samchain/econo-pairs-v1 huggingface dataset:
The prominent role of money is signalled by the announcement of a reference value for the annual rate of growth of the broad monetary aggregate M3. This reference value represents a visible public commitment to analysing and explaining monetary developments and their implications for price stability in detail. In December 2000, the Governing Council of the ECB reconfirmed the reference value of 4 1/2% annual growth. This rate should be consistent with price stability in the medium term. While the reference value plays an important role in monetary analysis, the assessment of the first pillar goes beyond the evaluation of the deviation of M3 growth from the reference value. It encompasses a variety of approaches which assign a central role to money because of the ultimately monetary nature of inflation, as well as a detailed analysis of the components and counterparts of M3. Thus, an in-depth analysis of the overall liquidity conditions in the euro area is provided. BIS Review 10/2001  1  Despite broad consensus on the fact that inflation is ultimately a monetary phenomenon, the assessment of monetary developments alone does not give an accurate picture of the state of the economy and of the potential risks to price stability. Therefore, for a robust strategy, it is useful to analyse additional indicators relevant for future price stability and to combine them under a second pillar.

However, it is difficult to evaluate the extent of these structural changes and to gauge how quickly their impact will be felt on medium-term growth, particularly at an early stage. In addition to the specific factors resulting from the introduction of the euro, the rapid change in information and communication technology is likely to add further potential for structural changes in the economy. The possible emergence of a "New Economy" may raise the economy's productive capacity temporarily or on a more permanent basis. Much faster data transfer and the increased transparency of information in a knowledge-based society could enhance efficiency. Even if some of the euphoria surrounding the start of a new economic era has dissipated, as could be seen in stock market developments over the last few months, there remains a remarkable potential for economic change in the future. To date, however, clear evidence of positive effects on the supply side, which may lead to a temporary or even permanent higher potential output growth, is still lacking for the euro area. In addition, it should be borne in mind that the expectation of higher growth and positive wealth effects may also lead to inflationary pressures from the demand side of the economy. Therefore, the implications of the "New Economy" for monetary policy are far from clear. Monetary policy-makers, whose aim is to maintain price stability, need to exercise particular caution in such an environment of change.
Banking by its very nature is a business of taking calculated risks. If they didn’t take risks, banks could not perform their essential functions in a market economy. But sound banking also entails the prudent management of those unavoidable risks. Each banking institution must have in place the technical systems and management processes necessary to identify the risks associated with its activities – lending and otherwise – and to effectively measure, monitor and control those risks. But even if an institution has an effective risk management and control structure in place, that structure must also be accompanied by an institutional management culture that ensures that written policies and procedures are actually translated into practice, with buy-in at all staff levels. Ultimately, an institution's culture is determined – once again – by the board of directors and the senior management it chooses to install. Management must take active steps to ensure that its commitment to an operating environment that includes effective risk management and rigorous controls filters down the line of the organization. To summarize, these aspects of effective bank level management – good corporate governance, rigorous internal controls and effective risk management – represent the first and most important line of defense against potential problems. And this will increasingly be the case as the activities of banks and other financial institutions become more complex and more global.

These reforms bore more than a passing resemblance to the solutions complexity scientists might have proposed. A new word emerged to capture these reforms - macro-prudential regulation. The macro signalled two important ideological shifts from the past. First, banking needed to be managed at the level of the system as a whole, like any other eco-system. Second, as important as the resilience of the financial system was its interaction with the macro-economy to avoid adverse feedback effects between the two, such as credit crunches. Finance was to be servant of the economy, not master. This, truly, was a regulatory revolution. 21  See https://www.bis.org/bcbs/basel3.htm. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  13  Not all proposals for international regulatory reform found universal favour. In a paper prepared for the Jackson Hole central banking shindig in 2012, I questioned whether the very complexity of financial regulation might have contributed to the increasing fragility of the financial system. As you did not fight fire with fire, you did not fight financial complexity with regulatory complexity. That risked making a bad situation worse, a complexity problem squared rather than halved. To be honest, had I not called the paper “The Dog and the Frisbee” I doubt anyone would have read it. But I did, they did and the result was a sharp intake of collective breath among my colleagues around the Basel Committee table - and beyond.
In September 2013, shareholders of a major U.S. bank requested that the bank prepare “a full report on what the bank has done to end [its] unethical activities, to rebuild [its] credibility and provide new strong, effective checks and balances within the [b]ank.” That request was forwarded, by the way, by a Catholic nun. The bank responded through its attorneys that the nun’s proposal was “materially false and misleading” and “impermissibly vague and indefinite.”9 Fast forward to May 2015. The Federal Advisory Council-a panel of bankers that advises the Federal Reserve System-reported that “Regulators and the banking industry have worked extensively to restore financial stability through a series of mechanisms and rules that establish appropriate levels of capital, liquidity, and leverage. . . . As often as not, however, the challenges faced in recent years have been behavioral and cultural; post-crisis episodes such as LIBOR and foreign exchange manipulation provide hard evidence that there remains work to be done.”10 This is clearly an encouraging difference in perspectives. The public sector, too, has paid increasing attention to culture. The Group of Thirty, the Basel Committee, the European Systemic Risk Board, and the Financial Stability Board have issued papers on culture, governance, and misconduct risk. The Fair and Effective Markets Reviewa joint project of the Bank of England, the Financial Conduct Authority, and Her Majesty’s Treasury-has called for heightened standards for market practice in matters affecting the public good.

