samchain/econo-pairs-v1 huggingface dataset:
In addition, detailed EU guidelines must be in place before PSD2 can have its intended effect. PSD2 takes account of two new types of payment services: payment initiation and account information services. Payment initiation permits third parties (in addition to customers and customers’ banks) to initiate payments from customers’ accounts. A third party may, for example, be a company that offers a payment application for smart phones. Account information means that third parties gain access to customer account information and can provide customers with aggregated online information for multiple payment accounts. This change separates ownership of the account systems from the provision of payment services. This is intended to facilitate innovation and competition for customer services, on top of the account infrastructure. Payment initiation and account information may be offered as independent services or as part of a wider array of services. Platform-based service providers in particular will likely explore the possibilities for offering payment services bundled with other services. PSD2 will, in principle, promote a more efficient payment system. At the same time, we must be prepared for the possibility that an altered market structure and technological innovation may lead to new vulnerabilities and risks. This may necessitate further regulations. Norges Bank will consider measures if they are required. The aim must be the continued existence of a robust and efficient payment system. 1/5  BIS central bankers' speeches  The payment market is characterised by network effects and platform competition.

Fast payment solutions The general public increasingly expects to be able to transfer funds on any day of the week and outside traditional opening hours. They also expect that payees will be credited quickly. In the future, there will have to be a good reason not to credit payees immediately, rather than with a delay, as is the case currently. This means that the payment system must meet new requirements. In Norway, there is a provisional instant payments solution, which an increasing number of banks are adopting. It is positive that the solution is becoming more widely used, but it has its drawbacks. For even though participating banks have entered into a loss-sharing agreement, banks still incur credit risk before payments are settled and the solution cannot be used for certain types of payments. Bits and Norges Bank are therefore jointly developing a better solution, called BRO in Norwegian “Betalinger med raskere oppgjør” (payments with faster settlement). BRO will be an efficient underlying infrastructure that is intended for all types of payments. The solution will be in place by the end of 2019. Norges Bank has initiated an in-house project to make the necessary adjustments to the settlement system. The Bank will do its share to enable banks to settle payments to each other without incurring credit risk. Customers will also be able to make instant payments in larger amounts. Customer services will also have to be modified.
We care about the health and stability of the tri-party repo market both because of our interest in promoting stable and liquid financial markets and because we use it to implement monetary policy. The recent financial crisis showed us that the tri-party repo market was inherently unstable due to deficiencies in the settlement infrastructure. Prior to 2008, there was limited recognition of the ways in which adverse developments in this market could quickly transmit risk to other parts of the financial system with unforeseen consequences. We now know, with the benefit of hindsight, that the market was overly reliant on massive extensions of intraday credit by the clearing banks to the broker-dealers, that market participants did not adequately appreciate the magnitude of the risk embedded in the role played by the clearing banks, and, as a result, market participants underpriced risk in ways that undermined the market’s resiliency during periods of stress. These vulnerabilities were made apparent in the spring of 2008 when the events surrounding Bear Stearns demonstrated the run risk that existed more broadly in the tri-party repo market, prompting the Federal Reserve to intervene in order to restore confidence and market functioning. This intervention took the form of the creation of a Primary Dealer Credit Facility in March 2008, and a subsequent expansion of the facility in September 2008. The scope and scale of the market disruption were clearly very troublesome.

The transmission of instability typically occurs as a consequence of increased margin calls and mark-to-market losses that strain firms’ liquidity and capital positions and put additional pressure on firms to further deleverage. Such scenarios can have material adverse repercussions on other market segments and market participants. It is vital that we take steps to address this risk now, during a period when markets are functioning without stress, in order to improve the resiliency of this market before the next crisis occurs. This is especially important in light of the heightened threshold established by the Dodd-Frank Act for future central bank interventions in the event of a market disruption. Even if this constraint did not exist, the experience of the recent financial crisis has served to strengthen our resolve to ensure that the market is structured in a way where risk is accurately priced and resilient to stress on a day-to-day basis, without the need for official sector intervention as a first resort. As many of you know, the Federal Reserve has been calling for action on this issue over the past two years, and all three Financial Stability Oversight Council annual reports have highlighted this as a significant issue worthy of our attention. However, the diversity of participants in the tri-party repo market has made it difficult to move forward quickly with a market solution that addresses the risk I have outlined. Industry leadership is absolutely critical to overcoming these challenges.
But now that the fence is up, we need it to do its job. It is of course a twenty-first century, modern fence – not a medieval stone wall, and as part of this it was electrified by Parliament in order to discourage attempts to  2  All speeches are available online at www.bankofengland.co.uk/speeches  2  climb over it: the legislation empowers the PRA to use a group restructuring tool to require a banking group to sell its ring-fenced bank or other parts of its group. Hopefully the prospect of electrocution will discourage any blatant attempts to climb over the fence. But there is still perhaps the possibility of wicked burrowing under the fence, passing things through it or even perhaps using a drone to create mischief. We are therefore setting up a border patrol of PRA staff who will police the fence. The patrol will ensure there is compliance with restrictions on activities performed by the ring-fenced entities and independence from the rest of the group. In particular, we will closely monitor governance arrangements, seeking evidence that ring-fenced banks can identify conflicts of interest and are able to make decisions on their own. We will set capital and liquidity for the ring-fenced banks, and more generally keep an eye on the risks they face. Let me move to my second example: accountability. As with the ring-fence, we and firms have gone to great lengths to bring in the Senior Managers Regime here in the UK.

