samchain/econo-pairs-v1 huggingface dataset:
A second practical role for macro-prudential policy is to make recommendations for how regulation might contribute towards moderating the credit cycle. The Basel Committee has recently developed guidelines for one potential macro-prudential tool – banks’ counter-cyclical capital buffer. This guideline is based on deviations in the ratio of credit-to-GDP from its long-term trend. This has been shown to be a reliable early warning indicator of future crises across a wide range of countries. It is akin to a Taylor rule for macro-prudential policy. Chart 18 plots the path of the UK credit-to-GDP guide-path over recent years. Unsurprisingly, it suggests that UK banks’ capital ratios should have been tightened in the run-up to the crisis, with credit-to-GDP above its long-term trend by up to 10 percentage points. That disequilibrium has since been completely eliminated as credit growth has collapsed. Currently, the guide-path is close to cycle-neutral. Any further fall would put credit below its cycle-neutral level, implying a loosening to support risk-taking. Setting regulation to boost risk-taking may feel like a new and radical departure from the past. But in fact it is neither as radical nor as new as it might first appear. In 1938, the US was facing a double-dip recession. Criticism of banks’ unwillingness to lend to the real economy was rampant. Fear in financial markets was mounting. The situation was eerily reminiscent of today. At that point, Roosevelt turned macro-prudential. In the Uniform Agreement on Bank Supervisory Procedures, a relaxation of prudential and valuation standards was announced for US banks.

Real gold prices have more than doubled since 2008, edging towards their previous high-water mark after the oil price shocks of the late 1970s (Chart 6). Safe-haven flows to the Swiss franc have boosted its value by over 30% against both the euro and the dollar since September 2008. The reach-for-return, familiar at times in the past, has flipped into a scramble-for-safety. Risky assets tell a similar tale. The compensation investors demand for risk – the so-called risk premium – in advanced economy equities and investment grade corporate bonds is above or in line with its long-term average value. Bank lending spreads, which embody a compensation for risk, are materially higher for all classes of borrower. And measures of equity market uncertainty, such as the VIX, are at levels not seen since early 2009 (Chart 7). Not for nothing has the VIX become known as the “fear index”. Some risky assets have fared better. Since their trough in late 2008, global high yield debt prices have risen by two-thirds, emerging markets equities have roughly doubled, while commodity prices have risen by even more. But even these assets have recently fallen from their peaks. Investors have concluded this is not a time for bravery. For much of this century, risk was cheap. Today it is expensive. Market participants’ willingness to put risk capital to work can be seen in measures of financial market liquidity. Those have also yo-yoed (Chart 8).
François Villeroy de Galhau: Presentation of the 2019 Annual Report of the ACPR Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the press conference, Paris, 28 May 2020. * * * Ladies and Gentlemen, I am pleased to welcome you to this presentation of the 2019 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of Bernard Delas, Vice-Chairman of the ACPR, Dominique Laboureix, the new Secretary General of the ACPR, and Alain Ménéménis, the new President of the Sanctions Committee. The circumstances are unusual and unprecedented. Indeed, we shall be talking about a year that has ended, at a time when, since then, we have found ourselves engulfed in an unprecedented health and economic crisis. We shall come back to this. In 2019 and since the start of 2020, the women and men of the ACPR have continued to work tirelessly to safeguard financial stability. I would like to take this opportunity to thank them. This morning, I shall focus my comments on an issue that cannot be ignored and that is at the heart of our concerns, without forgetting the other challenges we face – the profitability and solvency of French and European banks and insurers. I.

