samchain/econo-pairs-v1 huggingface dataset:
It may not be so much a question of purely economic aspects, but rather what is feasible according to social conventions and possible to create understanding for. During the period we have had a negative repo rate, individuals have not faced negative interest rates and thus not needed to pay for having money in the bank. 6 I assume here that –0.5 per cent, that is, the lowest level to which the Riksbank has ever cut the repo rate, is a  lower bound for how much the rate can be cut. This assumption can of course be discussed, and I shall return to this shortly. 4 [24]  But if the repo rate becomes sufficiently negative, this may happen. On a theoretical level, one can argue that the policy would then be more powerful and have a greater effect on the economy – that the so-called monetary policy transmission mechanism would function better. But this also risks leading to various types of problem. As I see it, the biggest problem is not the economic arguments usually raised, such as the general public wanting to empty their bank accounts and hold cash instead. Holding savings in cash is, when it comes down to it, troublesome and costly and given that most people in Sweden are getting used to living without cash it would not be a natural thing to do. The threshold would probably be relatively high here. The main problem, as I see it, is another one.

In terms of monetary policy, this strategy is less dependent on the accuracy of the forecasts; instead it is a case of committing oneself to not deviating from the interest-rate development one has indicated. But Odyssean forward guidance also has its problems. Binding oneself to a particular monetary policy no matter what may on the one hand indicate strong determination and thereby have an effect on expectations. But on the other hand, such a policy may appear obstinate and unrealistic. If events occur that cause the policy to appear as inappropriate or directly harmful, it will be difficult to implement it. 13 And once one has deviated from a strategy which one has firmly undertaken to follow, one will hardly appear credible when trying to apply it the next time. When applying a makeup strategy, a less strict Odyssean forward guidance might mean that the central bank – in accordance with predetermined and clarified principles – makes it clear that it will hold the policy rate at the lower bound until inflation, or perhaps some measure of the development of the real economy, has  12 For more detailed analyses of the Riksbank’s experiences of publishing repo-rate forecasts, see Sveriges Riks-  bank (2017a). 13 See, for instance, Bernanke (2003). 7 [24]  attained a particular level. In this case, one does not make an unconditional commitment but makes one’s behaviour depend on certain developments. 14  Purchases of financial assets?
Despite the fact that it is hard to discern bubbles, especially in their early stages, I conclude that uncertainty is not grounds for inaction. Instead, the decision whether to act depends on whether appropriate tools can be deployed to limit the size of a bubble and whether the benefits of acting and deploying such tools are likely to exceed the costs. That cost-benefit calculus, in turn, depends crucially on the tools we can deploy to limit the growth of bubbles and the consequences when they burst. In this respect, I will argue that, in most cases, use of the bully pulpit and macroprudential tools, such as rules limiting loan-tovalue ratios or leverage, are likely to prove superior to monetary policy. Turning to the first issue of whether there are asset bubbles, I am going to be a bit of a heretic and argue that there is little doubt that asset bubbles exist and that they occur fairly frequently. By an asset bubble, I mean price increases (or declines) that become unmoored from fundamental valuations. I want to be clear that I am distinguishing this from price movements that are tied to changes in fundamentals. I know this runs afoul of the efficient markets hypothesis – which in this context would argue that if a bubble were obvious, then people would take the other side and the bubble would not occur in the first place. There are several reasons why this argument does not hold in practice.

Those that had doubts about the importance of the innovation or the persistence of the gain in asset prices lose confidence in their opinions as they underperform and lose business and market share. Those who believed that the large gains in asset prices were justified by the innovation and who benefited from those beliefs become more dominant. Casual investors see the large rise in prices and jump in. This shift is important because, in markets, prices are driven by the marginal investor. As new and often less well-informed investors plunge in to participate in the boom, they can overwhelm the so-called “smart money” that gets frustrated after having lost repeatedly trying to take the other side. In this respect, a bias toward optimism may also play an important role. Studies have found that most people believe that they are above average in terms of their acumen, be it as investors, car drivers or in other activities. 5 This overconfidence may cause some people to keep investing in the asset, even when they are skeptical about its valuation because they are overly confident that they will anticipate the end of the bubble and be able to get out in time. Fifth, asset bubbles occur more easily when it is difficult to short the assets.
In the euro area, the amount of outstanding debt securities issued by non-financial corporations in their domestic currency represents around 5% of GDP, compared to a figure of more than 20% in the United States. Integration is progressing in the government bond markets and, to a lesser extent, also in the corporate bond markets. The corporate bond markets have grown and deepened substantially in Europe over the past years, although a large gap with the United States still exists as regards the outstanding volume. But the new issuances in 2003, according to the best estimates, were of the same order of magnitude on both sides of the Atlantic. The business of underwriting corporate bonds in euro, on the other hand, is a wholesale banking area that has become largely pan-European and even international. The short-term securities markets in Europe are slowly integrating. The market’s size for commercial paper in the EU represents about EUR 1000 billion, which is about two thirds of the size the US market for commercial paper. As I mentioned earlier, one of the ECB’s approaches to fostering financial integration is to act as a catalyst for initiatives from the private sector. One such example is the Short-Term European Paper (STEP) initiative, which was set up by the ACI – The Financial Markets Association. It aims to promote the convergence of the practices prevailing in the fragmented European short-term securities markets through market players’ voluntary compliance with the standards set out in the STEP Market Convention.