In the area of equity-release mortgages (ERMs) we have consulted on measures to ensure that investments1 in that asset class, which is growing by more than 10% a year, are appropriately and consistently reflected in the regulatory balance sheet. We want to do this both for prudential reasons and to facilitate competition by establishing a level playing field. Our proposition is a simple one: house price growth above the risk-free rate is a risk to which ERM providers are exposed; it should not therefore be assumed and banked up-front as capital in the form of the Matching Adjustment, even if a reasonable person could expect house prices to increase in that way – instead, that benefit should be earned if and when the house price growth actually materialises. We have received many strong views in response to this suggestion, and are considering them now before reaching a final view. Good cop I will turn now to the other part of our work – areas where, as I see it, there is generally no inherent conflict and we and firms are engaged in a shared endeavour to deal with the challenges we face. You may be relieved to hear that, in my determination to be the Mansion House good cop this year, I will only touch on two examples of this – though each of them is a huge topic. Operational Resilience First, what we call ‘operational resilience’ – the ability of firms to keep going operationally as well as financially.
[7]  https://www.mas.gov.sg/news/speeches/2021/pushing-ahead-with-sor-sora-transition-in-2021  3/7  12/02/2021  "Pushing Ahead with SOR-SORA Transition in 2021" - Keynote Speech by Mr Leong Sing Chiong, Deputy Managing Director (Markets …  In addition, the Committee is considering the need to set a clear timeline, possibly sometime in 2H 2021, to cease the use of SOR in new derivatives transactions, except where strictly necessary for risk management and unwinding of legacy SOR exposures. This timeline will support a more coordinated shi to SORA among key derivatives market participants. This will also align our market with similar timelines being contemplated for stopping new LIBOR transactions in other key jurisdictions. SC-STS expects to share its guidance in the coming months a er incorporating feedback from market participants. Related to this, the Committee had previously announced in December 2020 [8] , that it plans to set out guidance on timelines to cease the use of SIBOR in new loan contracts in 2021. This will likewise be finalised in the coming months. 15 Taken together, we expect SOR, SIBOR and LIBOR activities to wind down towards the end of this year. This in turn, will generate a growing critical mass in new SORA-based cash market activity, and spur greater market eﬀiciency and liquidity. Developing a robust SORA curve 16 Third, the Committee and MAS will take further steps to develop a robust SORA curve, to reinforce the shi to a SORA-centered regime. We will do so by undertaking several key initiatives in the first half of 2021.