Alberto G Musalem: Why focus on culture? Remarks by Mr Alberto G Musalem, Executive Vice President of the Integrated Policy Analysis Group of the Federal Reserve Bank of New York, at the Institute of Law and Finance conference “Towards a New Age of Responsibility in Banking and Finance: Getting the Culture and the Ethics Right”, Goethe-University, Frankfurt am Main, 23 November 2015. *  *  *  Thank you to the Institute for Law and Finance for the invitation to speak here today. It is a pleasure to be at Goethe University. The New York Fed has, for the last two years, been part of an international dialogue on the reform of culture in the financial services industry. Why culture? Let’s begin with the following hypothesis: environment drives conduct. What each of us learned from our parents governs some of our behavior, but not nearly as much as any of us who are parents would like to believe. Place ordinary people in a bad environment, and bad things tend to happen. That said, place someone in a good environment, and good things tend to happen. This is just part of being human. We observe and adapt. Before continuing, I would like to clarify that the views I express today are my own and may not reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. Part of any organization’s environment is its culture.
That is why it was urgent to change the legislation on restructuring, which had been designed to resolve isolated, nonsystemic crises and which, in particular, was not appropriate for managing the restructuring of savings banks. Moreover, the legislation then in force involved the use of tools that had been very useful for resolving crises in the past, but that were banned by the Monetary Union. Consequently it was important to create instruments such as the FROB to enable preventive action to be taken, before the situation worsened and required a wholesale winding up of institutions. Apart from the costs of winding up, there was a risk, especially at a time of global banking crisis, that contagion might spread throughout the Spanish financial system. When examining the possible formulae for financial restructuring, the authorities ruled out some that definitely might have speeded up the process of restructuring the banks. They did so on the basis of prudence, since a sudden sharp deterioration in public finances in the midst of the crisis could, as it did elsewhere in Europe, have meant that the rescue of the banking system brought the country to the brink of bankruptcy and an eventual bail-out. The containment of public spending matters not only from a medium-term perspective; given the current vulnerability of sovereign debt on the markets, its short-term effects must also be considered.

