samchain/econo-pairs-v1 huggingface dataset:
We know that the LCR can be volatile during times of liquidity stress and market volatility, with changes in the ratio not necessarily reflecting a bank’s true liquidity position. Indeed, it is possible for the LCR to fall relatively more sharply than HQLA. For example, under the historical Lookback Approach (HLBA) methodology, when a bank faces an unusual outflows of derivatives variation margin, net outflows can increase while HQLA falls. [30] Another issue is banks’ potential market obligations to notify debt investors in the event of LCR falling below 100%, due to local capital market transparency regulations. In addition, discussions with firms highlight concerns that if banks report a fall in their LCR they may get a credit rating downgrade. This is despite the fact that LCR plays a fairly limited role in the methodologies of most credit rating agencies, which typically consider a much wider set of information. [31] Nonetheless, fears of adverse market reaction appear to induce banks to seek to quickly rebuild their LCR levels, in the event that the levels do fall. Concerns around disclosures may be especially problematic for banks that disclose spot (rather than average) LCR levels, due to the greater volatility and sensitivity of spot LCR rates compared to an averaged metric. Basel III policymakers were aware of this risk. This is why Basel requires disclosure of average LCRs only. However, in some jurisdictions, including the EU and UK, some banks voluntarily disclose their spot LCRs. Fourth, there is uncertainty about the future.

Page 1  Capital and (for a change) Liquidity Buffers − speech by Victoria Saporta Given at the Bank of England  Page 2  Published on 14 July 2022  Our Prudential Regulation Authority (PRA) requires UK banks to hold ‘buffers’. These are extra funds that banks can use in times of stress. Vicky Saporta says there is evidence that banks are reluctant to use these buffers and she explains why. Then she starts a discussion on what the PRA could do to make it easier for banks to use them. Speech Good morning. Last year, I reflected on the emerging prudential lessons from the Covid-19 stress. [1] I noted that one major lesson was that the banking system remained resilient and continued to provide credit to the real economy, demonstrating why the post-Global Financial Crisis capital and liquidity reforms were necessary. I did, however, also identify some potential issues with the current capital framework, some of which were also reflected in Sam Woods’ more recent ‘Bufferati’ speech. [2] In short, I noted that the evidence suggested that capital buffers are likely not to work as intended. During a systemic stress, firms might not be willing to use their buffers and instead cut back on lending to the real economy to avoid dipping into them. But capital buffers are only one of available instruments to support the banking system during periods of stress – there are other important instruments, including the vital liquidity buffer framework.
The Official Credit Institute’s programmes, aimed at smoothing small and medium-sized companies’ access to credit, have attempted to correct this market failing. Further work along these lines should be pursued, improving where possible the workings of these programmes and increasing their volume if necessary. Yet I must urge credit institutions to be responsible, as I have on previous occasions. Evidently, at a time such as the present, they must be particularly careful and, naturally, not  2  BIS Review 27/2010  extend credit to companies that are not solvent; but nor must they forget that should they fail to lend but a single euro to companies that are solvent, they will only be making things difficult for themselves. Another example of progress in financial reform backed by broad Parliamentary consensus has been the approval of legislation whose aim is to restructure the financial system at the least cost to taxpayers and in the shortest time possible, observing the constitutional distribution of powers, so that all institutions in the system are in a position to provide credit to households and firms when the recovery arrives.