To establish a robust SORA curve, SC-STS is coordinating closely with LCH to extend central clearing for SORA derivatives from 5Y currently to 21Y in the coming months. This will mitigate counterparty credit risks and support higher SORA transaction volumes and market activity across the longer tenors. Similarly, MAS will also extend the tenors and broaden industry participation in our SORA price discovery auctions. Since its launch in June last year, the number of participants in the auctions has doubled from six to twelve major banks. This has facilitated price discovery in SORA derivatives up to the 5Y tenor. Given the positive outcome, MAS will extend the tenors of the SORA auctions to 20Y from 1 March 2021. We expect the bid-ask spreads for SORA OIS and SOR-SORA basis swaps at the longer end of the curve to tighten further with these enhancements. To further enhance market depth, MAS will expand our SORA Floating Rate Notes (FRN) programme. This was launched in August last year, and has met with strong investor demand, with outstanding size growing to $ billion in only 6 months. Looking ahead, we will extend the tenors from 6 months to 1 year and 2 years in the first half of this year. The 1-year tenor will be issued quarterly while the 2-year tenor will be issued semiannually. We will also gradually increase the issuance sizes if investor demand continues to be strong.
The agreement was followed up by similar, but not as far-reaching, agreements in other sectors. At the same time, there were substantial parts of the labour market that had no such type of agreement. The inquiry led to a new National Mediation Office being established, with the tasks of mediating in labour disputes and acting to promote an efficient wage formation process. The most important change was in my opinion that a third, independent, party was established in the labour market to promote efficient wage formation. The National Mediation Office has the task of keeping up-to-date with the situation in central wage negotiations and acting to ensure that macroeconomic considerations are taken into account in wage negotiations. The Office was also given increased powers of authority to act in connection with central agreement negotiations, for instance, the  BIS Review 21/2006  3  possibility to call the parties to talks, to provide mediation even if one party was opposed to mediation and to postpone industrial action. The wage statistics improved. The National Institute of Economic Research was given the task of annually producing reports on the economic conditions for wage formation. Over the past 10 years wage formation has functioned much more efficiently. Nominal wage increases have been around 4 per cent a year on average, compared with 8 per cent a year in the 1980s. The agreements no longer contain clauses regarding inflation and so on and wage drift is much more limited.

It was common for central wage agreements signed during the 1980s to contain price trend guarantees, wage development guarantees, earnings guarantees, checkpoints etc., which led to prices and wages pushing one another upwards in an increasing spiral. On 1 March 1990, the Government appointed the Rehnberg Commission to follow negotiations of new central wage agreements in the labour market and to act to achieve new agreements that would contain price clauses to replace the agreements for 1990 and new agreements for 1991 and lead to a radical reduction in total wage increases, including wage drift, during 1991. Based on the Commission’s proposals, stabilisation agreements were signed for the period 1 January 1991 – 31 March 1993 for just over 75 per cent of the labour market, which contributed to the rate of wage increasing falling from around 10 per cent in 1990 to 3 – 4 per cent a year during 1992 – 1993. After that, however, the rate of wage increase rose again to around 6 per cent in 1996. In April 1997 I was given the task by Deputy Labour Minister Ulrika Messing of making an inquiry into wage formation and mediation. When I was given this task, the social partners in the industrial sector had recently (in March 1997) signed a new cooperation agreement, known as the Industrial Agreement, whereby the parties took joint responsibility for wage formation in their part of the labour market and had agreed on a regulatory framework for negotiating wage agreements.
The day after the results were published, I remember that Bridgewater Associates – which had said the banks needed considerably more resources – published a paper evaluating the SCAP results. The banner headline was: “We Agree.” So this was important. However, I would note that it is important not to draw too strong a conclusion from just one episode. In the SCAP process, I also think it is important that we had some good luck. First, the banks’ needs were not that great. What people didn’t appreciate going in was that U.S. banks have strong revenue-generation capabilities: the banks had already set aside a large amount of reserves and taken large mark-to-market losses, and the banks had already bolstered their capital resources via capital raises and the sale of ancillary businesses. Second, the economy started to look a bit better in May at the time the SCAP results were released. This made the stress scenario more credible. Third, the capital markets were open to the banks. This was important because, as we saw, private capital was viewed as very much superior to Treasury mandatory convertible preferred shares. Fourth, although we made the correct decision to disclose, this was a difficult and close call. The fact that the loss experiences for the different asset classes varied across the banks helped to bolster the credibility of the results. Going into the spring of 2009, there was a prevailing view that several of the largest banks would have to be nationalized.

