samchain/econo-pairs-v1 huggingface dataset:
Having observed the behaviour of the economy in the period since the crisis, the Committee was aware of the possibility that these effects could, in combination, mean a period of weaker growth but higher inflation and thus create a trade-off for monetary policy to balance. The Committee made its first full assessment of these effects in August. Over the three-year forecast period, uncertainty was expected to weigh on demand, investment spending by firms in particular, and a period of resource reallocation as the UK’s trading relationships were re-configured was expected to weigh on supply. At the same time, the sharp fall in the sterling exchange rate following the vote to leave would imply higher imported inflation, meaning upward pressure on inflation. The MPC responded to this outlook by reducing Chart 8: No stimulus in August would have been consistent with a weight of zero on stabilising the output gap at the 2-year forecast horizon 4  Bank Rate by 25 basis points, announcing £ billion of asset purchases, and by launching a Term Funding Scheme to ensure banks passed through lower interest rates to end borrowers. A majority of  Inflation (%)  the MPC also indicated that, if the economy evolved 3.5  in line with its forecast, they were prepared to take further action. 3  Suppose the MPC had not responded in this timely,  November August , with stimulus  coherent, and comprehensive way.

A better allocation of European private savings, however, requires more effective cross-border financing channels. We therefore need to combine a more efficient Banking Union and an at last completed Capital Markets Union (CMU) to make a genuine “Financing Union for Investment and Innovation”. Jens Weidmann, the President of the Bundesbank, and I had made a strong case for it in a joint op-ed published in April 2019. Reviving the single market, our essential asset There is an essential asset that Europe does not talk about enough: it is its single market. Yet, 3/4  BIS central bankers' speeches  this is its great economic success, together with the euro. But it is vital to remain vigilant as to the dangers of fragmentation with the Covid crisis. National governments acted appropriately during the critical phase, adopting emergency measures in particular to provide liquidity support to their businesses. But the single market means common rules for businesses: if this were not the case, the divergence between our economies could regrettably increase further. It is therefore necessary to quickly restore the Commission's control over state aid and fair competition Furthermore, we must revive the single market, above all because we can optimise its power by combining its various components much better: free movement of goods, naturally; but also the cross-border financing capacity with the financing Union; and last but not least, regulatory power. There are still too many implicit borders and too much fragmentation.
I think this is now a conclusion shared by all Central Bankers in the world, whatever the regulatory environment they live in. An intimate knowledge of the banking sector and of different financial institutions is extremely helpful in managing periods of tensions and stress on money and credit markets. Central Banks have had to make almost instant judgment on the provision of liquidity in different forms and different maturities. There are circumstances where being able to assess the creditworthiness of market participants and the effective amplitude of their needs is of extreme help. More generally (and somehow academically), in times of crisis, the distinction between liquidity and solvency problems becomes both more important and much more difficult to make. Having, so to speak, all the cards in your hands, minimizes the risk of making mistakes. Second, as concerns the supervision infrastructure, it seems to me that clear, simple, robust and pragmatic arrangements have performed better than more sophisticated and elaborate schemes. As you know, I had myself to face a situation of acute crisis and make decisisions in real time, concerning a major, and internationally active, financial institution. At no time did I have the feeling that our current arrangements were deficient and prevented me for getting the necessary information and making the necessary decisions. As you also know, seen from a public interest perspective, we could solve the situation without any significant disturbance to capital market. Nobody knows about the future.

