samchain/econo-pairs-v1 huggingface dataset:
Although the franc has weakened somewhat on a trade-weighted basis in recent months, it remains highly valued (cf. chart 1) and the situation on the foreign exchange market is still fragile. Let me start by reminding you of the background to our current policy: in the wake of the global financial crisis, demand for Swiss francs increased – substantially at times – causing the currency to appreciate rapidly and very sharply. We faced the risk of major economic turbulence and deflation – that is to say, of a sustained and harmful decline in the price level. The SNB therefore announced publicly (initially in March 2009) that it was purchasing foreign currency in order to limit further appreciation of the Swiss franc. Since then, the SNB has purchased some CHF 600 billion of foreign currency. At the beginning of 2015, the interest rate on sight deposits held by banks and other financial market participants at the SNB which exceed a given exemption threshold was lowered to –0.75%. The monetary policy instrument of negative interest aims to bring down the general level of interest rates in Switzerland and to restore, partially at least, the interest rate differential with other currencies. Since its deployment, a significant share of outstanding Swiss franc bonds has been negative-yielding. These low interest rates make Swiss franc assets less attractive, thereby helping to curb the currency’s overvaluation. The SNB’s policy measures have thus affected the capital market, which plays an important role in the transmission of monetary policy to the real economy.

Done well, these can also augment market discipline by promoting debates on important CG issues and in educating investors to be discerning. In sum, building a strong CG ecosystem is most effective when there is collective effort involving multiple gatekeepers – beyond the regulators and the boards of companies. To end my remarks, let me also acknowledge, as this forum demonstrates, that many companies have and do take good CG seriously. The care and vigilance put into this effort must continue. I am sure the boards and management of all the firms present here will not rest on your laurels either. And I trust that from your examples as good CG stewards, others will follow likewise. 4/4  BIS central bankers' speeches
In addition, as part of the Bank’s desire to ensure that commercial banks are adequately incentivised to seek their own liquidity insurance, the cost of borrowing increases with the size of the draw. The resulting matrix of fees is summarised in Table 1. Table 1 Fee table for DWF drawings of gilts Fees (bps) % of sterling eligible liabilities  0-10%  Collateral Type Level A  Level B  Level C  Level D  (e.g. high quality  (e.g. liquid and  (e.g. illiquid  (e.g. own-name  sovereign debt)  high quality  transferable  securitisations  mortgage and  securitised loans  and covered  corporate bonds)  and mortgages)  bonds, and loans)  50  75  125  200  75  125  200  300  100  175  275  400  10-20% 20-30% >30%  At the Bank’s discretion  There is one further important point to make regarding the policy decisions underpinning the design of the DWF. It relates to the challenges associated with providing liquidity support while not compromising the Bank of England’s ability to conduct monetary policy. To implement interest rate decisions, the Bank must, through its market operations, adjust the supply of central bank money in response to changes in the demand for banknotes and reserves, given the MPC’s policy rate (Bank Rate).

The EU’s new Markets in Financial Instruments Directive (MiFID), for example, is expected to bring about important changes and intensify competition in the European financial market. This development will also influence the future of financial market infrastructures in Switzerland. Against this background, it is certainly crucial for the Swiss financial market infrastructures to persistently foster their competitiveness. They have pursued this strategy so far, and will need to continue doing so in the future. BIS Review 87/2006  1
The new set of liquidity requirements will provide for a better monitoring of risks on banks’ balance sheets and will limit the social cost of liquidity crises. It has to be combined with actions ensuring a proper functioning of the money market, such as reform and oversight of reference rates. It should be seen as a complement to regulatory reforms that improve market discipline in other segments of the banks’ liability structure, such as capital buffers and the new bail-in rules for senior bond-holders and uninsured depositors. A more far-reaching question, which I did not address in this speech, is whether the increased risk-sensitivity of bank liabilities under the new regulatory regime will constrain the role of banks as providers of liquidity services to the economy, or as creators of “quasimoney”. If so, this could put undue pressure on central banks as producers of the only truly safe and liquid asset – bank reserves. This makes it even more important for governments to be fiscally responsible so that Treasuries can keep or regain their role as safe and liquid instruments. Going forward, central banks will continue to act as lenders of last resort, but the crisis has helped us better understand the conditions for it to be socially useful. One of these is an effective liquidity regulation that constrains the business models of banks in a way that ensures that liquidity risk is self-insured. If properly priced, instruments such as a Committed Liquidity Facility can complement liquidity regulation while protecting monetary policy.

