samchain/econo-pairs-v1 huggingface dataset:
Lending and the building up buffers among both lenders and borrowers then stabilises over time. I would like to emphasise that this is a highly simplified description of financial stability, which to a certain extent disregards the structural aspects of systemic risk such as resilience and risks in financial infrastructure on the one hand, and such factors that trigger financial crises on the other. However, even the simplified picture gives important insights. The new tools being developed and the old tools which can be used for a new purpose are crucial to the success of macroprudential policy. Allow me therefore to discuss macroprudential policy tools and how they are intended to function. Macroprudential policy tools and how they fit in with monetary policy Typical macroprudential policy tools are capital and liquidity requirements chiefly focused on banks and the supply of credit. However, it’s also about measures to limit demand, such as the mortgage cap, or the regulation of exposures and haircuts with the purpose of limiting the contagion risk in the financial infrastructure. The various tools can be divided into static and time-varying tools. Using my simple lending rate formula, I will illustrate how, in different ways, these tools affect lending rates and credit terms. That is, after all, partly their purpose. However, this also has consequences for monetary policy.

It allows a smooth and relatively painless adjustment if the economy looses competitiveness. Summing up, I have discussed selected aspects of the cost-benefit analysis of Poland’s adoption of the euro. Although the costs may seem substantial, one has to bear in mind two things. First, the probability that these costs will have to be incurred is relatively low. Second, their magnitude depends crucially on domestic policy – prudent banking sector supervision, labor market reforms and sound fiscal policies to name a few. In my view, given the evidence that reforms have been halted in many countries after entering the eurozone, these measures should be taken before the euro area accession. Thank you for your attention. References: Borowski J. 2003. “Potential Benefits of Poland’s EMU Accession”, Focus on Transition No. 1. Brzoza-Brzezina, M. 2005. “Lending Booms in the New EU Member States: Will Euro Adoption Matter?”, ECB Working Paper No 543, European Central Bank, Frankfurt. BIS Review 6/2007  3  Brzoza-Brzezina, M. 2006. “The Information Content of the Neutral Rate of Interest: The Case of Poland”, Economics of Transition 14(2), s. 391-412. Csajbók, A., Csermely, A. (ed.) 2002. “Adopting the euro in Hungary: expected benefits, costs and timing”, MNB Occasional Paper 24, National Bank of Hungary DeGrauwe, P. 2003. “The Enlarged Eurozone: Can it Survive?”, Jelle Zijlstra Lecture, NIAS. Demirgüç-Kunt, A., Detragiache, E. 1998. “The Determinants of Banking Crises in Developing and Developed Countries”, IMF Staff Papers, Vol. 45, No. 1, Washington, D.C. Eickmeier, S., Breitung, J. 2005.
In view of the medium-term challenges posed by the high debt-to-GDP ratio and the impact of population ageing on public expenditure, the process of redressing fiscal imbalances must be compatible with an increase in the quality of public finances. In this respect, the composition of the income/expenditure adjustment in the necessary mediumterm programme is of utmost importance in order to achieve the objectives set without BANCO DE ESPAÑA  14	 TESTIMONY BY THE GOVERNOR OF THE BANCO DE ESPAÑA BEFORE PARLIAMENT IN RELATION TO THE DRAFT STATE AND SOCIAL SECURITY BUDGET FOR 2019  THE QUALITY OF PUBLIC FINANCES  CHART 14  TAX STRUCTURE IN SPAIN  GENERAL GOVERNMENT INVESTMENT % of GDP  % of public expenditure  12  18  10  15  8  12  6  9  4  6  2  3  0  0  100 90  70  75  80  85  90  95  00  05  10  PUBLIC EXPENDITURE IN SPAIN (2017)  80  CONSUMPTION  70 60  CAPITAL  50 40 30 20  LABOUR  10 0  16  2017  GEN. GVT. (% of GDP)  GENERAL GOVERNMENT  SOCIAL SECURITY  GEN. GVT. (% OF TOTAL EXPENDITURE) (right-hand scale)  REGIONAL GOVERNMENT  LOCAL GOVERNMENT  SOURCES: IGAE, INE and Banco de España. hampering economic growth.