They must provide the tools for first responders to react quickly and investigate the source and impact of breaches, compromises and incidents. Most essentially, there is a need to balance the right mix of investments across prevention, detection and response capabilities vis-à-vis an organisation’s risk appetite. Not only are new and advanced tools needed to supplement existing protection solutions, but also new skills and culture need to be developed within existing security teams and the larger organization, more so within the ambit of digital financial services whereby regulatory compliance plays a major role in cybersecurity. 2/3  BIS central bankers' speeches  Regulatory compliance does not equal cybersecurity Regulations are designed to protect organisations, clients, and consumers against the potentially devastating consequences of cyber-attacks. Regulatory requirements for financial institutions have undeniably become tougher, and organisations are continuously burdened by the need to interpret what a fragmented global regulatory landscape means for their operations. Financial institution often find themselves chasing regulatory compliance, rather than leading independent security planning. Regulatory compliance by itself is not cybersecurity. When new cybersecurity requirements or frameworks are published, organisations must first determine their current security state and identify gaps. If routine testing and remediation are conducted, being compliant or meeting regulations should be easier to achieve. Of course, some parties will want or need to go above and beyond regulations. Too often, however, organisations find themselves in reactive mode.
The bears may have seen their bargain flat pack furniture in a different light when they discovered how easily the chairs were broken by a little girl. Similarly, financial services supplied by undercapitalized firms are poor value as they cannot be relied on. And if policyholders cannot reliably distinguish the sound firms from the others, the whole sector is tainted – to the cost of us all as economic activity that relies on being able to lay off unsupportable risks is depressed. On the other hand, if prices are unnecessarily high that can also reduce or prevent risk transfer, and this can have a knock-on effect on economic activity and long-term investment. There is a balance to be struck. As I said in my opening remarks, I do not believe that we have that balance badly wrong at the moment. I hope that I have convinced you that, like Goldilocks in the more familiar version of the story, regulators do want to get it just right: we aren’t continually hankering after the largest chair, the softest bed, or the hottest porridge. And we are as open to evidence about what constitutes ‘just right’ as we are to how best to correct the distortions introduced by the current design and calibration of specific measures in the regime.

BIS Review 103/2006  3
Risk can be measured. Cases where the course and results of the events neither cannot be measured nor predicted are not referred to as risk but uncertainty. In other words, the intangible aspect of events is defined as uncertainty. Due to the intangible nature of uncertainty, its results and the extent of its effects cannot be predicted. Probability cannot be attributed to uncertainty. Uncertainty is inevitable and its results are unmanageable. There exists no market that can avoid uncertainty. 1  Knight, F.H. (1985), “Risk, Uncertainty and Profit”, Chicago, University of Chicago Press, Chapters 2 and 7. BIS Review 17/2005  1  On the other hand, risk refers to the part of the future effects of events which can be measured. Risk can be calculated; results of risks can be explained by certain probabilities. In this context, risk is predictable and we can manage its results. There exist markets for risk management. In Turkey, high and volatile inflation has been the main source of uncertainty for the last 30 years. Concepts of uncertainty and risk have become indistinguishable. Hence, it has been impossible to implement risk management or to establish risk management agents on this slippery slope. At this point, I would like to emphasize on a technical matter. As it is known, volatility is priced in derivatives markets. When uncertainty is high, volatility increases significantly. This makes pricing difficult and in these circumstances prices reach very high levels. Hence, risk management becomes almost impossible.

Facilitating the integration of fintechs into the regulatory framework As regards the fostering of innovation, I would first like to recall a founding principle. As supervisors, we need to promote a regulatory framework that is innovation-friendly, but technology-neutral, in order to encourage the appropriate and uniform treatment of risks: the same activity, same risk, same rule principle. Last year, I drew a parallel with the invention of the railway, which was a major innovation in the 19th century but not devoid of risks. Our role is to prevent the train from going off the tracks and to ensure that passengers are happy to get on board without being afraid. In other words, we need to promote innovation but also confidence in 1/3  BIS central bankers' speeches  innovation. At the European level, the balance between innovation and security is embodied in the first draft texts of the digital finance package, presented by the European Commission in September 2020. The draft Markets in Crypto-Assets Regulation (MiCA) constitutes a first step forward. I would like to stress two key points: it must be adopted quickly, and it must be consolidated. Indeed, technology is advancing rapidly, and decentralised finance, which is an even more crucial area than in September 2020, must be taken into account to avoid leaving any blind spots or allowing alternative circuits to develop without regulation. The draft DORA Act focuses on the key issue of operational resilience, which is vital, notably to address cyber risk.
Five-year real interest rates expected in five years’ time have fallen by over 100 basis points in the United Kingdom, the euro area and the United States (Chart 12). The upshot is a fascinating pattern of real interest rates along the yield curve (Chart 13). In the UK, real interest rates are now expected to remain negative for at least the next 40 years. The pattern is less dramatic in the US and euro-area, but even there real rates remain at exceptionally low levels as far as the eye can see.6 That is truly extra-ordinary and naturally begs the question – why? One hypothesis is that it simply reflects a portfolio shift by investors towards government assets – if you like, a “search for safety” in the face of heightened geo-political risks. The implications for future growth might then be relatively benign, either because these risks are short-lived or because they do not affect companies’ investment plans. In other words, the pattern of real rates might still be consistent with a recovery. 6  4  The levels of these international series are not entirely comparable, as UK real rates are indexed to RPI, whereas US and European are indexed to CPI. BIS central bankers’ speeches  An alternative hypothesis is that these developments reflect pessimistic expectations about future growth prospects, which are mirrored in expected policy rates needing to remain lower for much longer. This would carry more far-reaching and negative implications for the economy, more in line with the secular stagnation hypothesis.

