samchain/econo-pairs-v1 huggingface dataset:
Part of the problem was that when the music stopped, just as the market was uncertain which banks were sound, investors and savers could not tell a sound ABS from an unsound ABS. So one lesson must surely be that securities regulators and exchanges, which admit ABS to listing, should set more exacting but also simpler standards for transparency. They surely have a clear role to play in the regime for the issue and distribution of such securities. IOSCO has been working on this. 11 A second lesson is that we have to be clearer about the nature and extent of risks retained by originators. The Basel Committee is focused on this. Other ideas are more radical. It has been suggested that, when combined with repo, the ABS market amounts to a major shadow banking system – portfolios of loans financed short term, so with maturity mismatch risk. It follows from this, it is suggested, that the kind of social contract that applies to the mainstream banking system should be extended, suitably adapted, to the ABS market. On that view, AAA tranches occupy a place in the capital structure of a securitised shadow banking system equivalent to that of retail deposits in the capital structure of mainstream banks, and so should be guaranteed by governments or, in a closer analogy to retail-deposit protection, by industry-funded insurance schemes; and with issuers subject to authorisation criteria. 12 I am not at all endorsing those prescriptions here. Rather I mention them because they serve to highlight two things.

4 When the Reserve Fund “broke the buck” after Lehman’s failure, there was a run by institutional investors. The industry had to be given access to central banks’ liquidity facilities to contain the vortex. Many banking groups running supposedly arms-length money funds injected “capital” into their funds to keep them afloat. Yet the funds had not been consolidated, and their bank sponsors had not had to hold capital against such implicit support. Echoing the concerns that Paul Volcker is reported to have expressed at internal Federal Reserve meetings around thirty years ago, 5 the Bank of England believes that Constant-NAV money funds should not exist in their current form. They should become either regulated banks or, alternatively, Variable NAV funds that do not offer instant liquidity. Meanwhile, so-called “enhanced return" funds should surely have to make clear what they are and what they are not. Offering 300bp (or whatever) over LIBOR is to offer a risky investment. There is nothing wrong with that. But securities regulators should ensure that the marketing and distribution is appropriate. “Money fund” does not seem to be quite the right label. For both those riskier funds, and Variable NAV money funds, investors would clearly be exposed to risk, just as in mainstream equity and bond mutual funds. Finance companies My second example is so-called finance companies. They are prominent in, but by no means unique to, the US. Some operate globally.
As virtually all economic transactions involve some form of payment, one of the financial system’s principal components is the payment system. This is clearly expressed in a statement in the main report from the Banking Law Committee, to the effect that concern for the payment system is the primary reason for supervising and controlling financial institutions. BIS Review 23/1999  2  In Sweden it is the Riksbank that provides and is accountable for the central payment system. This RIX system handles 1,500 interbank payments a day with a total value of SEK 350 billion. While it is often the central bank that is responsible for a country’s payment system, there is nothing to prevent this function being performed by some other player. In countries where that is the case, the payment system is not a central bank concern. Nonetheless, one reason for assigning the task to the central bank is the payment system’s importance for the transmission of monetary policy. Another reason is that a central bank is in a unique position to provide the liquidity that the smooth functioning of the system constantly requires. Players are liable to need a temporary supply of liquidity in order to smooth the flow of payments with other participants. The payment system can be said to consist in turn of two components: the payment infrastructure and the financial firms, mainly banks, with access to the system. The stability of the system is dependent on the proper functioning of both these components.

However, the group chaired by Governor Liikanen has come out with the simplest proposal. The second element of the reform of the regulatory framework is that of macroprudential supervision. While microprudential supervision concerns itself with individually considered financial institutions, macroprudential supervision contributes to financial stability by identifying, monitoring and mitigating the risks that may affect the financial system as a whole. While such a concept may not be entirely novel, this crisis has underlined the absence of macroprudential authorities with well-defined mandates in this field and clearly defined intervention instruments. The main advanced economies have set up macroprudential authorities such as the Financial Stability Oversight Council (FSOC) in the United States and, in the United Kingdom, the Bank of England’s Financial Policy Committee. I would just mention that at the Banco de España, too, we have begun work to accommodate our organisational structures to the needs of the macroprudential approach. Thank you very much for your attention. BIS central bankers’ speeches  3
There are challenges that still exist in coordinating across multiple agencies – domestically and internationally and, at times, with competing agendas (e.g., prudential vs. conduct). As well, there remain some challenges to effectively sharing information, and while some legal impediments have been resolved, the seamless exchange of information is not yet the norm among key supervisors. I do believe that the trust level is building among supervisors as a result of the hard work over the past couple of years, but this will be an ongoing effort as players change and circumstances evolve. There have been several opportunities over the past year to test some of the close coordination among supervisors and regulators, and I think they have provided valuable experience – and lessons learned – for those involved. What I think has been clearest in those lessons is the ongoing need to coordinate – to ensure that problems are well understood from each vantage point or jurisdiction, that mitigants are discussed and implemented as necessary, and that all stakeholders are well informed – all of this to ensure that problems don’t become systemic. A final point on enhancing coordination and communication is ensuring that supervisors continue to develop an understanding of the impact of the new rules and regulations across global organizations. As I noted earlier, there is recognition that regulatory changes are affecting strategies, business models, and business activities in a meaningful way – and that this is occurring across organizations (not just locally).