The financial stress episodes of the past few weeks are part of a growing uncertainty regarding the strength of the recovery in the developed world. In this context, two phenomena occurred that triggered the current fragility. First, between July and August we witnessed the debate in the U.S. Congress on raising the fiscal debt ceiling – an illustration of the difficulties of the American political system to deal with their problems in this area – , plus the downgrading of their sovereign debt rating. Second, sovereign debt problems in peripheral Europe, notably Greece, expanded into central European economies such as Spain and Italy. In the U.S., the focus of the debate has shifted to the state of the economy and the possibility of a double-dip recession. The high levels of household debt and the difficulties to resolve the real-estate problem are yet to be resolved and will probably take a while. The labor market is being unable to pick up. The Central Bank and the fiscal authority, as in other developed economies, have no room for new stimulus measures to make up for the weakness of private demand (figure 13). The Fed announced that it would hold the policy rate low at least through mid-2013 and also a purchase of long-term bonds financed with short-term instruments. Since the Fed has the short-term rate at its lowest and the economy  4  BIS central bankers’ speeches  needs further monetary stimulus, this measure is intended to flatten the yield curve, reducing long-term rates.
The second reason why recovery is likely to be slow after a banking crisis, highlighted by those such as Richard Koo (2003), is that the excess debt and investments built up in the preceding period of over-optimism need to be worked off. And that process of balance sheet repair – by households, businesses and financial institutions – typically takes time and involves a period of subdued demand unless the spending of other, less indebted, agents rises to compensate. Unlike some other countries which saw substantial rises in house prices during the years preceding the crisis, the United Kingdom did not see a major boom in residential construction (Broadbent, 2012). As a result, the overhang of unsold properties needing to be worked off was much smaller here than in, say, the United States or Spain. Even so, households that had taken out relatively large mortgages might have been more inclined to cut back their spending when conditions deteriorated in 2008–9 as the financial crisis worsened. Some support for this hypothesis is provided in Chart 4, which exploits microeconomic data from the Living Costs and Food Survey to examine consumption patterns by income quartile, split by the indebtedness of households. It is striking that the sharpest falls in consumption were seen amongst high income, highly indebted households, though there may be other explanations for this too. The most important process of balance sheet repair is, though, taking place within the financial sector itself.

Finally, this initiative of bilateral engagement on the issues in developing talent in the industry will also gain from the synergy and will contribute to strengthening the ability to further the agenda of building human capital in the financial services industry. On this note, I wish you a productive and successful conference. Thank you. BIS Review 25/2008  3
Over the past seven months, this fact has been confirmed by the increasingly strong correlation of bank CDS with those of the country where they are located. It is an area of concerns for banks especially in the case of a rapid and abrupt evolution. A surge in the cost of funding will be therefore damaging for banks profitability and their ability to grant credits. Short-term funding may also cause some concerns for banks as multiple sovereign downgrades can lower, either through a decrease in market prices or through an increase in haircuts, the value of government securities used to collateralize refinancing. On the asset side, banks are exposed to an abrupt drop in sovereign debt prices through mark-to-market losses on sometimes large trading portfolios of government bonds detained as a liquidity buffer. In addition, banks active on CDS as net protection sellers are also exposed to mark-to-market losses and real losses in case of a debt restructuration which constitutes a credit event triggering the CDS. These losses could erode the capital base of the banks at a time when the risk weighting of assets, based on credit rating levels, increases. The two factors push down capital ratios and reduce the potential for lending to the economy. It brings us to our third contagion channel. 2  BIS Review 84/2010  3)  Lastly, the economic channel is likely to play a significant role via the fiscal adjustments necessary to repair public finances and restore the credibility of the countries on financial markets.

However while such measures have removed near-term uncertainty, they could prove insufficient to provide a lasting change in the negative sentiment of investors on the mediumterm if budget deficits and debt situation are not considerably improved. In this context, European authorities have to show their strong level of cooperation and commitments to global and common solutions. Any unilateral and uncoordinated decision may notably prove to be less efficient and may amplify markets volatility. Finally, the removal of vulnerabilities in the banking sector is desirable to alleviate uncertainties. Effective risk management, transparency and robust business models are essential to strengthen banks’ resilience to shocks and to ensure adequate funding of real economy that underpins sustainable growth and financial stability. The effective and timely implementation of the G20 policy orientations is necessary to build the new international system on a solid and stable ground. This is notably the case for the G 20 provisions on the CDS market and on credit rating agencies. One cannot deny that certain OTC derivatives (CDS for instance) or certain types of transactions (short sales) are likely to exacerbate price movements or create instability that are detrimental to both issuers and investors. One may thus find it tempting to ban or drastically limit this type of operations and we indeed have observed national proposals going in that direction, including the bank of naked CDS, naked short sales or mandatory shorter time horizon for settling transactions. I am of the view that such measures may not be efficient and, worse, may be counterproductive.
The step-up in inflation since late 2021 was mainly due to sharp increases in global energy and food prices, and stronger domestic wage growth. As for private residential properties, purchases by all foreigners have accounted for a low share of transaction volume over the last three years, averaging about 4%. There were no purchases by SFOs in the last three years, and their foreign employees accounted for an insignificant number within this 4%. Likewise, SFOs and their foreign employees account for a tiny proportion of car purchases in Singapore. Instead, the key risk that MAS is focused on with respect to wealth inflows into Singapore is potential money laundering. Be it high net worth individuals, or SFOs, MAS expects financial institutions servicing them to apply stringent anti-money laundering controls. 10/16  BIS - Central bankers' speeches  Financial institutions are expected to conduct additional due diligence such as corroborating the customers' source of wealth. Where doubts or suspicions are flagged as part of their due diligence, financial institutions have to take appropriate risk mitigation measures. These include not onboarding the customer or discontinuing the relationship. If there is suspicion of criminal activity, they have to file a Suspicious Transaction Report. MAS has been carrying out several onsite inspections to ensure that financial institutions' controls in the wealth management area continue to keep pace with money laundering/terrorism financing risks.