At the present moment, the current configuration remains complex, with a significant number of national exchanges, clearing houses and central securities depositories. Further consolidation of some of the European infrastructure is advisable. The ECB has a particular interest in an integrated securities infrastructure because it uses it in the context of the collateralisation of its intraday credit operations for payment system purposes and its monetary policy. In addition, a major disruption in a securities settlement system could undermine the stability of financial markets. There are numerous private and public-sector initiatives under way to promote the integration, efficiency, and security of the European securities infrastructure. The “Standards for Securities Clearing and Settlement in the European Union” that have been drawn up jointly by the ESCB and the Committee of European Securities Regulators (CESR) are an important initiative. In its communication on “Clearing and Settlement in the European Union”, the European Commission recently outlined the actions it intends to undertake to improve clearing and settlement arrangements, which are welcomed by the ECB and the Eurosystem. In particular, we agree that the barriers as identified by the “Giovannini Group”, must be eliminated. In addition, we concur that some parts of the clearing and settlement industry deserve careful attention from a competition policy point of view. Finally, in order to ensure the smooth operation of the markets and guarantee financial stability, we share the Commission’s view that a sound regulatory framework is essential.
Figure 2: Annual CPI Inflation and Target Path  14 12 10 8 6 4  Annual CPI Inflation I*  2  Outer Band Target Path  1109  0909  0709  0509  0309  0109  1108  0908  0708  0508  0308  0108  1107  0907  0707  0507  0307  0107  0  * Temporary tax adjustments corrected I Index Source: TURKSTAT, CBRT. Figure 3: Contribution to Annual CPI Figure 4: CPI Sub-groups Inflation (Third Quarter Percentage Change) (Annual Percentage Change) Food and Energy Services  Tobacco and Gold Core Goods  12  2006-2007 Av erage  10  2008  10  8 6  2009  8  4  6  2  14 12  0  4  -2  0909  0609  0309  1208  0908  0608  0308  -6 1207  0 0907  -4 0607  2  * Food and Energy: Food, non-alcoholic beverages and energy. ** Tobacco and Gold: Alcoholic beverages, tobacco and gold. Source: TURKSTAT, CBRT. Foo d  Energy  Tobacco Co re and Gold* Goods**  servic es  *Core Goods: Goods excluding food and nonalcoholic beverages, energy, alcoholic beverages and tobacco and gold. Source: TURKSTAT, CBRT. Although processed food and energy were instrumental in the downward trend of inflation, core goods and services inflation also hovers around historic lows (Figure 3).

Erdem Başçi: Latest economic outlook and macroeconomic developments in Turkey Panel speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the Conference on “Policy responses to commodity price movements”, Istanbul, 7 April 2012. *  *  *  Distinguished Guests, The global economic developments observed during the last decade are influential on the commodity prices. Some of these developments were real factors directly affecting the supply and demand of these commodities. On the demand side, significant growth in demand for energy, food and raw materials of developing countries, led by China and India, became an important factor in commodity markets in recent years. Likewise, the discrepancy between the paces of recovery of developed and developing countries in the aftermath of the global crisis and the global monetary expansion are observed to have reflections on the demand for commodities. The increasing income in developing countries enjoying robust growth broadly decreases the price sensitivity of commodity demand. As a result of production capacity shortfalls of exporting countries in the short run and these countries’ reluctance to increase their production capacity, prices sometimes display excessive increases in the event of a setback in supply. On the other hand, the robust economic growth potential of developing countries implies that the demand for raw materials will continue to be strong also in the medium term. The key solution for imports-dependent countries due to having little natural resources lies in increasing the productivity in agriculture and energy sectors.
It is therefore primarily the developments in the household sector and in the housing market that are important when assessing the mortgage institutions’ assets. The Riksbank’s Financial Stability Report contains analyses of the household sector and the property market. The most recent Report observed that Swedish households are continuing to increase their debt burden at a rapid rate. Improved disposable incomes, low interest rates and high turnover in the housing market are some of the most important reasons behind this. Households’ debt in relation to disposable income has increased from around 90 per cent in the mid-1990s to almost 120 per cent  2  BIS Review 35/2004  today. However, interest payments after tax on these loans have comprised around 5 per cent of disposable incomes, which can be compared with levels of almost 11 per cent at the beginning of the 1990s. Both the debt ratio and the interest ratio are expected to continue to increase over the coming years. Nevertheless, Swedish households’ ability to service their debt is relatively good. In addition to their disposable incomes, households also have assets that can be used as a buffer for increased borrowing costs. Their total assets exceed their total debts. A special article studies household debt and households’ ability to service this debt in different income classes. In the article the Riksbank has examined how households would be affected by increased interest costs or rising unemployment.