As Tom Baxter, our General Counsel says, “This failure to correlate the rule with the value is the root of real mischief.” As firms continue to work on improving their culture, there are a number of themes that should drive their efforts. First, culture starts at the top of the organization – and when I say top, I mean all the way at the top, not just in a particular jurisdiction. Senior leaders and boards of directors around the world must lead by example and demonstrate to local leadership the firm’s underlying values through their actions, not just their words. (Practice what you preach.) Incentives within the firm should be designed to set the right expectations for behavior, and recognition programs should clearly reward desired actions, not just financial performance. At the end of the day, culture is fundamentally about people, and we shouldn’t forget that. Having the right culture in place is not a “nice to have” in a firm, it is a “must have.” Some say that the financial industry is late to recognize the need to address culture – I say we can’t wait any longer. We are spending a lot of time discussing culture internally at the Fed right now, so expect to hear more about it in the near future. Adjusting as necessary and engaging in dialogue As firms are developing and implementing changes, such as the ones I mentioned, to meet the requirements of the Enhanced Prudential Standards, it is important to refine the business strategy of the U.S. operations.
Continuing on this subject, I will next talk about the way macroeconomic policies have helped in the context of the large swings of the price of copper. Macroeconomic policies and copper in the current scenario To make economies less vulnerable to commodity price fluctuations, having an adequate macroeconomic policy framework is imperative. As will be argued in this section, this is the case in Chile today. 3 It is common knowledge that in Latin America, cycles have historically been very pronounced. Global economic downturns have triggered strong adjustments in the countries in the region. This is largely due to the destabilizing effects of terms of trade fluctuations on public finances (Gavin and Perotti, 1997). Due to the importance of copper for fiscal income, a positive shock on its price should be expected to prompt destabilizing policies. This does not occur, however, because Chile’s fiscal policy is countercyclical, and is based on a  3  This issue is also discussed in De Gregorio (2006). BIS Review 106/2009  3  structural fiscal balance rule. To determine the structural balance, a key element is the estimated long-term copper price. This rule began being applied in 2001 with a target of 1% of GDP; last year it was brought down to 0.5% because of a large accumulation of resources in sovereign funds, and this year, to provide an extra fiscal impulse, it was reduced to 0% (figure 8).

But an environment in which borrowing is free and the real interest rate is considerably lower than trend growth in the economy is unlikely to be sustainable over time. Chart: Estimates of the neutral interest rate The neutral interest rate cannot be observed and must be estimated. In the Bank’s Monetary Policy Report, the current neutral real interest rate in Norway is assumed to be around zero. The estimate is based on calculations from a range of different models. As we can see in the chart, these calculations show that the neutral interest rate has fallen to a historically low level close to zero over the past 20 years. With an inflation target of 2 percent, this means that setting the policy rate at zero would enable us to bring the real interest rate down to 2 percentage points below its equilibrium level.1 2 In Norges Bank’s assessment, monetary policy has sufficient room for manoeuvre with an inflation target of 2 percent. First, international experience has shown that the room for manoeuvre in monetary policy is not exhausted when the policy rate is close to zero. I will come back to this. Second, our calculations show that over the past 20 years, the real interest rate has normally remained less than 2 percentage points away from its estimated equilibrium level.3 This may suggest that a real interest rate that is 2 percentage points below equilibrium has in most cases provided sufficient economic stimulus.
If exchange rate developments pose a significant threat to price stability in the euro area, all other things being equal, monetary policy will have to respond. Of course, all other factors that impart information on price developments will also be taken into account before an interest rate decision is taken. Monetary policy decisions and the outlook for price stability In December 1998 the Governing Council announced that the interest rate on the main refinancing operation would be 3%. In the first quarter of 1999 the Governing Council kept this rate unchanged. After an in-depth review of recent monetary, financial and economic developments, the Governing Council decided at its meeting on 8 April to set the interest rate for the ECB’s main refinancing operations at 2.5%. In addition, the interest rate on the marginal lending facility was lowered to 3.5% and the interest rate on the deposit facility to 1.5%. These rates were left unchanged at the meeting of the Governing Council last week. The decision to lower interest rates taken at the first meeting in April has to be seen in the context of the stability-oriented strategy. The decision has thus been taken from a forwardlooking perspective, focusing on the medium-term trends in inflation and the compatibility of these trends with the Eurosystem’s definition of price stability. By adhering to this strategy, the Eurosystem’s monetary policy contributes to creating the economic conditions which are essential to exploiting the considerable growth potential of the euro area and to reducing uncertainty about future economic developments.