Heng Swee Keat: The sale of structured products to retail investors Opening remarks by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the Monetary Authority of Singapore’s Press Conference on the Sale of Structured Products to Retail Investors, Singapore, 17 October 2008. *  *  *  Many individuals who purchased structured products linked to Lehman Brothers are worried about their investments. MAS has been actively working to ensure a fair resolution for these investors. We have also been communicating our actions to the public since the issue first came to light in the middle of September. Our first priority has always been to help affected investors. Let me touch on what we have done and how we have put in place a serious and impartial resolution process to deal with investors’ legitimate concerns. First, we are making sure that HSBC Institutional Trust Services (Singapore) Ltd, the trustee for the Lehman Minibond Programme, carefully considers all options and acts in the interests of investors. If a new swap counterparty is available, investors would have the opportunity to vote on this option. In order to assist investors make an informed decision, MAS will appoint an independent financial adviser. We expect the trustee to know whether options will be available to noteholders by the end of next week.
In the budget, the Government maintained its focus on diversifying the economy, increasing productive employment and maintaining a stable macro-economic environment. The key Macroeconomic objectives for 2011 are;   To exceed 6% GDP growth;    To reduce end-year inflation to 7.0%; and    To maintain international reserves of at least 4 months of import cover. The growth in GDP for 2011 is premised on the continued strong performance of the agriculture, mining, construction, manufacturing, transport and communications and tourism sectors. Inflation outlook for the fourth quarter of 2010 In the fourth quarter of 2010, annual overall inflation is projected to remain below the end year target of 8.0%. This favourable outlook is on account of expected stability in maize prices in view of the bumper harvest in 2010; expected favourable supply of vegetables and fresh fish during the period and expected relative stability of the exchange rate of the Kwacha against the US dollar for much of the fourth quarter. At end-September 2010, annual inflation was largely unchanged at 7.7% compared to the 7.8% recorded in June 2010, due to a decline in annual food inflation against a rise in annual non-food inflation during the same period. Consistent with this outturn, inflation projections indicate an annual overall inflation rate of 7.3% for end-December 2010. The Bank of Zambia will continue to monitor developments and undertake appropriate monetary policy actions to ensure that monetary targets are achieved.

The lingering economic uncertainty and the burgeoning fiscal deficit drove the US dollar weaker across all currencies. Therefore, benefitting from the broad based dollar weakness and relatively high levels of US dollar liquidity in the market, the Kwacha posted a 5.0% gain against the American currency. A sustained rise in the copper prices at the London Metal Exchange to an average of $ per tonne in the third quarter from $ tonne gave further support to the domestic currency, with the interbank rate ending the period at an average of K4,869.21 per US dollar. Balance of payments Preliminary data show that Zambia’s overall balance of payments (BoP) recorded a surplus of US $ million during the third quarter of 2010 compared to a deficit of US $ million in the previous quarter. This was driven by the improvement in the performance of both the current account and the capital and financial account balances. The current account surplus increased to US $ million from a surplus of US $ million recorded the previous quarter, reflecting an increase in the merchandise trade surplus coupled with the narrowing of the services and income accounts deficits. Supporting the current account was the merchandise trade surplus which rose by 74.8% to US $ million in the quarter under review following an increase in exports as well as a decline in imports. Merchandise export earnings edged upward by 18.7% to US $ million, on account of increases in both metal and non-traditional export earnings.
These monetary policy measures carried out by the Eurosystem have been necessary to ensure the continued orderly transmission of monetary policy throughout the euro area and to provide sufficient stimulus to bring inflation back to our objective. They have also been proportionate solutions to the scale of the problems they seek to solve. The ECB is aware of – and closely monitors – the potential impact of its monetary policy measures on market functioning. Indeed, as I mentioned earlier, full allotment was put in place precisely because the market wasn’t functioning. But in assessing the impact of its policies, the ECB must have first regard to its primary objective of price stability. Under our mandate, considerations of the robustness of the financial system and market functioning are only relevant once we have fulfilled that primary objective. Nonetheless, in designing the APP programme, the ECB has implemented a number of features designed to minimise the impact on market functioning. The hard legal constraints on issue and issuer limits reduce the influence the APP has on particular bonds. Our recent widening of eligible maturities and removal of the DFR floor permit purchases to be spread more widely and reduce pressure on specials. We have also put in place a number of securities lending facilities.