As I have said on previous occasions, the greatest cause for concern at present should not be predicting exactly when positive quarter-on-quarter growth will resume, but rather determining to what extent the Spanish economy is ready – or not – to move into a long phase of robust growth. During the last upturn, the Spanish economy built up some significant imbalances, such as the excessive weight of real estate activities, a swollen external deficit, a relative loss of competitiveness, and high corporate and household debt. Over the course of the crisis, some of these imbalances have begun to be corrected, but others are still significantly holding back a pickup in growth. With the crisis, these pre-existing structural problems have been compounded by an increase in unemployment to levels far higher than those of any other developed countries and by the sharp deterioration in public finances. These are now undoubtedly the two main problems affecting our economy. To embark on a sustainable economic recovery, the imbalances built up by the Spanish economy before and during the crisis must be reversed. Job destruction must be halted and unemployment absorbed. And, further, an ambitious plan must be devised and set in place to cut the budget deficit, to redress the financial position of the private sector and, in sum, to mitigate all those structural shortcomings that are currently weighing on the recovery and contributing to reducing the growth potential with which our economy will face the new expansionary cycle.
In a more specific aspect, the European integration processes will slowdown, as far as our firms will not be able to withstand the competitiveness pressures. For this reason, I think that the regional and Albanian authorities should continue with the implementation of structural reforms, which aim to: Increase the formalisation level of the economy, as a tool for raising competitiveness, for promoting consolidation, for improving the governance of firms, and for lowering their financing costs; Promote the development of firms in fields where the region and Albania provide competitive advantages, such as tourism or the agro-industry, and in those fields that have high value added, such as the information technology or the financial services. Development capital markets, as a tool to support new and innovative firms and as a partner to share the financial risk of entrepreneurs in the stage of the expansion and development. Dear participants, Let me emphasise that, notwithstanding the focus on the future challenges, the report shows optimism for the region. It notes that, unlike the other emerging economies, the presentation of productive industries will contribute to the increase of employment. Also, the regional integration in industry has the capacity to generate growth of productivity, to better compete with the imports and contribute to the growth of regional exports. The institutional adoption and convergence is considerably important for the integration of Albanian firms in the global output chain, and for strengthening their sophistication and specialisation in the global market.

Therefore, it's critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation and central bank balance sheets. In addition, we must think carefully about proper regulation to protect consumers and investors and ensure the stability and safety of the financial system.1 So, what are some of the things that the New York Fed should be thinking about? To start, digital transformation could have implications for markets and for our interactions with counterparties, as well as how we carry out monetary policy. Like in the example of music, change is already underway. Take the Fed's overnight reverse repo (ON RRP) facility, for example2. The ON RRP facility has broadened the set of our counterparties and diversified the type of instruments on the liability side of our balance sheet. This facility has supported the control of short-term interest rates according to the FOMC's policy direction. This has had profound effects on the composition of liabilities on our balance sheet. Traditionally, the Fed's liabilities have primarily been paper currency and reserves held by banks at the Fed. For example, a decade ago, paper currency totaled $ trillion and bank reserves $ trillion. But since then, we've seen a dramatic change in the makeup of the liability side of our balance sheet. Today, in addition to $ trillion of currency and $ trillion of bank reserves, there are $ trillion in overnight reverse repos, representing funding from nonbank sources such as money market funds.
There are certain preconditions to be met for a successful implementation of inflation targeting regime. First central bank must have strong team of economists, well functioning transmission channels and the instrument to guide the policies. In this respect the Central Bank of Turkey reorganized its Research and Monetary Policy Department and increased the number of economists with PhD’s. We have strengthened the research capacity and the analytical power of the Department. At the start of the program, high debt to GDP ratio was a problem for debt sustainability and there were high uncertainties about the transmission mechanism. And also due to the high and chronic 30 years of inflation there was not a solid track record of credibility. Between 2002 and 2005, the period of implicit inflation-targeting  1  Trichet, J.C. (2007). “Hearing Before the Economic and Monetary Affairs Committee of the European Parliament”. Brussels, March 21, 2007. BIS Review 57/2007  3  regime, the Central Bank tried to build up its credibility by setting inflation targets together with the Government and achieving them. During the last 5 years’ period debt to GDP ratio fell to sustainable levels, with significant developments in credit markets and a downfall in dollarization levels, which strengthened the transmission mechanism to a large extent. Also the MPC assumed the role of a decision making body, from an advisory one. The currency reform was also a necessary condition for successful IT implementation as the currency with many zeros kept the inflation memories in the public mind alive.