a Deviation in the level of cumulative GDP in 5 years, the time considered necessary to reach the new "long term". The two simulations assume a "no-deal" that includes a long-term scenario under WTO rules. FORECASTS FOR THE SPANISH ECONOMY: MAIN RISKS. SURPRISES ON THE DOWNSIDE FOR INFLATION OIL PRICES  OVERALL INFLATION  3  CHART 6  %  Projections  70  Dollars/barrel  Projections  65 2  60 55  1  50 0  45 40  -1  35 -2 2013  2014  2015  2016  LATEST PUBLISHED PROJECTIONS  2017  2018  PROVISIONAL UPDATE  2019  30 2016  2017  2018  2019  ASSUMPTIONS USED IN LATEST PUBLISHED PROJECTIONS UPDATED PROJECTIONS  SOURCES: ECB, INE, Reuters and Banco de España. which Spanish general government has been immersed since 2009, as part of the “corrective arm” of the EU’s Stability and Growth Pact. Specifically, the budget deficit is expected to be below 3% of GDP both in 2018 and 2019. 1.3  Main risks and elements of vulnerability  The macroeconomic and financial scenario I have just sketched, which prolongs the expansionary phase of the Spanish economy, is, however, subject to certain downside risks. It should also be added that these risks have tended to increase recently and are being reflected in sharper downward revisions of analysts’ opinions on the outlook for the global economy in 2019 (see left-hand panel of Chart 5).
John C Williams: Restoring balance Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at New Jersey City University, 18 February 2022. * * * As prepared for delivery Good morning, everyone. I want to thank Sue Henderson for that kind introduction, and New Jersey City University for hosting today’s discussion. I always enjoy speaking with students, and I look forward to the time—hopefully soon—when we can have these types of events in person. Today, our virtual setting is Jersey City, one of the most diverse cities in the world—and one known for terrific pizza. Now, it’s not my place to get into the debate over who has the best pizza, and I know that people have strong views on that subject. As president of the New York Fed, I proudly represent both sides of the Hudson River, and my job is to make the economy stronger and the financial system more stable for all. Before I move on from the topic of pizza to economics, I should give the standard Fed disclaimer that the views I express today are mine alone. They do not necessarily reflect those of the Federal Open Market Committee—what we call the “FOMC"—or others in the Federal Reserve System. As you well know, the economy—like many facets of our lives—continues to be shaped by the unpredictable nature of the coronavirus. As I’ve said before, the pandemic is first and foremost a health crisis.

Central banks have an operational independence but they do not decide their own mandate. The mandate given to the Eurosystem is clear: our primary objective is price stability. However, our mandate states that we “shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system” x. Careful attention to the dynamics of the indebtedness of households, firms, and financial intermediaries would also be in line with the intellectual tradition of the Eurosystem. Since its inception, the ECB has always given special attention to broad financial aggregates in setting the course of monetary policy. It was emphasised by its monetary pillar and is now emphasised by its monetary analysis. Restricting attention to measures of liquid liabilities such as M3 has probably little justification today in view of the little direct relevance of monetary aggregates for price developments. But the relevance of broader and more varied credit aggregates is beyond question for both price and financial stability concerns. Together with asset prices, they could constitute the base of a revised credit and financial pillar. xi  2.2  The Separation Principle becomes less relevant with a multifaceted monetary policy  The link between monetary policy and financial stability raises two questions. First, what are the quantitative effects of monetary policy instruments on financial stability?
Technology does not only manifest itself in web and wires, but also in the rarefied area of financial engineering, with advanced mathematical models and complex equations developed to price new derivative products. These have become useful instruments for hedging purposes and for offloading and allocating risks to those who have the appetite and capacity to take them on. 22. But these developments have brought dangers and anxieties as well as benefits and convenience. The Y2K episode – though it was well managed and ultimately uneventful – underlined how dependent we have become on the technology created over the last decade or so, and how irreversible that technology is. More recently, and now that the Y2K anxiety has been overcome, the rapid development of e-banking has underlined other concerns about privacy, security, risk management, customer protection – even about the very nature of banking – in a borderless world. The dangers posed by innovative financial products hardly need to be laboured in a place that has been very much at the brunt of their more destructive forces in recent years. 23. What can a monetary authority do in the face of such difficulties? I have referred already to the drastic measures taken in 1998, and more than enough has been said on that matter elsewhere. In the field of regulation and supervision, we need to ensure that we keep pace with the rapid 5  BIS Review 114/2000  developments going on, so that anxieties about e-money and e-banking – real or imagined – are properly addressed.