I will start by discussing a couple of aspects of the definition of actual unemployment. Actual unemployment Official unemployment in Sweden is measured by Statistics Sweden’s monthly labour force survey (AKU), in which a sample of the population in the age group 15–74 is interviewed. The unemployed are defined as those who are out of work and who, on the date of the survey or in the previous four weeks, have looked for work that they would be able to take up immediately or within the next 14 days.3 The Swedish Public Employment Service also reports unemployment figures every month on the basis of the people registered at its offices. Each month, the Swedish Public Employment Service publishes figures showing what is known as total unemployment. This includes both the openly unemployed and persons in labour market programmes with activity grants.4  2  See, for example, “Monetary policy and unemployment” in Economic Review 2005:4. In this article, Bergström and Boije discuss the problems of using unemployment as an indicator of resource utilisation. Rogerson (1997) has reviewed the literature covering so-called equilibrium unemployment and points out that the meaning of this term is extremely unclear. Rogerson also points out that there are many different definitions of equilibrium unemployment in the theoretical literature and that their significance varies depending on which theoretical model is being used. The question of how central banks can take real economic considerations into account has also recently been discussed by the Centre for Business and Policy Studies’ Economic Policy Group.
BIS central bankers’ speeches  11  Chart 7: Sterling corporate bond yields Per cent 9  Per cent 40  8  QE2  QE1  7  35 30  6  Investment grade, non-financial (left-hand scale)  25  5 20  4  15  3  10  2 High yield (right-hand scale)  1  5  0  0 2007  2008  2009  2010  2011  2012  Source: Bank of America/Merrill Lynch. Chart 8: International equity prices(a) Indices: 4 January 2007 = 100 120 QE1  QE2  100 80 60 40  Euro Stoxx S&P 500  20  FTSE All-Share 0 2007  2008  2009  2010  2011  2012  (a) In local currency terms. 12  BIS central bankers’ speeches  Chart 9: Constraints on investment spending(a) Percentages of respondents 100 Recessions Uncertainty about demand Inability to raise external finance Cost of finance Internal finance shortage  90 80 70 60 50 40 30 20 10 0  2000  2002  2004  2006  2008  2010  2012  Sources: CBI, CBI/PwC and ONS. (a) Manufacturing, financial services and consumer/business services surveys weighted by shares in real business investment. Companies are asked for factors likely to limit capital expenditure authorisations over the next twelve months. Financial service companies are not asked to distinguish between a shortage of internal finance and an inability to raise external finance, so their single response is used for both questions.

A weakness in the current criticism is that it takes the advantages I have just outlined too lightly, or in other words underestimates the benefit of maintaining confidence in an already formulated inflation target. I also think that the criticism overestimates the possibility of managing the debt and housing problem by using the repo rate. I will explain what I mean in more detail shortly. The criticism: Lower the target or accept long term low inflation It is easier to discuss the criticism if we divide it up based on the conclusions drawn from it. Different commentators have put forward roughly the same arguments in favour of the Riksbank reconsidering its policy, but they have drawn slightly different conclusions about what the consequences should be for the inflation target. Some have claimed that the inflation target is outdated or that it should be lowered. 2 Others have not gone as far, but instead said that the Riksbank should keep the 2 per cent target but accept that inflation will continue to remain below the target for a long time to come. 3, 4 My perception is that the criticism has gradually aligned itself with the latter view, but I still want to say something about the argument that the inflation target should be lowered, as that discussion is important in principle.
Michael C Bonello: Nexus of Basel II and financial stability Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the Annual Seminar of the Institute of Financial Services (IFS), Floriana, 14 May 2010. *  *  *  I would first like to thank the Institute for inviting me to their Annual Seminar, which this year focuses on the topical, but complex subject of risk, capital and financial stability after the financial crisis. My remarks will concentrate on the lessons learned and on some open questions being addressed by international standard setters. In the introduction to his recent book “Good value”, Stephen Green, the Group Chairman of HSBC Holdings plc, recalls his thoughts one day in April 2008 on the shores of Lake Como against the background of an unfolding global financial crisis. He describes that time as one of those moments in history when it seems as if the tectonic plates are shifting, striking at the roots of what we had taken for granted for a quarter of a century.

There were manifest conflicts of interest, originators and brokers had limited interest in ensuring continued monitoring of products and credit ratings were inflated, conveying a false sense of security. A euphoric bubble thus developed, based, in Alan Greenspan’s words, on “the complexity of the interactions of asset markets and the economy”, and which concealed a massive global under-pricing of risk. Market participants seem to have been aware of the growing risks but were unwilling to retrench. You might recall Citibank’s Chuck Prince’s memorable words during the onset of the crisis that “as long as the music is playing, you’ve got to get up and dance. We’re still dancing”. Market players failed to appreciate the speed at which demand could evaporate and risk aversion could increase. This soon resulted in record-high risk premia, seized-up interbank markets, acute liquidity and credit shortages, bank failures and a widespread loss of confidence. Meanwhile the high degree of financial market integration had created the premise for a simultaneous build-up of systemic risk. Financial institutions did not internalise the costs arising from the too-big-to-fail and too-interconnected syndrome. Central banks had been monitoring these trends, but it turned out that the regulatory tools were not designed to address systemic risk. Neither was the strength of the feedback loop between the financial  BIS Review 67/2010  1  system and the economy fully anticipated. Unfortunately, these all proved to be critical weaknesses.
Also paradigmatic is the change in the number of bank offices, which have fallen by more than 40% (20,000 fewer), and in staff numbers, which are down by more than 30% (around 90,000 fewer workers). Against this backdrop of substantial business adjustment, banks have managed to improve their solvency and the quality of their balance sheets. The average Tier 1 capital ratio has risen from 8.1% in 2008 to 13.4% late last year. Banks have also been active in the disposal of their non-earning assets, and non-performing and foreclosed loans, which has allowed volumes to be reduced most considerably. This divestment of non-earning assets has come about against a background of economic growth, which, undoubtedly, has helped the process. But I believe it is important to stress that supervisory pressure has also notably influenced this improvement. The chart shows clearly how the volume of NPLs has fallen almost exclusively over the past two years. To my understanding, the publication of the SSM guidance in March 2017 and of its addendum a year later have had a lot to do with this. 4/15  As regards results, once the 2012 downturn was behind us, banks showed returns on assets and on equity moving around 0.55% and 7.22%, respectively. As a result of all these efforts, Spanish banks are in a much sounder position and currently have unquestionable strengths compared with their European rivals, essentially as regards their profitability and efficiency.