In particular, in developing our financial ecosystem, we are helping the financial sector fill the capacity gap in knowledge, talent and data. We are also taking steps to create a more supportive platform to enable green and sustainable finance to take off, not just in Hong Kong but also on the Mainland and in the region as a whole. In terms of technology, we have laid solid foundations that have already made virtual banking and faster payments a part of daily life. We are now accelerating the digital transformation by encouraging all banks to harness the power of data to promote financial efficiency and inclusion. We are pioneering research and pilot schemes in domestic and cross-border central-bank digital currencies. We are very pleased that the PBoC is our close partner in the m-CBDC Bridge project and the technical trials for cross-boundary use of e-CNY. Conclusion There is much more to say about these exciting topics, and I have no doubt that much more will be said during this afternoon’s seminar. I began with the question of whether Hong Kong has the attributes of an IFC. My answer is a clear and resounding “yes”. Yes, because of what we have achieved collectively through building our ecosystem and our resilience; and yes, because of what is achievable in future through the many opportunities that lie ahead. I now look forward to what promises to be a very interesting and productive afternoon. Thank you. 3/4  BIS central bankers' speeches  4/4  BIS central bankers' speeches
Thirdly, if we “no longer know where the risk is”, that implies that it has been dispersed beyond the regulated sector. One might think that was a Good Thing. To take an extreme scenario, if risks were widely and evenly distributed across savings institutions internationally, a very nasty shock causing a sharp fall in asset markets would not obviously destabilise the financial system. It would obviously have macroeconomic consequences, by depleting household wealth and raising the cost of capital for firms. Other things being equal, central banks could respond by adopting an easier path for interest rates than otherwise, in order to maintain aggregate demand broadly in line with aggregate supply, with the objective of keeping inflation in line with explicit or implicit targets. Although the original shock may be nasty, the response would be the routine use of the routine instrument: the price of central bank money. There is no question of a so-called Greenspan (or any other kind of) “put” here; the focus would be not asset prices, but the outlook for spending in the economy and so inflation. This is obviously rather different from a similarly nasty shock producing severe disorder in a banking system that was carrying unduly concentrated exposures of some kind. For a central banker, banks matter because their liabilities are used as money, they are at the centre of the payments system, and they carry an associated asset/liability maturity mismatch. 6 Banking system distress is therefore typically characterised by a liquidity run.

8  A fuller explanation is in Tucker P M W (2006b), “Macro, asset price and financial system uncertainties”, Roy Bridge Memorial Lecture at the Annual Conference of the ACI – Financial Markets Association, London, December 2006, Bank of England Quarterly Bulletin, Spring 2007, pp 122-130. 9  The composition of the balance sheets of Large and Complex Banks is discussed at greater length in Tucker P M W (2006b), op. cit. 10  Report on “Towards Greater Financial Stability: A Private Sector Perspective” by the Counterparty Risk Management Policy Group, July 2005. BIS Review 44/2007  5  within their own firms. My sense is that that view is shared by at least some Chief Risk Officers. Greater transparency of such stress testing would not only shed light on the risks retained by the banking system, it might also have a productive effect on incentives – rather as greater transparency has enhanced monetary policy making. What happens when the music stops: ex ante preparation for stress But of course severe stress cannot be ruled out. Central banks and practitioners therefore expend effort thinking about what will happen if and when the music stops. As the Bank’s latest Financial Stability Report discusses, the official sector has stepped up its practice exercises of various kinds. The private sector analogue to crisis resolution is the “workout”, in which a company is restructured under the shadow of insolvency. In a world characterised by bank intermediation, workouts typically involved bank syndicates co-ordinated by a few lead banks.
Ardian Fullani: Achievements and challenges of the Albanian banking system Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Open Forum with the Albanian banking system’s players, Tirana, 29 September 2008. *  *  *  Dear heads of commercial banks operating in Albania, Dear participants, It has almost been 6 months since the first open forum was held, at the core of which were the achievements and challenges of the Albanian banking system. Today’s forum is a follow-up of the debate which commenced 6 months ago with the good will and goal to further bolster the banking system’s stability in Albania. I consider the first forum a successful one, given that it generated a number of important decisions that have been made recently. In addition, I have the strong conviction that the discussions to be held this afternoon will be productive and will serve to the prudent examination of the banking system’s activity, in particular in the context of the recent developments in the global financial markets. To begin with, I would like to provide a general overview of the banking sector’s financial situation and the extent of impact from the developments in the international financial markets. During the first half of 2008, the banking sector maintained its stable growth pace. The Albanian banking system is lucrative, well-capitalized and liquid. The good financial result continues to be driven by the rapid growth of high return on investment activities.