Muhammad bin Ibrahim: Catalysing SME growth Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Official Book Launch of “Catalysing SME growth”, organised by Credit Guarantee Corporation Malaysia Berhad (CGC), Kuala Lumpur, 21 June 2013. *  *  *  Saya ingin mengucapkan tahniah kepada CGC atas pelancaran buku “Catalysing SME Growth”, sempena menyambut ulangtahun yang ke-40, yang merakam sejarah CGC dalam menyokong institusi kewangan di Malaysia bagi mambantu menyediakan pembiayaan kewangan untuk perusahaan kecil dan sederhana. CGC sebagai satu institusi, terus kekal kukuh dan teguh serta mempunyai pengetahuan yang dalam mengenai teras perniagaannya setelah melalui pelbagai kitaran perniagaan dan ekonomi sepanjang 4 dekad. Izinkan saya meneruskan ucapan saya dalam bahasa Inggeris. The Malaysian economy has undergone many changes in terms of both size and sectoral composition since CGC’s establishment in 1972. From being an agricultural-based economy with a GDP per capita of RM1,5981, Malaysia has become a more industrialised and serviceoriented economy with a GDP per capita of RM32,124 as at end-2012.1 This remarkable story of growth is supported by the expansion of financing to the private sector by the financial system. In 1973, outstanding loans by commercial banks in Malaysia stood at RM5.5 billion. As at 30 April 2013, total outstanding loans by commercial banks increased to RM1,138.6 billion2 with annual growth rate (CAGR) of 19.6% since 1973. The outstanding amount of SME financing stood at RM184.5 billion (16.2%).
When these transitory influences drop out of the year-over-year numbers this spring, the inflation rate is likely to move higher. Importantly, even as inflation undershot the FOMC’s objective over the past year, inflation expectations have been broadly stable. I would be much more concerned if low inflation outcomes were contributing to a decline in inflation expectations. That would make it more difficult to push inflation back toward our 2 percent objective and would increase the risk of getting stuck at the effective lower bound for interest rates following the next economic downturn, which inevitably will come. Even if inflation were to remain somewhat below 2 percent over the near future, that might not be a serious problem, if the economy were to continue to perform well in other respects. To me, it would imply that the unemployment rate associated with “maximum employment” is lower than current estimates and that we could let the labor market tighten a bit further. This would be a positive outcome because the productive capacity of the U.S. economy would be enhanced and more people would be able to find jobs, develop their job skills, and build their human capital. In short, 2018 looks like it will be a good year for the economy. I anticipate that the Federal Reserve will make further progress in achieving its dual mandate objectives of maximum sustainable employment and price stability. If circumstances evolve close to what I have outlined today, I will continue to advocate for gradually removing monetary policy accommodation.