Emphasis on improved corporate governance goes hand in hand with the need for improvements in risk management standards. Sound risk management practices will minimise adverse consequences  BIS Review 51/2004  3  faced by financial institutions during periods of uncertainty. Robust internal controls to provide qualitative standards are also necessary to complement the quantitative analysis of risk to provide the necessary checks and balances. In the area of Islamic banking, the requirement to manage the risks becomes more important because of the unique peculiarities in the contracts. Basel II has, to a certain extent, incorporated some aspects in the identification of risks, in particular the credit, market and operational risks that can be assimilated by the Islamic banks in terms of its product offering. Another important pre-condition to sustain the continued growth of Islamic banking and finance is a comprehensive legal infrastructure for legal redress arising from disputes in Islamic financial transactions. The legal infrastructure needs to comprise both effective regulatory and substantive laws as weIl as appropriate adjudicative fora to resolve disputes relating to Islamic financial transactions. To address this, efforts are needed to develop a sufficient number of competent lawyers and judges that are equipped with sound knowledge and expertise in both Shariah and civil laws to deal with such matters. This would need to be supported by an efficient court system that can effectively deal with all Islamic banking and finance cases, whose decisions are enforceable over the range of financial issues.
Problems in the financial sector are contagious. Precisely because we need the financial system so much, reducing the risk of financial crises must be an important priority. Financial crises cause great damage to society. In addition, we know that financial crises have permanent effects on growth. It takes a long time to recover from the major fall in GDP following on from a deep financial crisis. Normally, we see a downwards shift in GDP level even if good times may then mean a return to the same rate of growth. BIS central bankers’ speeches  1  The modern Swedish example of a financial crisis was a frightening experience for many of us. The social costs of the crisis at the start of the 1990s can be illustrated in several ways. One way would be to compare actual growth with the trend development. The difference in Sweden’s GDP towards the end of the 1990s corresponds to 20 per cent of GDP each year, or SEK 50 000 per person in 1998 prices. The financial crisis of a few years ago, which was milder for Sweden, has cost the people of Sweden thousands of kronor more per year. The real effects have a high social and economic price One of the more tangible effects of the crisis of the 1990s was its impact on the labour market. Having gotten used to a level of unemployment of a few per cent, we then saw unemployment increase to double figures over only a couple of years.

Peterson Institute for International Economics, 13 April 2021 How to revisit central banking and financial stability? Speech by François Villeroy de Galhau, Governor of the Banque de France  Press contact: Mark Deen (mark.deen@banque-france.fr), Déborah Guedj (deborah.guedj@banquefrance.fr)  Page 1 sur 9 Ladies and Gentlemen, It is a pleasure to be with you today, and I extend my warmest thanks to Adam Posen for his kind welcome speech. As you know, we are living a period of great uncertainties. Yet in this deep mist, one thing is clear: the Covid crisis has increased expectations among the general public about what central banks can and should do, and hence relaunched the debate about their objectives, be it climate mitigation or the fight against inequalities. Admittedly, this is a sign of great confidence: central banks are clearly the victims of their own success in their central roles of price stability. However, as Benjamin Franklin reportedly said: “There are many roads to success, but only one sure road to failure; and that is to try to please everyone.” These additional expectations run the risk of growing confusion and disappointment. Today I will first elaborate on our inflation objective. Although the title of today’s lecture invites us to “revisit” central banking, inflation targeting is and will remain the principal edifice in the shared estate of central banking.
A period of overshooting would be followed by a period of undershooting, and vice versa 26 . Assuming complete credibility, this would mean that following an adverse demand shock, households and firms would expect sufficient policy stimulus to plug the gap left by deficient demand and, on top of that, to generate a little excess demand in order to raise inflation above its average and so bring the price level back to its targeted path. The consequent rise in near-term inflation expectations would, it is argued, make the job of offsetting the initial adverse shock somewhat easier. I wonder, though, whether price-level targeting might, in fact, endanger credibility by the extra complication it would bring to the formation of inflation expectations. When asked about what rate of inflation we are trying to deliver over the long run or cyclical horizons, the MPC’s answer is virtually  26  A short or a long horizon could be set for ‘correcting’ deviations from the targeted path for the price level. See King, M.A., 1999, ‘Challenges for monetary policy: new and old’, Symposium on ‘New challenges for Monetary Policy, Federal reserve bank of Kansas City at Jackson Hole, Wyoming . BIS Review 46/2006  9  always the same: 2% on the CPI (potentially departing from that only on rare occasions when, after a major supply/cost shock, we wanted to get inflation back to target more gradually than usual).