Willem F Duisenberg: Time to say goodbye Address delivered by Dr Willem F Duisenberg, President of the European Central Bank, on the occasion of a special ECOFIN dinner to pay tribute to his leadership of the European Central Bank, Venice, 29 October 2003. *  *  *  It is time to say goodbye. After more than five years of steering the ECB through the high seas, it is time for me to return to port and drop my anchor in more tranquil waters. Over the past few weeks, a lot of people have asked me how I feel about retiring. I have told them that my feelings are mixed. Half of me, Wim Duisenberg the private man, wishes that I had gone already. As you know, I had announced my intention to retire already last July. But for the other half of me, Wim Duisenberg the central banker, it will be more difficult letting go. Without a doubt, the last five years have been the pinnacle of my career. It has been an honour and a privilege to be the first President of the European Central Bank; to be bestowed the task of rearing, nurturing, and then guarding Europe’s young currency. Europe has made history and I have been given a place at the heart of it. I couldn’t ask for more than that. In years to come, history will be the judge of our success, or our failure. I hope that history will be kind.
As a powerpoint slide used by a FinTech company in Silicon Valley rather immodestly proclaims: “the geeks shall inherit the earth!”. It is no doubt an exaggeration. But the message is clear: •  In the years ahead, countries, businesses, and people who know how to use technology and innovate will have a keen competitive advantage. Why this time is different Now, have we not heard this story before – that technology will transform banking and then nothing changed fundamentally? Indeed there have been false starts in the past. •  In the 1990s, we thought that electronic money would replace cash and cheques. That has not happened. –  •  In most parts of the world, including the US, Japan, Europe, and Singapore, notes and coins in circulation outside banks has been increasing steadily every year. In 2000, some of us were quite sure that Internet-only banks would eventually replace brick-and-mortar branches. This too has not happened. The most obvious evidence that both beliefs were manifestly wrong occurs year after year, when lines of Singaporeans form at bank branches to obtain new notes for “angpows”, to be given out during the Chinese New Year celebrations. •  But this year, however, we saw “e-angpows” being given out for the first time. •  Could this be a sign of things to come? Technology takes time to proliferate. More importantly, it is the interaction among related technologies that often creates transformation – and that takes time.

José Manuel González-Páramo: How will historians judge our handling of this crisis? Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, in the occasion of the presentation of the book titled “Un Siglo de Historia del Sistema Financiero Español”, Bank of Spain, Madrid, 10 June 2011. *  *  *  Ladies and Gentlemen, It is a great pleasure to have the opportunity to speak today at the Bank of Spain about the Spanish financial sector. The book being presented today consists of a distinguished collection of essays providing a wealth of information on Spain’s financial sector over the last century. Not only does it summarise the key data and the main developments, but it also provides deep analyses. It will definitely become the work of reference on the history of the financial sector in this country in the 20th century. Let me then congratulate the contributors and the editors, José Luis Malo de Molina and Pablo Martín Aceña for their excellent work. Reading the book, notably the chapter by Raimundo Poveda, we can draw some interesting parallels between the current crisis and the banking crisis in the late 1970s and early 1980s. In particular, given the current circumstances, the main message I would like to emphasise today is that certain changes in the banking sector that are implemented in response to crises are essential to guarantee a strong, robust banking sector in the future.
Within academia, economic theorists began constructing models where policy credibility was absolutely central if people’s expectations were to remain anchored and the economy 4  kept stable. Establishing credibility called for clear policy targets and policy actions. Secrecy about policy actions, whatever its potential shorter-term benefits, came at a potentially significant longer-term cost. Monetary policy “surprises” might provide a short-term jolt to the economy. These surprises were especially likely when policy was in the hands of politicians, perhaps seeking re-election. But these actions nurtured longer-term suspicions that policymakers might neglect inflation, causing inflation expectations to rise and policy credibility to fall. 2 3 4  Kynaston (2017) discusses this era of the Bank of England’s history. Brunner (1981). Kydland and Prescott (1977), Barro and Gordon (1983). 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  If so, monetary surprises could prove self-defeating even in stimulating the economy. They would instead 5  merely stoke expectations of higher inflation. In the academic jargon, an “inflation bias” would emerge. This theoretical story found empirical support in the behaviour of a number of advanced economies during the 1970s, who experienced a so-called “Great Inflation”. 6  In part in response to the Great Inflation, a number of central banks began to be given new policy responsibilities to reduce the potential for electorally-driven monetary surprises. Perhaps the most important of those was operational independence for the setting of monetary policy.