In fact, most of our non-standard measures have focused on providing adequate liquidity to financial institutions and did not require changes to our operational framework. The adjustments were merely on the parameters of the existing framework. Yet, the provision of liquidity by central banks needs to be linked to a clear assessment of solvency of the counterparties. Only by being able to distinguish solvent from insolvent financial institutions can central banks continue to fulfil their mandate of being lenders of last resort to the financial system. Detailed information on the health of financial institutions and the capacity of the central bank to resolve insolvent banks would ensure that liquidity provision is kept to the circle of solvent banks. Conclusion Let me conclude. During the financial crisis central banks assumed an active role as crisis managers. The ensuing episodes from the subprime crisis with the collapse of Lehman Brothers to the debt crisis has left the ECB as one of the few actors in guaranteeing stability over the past five years. One may argue that central banks are in an extremely difficult position, that they may suffer from the outcome of the recent crisis and that “paradise is lost”. 11 If paradise is lost, it may however be the right time to take on a new and a pro-active role in “the real world” or in the “new normal”. We will not turn the clock backwards. 9  The contribution by Kyotaki and Moore on credit cycles in 1997 served only recently to numerous macroeconomic extensions.
and Stein, J.C. (2004), “Cyclical Implications of the Basel II Standards”, Economic Perspectives, Federal Reserve Bank of Chicago, Quarter 1, p. 18-31. BIS Review 131/2009  11  downturn, loan losses increase and erode the banks’ capital. Banks respond by tightening lending. Bank behaviour therefore amplifies fluctuations in economic activity. An analysis by Norges Bank sheds light on the procyclical effects of the Basel II capital requirements. The analysis is based on a path where the Norwegian economy is exposed to a severe disturbance. During a downturn, the debt-servicing capacity of borrowers declines and the value of bank collateral falls. The risk of bank losses increases. This leads to an upward adjustment of the risk weights used to calculate the minimum capital requirement under Basel II. The minimum capital requirement increases. The shorter the data series applied by banks in their risk models are, the more the capital requirements fluctuate with business cycles. The effects may be considerable. Higher capital requirements for banks in a downturn will amplify the downturn. In an upturn, the effect will be the opposite. If banks apply a time series that is longer than 20 years, which includes at least one pronounced economic downturn, the effect on the minimum capital requirement during a downturn under Basel II will not be as strong as when the banks use short series. Risk weights calculated on short series that do not include downturns are thus of little value. There are also other approaches to reducing the procyclicality of bank behaviour.

BIS Review 131/2009  17  The swap arrangement involving covered bonds in exchange for government securities has made a considerable contribution to securing banks’ long-term funding. This spring we saw that the covered bond market started to reopen. The minimum price in the swap arrangement is thus adjusted to the interest rate forming in the market. The arrangement will be phased out in the course of autumn. Norges Bank temporarily eased its collateral requirements to facilitate banks’ access to borrowing in the central bank. Banks’ borrowing needs are falling, and a good supply of highquality collateral, particularly Treasury notes, has increased markedly. We are of the view that the conditions are now appropriate for reversing these temporary changes. We will also tighten the collateral requirements. Today the planned changes have been circulated for comment. The acceptance of new securities eligible as collateral under the temporary rules is now discontinued. Securities that were already accepted as collateral under the temporary rules can normally be used as collateral until they mature or up to no later than 15 February 2012 when the last long-term fixed-rate loan in Norges Bank has matured. We have also announced a change in the so-called bank quota. Under today’s rules, 35 per cent of a bank’s borrowing facility in Norges Bank can be based on collateral in bonds issued  18  BIS Review 131/2009  by other Norwegian banks. It is a disadvantage that the provider of the collateral and the collateral are from the same sector.