In other words, the business ‘creation effect’ stimulated by WTO accession will far outweigh the ‘diversion effect’, under which the pessimists had been predicting that Hong Kong’s trade would gradually dry out and shrivel up. To put a figure on it, our estimates within the HKMA suggest that Hong Kong’s annual GDP growth rate will be boosted by somewhere between half to one per cent through the increase in re-export trade resulting from China’s membership of the WTO. 6. But that is not the end of it. For our less visible trade, in financial, technical and professional services, the outlook is even more promising. These lucrative service industries, which are increasingly taking pride of place in Hong Kong’s economy, will be greatly boosted by business from Chinese enterprises seeking to expand their capabilities and improve their governance to handle increased trade and meet foreign competition. They will also be stimulated by overseas investors who need advice on how to make the best of the opportunities on the Mainland and who find Hong Kong the best place at which to obtain that advice. These trends have been in play for a long time – indeed they reflect Hong Kong’s historic role as a hub of commercial, technological and cultural exchange between China and the rest of the world. But there are clear signs that these mediatory and advisory services are now receiving a boost in anticipation of WTO entry, as companies in the Mainland, in Hong Kong and overseas position themselves for new kinds of commercial relationships.
Last year the UK participated in EU-wide tests carried out by the European Insurance and Occupational Pensions Authority (EIOPA), conducted for the first time on a Solvency II basis. This exercise focussed on the overall impact of an adverse market scenario and a low yield scenario. The tests covered 60 groups and 107 companies from across Europe, including the larger UK firms and from some non-EU countries6. In 2015/16 the PRA is currently conducting a stress test on its own authorised General Insurers, covering a range of stresses such as natural catastrophes, terrorism and cyber-attack. Liquidity CRDIV covers liquidity requirements as well as capital requirements. The two are quite different in nature and liquidity is, in my personal view, more controversial. Most firms – including banks – if they fail will actually do so when they run out of cash, before they become insolvent. And banks are structurally vulnerable to a liquidity run because their assets, such as mortgages or company loans, are longer maturity than their liabilities, such as corporate or retail deposits. One reason why liquidity requirements can be more controversial is because of the business impact. Capital, in whatever form – whether equity or bonds that could be converted into equity – is actually a source of funding and sits on the liabilities side of the balance sheet. Capital may be more expensive than debt for tax reasons, but both provide funding to be used. Liquidity requirements usually take the form of a specified minimum holding of liquid assets.

Paul Fisher: The Financial Regulation Reform agenda – what has been achieved and how much is left to do? Speech by Mr Paul Fisher, Executive Director for Supervisory Risk Specialists and Regulatory Operations of the Bank of England and Deputy Head of the Prudential Regulation Authority (PRA), at Richmond, the American International University, London, 30 September 2015. *  *  *  It is now 8 years since the start of the great financial crisis, and 7 years since the collapse of Lehman Brothers and AIG in the United States, followed by the bailing out of HBoS and RBS in the UK. The consequences were not limited to the financial sector – the economic recession that followed in much of the developed world was both deep and prolonged. This naturally created an imperative for changes to the regulation of the financial system to prevent the same thing happening again in future. Since I became Deputy Head of the Prudential Regulation Authority (the PRA) in June 2014, I have been asked a number of times to comment on how far the regulatory reform agenda has advanced. How close are we to ending “too big to fail”? How much more regulatory change can one expect?
5 But the higher living standards which the division of labour permits require institutions that allow us to exchange what we each produce. Smith described how “in a nation of hunters, if any one has a talent for making bows and arrows better than his neighbours he will at first make presents of them, and in return get presents of their game”. 6 But a man who spends all day making arrows to swap them for meat gives up the chance of hunting himself for the chance of sharing in a larger catch. For the group to specialise, the hunter who turns arrow-maker has to be sure that his partner in trade will deliver the “present” of meat. When the timing of these exchanges is not coincident, there is a need for social institutions to prevent one party reneging on the transaction, and, in particular, for money – an issue that I will return to later. Smith’s second insight was that the social institutions necessary to exploit the full potential of a market economy were not derived from the relentless pursuit of selfinterest, but from the recognition that we all benefit from what he described in Theory of Moral Sentiments as the exercise of “sympathy”. In other words, we step back from our immediate situation and ask: how do my actions affect others? Answering that requires an ability to imagine ourselves in others’ shoes – “sympathy”. That sympathy in the hunter, for example, might mean feeling the pain of a starving arrow-maker.

