1. Structural policy to boost potential growth  The Thai economy is growing at a pace well below what a typical country with the same level of income should be able to attain. Failure to sustain a higher pace of growth over an extended period, even when demand pressure has eased, suggests that part of the problem could be from the supply side. It is no secret that infrastructure in Thailand needs an overhaul. Indeed, very few would dispute the merits of large-scale public investment.
So it is important that both households and mortgage institutions take account in their estimates of the possibility that interest rates will be higher in the future than at present. That also means that the rate of increase in house prices cannot be expected to remain as high in the long term as it is today. The consequences of this assessment of house price developments differ somewhat depending on which of the Riksbank’s two tasks we are talking about. As regards payment system stability, i.e. financial stability, I do not believe that house prices and household debt pose any threat at present. 2/6  The bulk of lending to households comprises loans secured on housing. A home is part of a household’s wealth and if the value of a home or apartment were to fall, it naturally would mean that the homeowner’s ability to pay would decrease. But the household’s income is not tied to the value of its home, and as long as the household is able to meet its borrowing costs, it does not represent a threat to the banks and the payment system. Both higher incomes and lower interest payments have resulted in a good ability to pay in the household sector at present.

4/6  Growth in the swedish economy continuing to strengthen For the Swedish economy, too, it was concluded in the Inflation Report that the economic upswing appeared to have gained impetus again after the slowdown at the start of the year. Compared with the previous assessment, GDP growth and resource utilisation were forecast to be somewhat higher in the years ahead, largely owing to more expansionary economic policy. All in all, the assessment was that growth would be relatively firm in the Swedish economy in the coming years. The recent years’ high productivity growth has partly laid the foundation for this development. Companies have been able to boost output with their present workforces, which has improved their cost situation and held back price increases in the economy. The low inflation rate has enabled monetary policy to be expansionary for a comparatively long period. In addition, the high productivity and relatively good profitability is anticipated to create scope for comparatively favourable wage growth in the period ahead. This means that there are good prospects for firm growth in domestic demand over the coming years. Expansionary fiscal policy will also help to boost domestic demand, while more robust growth in Swedish export markets will contribute to stronger exports. New information broadly supports the picture of a continued improvement in economic activity in Sweden. The National Institute of Economic Research’s (NIER) latest business tendency survey provides a relatively bright picture of economic conditions in most of the surveyed industries.
While $ billion was authorized for the program, only approximately $ billion in total was lent. Moreover, because loans were paid back as private credit markets improved, the maximum amount of credit extended under the program was about $ billion. Today, there is about $ billion of TALF credit outstanding. It is worth considering why the program was able to achieve such significant market improvements with a limited amount of balance sheet. The success of the TALF may reflect that it targeted a market under severe stress, one characterized by extreme liquidity premiums that had caused asset prices to become detached from the underlying credit quality of the securities. Under those conditions, our involvement was able to have a substantial effect, in part by pushing those markets back toward more normal functioning and pricing. To be sure, improvements in funding markets broadly and in the macroeconomic outlook during the course of the program clearly influenced the recovery of securitized credit markets. That said, the TALF lending mechanism has been widely credited with helping to jumpstart those markets. As markets have improved and the liquidity premium on securitized credit has shrunk, the TALF has become a less appealing source of funding. Indeed, borrowers have been prepaying their loans as spreads have narrowed below the TALF lending rate. At this point, those asset-backed securities markets that were supported by TALF appear to be standing on their own.