And only three years ago the Bank’s Court held its annual out-of-London meeting in Liverpool’s imposing Town Hall. I am particularly pleased to launch this, the third edition of the Merseyside Economic Review. The Partnership had its origins in a Daily Post campaign over a decade ago (‘who speaks for Merseyside?’). It broke new ground then and it has been breaking new ground ever since. The Economic Review was the first of its kind for any UK City Region. And the Partnership’s report on ‘the Gender Agenda: Women in the Merseyside economy’ is another first. The value of the Partnership’s approach is clear. Economic regeneration is a highly complex long term business which has to bring together many different bodies and initiatives – at local, regional, national, European and even international levels. It’s only too easy to lose sight of the big picture. But successful partnership rests on shared goals and clear expectations. This Review charts the way: it sets out in clear and simple terms what the Partnership is seeking to achieve and it assesses progress against measurable objectives. It has the credibility that comes from being grounded in serious analysis of the issues confronting Merseyside. And it has benefited from the advice of an independent panel of distinguished experts. There is no doubt that the performance of monetary policy has benefited greatly from setting clear objectives and measuring progress in a transparent and open way.
The key hypothesis of the research is that the context in which monetary and financial stability is pursued in emerging market economies is different to that of developed economies, and so the challenge and the implications for policy are different. My lecture this evening is organized into two parts. In the first part, I will talk about the unique context of emerging market economies compared to developed economies in the attainment of monetary and financial stability, and discuss the underlying cause of the difference. In the second part, I will highlight the key implications of these differences for the pursuance of monetary and financial stability in emerging market economies, both in the context of shortterm stabilization challenge and the longer-term structural challenge in implementing structural reforms. The lecture will be brief, so that we will have time for a Q and A session afterward. 1. First, the unique context of emerging market economies. As a general statement, one can begin with the notion that the attainment of monetary and financial stability is something that policymakers everywhere place at the forefront of their agendas. And, monetary and financial stability are desirable because they are prerequisites for welfare-enhancing macroeconomic outcomes. Along this line, the context in which monetary and financial stability is pursued in emerging market economies is quite distinct from that in developed economies. For emerging markets, there are two stylized facts that are unique to its policy setting.

PLATFORM FOR DISCUSSION Speaking note  SPEAKER:  Anita Angelovska Bezhoska, Governor  DATE:  5-7 September 2018  LOCATION:  Vienna, Austria  NATIONAL BANK OF THE REPUBLIC OF MACEDONIA info@nbrm.mk www.nbrm.mk   INVESTMENT AND FINANCE, CHALLENGES FOR THE CESEE REGION This Speaking note was prepared for the EUROFI Financial Forum, 2018, organised in association with the Austrian EU Council Presidency  Contributors to the note: Ana Mitreska, Biljana Jovanovikj, Tanja Jakimova and Neda Popovska Kamnar Department: Monetary Policy and Research  1  Investment and Finance, Challenges for the CESEE Region  1. Investment in CESEE – historical perspective and recent developments The investment in spurring growth and supporting productivity and efficiency of an economy is a well-known principle. The larger the investments, the higher the potential to grow. Yet, the investment function is dependent on many factors such as expectations of investors, the already existing capital stock, the general business environment, the level of demand, technological progress, the possibility to invent and innovate, the leverage level, and the access to finance. Before the outburst of the global crisis, investment was an important growth driver in the CESEE region, though the growth was not sufficient to provide for stronger capital accumulation. Notwithstanding the heterogeneity among countries, prior to the crisis, investment was an important contributor to the overall growth, supported by large capital inflows, which propelled the productivity of the economies, as well.
International efforts range from the creation of specialized units of behavioral risk experts to risk culture assessment frameworks to supervisory guidance that directs supervised institutions to develop and promote a sound corporate culture. I view this variation in approach as a feature and not a bug of the official sector focus on culture reform. There is rarely a single solution to a complex problem with many interdependencies and deep uncertainty. Rather, the official sector must experiment and innovate; probe and adapt; and try new approaches to foster a healthy culture that promotes appropriate conduct. One common thread of the recent innovations, however, is that supervisors can provide a horizontal perspective on culture reform that reflects broad social goals in a way that the private sector cannot. To be clear, it is not the supervisors’ job to dictate the internal culture of a firm, but when there are market failures such as externalities or information asymmetries, then there is a role for the official sector to push firms to do more to address these issues and mitigate misconduct risk. We should be cautious, however, about our ability to influence precisely and predictably. Public health studies, for example, document “policy resistance” where interventions are defeated by the system’s response to an intervention.8 As an example, a rules-based regime that focuses on reducing conduct risk by prescriptive regulatory fiat runs the risks of creating a “check-the-box culture” where everything not explicitly banned is considered acceptable behavior.