4  BIS central bankers’ speeches
That suggests there may be further adjustment to come. Investment fell even more sharply than private consumption during the recession – down almost 20% – as the higher cost and reduced availability of finance, coupled with sharply heightened uncertainty about economic prospects, led businesses to cancel or postpone  1  See “The financial position of British households: evidence from the 2010 NMG Consulting survey” by Mette Nielsen, Silvia Pezzini, Kate Reinold and Richard Williams, Bank of England Quarterly Bulletin, Winter 2010. BIS Review 169/2010  1  investment projects. While the outlook remains highly uncertain, the improvement in both financial markets and in the real economy since mid-2009 is likely to have contributed to the modest recovery seen in businesses’ capital spending over the past year. And though continued tight credit conditions may restrain the investment spending of small and mediumsized enterprises, the bulk of capital expenditure is carried out by large businesses. They appear to be less credit-constrained and also have better access to the capital markets. Moreover, despite the downturn, the corporate financial position appears to be relatively healthy. So the availability of finance is unlikely to be a major brake. Rather investment spending is likely to be restrained by the juxtaposition of muted product demand and an overhang of spare capacity. For almost as long as I have been a member of the Bank’s Monetary Policy Committee, we have pointed to the need for a re-balancing of the composition of demand at some juncture, away from domestic demand and towards net exports.

Accompanying that re-balancing would be a re-orientation of the structure of activity away from businesses that predominantly meet domestic needs towards those producing internationally tradable goods and services. The substantial depreciation of sterling – down around a quarter since August 2007 – should facilitate that re-balancing by making it more profitable to produce for export or to compete against imports. For example, relative unit labour costs in the United Kingdom are now more than 25% lower than before the crisis. The contribution of net exports to the recovery had – at least until the very latest GDP release – been somewhat disappointing. Net exports reduced growth by a total of 0.7 percentage points over the past four quarters, as import growth outstripped that of exports. As world output, weighted according to countries’ importance to UK trade, grew somewhat faster over that period than UK activity, the weakness in the UK’s net export performance cannot be attributed to a more rapid recovery here. Some of the weakness can perhaps be ascribed to strong import growth associated with the working out of the stock cycle, as inventories are relatively import intensive. But closer investigation suggests that the weakness has been especially concentrated in exports of financial services, no doubt in part reflecting the impact of the banking crisis. Foreigners’ demand for UK financial services may plausibly continue to be somewhat lower than before the crisis, so this weakness may persist.
Moreover, also on 12 March, the ECB approved the launch of a series of longer-term refinancing operations (LTROs), which will be conducted until June as a form of “bridge” financing, until the first of the new TLTRO-III operations are executed. Also in this connection, the ECB Governing Council announced on 30 April a new series of pandemic emergency longer-term refinancing operations (PELTROs), in continuance of the latter LTROs. Along these same lines, on 7 April the ECB announced a package of temporary measures relaxing the criteria for the acceptance of assets offered as collateral by banks in the Eurosystem’s refinancing operations (including TLTRO-III). The aim of this package is that banks may increase their fund-raising capacity in these operations. Among other measures, the ECB decided to include, among the assets accepted, general government-backed loans to companies (large corporations and SMEs alike), the self-employed and households in order to encourage banks to extend loans that may benefit from the guarantees granted by 24  the euro area countries in the context of this crisis. Further, the ECB decided on 22 April to continue accepting as collateral, until September 2021, tradable assets whose credit rating is several levels below the minimum level currently demanded. The goal of this measure is to mitigate the effect of possible credit downgrades on the availability of the assets that banks use as collateral in their financing operations with the ECB. It is still premature to estimate the overall impact of all these measures on financial conditions, bank lending and economic activity.

Sarah Dahlgren: Supervisory reform for global banks Remarks by Ms Sarah Dahlgren, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Center for Transnational Legal Studies Seminar on “The impact of US regulatory reform on global banks”, New York City, 12 February 2013. *  *  *  Thank you for the invitation to speak today. Please note that the opinions I express today are my own and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System. Although the topic of the seminar is “regulatory reform”, I will focus my comments on “supervisory reform”. Regulation and supervision work together to ensure a strong global financial system. While rules and regulations set out the standards that must be met, supervision provides the necessary oversight and enforcement to ensure firms are following the rules. It’s a challenge to supervise a large internationally active firm. Many businesses are truly global and often include complex booking models that may involve trades being originated in one domicile with various sub components being booked in one or more other jurisdictions. As Governor Tarullo noted in a recent speech, there are unique challenges in regulating and supervising the U.S. operations of a global institution. Although we have full authority over the local operations, we see only a piece of your global operations and regular access to information can be limited.