Dimitar Radev: Spillovers from the ECB’s monetary policy decisions are fast and strong Statement by Mr Dimitar Radev, Governor of the Bulgarian National Bank, for the IFLR Yearbook: Global Banking & Financial Policy Review 2019/2020, published on 24 September 2019. * * * There is much discussion these days about the course of monetary policy in the euro area. What global headlines rarely catch, however, is how such policy affects the European economies outside the euro area. Bulgaria is an example where, due to the high openness of our economy and the strong financial links with the euro area, spillovers from the ECB’s monetary policy decisions are fast and strong. Around 50% of Bulgaria’s exports go to the euro area. Investors from the euro area account for 67% of our FDI stock. Our banking system is dominated by the presence of euro area owned banks, which hold around 55% of the sector’s assets. The monetary policy regime in Bulgaria (a currency board with the national currency fixed to the euro) is another factor enhancing the direct transmission of ECB’s monetary policy. Therefore, even though Bulgaria is not a member of the euro area yet, it is important to consider how our economy is affected by the ECB’s continued accommodative stance. Financial stability and its implications are issues to be potentially concerned about. The ECB’s monetary policy in recent years has succeeded in sustaining the economic recovery in the EU following the great financial crisis.
These two pieces of legislation will usefully supplement the Second Payment Services Directive adopted in 2015, which paved the way for the creation of payment institutions, i.e. regulated entities that do not have to be registered as credit institutions. As you are well aware, however, the challenges linked to better regulation of digital finance are not confined to Europe. Globally, several major initiatives are under way. Because of time constraints, I will mention only two. First, the Financial Action Task Force, an intergovernmental body that works to prevent money laundering and terrorist financing, recently extended the scope of transfer transparency requirements, also known as the “travel rule”, to include virtual assets. Second, the Basel Committee on Banking Supervision is currently doing work on the question of setting prudential requirements for banks’ crypto-asset holdings. In a fast-changing world, there are a number of issues that regulatory authorities have yet to get to grips with. For example, we need to develop an adequate approach to regulate bigtech activity in finance. I would now like to talk about regulatory responses in the area of sustainable finance. The EU leads the field in this regard[SLIDE 6]. A major step forward was taken with the adoption on 18 June 2020 of the European Taxonomy Regulation, which seeks to promote sustainable investment through a common classification of economic activities (not of financing or businesses).

On the other hand, the experience with models based fully on rational expectations sometimes shows that certain aspects or policy implications are at odds with what is considered reasonable. One example is the forward guidance puzzle, i.e. the unrealistically large responses of inflation, long-term rates and output to the announcement of the future path of interest rates. Therefore, we as macroeconomists want to reconsider the assumption of superrational agents and replace it with something more realistic. The second session on Friday will be devoted to two papers that may challenge our ideas about the economy and the way we think in terms of our usual models. It is always extremely useful to listen to new concepts and visions and to rethink our current approaches. Discussing thoughtprovoking and stimulating papers is the only way to avoid rigidity in ideas and opinions. Rigidity that will – sooner or later – lead to wrong attitudes and decisions. I believe that good policymaking will always benefit from cutting-edge research. I would therefore like to thank the participants of the high-level policy panel, the presenters and commentators in the individual sessions, and all other participants for coming to our event. Ladies and gentlemen, thank you for your attention. I wish you all an interesting conference, fruitful discussions and an enjoyable stay in Prague. 2/2  BIS central bankers' speeches
If the currency market had been as sanguine as households sterling would not have fallen as far, if at all, and inflation of import prices and the aggregate CPI would not have risen to the same extent. If, conversely, consumers shared the currency market’s more pessimistic view of the future, domestic demand would have been weaker and inflationary pressure would again have been lower. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Resource allocation and aggregate supply  Let me say a little more about these points, starting briefly with productivity. I want to offer a slight corrective to a view I often hear that, were there any wider supply effects from Brexit – things that either improve or impair the UK’s productive potential – these could only come through very slowly, too slowly to have any material bearing on monetary policy. The MPC typically concerns itself with policy horizons of 2-3 years. If only implicitly, it often has to form a view about the economy’s trend rate of growth over that period – its “speed limit”, in the language of the latest Inflation Report. But if any impact on potential output takes years to come through, it’s not clear that either the fact or the nature of Brexit should change those short-term estimates. If you accept the way macro-economists often think about aggregate supply, this view makes sense.

changes in the relative prices of exports compared to imports: this is the theme of today’s conference. The subject chosen is highly topical, following the very sharp drop in commodity prices, in particular oil prices, between mid-2014 and early 2016, the effects of which on exporting countries had been underestimated, both by the countries themselves, but also by the international financial community. Thus, the economic growth forecasts for sub-Saharan Africa made by the main international organisations were revised downwards only very late. In January 2016, the IMF still expected Sub-Saharan Africa to grow by 4% in 2016 and by 4.7% in 2017, but the forecasts in the October 2016 global economic outlook were only 1.4% for 2016 and 2.9% for 2017, almost solely as a result of the recession in the oil economies. The Ivorian economy is another illustration of the importance of the terms of trade for economies focused on commodities. After experiencing exceptional growth over the last three years, partly driven by the good performance of cocoa prices, contrary to that of other commodities, activity appears to have slowed down, in the wake of the downturn in prices. The subject is also of major importance for central banks because the challenge here is to find how to implement appropriate counter-cyclical policies in the face of large-scale shocks that monetary policy cannot deal with either on its own or in the long run.