For purposes of this discussion, I will split our economy in two--the real economy and the financial economy. Let me begin my explanation of the present structure of the economy with real variables. - The Turkish economy is a continuously growing, dynamic economy. Its longterm average annual growth rate is over 4 percent and its average annual productivity increase is around 2 percent. In each of the last two years, GNP has increased by around 7 percent, well above most OECD countries. Along with this rapid growth, the composition of the gross domestic product (GDP) has shifted during the last two decades, toward the industrial and services sectors, while the GDP share of agriculture has greatly declined. The share of the public sector in industrial output has also decreased. - Spending on investments has been increasing since the first quarter of 1995. Normally, periods of investment aimed at increasing production capacity last for about 20 months, but the increase in investment activity spending remained focused on increasing production capacity throughout 1995 and 1996. The Economic Trend Analysis of the Central Bank of Turkey shows that no earlier period of expectation of rising investments has ever lasted longer. - Official records show that Turkey’s unemployment rate has been holding fairly constant at around 7 or 8 percent, which is very low compared to the other OECD countries. In April 1996, total employment rose by 2.6 percent and unemployment fell to 6.3 percent. The urban and rural unemployment rates were estimated at 9.3 percent and 3.8 percent respectively.
It must also be noted that real lending rates, although they have been rising since the spring of last year, are still lower in real terms than those observed at the beginning of 1999. Overall, money and credit developments signalled an upward risk to price stability which had to be counteracted. The new monetary data for May which was released this morning broadly confirmed this assessment. The three-month average of the annual growth rates of M3, covering the period from March to May 2000 remained unchanged at 6.3% and loans to the private sector continued to grow rapidly. Let me now discuss the outlook for growth and inflation. This is a rather pleasant task, as the prospects for strong growth are very favourable. Indeed, let me reiterate our conviction that they have not been this favourable in many years. If central bankers are famous for anything, it would normally be for guarded rather than for exuberant views. So, for a central banker, this assessment is quite something. I therefore hasten to fill you in on some of the underlying details. The consensus view emerging from the forecasts currently available is that of strong economic growth of over 3% in the euro area both this year and next. This is clearly more than most forecasters expected at the end of last year, when projections were still very much made in the light of the previous crises witnessed in emerging market economies.

The responsibilities of individual policy areas in ensuring sustained non-inflationary growth This brings me to a crucial issue: the single currency is the joint responsibility of all policymakers and Member States. Monetary policy is strictly geared towards the maintenance of price stability and thus also makes an important contribution to strong growth in output and employment. However, monetary policy needs the support of other policy areas. This is best achieved by having specific roles, clear mandates and agreed responsibilities for the individual policy areas. Let me go into these in a little more detail. The best contribution which monetary policy can make to sustainable growth is to achieve price stability. Indeed, inflation entails numerous costs and creates an uncertain economic environment. This is harmful to an optimal allocation of resources and thus hampers economic growth. Some costs of inflation are quite tangible, as is the case with those induced by the periodic revision of prices and indices or the increasing cost and time spent in cash transactions. More generally, increased inflation is accompanied by increased volatility of inflation. Stable high inflation has almost never been observed, and is seemingly a contradiction in terms. This volatility of inflation creates uncertainty which affects economic and social decisions.