11  For example, ‘Treasury Committee Questionnaire ahead of appointment hearing for Mr Paul Tucker’, The Monetary Policy Committee of the Bank of England: appointment hearing, First Report of Session 2005-06, Volume II. 12  Erceg C.J. and A.T. Levin, 2003, ‘Imperfect credibility and inflation persistence’, Journal of Monetary Economics, 2003, vol. 50, issue 4. BIS Review 46/2006  3  Notwithstanding the extent to which analysis of real economic variables seems to dominate the pages of most central banks’ published analysis, including the Bank of England’s, maintaining real aggregate demand in line with supply is not a sufficient condition for achieving an inflation target; indeed, it would be consistent with any level of inflation. We absolutely have to attend to indicators of medium-term nominal trends. That is why central bankers like me look at measures of inflation expectations from as many sources as we can: bond markets, surveys etc. And it is why the ECB and others, including at the Bank of England, track the monetary aggregates as a cross check, a potential amber light alerting us to medium-term risks. Stabilisation policy and the impracticalities of fine tuning: real-side stuff That brings me to the second element in the conduct of policy: stabilisation of the path of demand and output, in order to keep inflation in line with the target over the cycle, to underline the commitment to medium-term stability, and as something desirable in its own right. Well-anchored inflation expectations do make stabilisation policy ‘easier’.
Indeed, the average size of the resulting institutions is two and a half times larger, which boosts their competitiveness and facilitates the raising of external funding. Second, to reduce the excess capacity in their branch networks and central services. The adjustment envisaged in the restructuring plans would involve a reduction of 10 to 25% in the number of branches and 12 to 18% in the number of employees. These cuts are in addition to those which had already been made previously, of 5% in branches and 4% in staff from their peak levels in 2008. However the ultimate objective of the integration processes was to strengthen the viability of the resulting institutions with the funds and management capacity of the savings banks best positioned to  2  BIS central bankers’ speeches  lead each of the integration processes, and to contribute to cleaning up savings banks’ balance sheets. In fact, thanks to these processes, savings banks have recognised additional losses on their loans and receivables and foreclosed assets for more than € billion. Finally, the savings banks law was amended in an effort to increase the professionalism in the management of these institutions, and to open them up to market discipline and the possibility of raising share capital to strengthen their solvency. In parallel with the restructuring of the savings banks, there has been a significant drive to clean up balance sheets in the Spanish banking sector and to ensure that assets are appropriately valued.

The results obtained by those firms that have survived and the behaviour of Spanish exports, which have grown faster than German exports during the three years of crisis, are examples of how the Spanish private sector is reacting positively to the challenge of the crisis. And as I have said, all this has been achieved with a labour market that, unlike those in other more prosperous countries with greater social solidarity, forces firms to adjust through quantities. Thus, for the third time in thirty years, with the same institutional framework, our unemployment rate stands once again at over 20%. Nor should we overlook the damage to the productive fabric, which has occurred because so many firms have had to close owing to the lack of appropriate mechanisms allowing a flexible response to the crisis. The development of the crisis highlighted the need for structural reforms in areas like the labour market, public spending and savings banks. Initially the progress made in fiscal consolidation was very modest, but the outbreak of the sovereign debt crisis a year ago marked a significant turning point in the economic policy stance. Since then, government and Parliament have adopted an ambitious raft of measures, with the drastic reduction in structural public spending being particularly notable. This has involved unpopular measures such as reducing the wages of public sector employees, freezing all pensions except for the minimum ones and sharply reducing public investment, as well as the recent agreement to improve the sustainability of our public pension system.