This has the potential to facilitate exactly the wrong type of culture, conduct and risk-taking.9  Challenges Related to Complexity While I have spoken so far about work by the official sector, progress has also been made over the past few years by the industry in terms of senior management focus and commitment to culture reform. Some firms have created Board-level committees looking at culture, others have 2/5  BIS central bankers' speeches  introduced behavioral risk into their audit programs, and still others have developed dashboards with a range of quantitative and qualitative factors to track their efforts and outcomes. Progress has been uneven, however, and there is still more to do. Let me identify several areas where I think additional work is needed—assessment, technology, and influence. Assessment Given the complexity of the problem, measuring and assessing progress is not straightforward. Assessment of culture and the factors needed to change it are difficult, but this should not deter us. Managers, investors, and the official sector all want to know what is changing and whether misconduct risk has been mitigated. The question then is, how will we really know whether change is happening and whether progress is sustainable? I don’t believe that there is a “silver bullet” for assessing culture change—no single solution, approach, or template will work for every firm in every circumstance. That said, standardized metrics will help in assessing changes over time and across firms.
Unemployment rose to very high levels. The stringent containment measures led to a sharp decline in private consumption. There was also a shift away from services and towards goods consumption. Travel plans had to be put on hold, and much of the cultural sector was shut down. The pandemic and the measures to contain it also dampened the willingness and ability of mainland firms to invest. Petroleum investment fell on the back of lower oil prices and greater uncertainty. Reduced travel resulted in a fall in both exports and imports. After the decline in March and April, economic activity picked up towards summer, and the recovery continued through Q3. Unemployment declined. Through autumn, infection rates increased in Norway, and new containment measures were introduced. Activity slowed in the first months of this year, and in March and April we saw a renewed rise in the number of furloughed workers. Recently, infection rates have fallen. A gradual reopening of society is underway, and a large portion of the adult population in Norway will likely be vaccinated by the end of summer. This suggests that economic activity will pick up through 2021. Following a rise over the past three years, wage growth slowed again slightly in 2020. The moderation in wage growth must be viewed in the light of a sharp rise in unemployment caused by the Covid-19 outbreak and a marked decline in business sector profitability. Inflation has varied quite markedly over the past year.

The banks’ ability to transmit monetary policy effectively may be jeopardised if they have problems. The central role of the banks in the payment system - as the channel for payments of every type - makes it important that the banks are financially healthy and operate efficiently and reliably. Otherwise the traffic in payments is liable to be disturbed. If the problems become so great as to constitute systemic risk, it is incumbent on the central bank to consider support for liquidity. Moreover, in that central banks provide settlement systems for large-value payments, they also have a direct, operative function in the payment system. All inter-bank payments are channelled through the settlement system, which is thus the hub of the entire payment system. In Sweden the Riksbank now regularly publishes a Financial Market Report, in which we present our appraisal of the financial system’s development and stability. The Report is thus a way of monitoring one of our primary functions - the promotion of a safe and efficient payment system. There are some parallels here with the Inflation Report, which we publish regularly as part of the work on our other primary function - safeguarding a stable value of money. The rapid pace of financial developments, particularly in the international payment system, also calls for extensive international cooperation. The issue of financial system stability will be up for detailed discussion in various fora in connection with the coming annual meetings of the World Bank and the International Monetary Fund.
The model of global integration is the economic model that has been adopted by most of the transition countries, such as Albania. Under this guidance, the Albanian banking market has demonstrated clear willingness and objectives for a swift harmonization with the legal framework of the European Union’s banking system, as well as with its significant changes since 2008. Although there are no cases of bank failures in the history of the Albanian banking sector, we have identified in our banking legislation the same loopholes found in other European economies. The development of hypothetical scenarios for coping with a potential exposure of the Albanian economy to the Greek sovereign debt crisis evidenced that the Bank of Albania – as the supervisory authority of the banking sector – did not have all the necessary legal instruments to manage insolvency situations in systemically-important banks. This need for a new legal framework is addressed in both national and cross-border aspects, by the Bank Recovery and Resolution Directive. In fact, the initial efforts to prepare and present the first recovery plan to the Bank of Albania started in 2012. The relevant Regulation was approved by the Supervisory Council of the Bank of Albania in 2014. But, of course, these efforts were made within the supervisory legal authority and, as such, they were not sufficient. For this reason, during 2015, with the support of World Bank’s FinSAC project, the Bank of Albania started the difficult but necessary work of harmonizing the European Directive into a new Albanian law.