Expansionary monetary policy following a financial crisis and recession can therefore open up a welcome time window for carrying out consolidation measures, cleaning up bank balance sheets and implementing structural reform measures. However, if decision-makers have reason to believe that low interest rates will probably remain in place for a long time yet, their motivation to undertake reform measures is likely to flag. This is particularly the case in countries where reforms have been under way for many years now, but are still insufficient, and where resistance at the political level is now on the increase. Here the temptation to depend on low interest rates – or even to increase political pressure on the central bank to keep interest rates low for longer than necessary – is especially pronounced. In this context, it is important not to forget that central banks cannot do everything. They cannot restructure public sector budgets and they cannot carry out structural reforms. Nor can they provide substitutes for sensible fiscal policies. This area is the responsibility of other economic agents. A prosperous economy requires favourable conditions. In this respect, the contribution of central banks is to secure one of the major conditions – price stability. And inflation? This raises the question of whether the exceptionally expansionary monetary policy will lead to inflation in the long term. In most financial systems, surplus liquidity has reached historical dimensions. Under normal circumstances, monetary developments of this kind would point to a rise in inflation.
The French government and the French financial authorities, including the Banque de France, are also working together to facilitating the dissemination of sound and safe financial innovations and fostering the scaling up of sustainable finance. These investments are protected by a very resilient banking system, accompanied by consistent regulation. Let me remind you that Paris is already home to the European Securities and Markets Authority and will soon host the European Banking Authority. In addition, the Paris Court of Appeal was granted an 3/4  BIS central bankers' speeches  international chamber last February, with international commercial affairs falling within its remit. That will duly complete the Paris court organisation, which already includes an international chamber in its commercial court. Last but not least, let me stress that the French authorities are making sure that the Paris financial centre and its participants benefit from a streamlined and business-friendly regulatory framework, for instance in areas such as bond issuance and securitisation. Meanwhile, significant efforts have been made by the French government to alleviate the tax regime and social contributions of “impatriates.” Starting in 2016 under the previous government, they have been amplified by the new one, including on the eve of the business summit last January. *** France is changing, for the better. But it is still dependent on its economic environment, obviously. Let me conclude with two wishes. First: that Europe is courageous enough to strengthen itself through this cyclical upswing.

Policy makers were looking to trade finance as a major channel. However, contagion takes time and cannot fully account for the exceptional synchronisation in the drop in output. With hindsight, the phenomenon may best be seen as a global liquidity shock. Net supply of liquidity dried up at the same time everywhere in the world. International banks faced a sudden and ample shortage of dollars. Firms started to hoard liquidity. Investment and, in part, production, came abruptly to a halt. When such a shock occurs, public provision of liquidity has to replace private provision. In a domestic context, this is the function of the lender of last resort. But when there is a shortage of foreign currency liquidity, this role has to be played by foreign exchange reserves. Following the 1997–98 crisis, emerging countries constantly sought to expand their foreign exchange reserves. The average reserve ratio of emerging markets has more than quintupled from 4 percent to over 20 percent of GDP since 1990. One cannot assume, however, that equilibrium has been reached and that the demand for reserves will stabilise. On the contrary, there are strong indications that this trend will persist, or even be amplified, following the crisis. This may be seen as undesirable but also unavoidable in the current financial architecture. No amount of reserves will fully protect a financially open economy against a systemic shock.