For example, the CBO projects that debt service costs in 2027 will be more than $ billion—nearly 3 percent of GDP, more than double their current share.10  5/6  BIS central bankers' speeches  Finally, the retirement of the baby boom generation over the next decade will put considerable pressure on outlays. The CBO projects that, by 2027, outlays on Social Security and Medicare will rise to 6 percent and 5 percent of GDP, respectively—each more than a percentage point higher than in 2017. As the economist Herbert Stein once remarked, trends that are unsustainable must end. How, precisely, the United States chooses to address its fiscal challenges will have important consequences for the economy, monetary policy, and financial markets in the years ahead. To sum up, I am optimistic about the near-term economic outlook and the likelihood that the FOMC will be able to make progress this year in pushing inflation up toward its 2 percent objective. The economy has considerable forward momentum, monetary policy is still accommodative, financial conditions are easy, and fiscal policy is set to provide a boost. But, there are some significant storm clouds over the longer term. If the labor market tightens much further, it will be harder to slow the economy to a sustainable pace, avoiding overheating and an eventual economic downturn. Another important issue is the need to get the country’s fiscal house in order for the long run.
We know that there was great mobility within the international economy of that time, described for example in Vilhelm Moberg's books about the Swedish emigrants. Many of us have relatives in the USA as a result of the massive emigration, when more than one million Swedes left the country to seek their living elsewhere. This process was made easier when the obligation to carry a passport was abolished in 1860 and it became easier to move across Sweden's borders. There was also considerable migration within Sweden. Today's labour market cannot compare to this in terms of flexibility! Another important element in the dynamic economy of that time was the development on the financial markets. The rapid industrialisation of Sweden would hardly have been possible without functioning capital markets that ensured savings were channelled where they were most needed. The deregulation of the Swedish interest rate markets in 1864 was important for this capital transfer, but was not sufficient to enable large-scale industrialisation in Sweden. This required, in addition, access to the international capital market. I shall let the major Swedish railway project began in the mid-1800s explain why. BIS Review 26/2001  1  The state paved the way abroad Sweden was sparsely populated with vast distances, which made railway construction relatively expensive, compared with large parts of Europe. In addition, the railways tied up investment capital for a long period of time. As there was a shortage of long-term savings in 19th century Sweden, they were forced to seek financing abroad.

A major piece of work for us in this area in the coming year will be to develop a financial literacy core competency framework. Building on the three tiers of financial literacy in the MoneySENSE programme, the framework will set out the basic knowledge and life skills individuals would need to make informed financial decisions at key life stages, starting at an early age, continuing through working life and into retirement. These decisions include managing budgets, setting aside adequate funds for emergencies, managing CPF savings prudently for retirement, assessing affordability when buying a property, and understanding and evaluating risks when investing in particular products. The Financial Sector Development Fund has set aside $ million to fund financial educational programmes for the next three years. Going forward, we will invite the public to contribute new and imaginative ideas on how financial education can be delivered more  BIS Review 91/2009  5  effectively. Consumer education requires sustained efforts by each and everyone in the community. We will fund proposals that can best support the delivery of the knowledge and skills in the financial literacy competency framework. Our next measure to maintain confidence is a review of the deposit insurance (DI) scheme in Singapore. As part of MAS’ continual efforts to enhance the regulatory framework in Singapore, we are reviewing the DI scheme to ensure it remains relevant, provides adequate protection to depositors and is in line with international practice.
This uncertainty arises, on the one hand, as described above, from the fact that the depth and duration of the crisis are unknown and, therefore, also the extent to which it will be necessary to use fiscal policy. On the other hand, the structural balance is not an observable variable; its magnitude depends on the calculation of aggregate potential output, and the usual difficulties determining the level of the latter have been multiplied as a consequence of the crisis. That said, an approximate calculation of the magnitude of the structural deficit post-crisis can be made based on its estimated level in 2019 (3.1% of GDP). To this amount would need to be added certain structural spending introduced in recent months, such as spending on the health system, some of which is likely to have a structural component, and on the minimum income scheme, as well as the extra interest burden arising from the higher level of debt. In addition, according to the estimates available, around 1 pp of GDP would need to be added in each of the next three decades for the increase in pension spending as a consequence of the decision to return to consumer price indexation. The result is a structural deficit of not less than 5% of GDP, although as I have said this figure is surrounded by high levels of uncertainty, given the lack of precision with which the effects of the crisis on potential output can currently be measured.

The IMF has shown that, in all advanced countries, including the United States and the United Kingdom, these losses accounted for around two thirds of the deterioration in fiscal positions observed during the crisis. Fiscal deterioration was compounded, in some countries, by the size of implicit blanket guarantees, which materialized as the crisis unfolded through public money injections in the financial sector. Unfortunately, these problems were not specific to the euro area. Public debt jumped by around 30% of GDP in the United Kingdom and in the United Kingdom. Structural deficits in these countries stand at similar or higher levels than those in most parts of the euro area. This is also true for Japan. Overall, the crisis has brought to light major deficiencies in the implementation of fiscal discipline and, more generally, in the economic governance of the euro area. The founders of the euro had put in place the Growth and Stability Pact. The principles were sound. The framework was adequate. The implementation has been extremely weak. Bluntly speaking, peer pressure failed to ensure consistent and rigorous compliance with the principles which had been agreed upon. It was, and remains necessary to make a “quantum leap” in economic governance. 2  BIS central bankers’ speeches  What have we done? Governments are addressing these deficiencies. Significant progress has been made over the past year. At the national level, all Member States have embarked upon credible public finance consolidation plans that are already bearing fruit.