The third step is the resolution of banks, applied by the Bank of Albania in view of the new mandate. Similar to recovery plans, the resolution plans drafted by the Bank of Albania aim to identify the legal and structural obstacles and difficulties with financial resources that banks face, toward resolvability. In this regard, the resolution plans are one of the key instruments to facilitate the Bank of Albania’s resolution implementation. This year in April, the Bank of Albania approved a bylaw that defines the content of resolution plans. Then banks were required to report a broad set of data for drafting these plans, based on the model of the European Banking Authority and we are currently in the process of drafting them. The drafting of the banks resolution plans is complicated, which includes complex and cross-border issues that must be implemented and coordinated within a short period of time. Hence, the resolution planning is an on-going process and a long-term mission to remove obstacles against the possibility for resolution action in banks. This planning does not mean drafting an annual plan that is stored somewhere in some shelf and it is dusted off only when its implementation is necessary; instead, it is the beginning of a long process of restructuring all aspects of the banking business that may hinder this process.
11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  The level rule implies that policy rates snap back after the incidence of the shock. After all, if the downward shock to R-star is temporary, failing to raise policy rates in parallel with the recovery of R-star would lead to excessive monetary ease. But because the true shock to R-star is persistent, that approach creates a monetary tightening that widens the output gap and weighs on inflation. By contrast, the difference rule leaves policy rates lower and therefore does not induce the same instability in output and inflation. It stabilising properties are superior – and associated with a slower, steadier and more persistent rise in the policy rate. In the end, the learning process embodied in this model ensures that the outcomes of the different rules eventually converges. But during this process of convergence, the difference rule dominates in terms of social welfare and implies a slower, steadier and more persistent evolution of policy rates following the shock: one characterisation of a ‘steady-handed’ policy response. Of course, Chart 3 only illustrates the responses for one combination of underlying shocks and perceptions. A full analysis would explore all those combinations. But we can show – as illustrated in Chart 4 – that it is possible to construct scenarios (defined here as combinations of underlying shocks) that create this steady-handed response under the difference rule. This is probably the most relevant result for the current conjuncture.

We need to avoid a repeat of the 1997 Russian default, where Russia received a programme of aid, everyone expected it to work, but the needs turned out to be much bigger two months later. There is also a very rapidly increasing risk of citizens running on Greek banks as well as a rocketing risk of some other EU/eurozone country’s voters producing an outcome that will, in addition to other more likely and more profound consequences, further complicate finding a solution to the technical issues, i.e. how to structure the debt restructuring. To conclude, this is a crisis whose causes lie in eurozone institutions, which we were assured were created – together with the eurozone itself – to prevent crises. Without further close involvement of eurozone institutions, including the ECB and eurozone member states, it will most probably result in a disorderly meltdown of at least some European economies. On many levels, including the level of European institutions, the crisis was caused by incoherent and/or insincere communication, which increased the uncertainty of market participants in the broad sense. Our country’s history tells us that a generally predicted loss of a currency fix has much lower costs (including political ones) than an unexpected one. If eurozone countries and EU institutions opt for “safe” Greek membership in the eurozone, they must present a solution that is broad, generous and general enough to convince the markets of its credibility. This solution had better come fast, though, as muddling through has significant economic costs and increases the risks dramatically.
This observation is of special relevance precisely in times of crisis, when some bank managers may be more tempted to pursue “gambling for resurrection” strategies. Likewise, as market participants understand that banks will have stronger motivation to employ better technologies for risk management, one would naturally expect the industry to move to a safer plateau, with its capital, therefore, enjoying a lower risk premium, all other things being equal. To summarise, while I think that a reasonable degree of procyclicality of the supply of loans is a logical feature of the credit market, I sympathise with the idea that all kinds of regulations affecting banks, from accounting to prudential ones, should try to minimise or compensate for the risk of excessive sensitivity of bank lending policy to cyclical conditions. Indeed, the latter would normally appear when banks are poorly capitalised and lending decisions are based on inadequate risk assessments and driven only by current market conditions, a natural terrain for unplanned drastic swings in credit policies. I believe that all investment in technology and human capital, enhanced transparency, and better and pre-emptive risk management based on improved control structures and corporate governance will entail significant improvements not only to the stability and soundness of the financial system, but also to its efficiency in the allocation of resources. This, in my view, should benefit the cyclical behaviour of the banking system and also, it is very likely that it will be around a superior trend. 5.

I also want to thank the distinguished participants for their valuable contributions. I hope you enjoy both the conference and your stay in Istanbul. Thank you. BIS Review 124/2009  3