With respect to money market developments, commercial banks lending rates have been declining but not at the rate as inflation or treasury bill rates. Commercial banks nominal average lending rate declined from 33.9% in December 2005 to 27.6% in December 2006 and stood slightly lower at 27.3% in February 2007. This is still on the high side for most entrepreneurs. However, there are positive indications from commercial banks due to the growing confidence in the economy and lower lending rates are therefore expected given the current environment of low inflation. Mr. Chairman, in the Non-Bank Financial Institutions (NBFIs) sector, institutional growth has continued to be a challenge. The number of NBFIs supervised by the Bank of Zambia has increased in the last 6 years, by 15% from 52 in 2001 when a specialized NBFIs department was established, to 60 today. The establishment of this specialised department was in response to: •  2  the expansion of the NBFIs sector;  BIS Review 150/2007  •  the increased innovation in the sector; and  •  the increase in the number of NBFIs supervised by BoZ after amendments to the Banking and Financial Services Act (BFSA) in 2000. The increase in the number of new entrants in the NBFI sector has been due to the stability in the macro-economic environment in general and the financial sector in particular. To illustrate this further the BOZ receives on average about 7 applications per quarter, mainly from bureaux de change.
Real convergence encompasses factors such as labor mobility, price and wage flexibility, exposure towards external shocks, industrial structures, and so on. Judged by these factors, convergence among future members of the EMU still has a long BIS Review 102/1997  -3-  way to go. This is important because to be successful a European monetary policy depends exactly on these factors. Without a high degree of real convergence, monetary policy is bound to have different effects in different parts of the monetary union. The very idea of a single European monetary policy would thus become unrealistic. The ECB would come under political pressure to accommodate mutually incompatible wishes from different parts of the monetary union. The result could only be a less than optimal monetary policy and rising inflation and interest rates. For EMU to be successful the member states of the EU should therefore make determined efforts to further real convergence. The convergence criteria as laid down in the Maastricht Treaty require member states of the EU to achieve certain goals by spring 1998. Convergence, properly understood, can however never be something that can be pinpointed to a certain point in time, but must be an ongoing process. It does not make sense to require countries to get their fiscal situation under control by a certain date, just to let them go unpunished on a public spending spree shortly afterwards. Prudent fiscal policies should not only be a requirement for becoming, but also for remaining part of the EMU.

Inflation and interest rates should be low and in line with those in the other participating countries. The exchange rate should be stable. Last, but certainly not least, the budget deficit should be under control and the level of official debt sustainable. Over the last five to ten years, most member states of the EU have come a long way towards fulfilling these criteria. Inflation rates are at or close to historical lows in various countries. The same is true for interest rates, where differentials have diminished considerably. Much less successful was the quest for fiscal stability. Budget deficits in most countries are still too high and debt levels have often, instead of falling, risen over the last years. Without any doubt, the pursuit of the convergence criteria with a view to joining the EMU has been instrumental in improving economic policies in various member states of the EU. Who, for instance, would have thought ten years ago that Italy would today post an inflation rate lower than the one in Germany? Yet, despite the progress achieved over the last decade, two problems remain: First, convergence in important areas is still far from being satisfactory. Second, the convergence criteria require the aspiring members of the EMU to achieve certain goals by spring 1998. But what about their future policies? There is a widespread belief in the economics profession that nominal convergence -- as expressed by the convergence criteria -- is less important for a successful monetary union than real convergence.
Annual variations in inflation are now substantially smaller than they were in the 1970s and 1980s. Over the past ten years, average inflation has been somewhat lower than, although fairly close to, the target of 2.5 per cent. BIS Review 65/1008  1  Inflation measured by the CPI varies from month to month, primarily as a result of wide fluctuations in electricity prices, but also due to other temporary disturbances. The rise in the CPI-ATE shows inflation adjusted for one-time effects of tax changes and excluding energy products. Inflation, measured this way, has risen since summer 2006. One disadvantage of this indicator is that it does not only exclude the temporary effects on electricity prices of, for example, changes in the weather; it also excludes more persistent developments in energy prices. Energy prices have risen more than other prices for a fairly long period, leading to an average year-on-year rise in the CPI over the past 5-10 years that has been close to ½ per cent higher than the rise in the CPI-ATE. Other available measures of underlying inflation also suggest that inflation has moved up. While the year-on-year rise in the CPI-ATE is now 2.4 per cent, other measures of underlying inflation are above 3 per cent. 2  BIS Review 65/2008  Recently, inflation has been somewhat higher than our projections from last year. Inflation was broadly in line with expectations through 2007. In 2006, inflation was considerably lower than projected at the beginning of the year.

The U.K. Financial Conduct Authority (FCA) has reached an agreement with banks to keep submitting rates until the end of 2021, but beyond that date the existence of LIBOR is not guaranteed.5 The FCA has made it clear that it expects at least some banks to leave the LIBOR panels soon after 2021, making LIBOR even less representative than it is now, and that it would need to judge whether LIBOR was still representative at that stage.6  Headway Is Being Made While the clock is inevitably ticking, progress is being made. In 2017, the ARRC selected SOFR as its preferred alternative to U.S. dollar LIBOR.7 Since April 2018, the New York Fed has produced SOFR every business day. It’s based on an important underlying market with much higher volumes than LIBOR, and is compliant with the Principles for Financial Benchmarks set forth by the International Organization of Securities Commissions (IOSCO).8 The International Swaps and Derivatives Association (ISDA) has led really important work on the development of contingencies for some derivatives products for the scenario where LIBOR ceases to exist.9 A key question is what will happen if the FCA finds LIBOR to no longer be representative. Two large central counterparties have already indicated that they would expect to move the LIBOR trades they clear to SOFR if this occurred.