By moving the banking industry collectively back to Figure 1 from Figure 2, the “bad state of the world” becomes less likely. In the SCAP, we had to make a number of important decisions. These included:   The appropriate capital target. We focused on the Tier I common ratio because we believed that this was the most credible form of capital. This put much greater emphasis on common equity than previously.   The severity of the stress test. We assumed a stress scenario with an unemployment rate 1.5 percentage points higher than the baseline scenario, and further home price declines of about 29 percent compared with 18 percent in the base case. We were aiming for a stress test scenario that had about a 5 percent to 10 percent probability of being realized.   The capital target at the end of 2010 and the stress test severity were both important in terms of the credibility of the SCAP. Going in, we were worried that with our capital goal, the BHCs’ needs might turn out to be higher than the available  BIS central bankers’ speeches  3  resources from the private sector and the U.S. Treasury. We decided not to compromise the credibility of the stress test to save on needed capital resources.
José De Gregorio: Macroprudential regulation, financial stability and capital flows Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, at the 13th Annual International Banking Conference, Chicago, 24 September 2010. *  *  *  I am very grateful to Gabriel Aparici, Herman Bennett, Kevin Cowan and Pablo Garcia for very useful discussions and comments. I am grateful to the Chicago Fed for inviting me to participate in this important policy panel. Most recent conferences on macro and financial policies have been dealing with the causes, consequences and implications of the financial crisis of late 2008 and early 2009, and the Great Recession that ensued. This panel has been persuasively entitled Where to from Here? I would like to focus on two issues: capital inflows, which is a very relevant issue for emerging market economies, and the recent agreement of the Basel Committee on Banking Regulation. For this purpose I will start with a brief review of some facts regarding capital inflows. Then I will discuss the policy toolkit to deal with them. I will take a look from a macro perspective and then from the point of view of financial stability. Finally I will make some comments on the Basel agreements, focusing on the Chilean banking system and its financial regulation framework. Some evidence and factors behind the resumption of inflows There is concern in emerging market economies about resuming capital inflows and the challenges they impose on monetary policy.

Although, in general, I think that monetary policy should not target asset prices, nor should it be used as an instrument to deal with asset prices, the problem is more acute regarding capital inflows. If capital inflows fuel a bubble in the exchange rate, tightening monetary policy will actually induce more capital inflows. Paradoxically, monetary policy loosening may help to stabilize the economy and lead to a slowdown in the rise in asset prices. 2 Misalignments of the exchange rate, in particular in the context of massive inflows, may be the prelude of problems, in the extreme a currency or financial meltdown. For this reason other tools cannot be ruled out, in particular exchange rate intervention. To avoid the perils of introducing rigidities in the exchange rate regime, interventions should be truly exceptional and should not target a particular exchange rate value. Hence, the volatility of the exchange rate is not artificially lowered, and appreciation expectations are not introduced. If the currency is misaligned from fundamentals, the intervention may be successful in realigning the currency. If not, sterilized intervention will most likely be ineffective, and for this reason is important to have a strong presumption that the currency has moved away from fundamentals before intervening. 3 In addition, foreign exchange intervention allows authorities to increase the international liquidity position of the economy so as to insure against a future curtailment of capital inflows.
In China, a large share of income was saved, either in the form of investment in new production equipment or financial assets. The increased supply of financial savings pushed down global long-term interest rates. Lower interest rates encouraged consumers and businesses in other countries to borrow capital from China and other surplus countries. The foreign debt of countries such as the US and UK accumulated rapidly in the years leading up to the crisis. BIS Review 163/2009  1  Historically low interest rates prompted fund managers in Western countries to seek out new alternatives in their search for high yields. New financial savings products were developed and spread to investors around the world. It was often difficult, or even impossible, for investors to value the risk underlying the products. Yield potentials can also be increased by leveraging securities purchases. As long as prices rise, the return on equity will increase with the degree of leveraging. On the other hand, the risk of being left with debt, and little or no equity capital, increases when prices fall. In the years ahead of the crisis, high debt leveraging still appeared to be an attractive proposition in an environment of low credit risk and a glut of cheap credit. The result was a surge in debt accumulation in the years preceding the crisis. Prices in securities and property markets soared. The build-up of macroeconomic imbalances in the years prior to the crisis increased vulnerabilities and the potential amplitude of a downswing.

The problem was that on a mark-to-market basis, some of these banks were viewed as potentially insolvent. But the mark-to-market price declines overstated the problem because a significant portion of the decline in prices did not reflect expected losses but instead was due to a huge increase in the illiquidity premium. This was due to the fact that risky assets could no longer be financed easily on a leveraged basis. As long as banks could hold onto the assets, losses would shrink once the illiquidity premium narrowed back to a more typical level. To sum up, I believe that the SCAP was an important turning point in the financial crisis. Confidence improved as banks raised capital mainly in the private markets. So what were the lessons from the CCAR? 4  BIS central bankers’ speeches  I think here the lessons were mostly for the banks. There were negative consequences for banks that had inadequate capital planning capabilities or asked to make distributions that were too large relative to expected capital resources. From the CCAR, we concluded that all banks could and should be required to improve their capital planning processes, even those that received a decision of “no objection” to their proposed distributions. A detailed letter went to each firm outlining areas for improvement and we will be tracking the banks progress. CCAR is not a one-off event. It will be an ongoing process. It is designed to push banks to continue to upgrade their risk management and capital assessment processes.